EX-99.B 3 a51288786ex99b.htm EXHIBIT 99(B) a51288786ex99b.htm
Exhibit 99(b)
Page 1 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THREE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
                               
                               
   
THREE MONTHS ENDED
  
                               
   
Amounts
          
Percent of Sales
  
   
January 31,
    
February 1,
    
% Over
    
January 31,
    
February 1,
  
   
2016
    
2015
    
(Under)
    
2016
    
2015
  
                               
Net sales
   $ 78,466       81,269       (3.4 )%     100.0 %     100.0 %
Cost of sales
     61,903       66,867       (7.4 )%     78.9 %     82.3 %
        Gross profit
     16,563       14,402       15.0 %     21.1 %     17.7 %
                                         
Selling, general and
                                        
  administrative expenses
     9,337       8,375       11.5 %     11.9 %     10.3 %
         Income from operations
     7,226       6,027       19.9 %     9.2 %     7.4 %
                                         
Interest income
     (38 )     (202 )     (81.2 )%     (0.0 )%     (0.2 )%
Other expense
     85       307       (72.3 )%     0.1 %     0.4 %
         Income before income taxes
     7,179       5,922       21.2 %     9.1 %     7.3 %
                                         
Income taxes*
     2,317       2,110       9.8 %     32.3 %     35.6 %
        Net income
   $ 4,862       3,812       27.5 %     6.2 %     4.7 %
                                         
Net income per share-basic
   $ 0.39     $ 0.31       25.8 %                
Net income per share-diluted
   $ 0.39     $ 0.31       25.8 %                
Average shares outstanding-basic
     12,331       12,219       0.9 %                
Average shares outstanding-diluted
     12,486       12,417       0.6 %                
 
 
PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
                               
                               
   
THREE MONTHS ENDED
  
                               
   
Amounts
          
Percent of Sales
  
   
January 31,
    
February 1,
    
% Over
    
January 31,
    
February 1,
  
   
2016
    
2015
    
(Under)
    
2016
    
2015
  
                               
                               
Income before income taxes (see above)
   $ 7,179       5,922       21.2 %     9.1 %     7.3 %
                                         
Adjusted Income taxes (2)*
     1,278       906       41.1 %     17.8 %     15.3 %
           Adjusted net income
     5,901       5,016       17.6 %     7.5 %     6.2 %
                                         
Adjusted net income per share-basic
   $ 0.48     $ 0.41       17.1 %                
Adjusted net income per share-diluted
   $ 0.47     $ 0.40       17.5 %                
Average shares outstanding-basic
     12,331       12,219       0.9 %                
Average shares outstanding-diluted
     12,486       12,417       0.6 %                
 
 
(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $33.3 million in net operating loss carryforwards as of May 3, 2015. Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
 
(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
 
* Percent of sales column for income taxes is calculated as a % of income before income taxes.
 
 
 
 
 
Page 2 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE NINE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
                               
                               
   
NINE MONTHS ENDED
  
                               
   
Amounts
          
Percent of Sales
  
   
January 31,
    
February 1,
    
% Over
    
January 31,
    
February 1,
  
   
2016
    
2015
    
(Under)
    
2016
    
2015
  
                               
Net sales
   $ 235,607       231,320       1.9 %     100.0 %     100.0 %
Cost of sales
     187,109       191,925       (2.5 )%     79.4 %     83.0 %
        Gross profit
     48,498       39,395       23.1 %     20.6 %     17.0 %
                                         
Selling, general and
                                        
  administrative expenses
     27,512       23,173       18.7 %     11.7 %     10.0 %
         Income from operations
     20,986       16,222       29.4 %     8.9 %     7.0 %
                                         
Interest expense
     -       50       (100.0 )%     0.0 %     0.0 %
Interest income
     (150 )     (478 )     (68.6 )%     (0.1 )%     (0.2 )%
Other expense
     405       380       6.6 %     0.2 %     0.2 %
         Income before income taxes
     20,731       16,270       27.4 %     8.8 %     7.0 %
                                         
Income taxes*
     7,398       6,113       21.0 %     35.7 %     37.6 %
        Net income
   $ 13,333       10,157       31.3 %     5.7 %     4.4 %
                                         
Net income per share-basic
   $ 1.08     $ 0.83       30.1                  
Net income per share-diluted
   $ 1.07     $ 0.82       30.5                  
Average shares outstanding-basic
     12,317       12,216       0.8                  
Average shares outstanding-diluted
     12,488       12,410       0.6                  
 
 
PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
                               
                               
   
NINE MONTHS ENDED
  
                               
   
Amounts
          
Percent of Sales
  
   
January 31,
    
February 1,
    
% Over
    
January 31,
    
February 1,
  
   
2016
    
2015
    
(Under)
    
2016
    
2015
  
                               
                               
Income before income taxes (see above)
   $ 20,731       16,270       27.4 %     8.8 %     7.0 %
                                         
Adjusted Income taxes (2)*
     3,690       2,489       48.3 %     17.8 %     15.3 %
          Adjusted net income
     17,041       13,781       23.7 %     7.2 %     6.0 %
                                         
Adjusted net income per share-basic
   $ 1.38     $ 1.13       22.1 %                
Adjusted net income per share-diluted
   $ 1.36     $ 1.11       22.5 %                
Average shares outstanding-basic
     12,317       12,216       0.8 %                
Average shares outstanding-diluted
     12,488       12,410       0.6 %                
 
(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $33.3 million in net operating loss carryforwards as of May 3, 2015. Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
 
(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
 
* Percent of sales column for income taxes is calculated as a % of income before income taxes.
 
 
 
 
 
Page 3 or 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
JANUARY 31, 2016, FEBRUARY 1, 2015, AND MAY 3, 2015
Unaudited
(Amounts in Thousands)
                               
                               
   
Amounts
    
Increase
        
   
January 31,
    
February 1,
    
(Decrease)
    
* May 3,
  
   
2016
    
2015
    
Dollars
    
Percent
    
2015
  
                               
Current assets
                              
Cash and cash equivalents
   $ 31,713       28,772       2,941       10.2 %     29,725  
Short-term investments
     4,259       8,384       (4,125 )     (49.2 )%     10,004  
Accounts receivable
     26,784       30,774       (3,990 )     (13.0 )%     28,749  
Inventories
     48,485       38,013       10,472       27.5 %     42,484  
Income taxes receivable
     23       104       (81 )     (77.9 )%     229  
Other current assets
     2,331       2,992       (661 )     (22.1 )%     2,440  
Total current assets
     113,595       109,039       4,556       4.2 %     113,631  
                                         
Property, plant & equipment, net
     38,157       35,269       2,888       8.2 %     36,078  
Goodwill
     11,462       11,462       -       0.0 %     11,462  
Deferred income taxes
     4,312       5,020       (708 )     (14.1 ) %     5,169  
Long-term Investments
     3,590       2,063       1,527       74.0 %     2,415  
Other assets
     2,435       2,505       (70 )     (2.8 )%     2,545  
                                         
Total assets
   $ 173,551       165,358       8,193       5.0 %     171,300  
                                         
                                         
                                         
Current liabilities
                                        
Current maturities of long-term debt
   $ -       2,200       (2,200 )     (100.0 )%     2,200  
Accounts payable - trade
     25,601       28,644       (3,043 )     (10.6 )%     28,414  
Accounts payable - capital expenditures
     380       772       (392 )     (50.8 )%     990  
Accrued expenses
     12,690       9,954       2,736       27.5 %     11,129  
Income taxes payable - current
     622       325       297       91.4 %     325  
Total current liabilities
     39,293       41,895       (2,602 )     (6.2 )%     43,058  
                                         
Income taxes payable - long-term
     3,480       3,630       (150 )     (4.1 )%     3,792  
Deferred income taxes
     1,209       927       282       30.4 %     982  
Deferred compensation
     4,495       3,934       561       14.3 %     4,041  
                                         
Total liabilities
     48,477       50,386       (1,909 )     (3.8 )%     51,873  
                                         
Shareholders' equity
     125,074       114,972       10,102       8.8 %     119,427  
                                         
Total liabilities and
                                        
shareholders' equity
   $ 173,551       165,358       8,193       5.0 %     171,300  
                                         
Shares outstanding
     12,250       12,219       31       0.3 %     12,219  
 
* Derived from audited financial statements.
 
 
 
 
 
Page 4 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015
Unaudited
(Amounts in Thousands)
               
               
     
NINE MONTHS ENDED
  
               
     
Amounts
  
     
January 31,
    
February 1,
  
     
2016
    
2015
  
               
Cash flows from operating activities:
        
 
  
 
Net income
   $ 13,333       10,157  
 
Adjustments to reconcile net income to net cash
                
 
provided by operating activities:
                
 
Depreciation
     4,888       4,244  
 
Amortization of other assets
     123       140  
 
Stock-based compensation
     1,964       482  
 
Deferred income taxes
     1,906       3,274  
 
Gain on sale of equipment
     (66 )     (74 )
 
Realized loss on sale of short-term investments
     127       -  
 
Excess tax benefits related to stock-based compensation
     (822 )     (110 )
 
Foreign currency exchange gains
     (85 )     (6 )
 
Changes in assets and liabilities:
                
 
Accounts receivable
     1,091       (3,455 )
 
Inventories
     (6,485 )     2,536  
 
Other current assets
     (108 )     (739 )
 
Other assets
     48       (30 )
 
Accounts payable
     (1,979 )     2,267  
 
Accrued expenses and deferrred compensation
     1,406       2,121  
 
Income taxes
     535       (108 )
 
Net cash provided by operating activities
     15,876       20,699  
                   
Cash flows from investing activities:
                
 
Capital expenditures
     (7,686 )     (8,185 )
 
Proceeds from the sale of equipment
     230       625  
 
Proceeds from life insurance policies
     -       320  
 
Payments on life insurance policies
     (18 )     (18 )
 
Proceeds from the sale of short-term investments
     5,612       1,628  
 
Purchase of short-term investments
     (86 )     (3,719 )
 
Purchase of long-term investments
     (1,268 )     (1,298 )
 
Net cash used in investing activities
     (3,216 )     (10,647 )
                   
Cash flows from financing activities:
                
 
Proceeds from line of credit
     7,000       -  
 
Payments on line of credit
     (7,000 )     (538 )
 
Payments on long-term debt
     (2,200 )     (2,200 )
 
Repurchase of common stock
     (2,397 )     (745 )
 
Dividends paid
     (7,281 )     (6,846 )
 
Payments on debt issuance costs
     (43 )     -  
 
Proceeds from common stock issued
     138       94  
 
Excess tax benefits related to stock-based compensation
     822       110  
 
Net cash used in financing activities
     (10,961 )     (10,125 )
                   
Effect of exchange rate changes on cash and cash equivalents
     289       (458 )
 
                  
Increase (decrease) in cash and cash equivalents
     1,988       (531 )
 
                  
Cash and cash equivalents at beginning of period
     29,725       29,303  
 
                  
Cash and cash equivalents at end of period
   $ 31,713       28,772  
                   
 
                  
Free Cash Flow (1)
   $ 8,245       11,795  
 
                   
(1)  Free Cash Flow reconciliation is as follows:
                
     
FY 2016
    
FY 2015
  
A)
Net cash provided by operating activities
   $ 15,876       20,699  
B)
Minus:  Capital Expenditures
     (7,686 )     (8,185 )
C)
Add:     Proceeds from the sale of equipment
     230       625  
D)
Add:     Proceeds from life insurance policies
     -       320  
E)
Minus:  Payments on life insurance policies
     (18 )     (18 )
F)
Add:     Excess tax benefits related to stock-based compensation
     822       110  
G)
Minus:  Purchase of long-term investments
     (1,268 )     (1,298 )
H)
Effects of exchange rate changes on cash and cash equivalents
     289       (458 )
      $ 8,245       11,795  
                   
 
 
 
 
 
Page 5 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015
(Unaudited)
(Amounts in thousands)
                               
                               
   
THREE MONTHS ENDED
                               
   
Amounts
          
Percent of Total Sales
   
January 31,
    
February 1,
    
% Over
    
January 31,
    
February 1,
  
Net Sales by Segment
  
2016
    
2015
    
(Under)
    
2016
    
2015
  
                               
Mattress Fabrics
   $ 44,277       45,683       (3.1 )%     56.4 %     56.2 %
Upholstery Fabrics
     34,189       35,586       (3.9 )%     43.6 %     43.8 %
                                         
     Net Sales
   $ 78,466       81,269       (3.4 )%     100.0 %     100.0 %
                                         
                                         
Gross Profit by Segment
                          
Gross Profit Margin
                                         
Mattress Fabrics
   $ 8,751       8,076       8.4 %     19.8 %     17.7 %
Upholstery Fabrics
     7,812       6,326       23.5 %     22.8 %     17.8 %
     Gross Profit
   $ 16,563       14,402       15.0 %     21.1 %     17.7 %
                                         
                                         
                                         
Selling, General and Administrative Expenses by Segment
                          
Percent of Sales
  
                                         
Mattress Fabrics
   $ 2,953       2,853       3.5 %     6.7 %     6.2 %
Upholstery Fabrics
     3,963       3,781       4.8 %     11.6 %     10.6 %
Unallocated Corporate expenses
     2,421       1,741       39.1 %     3.1 %     2.1 %
    Selling, General and Administrative Expenses
   $ 9,337       8,375       11.5 %     11.9 %     10.3 %
                                         
                                         
Operating Income (loss) by Segment
                          
Operating Income (Loss) Margin
                                         
Mattress Fabrics
   $ 5,798       5,223       11.0 %     13.1 %     11.4 %
Upholstery Fabrics
     3,849       2,545       51.2 %     11.3 %     7.2 %
Unallocated corporate expenses
     (2,421 )     (1,741 )     39.1 %     (3.1 )%     (2.1 ) %
     Operating income
   $ 7,226       6,027       19.9 %     9.2 %     7.4 %
                                         
                                         
Depreciation by Segment
                                        
                                         
Mattress Fabrics
   $ 1,490       1,244       19.8 %                
Upholstery Fabrics
     215       188       14.4 %                
   Depreciation
   $ 1,705       1,432       19.1 %                
 
 
 
 
 
Page 6 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE NINE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015
(Unaudited)
(Amounts in thousands)
                               
                               
   
NINE MONTHS ENDED
  
                               
   
Amounts
          
Percent of Total Sales
  
   
January 31,
    
February 1,
    
% Over
    
January 31,
    
February 1,
  
Net Sales by Segment
  
2016
    
2015
    
(Under)
    
2016
    
2015
  
                               
Mattress Fabrics
   $ 137,522       131,543       4.5 %     58.4 %     56.9 %
Upholstery Fabrics
     98,085       99,777       (1.7 )%     41.6 %     43.1 %
                                         
     Net Sales
   $ 235,607       231,320       1.9 %     100.0 %     100.0 %
                                         
                                         
Gross Profit by Segment
                          
Gross Profit Margin
  
                                         
Mattress Fabrics
   $ 28,133       22,603       24.5 %     20.5 %     17.2 %
Upholstery Fabrics
     20,365       16,792       21.3 %     20.8 %     16.8 %
     Gross Profit
   $ 48,498       39,395       23.1 %     20.6 %     17.0 %
                                         
                                         
Selling, General and Administrative Expenses by Segment
                          
Percent of Sales
  
                                         
Mattress Fabrics
   $ 8,865       8,019       10.5 %     6.4 %     6.1 %
Upholstery Fabrics
     11,372       10,518       8.1 %     11.6 %     10.5 %
Unallocated Corporate expenses
     7,275       4,636       56.9 %     3.1 %     2.0 %
     Selling, General, and Administrative Expenses
   $ 27,512       23,173       18.7 %     11.7 %     10.0 %
                                         
                                         
Operating Income (loss)  by Segment
                          
Operating Income (Loss) Margin
  
                                         
Mattress Fabrics
   $ 19,267       14,584       32.1 %     14.0 %     11.1  
Upholstery Fabrics
     8,994       6,274       43.4 %     9.2 %     6.3  
Unallocated corporate expenses
     (7,275 )     (4,636 )     56.9 %     (3.1 )%     (2.0 )%
     Operating income
   $ 20,986       16,222       29.4 %     8.9 %     7.0 %
                                         
                                         
Return on Capital (1)
                                        
                                         
Mattress Fabrics
     35.9 %     30.7 %                        
Upholstery Fabrics
     68.9 %     48.2 %                        
Unallocated Corporate
     N/A     N/A                        
     Consolidated
     31.7 %     26.7 %                        
                                         
Capital Employed (2)
                                        
                                         
Mattress Fabrics
     72,644       65,178       11.5 %                
Upholstery Fabrics
     19,623       16,834       16.6 %                
Unallocated Corporate
     (1,284 )     (367 )     N/A                  
     Consolidated
     90,983       81,645       11.4 %                
                                         
                                         
Depreciation by Segment
                                        
                                         
Mattress Fabrics
   $ 4,273       3,692       15.7 %                
Upholstery Fabrics
     615       552       11.4 %                
   Depreciation
   $ 4,888       4,244       15.2 %                
 
Notes:
 
(1) See pages 8 and 9 of this financial information release for calculations.
 
(2) The capital employed balances are as of January 31, 2016 and February 1, 2015.
 
 
 
 
 
Page 7 of 10
 
   
CULP, INC. FINANCIAL INFORMATION RELEASE
  
   
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
  
    FOR THE TWELVE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015  
    (UNAUDITED)  
    (AMOUNTS IN THOUSANDS)  
                               
                               
                               
   
Quarter Ended
        
                           
Trailing 12
  
                           
Months
  
   
5/3/2015
    
8/2/2015
    
11/1/2015
    
1/31/2016
    
1/31/2016
  
                               
Net income
   $ 4,913     $ 4,701     $ 3,771     $ 4,862     $ 18,247  
Income taxes
     1,772       2,707       2,373       2,317       9,169  
Interest income, net
     (128 )     (42 )     (69 )     (38 )     (277 )
Depreciation and amortization expense
     1,576       1,602       1,668       1,741       6,587  
Stock based compensation
     304       265       1,074       625       2,268  
Adjusted EBITDA
   $ 8,437     $ 9,233     $ 8,817     $ 9,507     $ 35,994  
                                         
                                         
                                         
   
Quarter Ended
          
                                   
Trailing 12
  
                                   
Months
  
   
4/27/2014
    
8/3/2014
    
11/2/2014
    
2/1/2015
  
2/1/2015
  
                                         
Net income
   $ 2,740     $ 3,344     $ 3,001     $ 3,812     $ 12,897  
Income taxes
     1,380       2,115       1,889       2,110       7,494  
Interest income, net
     (43 )     (74 )     (153 )     (202 )     (472 )
Depreciation and amortization expense
     1,394       1,446       1,460       1,478       5,778  
Stock based compensation
     159       46       245       191       641  
Adjusted EBITDA
   $ 5,630     $ 6,877     $ 6,442     $ 7,389     $ 26,338  
                                         
% Over (Under)
     49.9 %     34.3 %     36.9 %     28.7 %     36.7 %
 
 
 
 
 
Page 8 of 10
 
   
CULP, INC. FINANCIAL INFORMATION RELEASE
  
   
RETURN ON CAPITAL EMPLOYED BY SEGMENT
  
   
FOR THE NINE MONTHS ENDED JANUARY 31, 2016
  
   
(Amounts in Thousands)
  
   
(Unaudited)
  
                   
   
Operating Income
  
 
        
   
Nine Months
  
Average
  
Return on
   
Ended
  
Capital
  
Avg. Capital
   
January 31, 2016 (1)
  
Employed (3)
  
Employed (2)
                   
Mattress Fabrics
   $ 19,267     $ 71,492       35.9 %
Upholstery Fabrics
     8,994       17,413       68.9 %
(less: Unallocated Corporate)
     (7,275 )     (631 )     N/A  
Total
   $ 20,986     $ 88,275       31.7 %
 
Average Capital Employed
  
As of the three Months Ended January 31, 2016
 
  
As of the three Months Ended November 1, 2015
    
As of the three Months Ended August 2, 2015
  
   
Mattress
  
Upholstery
  
Unallocated
  
 
    
Mattress
  
Upholstery
  
Unallocated
  
 
    
Mattress
  
Upholstery
  
Unallocated
  
 
  
   
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                         
Total assets
     93,779       33,975       45,797       173,551       90,730       32,187       46,030       168,947       91,614       33,795       41,470       166,879  
Total liabilities
     (21,135 )     (14,352 )     (12,990 )     (48,477 )     (19,228 )     (15,129 )     (11,615 )     (45,972 )     (20,265 )     (14,849 )     (13,040 )     (48,154 )
                                                                                                 
Subtotal
   $ 72,644     $ 19,623     $ 32,807     $ 125,074     $ 71,502     $ 17,058     $ 34,415     $ 122,975     $ 71,349     $ 18,946     $ 28,430     $ 118,725  
Less:
                                                                                                
Cash and cash equivalents
     -       -       (31,713 )     (31,713 )     -       -       (31,176 )     (31,176 )     -       -       (25,933 )     (25,933 )
Short-term investments
     -       -       (4,259 )     (4,259 )     -       -       (6,320 )     (6,320 )     -       -       (6,336 )     (6,336 )
Long-term investments
     -       -       (3,590 )     (3,590 )     -       -       (3,279 )     (3,279 )     -       -       (2,893 )     (2,893 )
Income taxes receivable
     -       -       (23 )     (23 )     -       -       (75 )     (75 )     -       -       (142 )     (142 )
Deferred income taxes - non-current
     -       -       (4,312 )     (4,312 )     -       -       (3,415 )     (3,415 )     -       -       (4,405 )     (4,405 )
Current maturities of long-term debt
     -       -       -       -       -       -       -       -       -       -       2,200       2,200  
Income taxes payable - current
     -       -       622       622       -       -       305       305       -       -       392       392  
Income taxes payable - long-term
     -       -       3,480       3,480       -       -       3,655       3,655       -       -       3,634       3,634  
Deferred income taxes - non-current
     -       -       1,209       1,209       -       -       1,206       1,206       -       -       1,071       1,071  
Deferred compensation
     -       -       4,495       4,495       -       -       4,421       4,421       -       -       4,280       4,280  
                                                                                                 
Total Capital Employed
   $ 72,644     $ 19,623     $ (1,284 )   $ 90,983     $ 71,502     $ 17,058     $ (263 )   $ 88,297     $ 71,349     $ 18,946     $ 298     $ 90,593  
                                                                                                 
                                                                                                 
   
As of the three Months Ended May 3, 2015
 
            
 
                                                  
   
Mattress
  
Upholstery
  
Unallocated
  
 
                                                                  
   
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                
                                                                                                 
Total assets
     89,066       32,838       49,396       171,300                                                                  
Total liabilities
     (18,594 )     (18,812 )     (14,467 )     (51,873 )                                                                
                                                                                                 
Subtotal
   $ 70,472     $ 14,026     $ 34,929     $ 119,427                                                                  
Less:
                                                                                                
Cash and cash equivalents
     -       -       (29,725 )     (29,725 )                                                                
Short-term investments
     -       -       (10,004 )     (10,004 )                                                                
Long-term investments
     -       -       (2,415 )     (2,415 )                                                                
Income taxes receivable
     -       -       (229 )     (229 )                                                                
Deferred income taxes - non-current
     -       -       (5,169 )     (5,169 )                                                                
Current maturities of long-term debt
     -       -       2,200       2,200                                                                  
Income taxes payable - current
     -       -       325       325                                                                  
Income taxes payable - long-term
     -       -       3,792       3,792                                                                  
Deferred income taxes - non-current
     -       -       982       982                                                                  
Deferred compensation
     -       -       4,041       4,041                                                                  
                                                                                                 
Total Capital Employed
   $ 70,472     $ 14,026     $ (1,273 )   $ 83,225                                                                  
                                                                                                 
                                                                                                 
   
Mattress
  
Upholstery
  
Unallocated
    
 
                                                                  
   
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                
                                                                                                 
Average Capital Employed (3)
   $ 71,492     $ 17,413     $ (631 )   $ 88,275                                                                  
 
Notes:
 
(1) See reconciliation per page 6 of this financial information release.
 
(2) Return on average capital employed represents operating income for the nine month period ending January 31, 2016 divided by three quarters times four quarters to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term investments, current maturities of long-term debt, noncurrent deferred tax assets and liabilities, income taxes receivable and payable, and deferred compensation.
 
(3) Average capital employed was computed using the four periods ending January 31, 2016, November 1, 2015, August 2, 2015 and May 3, 2015.
 
 
 
 
 
 
Page 9 of 10
 
   
RETURN ON CAPITAL EMPLOYED BY SEGMENT
  
   
FOR THE NINE MONTHS ENDED FEBRUARY 1, 2015
  
   
(Amounts in Thousands)
  
   
(Unaudited)
  
                   
   
Operating Income
  
 
        
   
Nine Months
  
Average
  
Return on
   
Ended
  
Capital
  
Avg. Capital
   
February 1, 2015 (1)
  
Employed (3)
  
Employed (2)
                   
Mattress Fabrics
   $ 14,584     $ 63,361       30.7 %
Upholstery Fabrics
     6,274       17,344       48.2 %
(less: Unallocated Corporate)
     (4,636 )     361       N/A  
Total
   $ 16,222     $ 81,065       26.7 %
 
Average Capital Employed
  
As of the three Months Ended February 1, 2015
  
As of the three Months Ended November 2, 2014
    
As of the three Months Ended August 3, 2014
  
   
Mattress
  
Upholstery
    
Unallocated
  
 
    
Mattress
  
Upholstery
  
Unallocated
  
 
    
Mattress
  
Upholstery
    
Unallocated
  
 
  
   
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                         
Total assets
     83,648       35,761       45,949       165,358       80,121       30,916       45,126       156,163       81,400       30,520       42,298       154,218  
Total liabilities
     (18,470 )     (18,927 )     (12,989 )     (50,386 )     (17,247 )     (14,847 )     (12,395 )     (44,489 )     (18,464 )     (11,468 )     (15,139 )     (45,071 )
                                                                                                 
Subtotal
   $ 65,178     $ 16,834     $ 32,960     $ 114,972     $ 62,874     $ 16,069     $ 32,731     $ 111,674     $ 62,936     $ 19,052     $ 27,159     $ 109,147  
Less:
                                                                                                
Cash and cash equivalents
     -       -       (28,772 )     (28,772 )     -       -       (28,953 )     (28,953 )     -       -       (24,665 )     (24,665 )
Short-term investments
     -       -       (8,384 )     (8,384 )     -       -       (6,318 )     (6,318 )     -       -       (6,311 )     (6,311 )
Long-term investments
     -       -       (2,063 )     (2,063 )                     (1,911 )     (1,911 )                     (1,749 )     (1,749 )
Income taxes receivable
     -       -       (104 )     (104 )     -       -       -       -       -       -       (136 )     (136 )
Deferred income taxes - non-current
     -       -       (5,020 )     (5,020 )     -       -       (6,200 )     (6,200 )     -       -       (7,182 )     (7,182 )
Current maturities of long-term debt
     -       -       2,200       2,200       -       -       2,200       2,200       -       -       2,200       2,200  
Line of credit
     -       -       -       -       -       -       -       -       -       -       569       569  
Income taxes payable - current
     -       -       325       325       -       -       268       268       -       -       387       387  
Income taxes payable - long-term
     -       -       3,630       3,630       -       -       3,980       3,980       -       -       4,037       4,037  
Deferred income taxes - non-current
     -       -       927       927       -       -       896       896       -       -       1,019       1,019  
Long-term debt, less current maturities
     -       -       -       -       -       -       -       -       -       -       2,200       2,200  
Deferred compensation
     -       -       3,934       3,934       -       -       3,794       3,794       -       -       3,632       3,632  
                                                                                                 
Total Capital Employed
   $ 65,178     $ 16,834     $ (367 )   $ 81,645     $ 62,874     $ 16,069     $ 487     $ 79,430     $ 62,936     $ 19,052     $ 1,160     $ 83,148  
 
   
As of the three Months Ended April 27, 2014
    
 
                                                  
   
Mattress
  
Upholstery
    
Unallocated
                                                                      
   
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                
                                                                                                 
Total assets
     79,055       34,987       46,886       160,928                                                                  
Total liabilities
     (16,598 )     (17,568 )     (15,018 )     (49,184 )                                                                
                                                                                                 
Subtotal
   $ 62,457     $ 17,419     $ 31,868     $ 111,744                                                                  
Less:
                                                                                                
Cash and cash equivalents
     -       -       (29,303 )     (29,303 )                                                                
Short-term investments
     -       -       (6,294 )     (6,294 )                                                                
Long-term investments
    
 
               (765 )     (765 )                                                                
Income taxes receivable
     -       -       (121 )     (121 )                                                                
Deferred income taxes - non-current
     -       -       (8,263 )     (8,263 )                                                                
Current maturities of long-term debt
     -       -       2,200       2,200                                                                  
Line of credit
                     586       586                                                                  
Income taxes payable - current
     -       -       442       442                                                                  
Income taxes payable - long-term
     -       -       3,962       3,962                                                                  
Deferred income taxes - non-current
     -       -       1,006       1,006                                                                  
Long-term debt, less current maturities
     -       -       2,200       2,200                                                                  
Deferred compensation
     -       -       2,644       2,644                                                                  
                                                                                                 
                     Total Capital Employed
   $ 62,457     $ 17,419     $ 162     $ 80,038                                                                  
                                                                                                 
                                                                                                 
                                                                                                 
                                                                                                 
   
Mattress
  
Upholstery
    
Unallocated
    
 
                                                                  
   
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                
                                                                                                 
Average Capital Employed (3)
   $ 63,361     $ 17,344     $ 361     $ 81,065                                                                  
 
Notes:
(1) See reconciliation per page 6 of this financial information release.
 
(2) Return on average capital employed represents operating income for the nine month period ending February 1, 2015 divided by 3 quarters times 4 quarters  to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term investments, long-term debt, including current maturities, line of credit, noncurrent deferred tax assets and liabilities, and income taxes payable and receivable.
 
(3) Average capital employed was computed using the four periods ending February 1, 2015, November 2, 2014, August 3, 2014 and April 27, 2014.
 
 
 
 
 
Page 10 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED ADJUSTED EFFECTIVE INCOME TAX RATE, NET INCOME AND EARNINGS PER SHARE
FOR THE NINE MONTHS ENDED JANUARY 31, 2016 AND FEBRUARY 1, 2015
Unaudited
(Amounts in Thousands)
                   
                   
                   
                   
                   
          NINE MONTHS ENDED  
                   
          Amounts  
         
January 31,
    
February 1,
  
         
2016
    
2015
  
                   
                   
Consolidated Effective GAAP Income Tax Rate
   (1)       35.7 %     37.6 %
                       
Non-Cash U.S. Income Tax Expense
           (17.9 )%     (22.1 )%
                       
Non-Cash Foreign Income Tax Expense
           0.0 %     (0.2 )%
                       
Consolidated Adjusted Effective Income Tax Rate
   (2)       17.8 %     15.3 %
 
 
   
THREE MONTHS ENDED
   
As reported
          
January 31, 2016
    
As reported
          
February 1, 2015
   
January 31,
          
Proforma Net
    
February 1,
          
Proforma Net
   
2016
    
Adjustments
    
of Adjustments
    
2015
    
Adjustments
  
of Adjustments
                                     
Income before income taxes
   $ 7,179     $ -     $ 7,179     $ 5,922           $ 5,922  
                                               
Income taxes (3)
     2,317     $ (1,039 )     1,278       2,110     $ (1,204 )     906  
Net income
   $ 4,862     $ 1,039     $ 5,901     $ 3,812     $ 1,204     $ 5,016  
                                                 
Net income per share-basic
   $ 0.39     $ 0.08     $ 0.48     $ 0.31     $ 0.10     $ 0.41  
Net income per share-diluted
   $ 0.39     $ 0.08     $ 0.47     $ 0.31     $ 0.10     $ 0.40  
Average shares outstanding-basic
     12,331       12,331       12,331       12,219       12,219       12,219  
Average shares outstanding-diluted
     12,486       12,486       12,486       12,417       12,417       12,417  
                                                 
                                                 
                                                 
   
NINE MONTHS ENDED
   
As reported
            
January 31, 2016
    
As reported
            
February 1, 2015
   
January 31,
            
Proforma Net
    
February 1,
            
Proforma Net
      2016    
Adjustments
    
of Adjustments
       2015    
Adjustments
  
of Adjustments
                                                 
Income before income taxes
   $ 20,731     $ -     $ 20,731     $ 16,270     $ -     $ 16,270  
                                                 
Income taxes (3)
     7,398     $ (3,708 )     3,690       6,113     $ (3,624 )     2,489  
Net income
   $ 13,333     $ 3,708     $ 17,041     $ 10,157     $ 3,624     $ 13,781  
                                                 
Net income per share-basic
   $ 1.08     $ 0.30     $ 1.38     $ 0.83     $ 0.30     $ 1.13  
Net income per share-diluted
   $ 1.07     $ 0.30     $ 1.36     $ 0.82     $ 0.29     $ 1.11  
Average shares outstanding-basic
     12,317       12,317       12,317       12,216       12,216       12,216  
Average shares outstanding-diluted
     12,488       12,488       12,488       12,410       12,410       12,410  
 
(1) Calculated by dividing consolidated income tax expense by consolidated income before income taxes.
 
(2) Represents estimated cash income tax expense for our subsidiaries located in Canada and China divided by consolidated income before income taxes.
 
(3) Proforma income taxes calculated using the Consolidated Adjusted Effective Income Tax Rate as reflected above.