-----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, I5R0p4emwqYEsXm2L8l51AsNuPqiLdwgRSR7EylDRSBMel2dZ+vH6/9DJi5Lxukk vokHVLYoxKPJ+r+ifc9kcg== 0001157523-07-011726.txt : 20071128 0001157523-07-011726.hdr.sgml : 20071128 20071128172321 ACCESSION NUMBER: 0001157523-07-011726 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20071128 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071128 DATE AS OF CHANGE: 20071128 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: 0429 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12597 FILM NUMBER: 071272356 BUSINESS ADDRESS: STREET 1: 1823 EASTCHESTER DRIVE CITY: HIGH POINT STATE: NC ZIP: 27265 BUSINESS PHONE: 3368895161 MAIL ADDRESS: STREET 1: P O BOX 2686 CITY: HIGH POINT STATE: NC ZIP: 27265 8-K 1 a5554241.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) November 28, 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 (see General Instruction A.2. below): |_| 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 5.02 - Departure of Directors or Certain Officers; Election 4 of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers Item 9.01(d) - Exhibits 4 Signature 5 Exhibits 2 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 19, 2007 for the fiscal year ended April 29, 2007. Item 2.02 - Results of Operations and Financial Condition On November 28, 2007, the Company issued a news release to announce its financial results for the second quarter ended October 28, 2007. The news release is attached hereto as Exhibit 99(a). Also on November 28, 2007, the Company released a Financial Information Release containing additional financial information and disclosures about the Company's second quarter ended October 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. 3 Item 5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. On November 26, 2007, the Company issued a news release announcing the departure of Kenneth M. Ludwig, Senior Vice President, Human Resources, and Corporate Secretary. Mr. Ludwig is expected to resign from the Company effective on or around December 31, 2007. The release announcing Mr. Ludwig's departure is attached hereto as Exhibit 99(c). On November 28, 2007, the compensation committee of the Company's board of directors approved reductions in salary for Franklin N. Saxon, President and Chief Executive Officer, and Robert G. Culp, III, Chairman. These reductions were based on a recommendation to the Board of Directors and its Compensation Committee from Mr. Saxon and Mr. Culp as part of management's overall efforts to reduce costs for the Company. Mr. Saxon's salary will be reduced by $25,000 to $325,000, and Mr. Culp's salary will be reduced by $50,000 to $250,000. Item 9.01 (d) - Exhibits 99(a) News Release dated November 28, 2007 99(b) Financial Information Release dated November 28, 2007 99(c) News Release dated November 26, 2007 4 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: /s/ Kenneth R. Bowling ---------------------- Chief Financial Officer (principal financial officer) By: /s/ Thomas B. Gallagher, Jr. ---------------------------- Corporate Controller (principal accounting officer) Dated: November 28, 2007 - ------------------------ 5 EXHIBIT INDEX Exhibit Number Exhibit -------------- ------- 99(a) News Release dated November 28, 2007 99(b) Financial Information Release dated November 28, 2007 99(c) News Release dated November 26, 2007 EX-99 2 a5554241ex99a.txt EXHIBIT 99(A) Exhibit 99(a) Culp Announces Results for Second Quarter Fiscal 2008 HIGH POINT, N.C.--(BUSINESS WIRE)--Nov. 28, 2007--Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter and six months ended October 28, 2007. Overview For the three months ended October 28, 2007, net sales were $64.3 million, up 9.0 percent compared with $59.0 million a year ago. The company reported net income of $1.6 million, or $0.12 per diluted share, for the second quarter of fiscal 2008, compared with net income of $812,000, or $0.07 per diluted share, for the second quarter of fiscal 2007. The financial results for the second quarter of fiscal 2008 included $503,000, or $0.04 per diluted share, in restructuring and related charges, after taxes. Excluding these charges, net income for the second fiscal quarter was $2.1 million, or $0.16 per diluted share. The second quarter fiscal 2008 results reflect a significantly lower tax rate due primarily to the effect of the strengthening of the Canadian currency during the quarter on estimated Canadian taxable income. The financial results for the second quarter of fiscal 2007 included $232,000, or $0.02 per diluted share, in restructuring and related charges, after taxes. Excluding these charges, net income for the second quarter of fiscal 2007 was $1,044,000, or $0.09 per diluted share. (A reconciliation of net income and net income per share has been set forth on Page 6.) For the six months ended October 28, 2007, the company reported net sales of $129.6 million compared with $121.6 million for the same period a year ago, an increase of 7.0 percent. Net income for the first six months of fiscal 2008 was $2.4 million, or $0.19 per diluted share, compared with $946,000, or $0.08 per diluted share, for the same period last year. Excluding restructuring and related charges, net income for the first six months of fiscal 2008 was $3.5 million, or $0.28 per diluted share. Excluding restructuring and related charges, net income for the first six months of fiscal 2007 was $2.2 million, or $0.19 per diluted share. Frank Saxon, chief executive officer of Culp, Inc., said, "We delivered a solid performance in the second quarter of fiscal 2008 during what has continued to be a challenging retail environment for the furniture industry. Our year over year sales gains and profitability improvement reflect continued growth in our mattress fabrics segment. While our upholstery fabrics sales have been affected by very difficult industry conditions, our China platform and lower operating cost structure have positioned us to operate more efficiently during the downturn, remain profitable on lower volumes and benefit from any upturn in demand. Additionally, we were pleased with the significant improvement in cash flow from operations during the first half of this year." Mattress Fabrics Segment Mattress fabric (known as mattress ticking) sales for the second quarter were $36.0 million, a 53 percent increase compared with $23.5 million for the second quarter of fiscal 2007. This trend reflects the incremental sales related to the company's acquisition of ITG's mattress fabrics product line in January 2007 and some organic growth. Mattress fabric sales represented 56 percent of total company sales for the quarter. On a unit volume basis, total yards sold increased by 48 percent compared with the second quarter of fiscal 2007. The average selling price of $2.39 per yard for the second quarter of fiscal 2008 was four percent higher than the same period a year ago, reflecting a shift in product mix toward more knitted fabrics. Operating income for this segment was $3.9 million, or 10.8 percent of sales, compared with $2.5 million, or 10.5 percent of sales, for the prior-year period. "Culp's mattress fabrics business continued to build momentum with sales up more than 53 percent over the same period a year ago," said Saxon. "The mattress industry has consistently outperformed other home furnishings categories, even with the recent downturn in the housing market. The strong demand for mattresses has been primarily driven by a steady replacement business. Culp has continued to enjoy excellent customer relationships and we have benefited from a favorable customer retention rate following the ITG acquisition. With the integration of the ITG business completed, we are now fully realizing the benefits of the additional sales and more efficient production. Knitted ticking, which has a higher average selling price, continues to be a high growth product category for Culp. The results for the quarter were affected by modestly higher raw materials costs and increased Canadian operating costs due to the strengthening of the Canadian currency as compared with the same period last year. For fiscal 2008, we are focused on maintaining our high level of execution and service for our customers, effectively managing an increased amount of working capital and pursuing opportunities to build upon our leadership position in the mattress fabrics industry." Upholstery Fabrics Segment Sales for this segment, which include both fabric and cut and sewn kits, were $28.3 million, a 20 percent decline compared with $35.5 million in the second quarter of fiscal 2007. Total fabric yards sold declined by 25 percent, while average selling prices were approximately three percent higher than the second quarter of fiscal 2007. Sales of cut and sewn kits were up significantly over the same period last year. Upholstery fabrics sales reflect very weak demand industry wide, as well as continued soft demand for U.S. produced upholstery fabrics driven by consumer preference for leather and suede furniture and other imported furniture and fabrics. Sales of non-U.S. produced fabrics were $16.9 million in the second quarter, down 18 percent over the prior year period, while sales of U.S. produced fabrics were $11.4 million, down 24 percent from the second quarter of fiscal 2007. Operating income for the upholstery fabrics segment for the second quarter of fiscal 2008 was $201,000 compared with $393,000 for the same period a year ago. Saxon remarked, "The results for the upholstery fabrics segment mirror the challenging operating environment across the retail furniture industry. The uncertain economy, depressed housing market and high energy prices are all adversely affecting consumer spending for furniture. Likewise, overall demand for upholstery fabrics has continued to decline. While our non-U.S. operations now account for 60 percent of all upholstery fabric sales, those sales have also been affected by the weak demand. "We were pleased to report another profitable quarter in upholstery fabrics in this very difficult operating environment, primarily driven by our non - US operations. We have improved our cost structure with substantially lower U.S. manufacturing costs and lower selling, general and administrative (SG&A) expenses for the second quarter of fiscal 2008. SG&A expenses were down $1.0 million, or 26 percent, from the same period a year ago. We continue to take steps to lower our costs and keep them in line with demand in this business. We have also reduced our inventory levels in the upholstery fabrics segment by almost $10 million, or 32 percent, since the second quarter of fiscal 2007. "We continue to be excited about our progress in China and the business model we have developed over the last several years," Saxon added. "With the excellent product values we are now offering from our China platform, we are aggressively pursuing top line growth, especially given the challenging near term industry outlook. In addition, our focus for fiscal 2008 is on improving gross profit in our U.S. operations, developing differentiated products and improving our supply chain performance. Balance Sheet "Strengthening our financial position is an important area of focus in fiscal 2008," added Saxon. "At the end of the second fiscal quarter, our balance sheet reflected $16.8 million in cash and cash equivalents, representing substantial improvement in cash flow from operations, which was approximately $10 million for the year to date period. This performance is due to increased profitability and significant improvement in working capital management. Total debt was $39 million at the end of the second quarter compared with $47 million a year earlier. Our debt to capital ratio has improved significantly and was 32 percent at the end of the second quarter, compared with 37 percent a year earlier. "After the end of the second quarter, we prepaid an additional $4.3 million on our term notes principal payment that is due in March 2008. Originally, this principal payment was $19.8 million. The company has now prepaid a total of $11.5 million over the last eight months, leaving only $8.3 million of this principal payment due in March 2008. Currently, the company has sufficient funds available to make this remaining principal payment in March 2008," added Saxon. Outlook Commenting on the outlook for the third quarter of fiscal 2008, Saxon remarked, "We believe our mattress fabrics segment will continue to perform well; however, we do not expect to see any near-term relief from the challenges facing the upholstery fabrics segment. Overall, we expect our third quarter sales to be slightly higher than the third quarter of last year. "We expect sales in our mattress fabrics segment to be up approximately 30 to 35 percent for the third quarter. The third quarter of fiscal 2007 included $1.0 million in incremental sales related to the company's acquisition of ITG's mattress fabrics product line, completed on January 22, 2007. Operating income in this segment is also expected to improve substantially compared with the prior year period due to higher sales and the completion of the ITG integration. "In our upholstery fabrics segment, we expect sales to be down approximately 15 to 20 percent for the third quarter, due mostly to lower sales of U.S. produced fabrics. We believe the upholstery fabric segment's operating results will reflect approximately breakeven results due primarily to lower sales and weak gross profits in our U.S. operations. However, we still expect continued solid gross profit margins in our non-U.S. produced business and substantially lower selling, general and administrative expenses as compared to the third quarter of the prior year. We are estimating approximately $500,000 of restructuring and related charges during the third fiscal quarter due primarily to employee termination benefits and operating costs of closed U.S. facilities. At this point, we estimate that we will incur an additional $200,000 of restructuring and related charges during the fourth fiscal quarter for previously announced restructuring initiatives. "Considering these factors, we expect the company to report net income in the third 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, some internal changes are still underway within the company and foreign currency fluctuations may continue. The actual results will depend primarily upon the level of demand throughout the quarter," said Saxon. The company estimates that restructuring and related charges of approximately $500,000 ($415,000 net of taxes, or $0.03 per diluted share) will be incurred during the third fiscal quarter. Including the restructuring and related charges, the company expects to report net income for the third fiscal quarter in the range of $0.04 to $0.08 per diluted share. (A reconciliation of the projected net income per share calculation has been set forth on Page 6.) In closing, Saxon remarked, "We are making sound progress so far in fiscal 2008 as we execute our strategy and build upon the leadership positions we enjoy in both of our operating segments. Our mattress fabrics business will continue to be the key driver of our growth in fiscal 2008. We have significantly enhanced our competitive position in mattress fabrics with the successful integration of the ITG purchase and are excited about the incremental value and synergies this acquisition is bringing to Culp. Our upholstery fabrics business is being affected by the extremely challenging conditions in the furniture industry; however, we believe we are well positioned to both withstand the current downturn and report better results as conditions improve. Our China platform provides a sustainable business model for Culp to compete effectively in upholstery fabrics and grow this business again. Overall, we are pleased with our progress and remain focused on achieving profitable growth over the long term." 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 Six Months Ended ------------------------------------------------- October 28, October 29, October 28, October 29, 2007 2006 2007 2006 ----------- ----------- ------------ ------------ Net sales $64,336,000 $59,040,000 $129,566,000 $121,625,000 Income before income taxes $ 1,459,000 $ 757,000 $ 2,770,000 $ 888,000 Net income $ 1,554,000 $ 812,000 $ 2,405,000 $ 946,000 Net income per share: Basic $ 0.12 $ 0.07 $ 0.19 $ 0.08 Diluted $ 0.12 $ 0.07 $ 0.19 $ 0.08 Income before income taxes, excluding restructuring and related charges(1) $ 1,991,000 $ 1,121,000 $ 4,276,000 $ 2,421,000 Net income per share, diluted, excluding restructuring and related charges(1) $ 0.16 $ 0.09 $ 0.28 $ 0.19 Average shares outstanding: Basic 12,635,000 11,686,000 12,609,000 11,679,000 Diluted 12,809,000 11,689,000 12,776,000 11,682,000 (1)Excludes restructuring and related charges of $532,000 ($503,000 or $0.04 per diluted share, after taxes) for the second quarter of fiscal 2008. Excludes restructuring and related charges of $1.5 million ($1.1 million, or $0.09 per diluted share, after taxes) for the first six months of fiscal 2008. Excludes restructuring and related charges of $364,000 ($232,000 or $0.02 per diluted share, after taxes) for the second quarter of fiscal 2007. Excludes restructuring and related charges of $1.5 million ($1.2 million, or $0.10 per diluted share, after taxes) for the first six months of fiscal 2007. CULP, INC. Reconciliation of Income before Income Taxes as Reported to Pro Forma Income before Income Taxes (Unaudited) Three Months Ended Six Months Ended ----------------------- ----------------------- October 28, October 29, October 28, October 29, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- Income before income taxes, as reported $ 1,459,000 $ 757,000 $ 2,770,000 $ 888,000 Restructuring and related charges $ 532,000 $ 364,000 $ 1,506,000 $ 1,533,000 ----------- ----------- ----------- ----------- Pro forma income before income taxes $ 1,991,000 $ 1,121,000 $ 4,276,000 $ 2,421,000 =========== =========== =========== =========== Reconciliation of Net Income as Reported to Pro Forma Net Income (Unaudited) Three Months Ended Six Months Ended ----------------------- ----------------------- October 28, October 29, October 28, October 29, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- Net income as reported $ 1,554,000 $ 812,000 $ 2,405,000 $ 946,000 Restructuring and related charges, net of income taxes $ 503,000 $ 232,000 $ 1,126,000 $ 1,218,000 ----------- ----------- ----------- ----------- Pro forma net income $ 2,057,000 $ 1,044,000 $ 3,531,000 $ 2,164,000 =========== =========== =========== =========== Reconciliation of Net Income Per Share as Reported to Pro Forma Net Income Per Share (Unaudited) Three Months Ended(1) Six Months Ended(1) ----------------------- ----------------------- October 28, October 29, October 28, October 29, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- Net income, per diluted share, as reported $ 0.12 $ 0.07 $ 0.19 $ 0.08 Restructuring and related charges, net of income taxes $ 0.04 $ 0.02 $ 0.09 $ 0.10 ----------- ----------- ----------- ----------- Net income per diluted share, adjusted $ 0.16 $ 0.09 $ 0.28 $ 0.19 =========== =========== =========== =========== (1)Per share numbers have been rounded Reconciliation of Projected Range of Net Income Per Share to Projected Range of Pro Forma Net Income Per Share (Unaudited) Three Months Ending January 27, 2008 ----------------------- Projected range of net income per diluted share $0.04 - $0.08 Projected restructuring and related charges, net of income taxes 0.03 ----------------------- Projected range of pro forma net income per diluted share $0.07 - $0.11 ======================= CONTACT: Culp, Inc. Investor & Media Contact: Kenneth R. Bowling, 336-881-5630 Chief Financial Officer EX-99 3 a5554241ex99b.txt EXHIBIT 99(B) Exhibit 99(b) Page 1 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED STATEMENTS OF NET INCOME FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 28, 2007 AND OCTOBER 29, 2006 (UNAUDITED) (Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED ------------------------------------------------------------------- Amounts Percent of Sales ------------------------- -------------------------- October 28, October 29, % Over October 28, October 29, 2007 2006 (1) (Under) 2007 2006 ----------- ----------- ---------- ------------ ------------ Net sales $ 64,336 59,040 9.0 % 100.0 % 100.0 % Cost of sales 55,914 51,049 9.5 % 86.9 % 86.5 % ----------- ----------- ---------- ------------ ------------ Gross profit 8,422 7,991 5.4 % 13.1 % 13.5 % Selling, general and administrative expenses 5,838 6,273 (6.9)% 9.1 % 10.6 % Restructuring (credit) expense (84) 43 295.3 % (0.1)% 0.1 % ----------- ----------- ---------- ------------ ------------ Income from operations 2,668 1,675 59.3 % 4.1 % 2.8 % Interest expense 809 938 (13.8)% 1.3 % 1.6 % Interest income (63) (51) 23.5 % (0.1)% (0.1)% Other expense 463 31 N.M. 0.7 % 0.1 % ----------- ----------- ---------- ------------ ------------ Income before income taxes 1,459 757 92.7 % 2.3 % 1.3 % Income taxes* (95) (55) 72.7 % (6.5)% (7.3)% ----------- ----------- ---------- ------------ ------------ Net income $ 1,554 812 91.4 % 2.4 % 1.4 % =========== =========== ========== ============ ============ Net income per share-basic $ 0.12 $ 0.07 71.4 % Net income per share-diluted $ 0.12 $ 0.07 71.4 % Net income per share, diluted, excluding restructuring and related charges (see proforma statement on page 6) $ 0.16 $ 0.09 77.8 % Average shares outstanding-basic 12,635 11,686 8.1 % Average shares outstanding-diluted 12,809 11,689 9.6 % SIX MONTHS ENDED ------------------------------------------------------------------ Amounts Percent of Sales ------------------------- -------------------------- October 28, October 29, % Over October 28, October 29, 2007 2006 (Under) 2007 2006 ----------- ----------- ---------- ------------ ------------ Net sales $ 129,566 121,625 6.5 % 100.0 % 100.0 % Cost of sales 112,088 105,574 6.2 % 86.5 % 86.8 % ----------- ----------- ---------- ------------ ------------ Gross profit 17,478 16,051 8.9 % 13.5 % 13.2 % Selling, general and administrative expenses 12,159 12,846 (5.3)% 9.4 % 10.6 % Restructuring expense 348 466 (25.3)% 0.3 % 0.4 % ----------- ----------- ---------- ------------ ------------ Income from operations 4,971 2,739 81.5 % 3.8 % 2.3 % Interest expense 1,627 1,888 (13.8)% 1.3 % 1.6 % Interest income (121) (97) 24.7 % (0.1)% (0.1)% Other expense 695 60 N.M. 0.5 % 0.0 % ----------- ----------- ---------- ------------ ------------ Income before income taxes 2,770 888 211.9 % 2.1 % 0.7 % Income taxes* 365 (58) (729.3)% 13.2 % (6.5)% ----------- ----------- ---------- ------------ ------------ Net income $ 2,405 946 154.2 % 1.9 % 0.8 % =========== =========== ========== ============ ============ Net income per share-basic $ 0.19 $ 0.08 137.5 % Net income per share-diluted $ 0.19 $ 0.08 137.5 % Net income per share, diluted, excluding restructuring and related charges (see proforma statement on page 7) $ 0.28 $ 0.19 47.4 % Average shares outstanding-basic 12,609 11,679 8.0 % Average shares outstanding-diluted 12,776 11,682 9.4 % * 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. Sales proceeds received on equipment with no carrying value of $307,000 was reclassified from other expense to restructuring expense to conform to current year presentation.
Page 2 of 7 CONSOLIDATED BALANCE SHEETS OCTOBER 28, 2007, OCTOBER 29, 2006 AND APRIL 29, 2007 Unaudited (Amounts in Thousands)
Amounts Increase ------------------------- (Decrease) October 28, October 29, -------------------- * April 29, 2007 2006 Dollars Percent 2007 ------------ ----------- --------- --------- ------------ Current assets Cash and cash equivalents $ 16,830 9,706 7,124 73.4 % 10,169 Accounts receivable 22,885 23,286 (401) (1.7)% 29,290 Inventories 41,518 44,430 (2,912) (6.6)% 40,630 Deferred income taxes 5,376 7,120 (1,744) (24.5)% 5,376 Assets held for sale 341 1,571 (1,230) (78.3)% 2,499 Income taxes receivable 491 - 491 100.0 % - Other current assets 1,271 1,506 (235) (15.6)% 1,824 ------------ ----------- --------- --------- ------------ Total current assets 88,712 87,619 1,093 1.2 % 89,788 Property, plant and equipment, net 37,887 42,487 (4,600) (10.8)% 37,773 Goodwill 4,114 4,114 - 0.0 % 4,114 Deferred income taxes 25,762 22,023 3,739 17.0 % 25,683 Other assets 2,439 1,354 1,085 80.1 % 2,588 ----------- ----------- --------- --------- ------------ Total assets $ 158,914 157,597 1,317 0.8 % 159,946 ============ =========== ========= ========= ============ Current liabilities Current maturities of long-term debt $ 12,834 7,742 5,092 65.8 % 16,046 Lines of credit 4,016 - 4,016 100.0 % 2,593 Accounts payable 21,124 18,540 2,584 13.9 % 23,585 Accrued expenses 9,040 9,001 39 0.4 % 8,670 Accrued restructuring 2,356 3,017 (661) (21.9)% 3,282 Income taxes payable - current (1) - 3,880 (3,880) (100.0)% 4,579 ------------ ----------- --------- --------- ------------ Total current liabilities 49,370 42,180 7,190 17.0 % 58,755 Income taxes payable - long-term (1) 4,299 - 4,299 100.0 % - Long-term debt , less current maturities 22,120 39,554 (17,434) (44.1)% 22,114 ------------ ----------- --------- --------- ------------ Total liabilities 75,789 81,734 (5,945) (7.3)% 80,869 Shareholders' equity 83,125 75,863 7,262 9.6 % 79,077 ------------ ----------- --------- --------- ------------ Total liabilities and shareholders' equity $ 158,914 157,597 1,317 0.8 % 159,946 ============ =========== ========= ========= ============ Shares outstanding 12,635 11,687 948 8.1 % 12,569 ============ =========== ========= ========= ============ * Derived from audited financial statements (1) Amounts as of October 28, 2007 reflect the adoption of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes" during the first quarter of fiscal 2008.
Page 3 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED OCTOBER 28, 2007 AND OCTOBER 29, 2006 Unaudited (Amounts in Thousands)
SIX MONTHS ENDED ---------------------------- Amounts ---------------------------- October 28, October 29, 2007 2006 ------------- ----------- Cash flows from operating activities: Net income $ 2,405 946 Adjustments to reconcile net income to net cash provided by (used in operating activities): Depreciation 2,892 3,364 Amortization of other assets 186 41 Stock-based compensation 366 287 Excess tax benefit related to stock options exercised (21) - Deferred income taxes 266 (1,847) Restructuring expenses, net of gain on sale of related assets 73 (364) Changes in assets and liabilities: Accounts receivable 6,625 5,763 Inventories (888) (7,737) Other current assets 553 (219) Other assets (31) 148 Accounts payable (1,687) (1,965) Accrued expenses 370 1,156 Accrued restructuring (1,002) (1,037) Income taxes (250) 1,392 ------------- ----------- Net cash provided by (used in) operating activities 9,857 (72) ------------- ----------- Cash flows from investing activities: Capital expenditures (3,385) (1,705) Proceeds from the sale of buildings and equipment 2,045 2,738 ------------- ----------- Net cash (used in) provided by investing activities (1,340) 1,033 ------------- ----------- Cash flows from financing activities: Proceeds from lines of credit 1,423 - Payments on vendor-financed capital expenditures (499) (670) Payments on long-term debt (3,206) (426) Proceeds from common stock issued 405 127 Excess tax benefit related to stock options exercised 21 - ------------- ----------- Net cash used in financing activities (1,856) (969) ------------- ----------- Increase (decrease) in cash and cash equivalents 6,661 (8) Cash and cash equivalents at beginning of period 10,169 9,714 ------------- ----------- Cash and cash equivalents at end of period $ 16,830 9,706 ============= =========== Free Cash Flow (1) $ 8,039 291 ============= =========== - -------------------------------------------------------------------------------------------------- (1) Free Cash Flow reconciliation is as follows: 2nd Qtr 2nd Qtr FY 2008 FY 2007 ---------------------------- A) Net cash provided by (used in) operating activities $ 9,857 (72) B) Minus: Capital Expenditures (3,385) (1,705) C) Add: Proceeds from the sale of buildings and equipment 2,045 2,738 D) Minus: Payments on vendor-financed capital expenditures (499) (670) E) Add: Excess tax benefit related to stock options exercised 21 - ------------- ----------- $ 8,039 291 ============= =========== - --------------------------------------------------------------------------------------------------
Page 4 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT FOR THE THREE MONTHS ENDED OCTOBER 28, 2007 AND OCTOBER 29, 2006 (Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED) --------------------------------------------------------------- Amounts Percent of Total Sales ------------------------- -------------------------- October 28, October 29, % Over October 28, October 29, Net Sales by Segment 2007 2006 (Under) 2007 2006 - ------------------------------------------------------- ----------- ----------- -------- ------------ ------------ Mattress Fabrics $ 36,010 23,494 53.3 % 56.0 % 39.8 % Upholstery Fabrics 28,326 35,546 (20.3)% 44.0 % 60.2 % ----------- ----------- -------- ------------ ------------ Net Sales $ 64,336 59,040 9.0 % 100.0 % 100.0 % =========== =========== ======== ============ ============ Gross Profit by Segment Gross Profit Margin - ------------------------------------------------------- -------------------------- Mattress Fabrics $ 6,038 4,144 45.7 % 16.8 % 17.6 % Upholstery Fabrics 2,975 4,138 (28.1)% 10.5 % 11.6 % ----------- ----------- -------- ------------ ------------ Subtotal 9,013 8,282 8.8 % 14.0 % 14.0 % Restructuring related charges (591)(1) (291)(4) 103.1 % (0.9)% (0.5)% ----------- ----------- -------- ------------ ------------ Gross Profit $ 8,422 7,991 5.4 % 13.1 % 13.5 % =========== =========== ======== ============ ============ Selling, General and Administrative expenses by Segment Percent of Sales - ------------------------------------------------------- -------------------------- Mattress Fabrics $ 2,166 1,674 29.4 % 6.0 % 7.1 % Upholstery Fabrics 2,774 3,745 (25.9)% 9.8 % 10.5 % Unallocated Corporate expenses 873 824 5.9 % 1.4 % 1.4 % ----------- ----------- -------- ------------ ------------ 5,813 6,243 (6.9)% 9.0 % 10.6 % Restructuring related charges 25(2) 30(4) (16.7)% 0.0 % 0.1 % ----------- ----------- -------- ------------ ------------ Selling, General and Administrative expenses $ 5,838 6,273 (6.9)% 9.1 % 10.6 % =========== =========== ======== ============ ============ Operating Income Operating Income (loss) by Segment (Loss) Margin - ------------------------------------------------------- -------------------------- Mattress Fabrics $ 3,872 2,470 56.8 % 10.8 % 10.5 % Upholstery Fabrics 201 393 (48.9)% 0.7 % 1.1 % Unallocated corporate expenses (873) (824) 5.9 % (1.4)% (1.4)% ----------- ----------- -------- ------------ ------------ Subtotal 3,200 2,039 56.9 % 5.0 % 3.5 % Restructuring expense and restructuring related charges (532)(3) (364)(5) 46.2 % (0.8)% (0.6)% ----------- ----------- -------- ------------ ------------ Operating income $ 2,668 1,675 59.3 % 4.1 % 2.8 % =========== =========== ======== ============ ============ Depreciation by Segment - ------------------------------------------------------- Mattress Fabrics $ 898 918 (2.2)% Upholstery Fabrics 547 744 (26.5)% ----------- ---------- -------- Subtotal 1,445 1,662 (13.1)% =========== ========== ======== Notes: (1) The $591,000 restructuring related charge represents $348,000 for inventory markdowns and $243,000 for other operating costs associated with closed plant facilities. (2) The $25,000 restructuring related charge represents other operating costs associated with closed plant facilities. (3) The $532,000 represents $348,000 for inventory markdowns, $268,000 for other operatings costs associated with closed plant facilities, $179,000 for lease termination and other exit costs, $73,000 for asset movement costs, $27,000 for write-downs of a building and equipment, a credit of $114,000 for proceeds received on equipment with no carrying value, and a credit of $249,000 for employee termination benefits. Of this total charge, $591,000 was recorded in cost of sales, $25,000 was recorded in selling, general, and administrative expenses, and a credit of $84,000 was recorded in restructuring expense. (4) The $291,000 and $30,000 restructuring related charge represents other operating costs associated with closed plant facilities. (5) The $364,000 represents $354,000 for asset movement costs, $333,000 for lease termination and other exit costs, $321,000 for other operating costs associated with closed plant facilities, a credit of $53,000 for write-downs of a building and equipment, a credit of $130,000 for sales proceeds received on equipment with no carrying value, and a credit of $461,000 for employee termination benefits. Of this total charge, $291,000 was recorded in cost of sales, $30,000 was recorded in selling, general, and administrative expenses, and $43,000 was recorded in restructuring expense. Certain prior year amounts have been corrected to conform to current year presentation. Sales proceeds received on equipment with no carrying value of $307,000 was reclassified from other expense to restructuring expense to conform to current year presentation.
Page 5 of 7 CULP, INC. FINANCIAL INFORMATION RELEASE SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT FOR THE SIX MONTHS ENDED OCTOBER 28, 2007 AND OCTOBER 29, 2006 (Amounts in thousands)
SIX MONTHS ENDED (UNAUDITED) ------------------------------------------------------------------- Amounts Percent of Total Sales ---------------------- -------------------------------- October 28, October 29, % Over October 28, October 29, Net Sales by Segment 2007 2006 (Under) 2007 2006 - ------------------------------- ---------- --------- --------- ----------------- -------------- Mattress Fabrics $ 72,546 45,339 60.0 % 56.0 % 37.3 % Upholstery Fabrics 57,020 76,286 (25.3)% 44.0 % 62.7 % ---------- --------- --------- ----------------- -------------- Net Sales $ 129,566 121,625 6.5 % 100.0 % 100.0 % ========== ========= ========= ================= ============== Gross Profit by Segment Gross Profit Margin - ------------------------------- -------------------------------- Mattress Fabrics $ 11,843 7,665 54.5 % 16.3 % 16.9 % Upholstery Fabrics 6,742 9,423 (28.5)% 11.8 % 12.4 % ---------- --------- --------- ----------------- -------------- Subtotal 18,585 17,088 8.8 % 14.3 % 14.0 % Restructuring related charges (1,107)(1) (1,037)(4) 6.8 % (0.9)% (0.9)% ---------- --------- --------- ----------------- -------------- Gross Profit $ 17,478 16,051 8.9 % 13.5 % 13.2 % ========== ========= ========= ================= ============== Selling, General and Administrative Percent of Sales expenses by Segment - ------------------------------------------- -------------------------------- Mattress Fabrics $ 4,208 3,337 26.1 % 5.8 % 7.4 % Upholstery Fabrics 6,092 7,453 (18.3)% 10.7 % 9.8 % Unallocated Corporate expenses 1,808 2,026 (10.8)% 1.4 % 1.7 % ---------- --------- --------- ---------------- -------------- Subtotal 12,108 12,816 (5.5)% 9.3 % 10.5 % Restructuring related charges 51 (2) 30 (5) 70.0 % 0.0 % 0.0 % ---------- --------- --------- ----------------- -------------- Selling, General and Administrative expenses $ 12,159 12,846 (5.3)% 9.4 % 10.6 % ========== ========= ========= ================= ============== Operating Income (loss) by Operating Income (Loss) Segment Margin - ------------------------------- -------------------------------- Mattress Fabrics $ 7,635 4,328 76.4 % 10.5 % 9.5 % Upholstery Fabrics 650 1,970 (67.0)% 1.1 % 2.6 % Unallocated corporate expenses (1,808) (2,026) (10.8)% (1.4)% (1.7)% ---------- --------- --------- ----------------- -------------- Subtotal 6,477 4,272 51.6 % 5.0 % 3.5 % Restructuring expense and restructuring related charges (1,506)(3) (1,533)(6) (1.8)% (1.2)% (1.3)% ---------- --------- --------- ----------------- -------------- Operating income $ 4,971 2,739 81.5 % 3.8 % 2.3 % ========== ========= ========= ================= ============== Depreciation by Segment - ------------------------------- Mattress Fabrics $ 1,795 1,860 (3.5)% Upholstery Fabrics 1,097 1,504 (27.1)% ---------- --------- --------- Subtotal 2,892 3,364 (14.0)% ========== ========= =========
Notes: (1) The $1.1 million represents restructuring related charges of $703,000 for other operating costs associated with closed plant facilities and $404,000 for inventory markdowns. (2) The $51,000 restructuring related charge represents other operating costs associated with a closed plant facilities. (3) The $1.5 million represents $754,000 for other operating costs on closed plant facilities, $546,000 for lease termination and other exit costs, $404,000 for inventory markdowns, $388,000 for write-downs of buildings and equipment, $127,000 for asset movement costs, a credit of $315,000 for sales proceeds received on equipment with no carrying value, and a credit of $398,000 for employee termination benefits. Of this total charge, $1.1 million was recorded in cost of sales, $51,000 was recorded in selling, general, and administrative expenses, and $348,000 was recorded in restructuring expense. (4) The $1.0 million represents restructuring related charges of $798,000 for other operating costs associated with closed plant facilities and $239,000 for inventory markdowns. (5) The $30,000 represents a restructuring related charge for other operating costs associated with closed plant facilities. (6) The $1.5 million represents $828,000 for other operating costs on closed plant facilities, $740,000 for asset movement costs, $327,000 for lease termination costs, $239,000 for inventory markdowns, $62,000 for write-downs of buildings and equipment, a credit of $226,000 for employee termination benefits, and a credit of $437,000 for sales proceeds received on equipment with no carrying value. Of this total charge, $1.0 million was recorded in cost of sales, $30,000 was recorded in selling, general, and administrative expenses, and $466,000 was recorded in restructuring expense. Page 6 of 7
CULP, INC. PROFORMA CONSOLIDATED STATEMENTS OF NET INCOME FOR THE THREE MONTHS ENDED OCTOBER 28, 2007 AND OCTOBER 29, 2006 (Amounts in Thousands, Except for Per Share Data) THREE MONTHS ENDED ------------------------------------------------------------------------------ As Reported October 28, 2007 October 28, % of % of Proforma Net % of 2007 Sales Adjustments Sales of Adjustments Sales ---------------------- ----------------------- ------------------------- Net sales $ 64,336 100.0% - 64,336 100.0% Cost of sales 55,914 86.9% (591) -0.9%(1) 55,323 86.0% ---------------------- ----------------------- ------------------------- Gross profit 8,422 13.1% (591) -0.9% 9,013 14.0% Selling, general and administrative expenses 5,838 9.1% (25) 0.0%(2) 5,813 9.0% Restructuring (credit) expense (84) -0.1% 84 0.1%(3) - 0.0% ---------------------- ----------------------- ------------------------- Income from operations 2,668 4.1% (532) -0.8% 3,200 5.0% Interest expense 809 1.3% - 0.0% 809 1.3% Interest income (63) -0.1% - 0.0% (63) -0.1% Other expense 463 0.7% - 0.0% 463 0.7% ---------------------- ----------------------- ------------------------- Income before income taxes 1,459 2.3% (532) -0.8%(6) 1,991 3.1% Income taxes (8) (95) -6.5% (29) 5.5% (66) -3.3% ---------------------- ----------------------- ------------------------- Net income $ 1,554 2.4% (503) -0.8% 2,057 3.2% ====================== ======================= ========================= Net income per share-basic $ 0.12 ($0.04) $ 0.16 Net income per share-diluted $ 0.12 ($0.04) $ 0.16 Average shares outstanding-basic 12,635 12,635 12,635 Average shares outstanding-diluted 12,809 12,635 12,809 THREE MONTHS ENDED --------------------------------------------------------------------------------------- As Reported October 29, 2006 Proforma October 29, % of % of Proforma Net % of % Over 2006 Sales Adjustments Sales of Adjustments Sales (Under) ---------------------- ----------------------- ------------------------- -------- Net sales 59,040 100.0% - 59,040 100.0% 9.0% Cost of sales 51,049 86.5% (291) -0.5%(4) 50,758 86.0% 9.0% ---------------------- ----------------------- ------------------------- -------- Gross profit 7,991 13.5% (291) -0.5% 8,282 14.0% 8.8% Selling, general and administrative expenses 6,273 10.6% (30) -0.1%(4) 6,243 10.6% -6.9% Restructuring (credit) expense 43 0.1% (43) -0.1%(5) - 0.0% 0.0% ---------------------- ----------------------- ------------------------- -------- Income from operations 1,675 2.8% (364) -0.6% 2,039 3.5% 56.9% Interest expense 938 1.6% - 0.0% 938 1.6% -13.8% Interest income (51) -0.1% - 0.0% (51) -0.1% 23.5% Other expense 31 0.1% - 0.0% 31 0.1% 1393.5% ---------------------- ----------------------- ------------------------- -------- Income before income taxes 757 1.3% (364) -0.6%(7) 1,121 1.9% 77.6% Income taxes (8) (55) -7.3% (132) 36.3% 77 6.9% 185.7% ---------------------- ----------------------- ------------------------- -------- Net income 812 1.4% (232) -0.4% 1,044 1.8% 97.0% ====================== ====================== ========================= ======== Net income per share-basic $ 0.07 ($0.02) $ 0.09 Net income per share-diluted $ 0.07 ($0.02) $ 0.09 Average shares outstanding-basic 11,686 11,686 11,686 Average shares outstanding-diluted 11,689 11,686 11,689
Notes: (1) The $591,000 restructuring related charge represents $348,000 for inventory markdowns and $243,000 for other operating costs associated with closed plant facilities. (2) The $25,000 restructuring related charge represents other operating costs associated with closed plant facilities. (3) The $84,000 restructuring credit represents $179,000 for lease termination and other exit costs, $73,000 for asset movement costs, $27,000 for write-downs of a building and equipment, a credit of $114,000 for proceeds received on equipment with no carrying value, and a credit of $249,000 for employee termination benefits. (4) The $291,000 and $30,000 restructuring related charge represents other operating costs associated with closed plant facilities. (5) The $43,000 restructuring expense represents $354,000 for asset movement costs, $333,000 for lease termination and other exit costs, a credit of $53,000 for write-downs of a building and equipment, a credit of $130,000 for sales proceeds received on equipment with no carrying value, and a credit of $461,000 for employee termination benefits. Certain prior year amounts have been corrected to conform to current year presentation. Sales proceeds received on equipment with no carrying value of $307,000 was reclassified from other expense to restructuring expense to conform to current year presentation. (6) Of this total charge, $158,000 and $374,000 represent cash and non-cash charges, respectively. (7) Of this total charge, $417,000 represent cash charges and the credit of $53,000 for write-downs of a building and equipment represent a non-cash gain. (8) The percent of net sales column for income taxes is calculated as a % of income before income taxes. Page 7 of 7
CULP, INC. PROFORMA CONSOLIDATED STATEMENTS OF NET INCOME FOR THE SIX MONTHS ENDED OCTOBER 28, 2007 AND OCTOBER 29, 2006 (Amounts in Thousands, Except for Per Share Data) SIX MONTHS ENDED ------------------------------------------------------------------------------ As Reported October 28, 2007 October 28, % of % of Proforma Net % of 2007 Sales Adjustments Sales of Adjustments Sales ---------------------- ----------------------- ------------------------- Net sales $ 129,566 100.0% - 129,566 100.0% Cost of sales 112,088 86.5% (1,107) -0.9%(1) 110,981 85.7% -------------------- ------------------------- ------------------------ Gross profit 17,478 13.5% (1,107) -0.9% 18,585 14.3% Selling, general and administrative expenses 12,159 9.4% (51) 0.0%(2) 12,108 9.3% Restructuring expense 348 0.3% (348) -0.3%(3) - 0.0% -------------------- ----------------------- ------------------------ Income from operations 4,971 3.8% (1,506) -1.2% 6,477 5.0% Interest expense 1,627 1.3% - 0.0% 1,627 1.3% Interest income (121) -0.1% - 0.0% (121) -0.1% Other expense 695 0.5% - 0.0% 695 0.5% -------------------- ----------------------- ------------------------ Income before income taxes 2,770 2.1% (1,506) -1.2%(7) 4,276 3.3% Income taxes (9) 365 13.2% (380) 25.2% 745 17.4% -------------------- ----------------------- ------------------------ Net income $ 2,405 1.9% (1,126) -0.9% 3,531 2.7% ==================== ======================= ======================== Net income per share-basic $ 0.19 ($0.09) $ 0.28 Net income per share-diluted $ 0.19 ($0.09) $ 0.28 Average shares outstanding-basic 12,609 12,609 12,609 Average shares outstanding-diluted 12,776 12,609 12,776 SIX MONTHS ENDED --------------------------------------------------------------------------------------- As Reported October 29, 2006 Proforma October 29, % of % of Proforma Net % of % Over 2006 Sales Adjustments Sales of Adjustments Sales (Under) ---------------------- ----------------------- ------------------------- -------- Net sales 121,625 100.0% - 121,625 100.0% 6.5% Cost of sales 105,574 86.8% (1,037) -0.9%(4) 104,537 86.0% 6.2% ---------------------- ----------------------- ------------------------- -------- Gross profit 16,051 13.2% (1,037) -0.9% 17,088 14.0% 8.8% Selling, general and administrative expenses 12,846 10.6% (30) 0.0%(5) 12,816 10.5% -5.5% Restructuring expense 466 0.4% (466) -0.4%(6) - 0.0% 0.0% ---------------------- ----------------------- ------------------------- -------- Income from operations 2,739 2.3% (1,533) -1.3% 4,272 3.5% 51.6% Interest expense 1,888 1.6% - 0.0% 1,888 1.6% -13.8% Interest income (97) -0.1% - 0.0% (97) -0.1% 24.7% Other expense 60 0.0% - 0.0% 60 0.0% 1058.3% ---------------------- ----------------------- ------------------------- -------- Income before income taxes 888 0.7% (1,533) -1.3%(8) 2,421 2.0% 76.6% Income taxes (9) (58) -6.5% (315) 20.5% 257 10.6% 189.9% ---------------------- ----------------------- ------------------------- -------- Net income 946 0.8% (1,218) -1.0% 2,164 1.8% 63.2% ====================== ======================= ========================= ======== Net income per share-basic $ 0.08 ($0.10) $ 0.19 Net income per share-diluted $ 0.08 ($0.10) $ 0.19 Average shares outstanding-basic 11,679 11,679 11,679 Average shares outstanding-diluted 11,682 11,679 11,682
Notes: (1) The $1.1 million represents restructuring related charges of $703,00 for other operating costs associated with the closed plant facilities and $404,000 for inventory markdowns. (2) The $51,000 restructuring related charge represents other operating costs associated with the closed plant facilities. (3) The $348,000 represents restructuring charges of $546,000 for lease termination and other exit costs, $388,000 for write-downs of buildings and equipment, $127,000 for asset movement costs, a credit of $315,000 for sales proceeds received on equipment with no carrying value, and a credit of $398,000 for employee termination benefits. (4) The $1.0 million represents restructuring related charges of $798,000 for other operating costs associated with closed plant facilities and $239,000 for inventory markdowns. (5) The $30,000 restructuring related charge represents other operating costs associated with the closed plant facilities. (6) The $466,000 represents $740,000 for asset movement costs, $327,000 for lease termination and other exit costs, $62,000 for write-downs of buildings and equipment, a credit of $226,000 for employee termination benefits, and a credit of $437,000 for sales proceeds on equipment with no carrying value. (7) Of this total charge, $713,000 and $793,000 represent cash and non-cash charges, respectively. (8) Of this total charge, $1.2 million and $301,000 represent cash and non-cash charges, respectively. (9) The percent of net sales column for income taxes is calculated as a % of income before income taxes. EX-99 4 a5554241ex99c.txt EXHIBIT 99(C) Exhibit 99(c) Culp, Inc. Announces Departure of Kenneth M. Ludwig HIGH POINT, N.C.--(BUSINESS WIRE)--Nov. 26, 2007--Culp, Inc. (NYSE: CFI) announced today that Kenneth M. Ludwig, Senior Vice President, Human Resources, and Corporate Secretary, is leaving the company to pursue other opportunities. The company said that Mr. Ludwig will remain with Culp until the end of the calendar year to assist with transition issues. His duties are expected to be assigned to other employees of Culp. "Ken has been with us for more than 23 years, and has consistently provided strong leadership, dedicated service, and sound guidance to Culp and its employees," said Franklin N. Saxon, president and chief executive officer of Culp. "During the challenging times we have faced in recent years, Ken Ludwig's personal and professional skills have been invaluable to the company, its shareholders, and employees. His presence will be missed on a personal and professional basis. Certainly all of us at Culp wish him the very best in his future endeavors." Robert G. Culp, III, chairman of Culp, Inc., said, "Ken has provided exemplary service to Culp in many roles over the years. I want to add best wishes to Ken from me personally and from all members of our board of directors. He is a man of great integrity and character." 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. CONTACT: Culp, Inc. Kenneth R. Bowling, Chief Financial Officer, 336-881-5630 -----END PRIVACY-ENHANCED MESSAGE-----