EX-99.B 3 a5766962-ex99b.htm 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 AUGUST 3, 2008 AND JULY 29, 2007
           
(Amounts in Thousands, Except for Per Share Data)
 
 
THREE MONTHS ENDED (UNAUDITED)
 
Amounts Percent of Sales
August 3, July 29, % Over August 3, July 29,
2008 2007 (Under) 2008 2007
 
Net sales $ 59,321 65,230 (9.1 ) % 100.0 % 100.0 %
Cost of sales 51,919   56,174   (7.6 ) % 87.5   % 86.1   %
Gross profit 7,402 9,056 (18.3 ) % 12.5 % 13.9 %
 
Selling, general and
administrative expenses 5,384 6,321 (14.8 ) % 9.1 % 9.7 %
Restructuring expense 402   432   (6.9 ) % 0.7   % 0.7   %
Income from operations 1,616 2,303 (29.8 ) % 2.7 % 3.5 %
 
Interest expense 431 818 (47.3 ) % 0.7 % 1.3 %
Interest income (34 ) (58 ) (41.4 ) % (0.1 ) % (0.1 ) %
Other expense 14   232   (94.0 ) % 0.0   % 0.4   %
Income before income taxes 1,205 1,311 (8.1 ) % 2.0 % 2.0 %
 
Income taxes* 424   460   (7.8 ) % 35.2   % 35.1   %
Net income $ 781   851   (8.2 ) % 1.3   % 1.3   %
 
Net income per share-basic $ 0.06 0.07 (14.3 ) %
Net income per share-diluted $ 0.06 0.07 (14.3 ) %
Net income per share, diluted, excluding
restructuring and related charges $ 0.08 0.12 (33.3 ) %
(see pro-forma statement on page 5)
Average shares outstanding-basic 12,648 12,583 0.5 %
Average shares outstanding-diluted 12,736 12,728 0.1 %
 
 
 
 
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 2 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
AUGUST 3, 2008, JULY 29, 2007 AND APRIL 27, 2008
Unaudited
(Amounts in Thousands)
         
 
Amounts Increase
August 3, July 29, (Decrease)

* April 27,

2008 2007 Dollars Percent   2008
 
Current assets
Cash and cash equivalents $ 6,352 9,017 (2,665 ) (29.6 ) % 4,914
Accounts receivable 20,164 23,903 (3,739 ) (15.6 ) % 27,073
Inventories 34,862 42,159 (7,297 ) (17.3 ) % 35,394
Deferred income taxes 4,472 5,376 (904 ) (16.8 ) % 4,380
Assets held for sale 5,610 1,906 3,704 194.3 % 5,610
Income taxes receivable 160 - 160 100.0 % 438
Other current assets 1,627 1,649 (22 ) (1.3 ) % 1,328
Total current assets 73,247 84,010 (10,763 ) (12.8 ) % 79,137
 
Property, plant & equipment, net 33,950 36,901 (2,951 ) (8.0 ) % 32,939
Goodwill 4,114 4,114 - 0.0 % 4,114
Deferred income taxes 29,144 26,220 2,924 11.2 % 29,430
Other assets 2,335 2,831 (496 ) (17.5 ) % 2,409
 
Total assets $ 142,790 154,076 (11,286 ) (7.3 ) % 148,029
 
 
 
Current liabilities
Current maturities of long-term debt $ 7,378 13,849 (6,471 ) (46.7 ) % 7,375
Current portion of obligation under a capital lease 692 - 692 100.0 % -
Lines of credit - 2,641 (2,641 ) (100.0 ) % -
Accounts payable - trade 17,249 16,776 473 2.8 % 21,103
Accounts payable - capital expenditures 1,020 1,219 (199 ) (16.3 ) % 1,547
Accrued expenses 5,534 8,484 (2,950 ) (34.8 ) % 8,300
Accrued restructuring 1,495 3,047 (1,552 ) (50.9 ) % 1,432
Income taxes payable - current 33 856 (823 ) (96.1 ) % 150
Total current liabilities 33,401 46,872 (13,471 ) (28.7 ) % 39,907
 
Accounts payable - capital expenditures 1,275 - 1,275 100.0 % 1,449
Income taxes payable - long-term 5,069 3,765 1,304 34.6 % 4,802
Deferred income taxes 1,363 - 1,363 100.0 % 1,464
Obligation under capital lease 458 - 458 100.0 % -
Long-term debt , less current maturities 13,980 22,094 (8,114 ) (36.7 ) % 14,048
 
Total liabilities 55,546 72,731 (17,185 ) (23.6 ) % 61,670
 
Shareholders' equity 87,244 81,345 5,899   7.3   % 86,359
 
Total liabilities and
shareholders' equity $ 142,790 154,076 (11,286 ) (7.3 ) % 148,029
 
Shares outstanding 12,648 12,635 13   0.1   % 12,648
 
 
 
* Derived from audited financial statements.

Page 3 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
Unaudited
(Amounts in Thousands)
         
 
THREE MONTHS ENDED
 
Amounts
August 3, July 29,
2008 2007
 
Cash flows from operating activities:
Net income $ 781 851
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,258 1,447
Amortization of other assets 79 90
Stock-based compensation 98 140
Excess tax benefit related to stock options exercised - (21 )
Deferred income taxes 90 (518 )
Restructuring expenses, net of gain on sale of related assets - 160
Changes in assets and liabilities:
Accounts receivable 6,909 5,387
Inventories 532 (1,529 )
Other current assets (299 ) 175
Other assets (5 ) (327 )
Accounts payable - trade (3,854 ) (5,251 )
Accrued expenses (2,757 ) (186 )
Accrued restructuring 63 (235 )
Income taxes 428   889  
Net cash provided by operating activities 3,323   1,072  
 
Cash flows from investing activities:
Capital expenditures (986 ) (1,113 )
Proceeds from the sale of buildings and equipment -   702  
Net cash used in investing activities (986 ) (411 )
 
Cash flows from financing activities:
Payments on vendor-financed capital expenditures (599 ) (70 )
Payments on long-term debt (65 ) (2,169 )
Payments on capital lease obligation (235 ) -
Proceeds from common stock issued - 405
Excess tax benefit related to stock options exercised -   21  
Net cash used in financing activities (899 ) (1,813 )
 
Increase (decrease) in cash and cash equivalents 1,438 (1,152 )
 
Cash and cash equivalents at beginning of period 4,914   10,169  
 
Cash and cash equivalents at end of period $ 6,352   9,017  
 
Free Cash Flow (1) $ 1,503   591  
 
                     
 
(1) Free Cash Flow reconciliation is as follows:
FY 2009 FY 2008
A) Net cash provided by operating activities $ 3,323 1,072
B) Minus: Capital Expenditures (986 ) (1,113 )
C) Add: Proceeds from the sale of buildings and equipment 0 702
D) Minus: Payments on vendor-financed capital expenditures (599 ) (70 )
E) Minus: Payments on capital lease obligation (235 ) -  
$ 1,503   591  
                         

Page 4 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
       
 
(Amounts in thousands)
 
 
THREE MONTHS ENDED (UNAUDITED)
 
Amounts Percent of Sales
August 3, July 29, % Over August 3, July 29,
Net Sales by Segment 2008 2007 (Under) 2008 2007
 
Mattress Fabrics $ 35,561 36,536 (2.7 ) % 59.9 % 56.0 %
Upholstery Fabrics 23,760   28,694   (17.2 ) % 40.1   % 44.0   %
 
Net Sales $ 59,321   65,230   (9.1 ) % 100.0   % 100.0   %
 
 
Gross Profit by Segment Gross Profit Margin
 
Mattress Fabrics $ 6,344 5,805 9.3 % 17.8 % 15.9 %
Upholstery Fabrics 1,070   3,768   (71.6 ) % 4.5   % 13.1   %
Subtotal 7,414 9,573 (22.6 ) % 12.5 % 14.7 %
 
Restructuring related charges (12 )

(1)

 

(517 )

(3)

 

(97.7 ) % (0.0 ) % (0.8 ) %
 
Gross Profit $ 7,402   9,056   (18.3 ) % 12.5   % 13.9   %
 
 
Sales, General and Administrative expenses by Segment Percent of Sales
 
Mattress Fabrics $ 2,128 2,042 4.2 % 6.0 % 5.6 %
Upholstery Fabrics 2,484 3,318 (25.1 ) % 10.5 % 11.6 %
Unallocated Corporate expenses 770   935   (17.6 ) % 1.3   % 1.4   %
Subtotal 5,382 6,295 (14.5 ) % 9.1 % 9.7 %
 
Restructuring related charges 2  

(1)

 

26  

(3)

 

(92.3 ) % 0.0   % 0.0   %
 
Selling, General and Administrative expenses $ 5,384   6,321   (14.8 ) % 9.1   % 9.7   %
 
 
Operating income (loss) by Segment Operating Income (Loss) Margin
 
Mattress Fabrics $ 4,216 3,763 12.0 % 11.9 % 10.3 %
Upholstery Fabrics (1,414 ) 450 N.M. (6.0 ) % 1.6 %
Unallocated corporate expenses (770 ) (935 ) 17.6   % (1.3 ) % (1.4 ) %
Subtotal 2,032 3,278 (38.0 ) % 3.4 % 5.0 %
 
Restructuring expense and restructuring related charges (416 )

(2)

 

(975 )

(4)

 

(57.3 ) % (0.7 ) % (1.5 ) %
 
Operating income $ 1,616   2,303   (29.8 ) % 2.7   % 3.5   %
 
 
Depreciation by Segment
 
Mattress Fabrics $ 758 897 (15.5 ) %
Upholstery Fabrics 500   550   (9.1 ) %
Total Depreciation 1,258   1,447   (13.1 ) %
 
(1) The $12 represents other operating costs associated with a closed plant facility. The $2 represents other operating costs associated with a closed plant facility.
(2) The $416 represents $414 for employee termination benefits, $14 for other operating costs associated with a closed plant facility, and a credit of $12 for lease termination and other exit costs. Of this total charge, $12, $2, and $402 are included in cost of sales, selling, general, and administrative expense, and restructuring expense, respectively.
(3) The $517 represents restructuring related charges of $460 for other operating costs associated with closed plant facilities and $57 for inventory markdowns. The $26 represents other operating costs associated with a closed plant facility.
(4) The $975 represents $486 for other operating costs associated with closed plant facilities, $367 for lease termination costs, $362 for write-downs of a building and equipment, $57 for inventory markdowns, $54 for asset movement costs, a credit of $149 for employee termination benefits, and a credit of $202 for sales proceeds received on equipment with no carrying value. Of this total charge, $517, $26 and $432 are included in cost of sales, selling, general, and administrative expense, and restructuring expense, respectively.

Page 5 of 5

CULP, INC.
PROFORMA CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
(Amounts in Thousands, Except for Per Share Data)
                 
 
THREE MONTHS ENDED (UNAUDITED)  
 
As Reported August 3, 2008 As Reported July 29, 2007 Proforma
August 3, % of % of Proforma Net % of July 29, % of % of Proforma Net % of % Over
  2008   Sales Adjustments Sales of Adjustments Sales   2007   Sales Adjustments Sales of Adjustments Sales (Under)
 
Net sales $   59,321 100.0 % - 0.0 %   59,321 100.0 %   65,230 100.0 % - 0.0 % 65,230 100.0 % -9.1 %
Cost of sales   51,919   87.5 % (12 ) 0.0 % (1 )   51,907   87.5 %   56,174   86.1 % (517 ) -0.8 % (3 )   55,657   85.3 % -6.7 %
Gross profit 7,402 12.5 % (12 ) 0.0 % 7,414 12.5 % 9,056 13.9 % (517 ) -0.8 % 9,573 14.7 % -22.6 %
 
Selling, general and
administrative expenses 5,384 9.1 % (2 ) 0.0 % (1 ) 5,382 9.1 % 6,321 9.7 % (26 ) 0.0 % (3 ) 6,295 9.7 % -14.5 %
Restructuring expense   402   0.7 % (402 ) -0.7 % (2 )   -   0.0 %   432   0.7 % (432 ) -0.7 % (4 )   -   0.0 % 0.0 %
Income from operations 1,616 2.7 % (416 ) -0.7 % 2,032 3.4 % 2,303 3.5 % (975 ) -1.5 % 3,278 5.0 % -38.0 %
 
Interest expense 431 0.7 % - 0.0 % 431 0.7 % 818 1.3 % - 0.0 % 818 1.3 % -47.3 %
Interest income (34 ) -0.1 % - 0.0 % (34 ) -0.1 % (58 ) -0.1 % - 0.0 % (58 ) -0.1 % -41.4 %
Other expense   14   0.0 % -   0.0 %   14   0.0 %   232   0.4 % -   0.0 %   232   0.4 % -94.0 %
Income before income taxes 1,205 2.0 % (416 ) -0.7 % (5 ) 1,621 2.7 % 1,311 2.0 % (975 ) -1.5 % (6 ) 2,286 3.5 % -29.1 %
 
Income taxes (7)   424   35.2 % (149 ) 35.8 %   573   35.3 %   460   35.1 % (351 ) 36.0 %   811   35.5 % -29.3 %
Net income $   781   1.3 % (267 ) -0.5 %   1,048   1.8 %   851   1.3 % (624 ) -1.0 %   1,475   2.3 % -28.9 %
 

Net income per share-basic

 

$0.06

($0.02 )

 

$0.08

 

$0.07

($0.05 ) $ 0.12
Net income per share-diluted

 

$0.06

($0.02 )

 

$0.08

 

$0.07

($0.05 ) $ 0.12
Average shares outstanding-basic 12,648 12,648 12,648 12,583 12,583 12,583
Average shares outstanding-diluted 12,736 12,648 12,736 12,728 12,583 12,728

Notes:

(1) The $12 represents other operating costs associated with a closed plant facility. The $2 represents other operating costs associated with a closed plant facility.
(2) The $402 represents $414 for employee termination benefits and a credit of $12 for lease termination and other exit costs.
(3) The $517 represents restructuring related charges of $460 for other operating costs associated with closed plant facilities and $57 for inventory markdowns. The $26 represents other operating costs associated with closed plant facilities.

(4) The $432 represents $367 for lease termination costs, $362 for write-downs of a building and equipment, $54 for asset movement costs, and a credit of $149 for employee termination benefits, and a credit of $202 for sales proceeds received on equipment with no carrying value.

 

(5) The $416 represents a cash charge.
(6) Of this total charge, $556 and $419 represent cash and non-cash charges, respectively.
(7) The percent of net sales column for income taxes is calculated as a % of income before income taxes.