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