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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) June 16, 2021

 

Culp, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

North Carolina		1-12597		56-1001967
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

1823 Eastchester Drive

High Point, North Carolina  27265

(Address of Principal Executive Offices)

(Zip Code)

 

(336) 889-5161

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable

(Former name or address, if changed from last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

	☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol	Name of exchange on which registered
Common stock, par value $0.05 per share	CULP	New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).  Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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This report and the exhibit attached hereto contain “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 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. 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,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations, meet our guidance, or that these beliefs will prove correct.

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 our 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 us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the global coronavirus pandemic currently affecting countries around the world, could also adversely affect our operations and financial performance. In addition, the impact of potential goodwill or intangible asset impairments or valuation allowances could affect our financial results. Finally, increases in market prices for petrochemical products can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission.  A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur.

 

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Item 2.02 – Results of Operations and Financial Condition

On June 16, 2021, we issued a news release to announce our financial results for our fourth quarter and fiscal year ended May 2, 2021. A copy of the news release is attached hereto as Exhibit 99.

The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99, is intended to be “furnished” under Item 2.02 of Form 8-K.  Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The news release contains adjusted income statement information, which discloses adjusted net income (loss) and adjusted earnings per share, non-GAAP performance measures that eliminate (i) asset impairment charges, (ii) a non-recurring gain on bargain purchase associated with our acquisition of the remaining fifty percent interest in our former unconsolidated joint venture located in Haiti, (iii) certain non-cash income tax adjustments relating to the income tax effects from the asset impairment charges and gain on bargain purchase, (iv) a non-cash income tax charge in connection with a full valuation allowance against the Company’s U.S. net deferred income tax assets, (v) a non-cash income tax benefit resulting from the re-establishment of certain U.S. Federal net operating loss carryforwards in connection with the recently enacted final regulations regarding the Global Intangible Low Taxed Income (“GILTI”) tax provisions of the Tax Cuts and Jobs Act of 2017, and (iv) GILTI tax incurred during fiscal 2020.  The company has included this adjusted information in order to show operational performance excluding the effects of these items, all of which are not expected to occur on a regular basis.  Details of these calculations and a reconciliation to information from our GAAP financial statements are set forth in the news release. Management believes this presentation aids in the comparison of financial results among comparable financial periods.  In addition, this information is used by management to evaluate and make operational decisions about the company’s business.  We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for net income (loss) or earnings per share calculated in accordance with GAAP.  In addition, the calculation of the company’s income taxes involves numerous estimates and assumptions, which we have made in good faith.  

The news release contains disclosures about free cash flow, a non-GAAP liquidity measure that we define as net cash provided by (used in) operating activities, less cash capital expenditures, plus any proceeds from sale of property, plant, and equipment, plus proceeds from long-term note receivable associated with discontinued operation, less investment in unconsolidated joint venture, plus proceeds from life insurance policies, less premium payments on life insurance policies, less payments on vendor-financed capital expenditures, plus proceeds from the sale of long-term investments associated with our rabbi trust, less the purchase of long-term investments associated with our rabbi trust, and plus or minus the effects of foreign currency exchange rate changes on cash and cash equivalents, in each case to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our GAAP financial statements are set forth in the news release. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, and additions to cash and investments. We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.

The news release contains disclosures about our Adjusted EBITDA, which is a non-GAAP performance measure that reflects net income (loss) excluding loss before income taxes from discontinued operations, income tax expense (benefit) from continuing operations, and net interest income, as well as depreciation and amortization expense from continuing operations, and stock-based compensation expense. This measure also excludes asset impairment charges from continuing operations, gain on bargain purchase, restructuring and related charges and credits, as well as other non-recurring charges and credits associated with our business. Details of these calculations and a reconciliation to

 

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information from our GAAP financial statements are set forth in the news release. We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest income and expense, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry. We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures. For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other companies. Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others. Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend upon capital structure and debt level, tax provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.

 

Item 9.01 (d) – Exhibits

 

99		News Release dated June 16, 2021
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit
99		News Release dated June 16, 2021
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

		CULP, INC. (Registrant)
		By:	/s/ Kenneth R. Bowling
			Chief Financial Officer
			(principal financial officer)
		By:	/s/ Thomas B. Gallagher, Jr.
			Corporate Controller
			(principal accounting officer)

 

Dated:  June 16, 2021

 

 

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Exhibit 99

 

 

 

 

CULP ANNOUNCES RESULTS FOR FOURTH QUARTER AND FISCAL 2021

 

Achieves Solid Finish to Fiscal 2021, Positive Momentum for Fiscal 2022

 

 

HIGH POINT, N.C. (June 16, 2021) ─ Culp, Inc. (NYSE: CULP) (together with its consolidated subsidiaries, “CULP”) today reported financial and operating results from continuing operations for the fourth quarter and fiscal year ended May 2, 2021.  

 

Fiscal 2021 Fourth Quarter Financial Summary⁽¹⁾

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

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June 16, 2021

 

 

Fiscal 2021 Full Year Financial Summary⁽¹⁾⁽³⁾

 

 

Financial Outlook

 

 

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

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June 16, 2021

 

 

 

      Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “We are pleased to have delivered a strong fourth quarter, with dramatic sales growth across both our divisions and consolidated operating income in line with expectations.  Despite some ongoing headwinds, we ended a tumultuous year with strength and momentum.  Demand remained strong during the quarter as consumer focus on the home continued, and our robust global platform and long-term supplier relationships enabled us to service the surge in demand for fabric and sewn covers from both new and existing customers.  

 

      “For the full year, we overcame tremendous adversity to deliver strong growth in sales and operating performance compared to the prior year.  Our company’s solid foundation and spirit of innovation helped us to successfully weather the initial pandemic-related downturn in our business at the end of fiscal 2020 and capitalize on market share opportunities throughout fiscal 2021.  Our performance during fiscal 2021 reflects the advantage of our diversified manufacturing and sourcing capabilities, the stability of our supply chain, the strong appeal of our innovative product offerings, and the benefits of our digital design and marketing capabilities. The exceptional execution by both divisions during this challenging operating environment strengthened our customer relationships and generated positive momentum to start fiscal 2022.

 

      “In addition to our improved sales and operating performance, our cash flow for the year and our balance sheet remained strong.  We ended fiscal 2021 with $46.9 million in total cash and investments and no outstanding debt.

 

      “Our existing Haiti operations have performed well for our mattress fabrics segment during fiscal 2021.  As previously reported, we acquired the remaining fifty percent ownership interest in our former unconsolidated joint venture in Haiti during the fourth quarter, and we are now the sole owner with full control of this mattress cover operation. With respect to this acquisition, we reported a gain from bargain purchase totaling $819,000.  We are also happy to announce an additional expansion to our Haiti operations to include a third facility.  This new building will be dedicated to production of cut and sewn upholstery kits.  Construction began during the fourth quarter and is expected to be complete during the second quarter of fiscal 2022.  The new facility will primarily support committed demand from an existing customer of the upholstery fabrics division.  We believe this move will enhance our speed to market, provide growth opportunities, and mitigate some risk for our upholstery fabrics business with near-shore capabilities that complement our strong Asian platform.  

 

      “Importantly, we finished the year as a stronger company both operationally and financially thanks to the extraordinary efforts and resilience of our associates around the world.  We are extremely proud of their hard work, adaptability, and perseverance in the face of unique challenges and uncertainties.  Our teams came together across divisions to service our customers and meet critical needs throughout the pandemic, while remaining diligent in their efforts to provide a safe environment for our employees, customers, business partners, and the communities we serve.  We are grateful for their unwavering dedication and tremendous accomplishment during this challenging time.  

 

      “Looking ahead, we are entering fiscal 2022 with a positive outlook for our business.  We are proud of our achievements to absorb the increase in demand during fiscal 2021, and we are even more pleased about the outlook for home furnishing demand trends that support our continued growth during fiscal 2022.  We also believe our hospitality business will begin to see improvement as conditions normalize in the travel and leisure industry.  Heading into the first quarter, we are faced with some continued near-term pressures in both divisions relating to ongoing customer capacity limitations, primarily due to supply chain disruption for non-fabric components and labor shortages, as well as increasing raw material and freight costs and ongoing foreign currency fluctuations in China and Canada.  We expect that most of these headwinds are temporary and will be mitigated to some extent by recent pricing actions taken by both divisions.  

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

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June 16, 2021

 

 

      “Despite these challenges, we believe our business will continue its solid and improved performance during fiscal 2022.  We will maintain our focus on innovation and emphasize efforts to increase our market share and make progress on ESG initiatives throughout the year.  On the innovation front, we are excited to advance the tremendous synergies developing between our two divisions by combining our design, innovation, and sales teams for both businesses into a shared space at our new innovation campus in downtown High Point, North Carolina.  This design-driven space will pull our top creative talent together to support collaboration across divisions and provide an everyday space to gather, meet with customers, develop new products, and showcase our technologies and innovations from fabric to sewn cover.  I am extremely proud of our company’s accomplishments in fiscal 2021, and I am confident that we are well-positioned to deliver value for our customers, employees, and shareholders in fiscal 2022 and beyond,” added Culp.

 

Segment Update

 

      Mattress Fabrics Segment

 

      Sales for this segment were $42.9 million for the fourth quarter, up 84 percent compared with sales of $23.4 million in the fourth quarter of fiscal 2020, which was impacted by the COVID-19 pandemic.  For fiscal 2021, mattress fabric sales were $157.7 million, up 20 percent compared with $131.4 million in fiscal 2020.  

 

      “We were energized by the significant growth in top line performance for the mattress fabric segment during the fourth quarter,” said Sandy Brown, president of the company’s mattress fabrics division.  “Our increase in sales compared to the prior-year period, as well as our top line growth for the full fiscal year, was driven by the ongoing consumer focus on the home environment, combined with our relentless focus on product innovation, creative designs, and our ability to service the increased demand through our strong global platform.  We benefitted from market share gains across a diversified group of new and existing customers, including further growth in our sewn mattress cover business.  Our fabric-to-cover model, as well as our on-shore, near-shore, and off-shore supply chain strategy, is proving to be a preferred platform for providing our mattress cover customers with the agility and value they need for their business.  

 

      “While we are pleased with our sales growth for the fourth quarter, our operating performance, though dramatically improved as compared to the prior-year period, was affected by several factors.  We were able to meet the extraordinary increase in customer demand during the quarter, but in doing so we incurred considerable operating inefficiencies to satisfy this surge.  Additionally, we were pressured by increased raw material prices, freight costs, and unfavorable foreign currency fluctuations in Canada and China.  Notably, although we announced a price increase during the fourth quarter to help mitigate higher freight and raw material costs, this action did not take effect until the beginning of fiscal 2022, resulting in a temporary cost-price lag that affected our operating performance for the quarter.  

 

      “Our improved operating performance for fiscal 2021, as compared to the prior year, primarily reflects our solid increase in sales for the year, offset somewhat by the same factors that affected the fourth quarter, as well as disruption in our customers’ supply chains for non-fabric components.

 

      “Although there are lingering pressures heading into fiscal 2022, we believe we are well positioned to gain market share, and we expect our solid top line performance to continue at improved profitability levels during the year.  We have the ability to leverage our creative designs, innovative products, digital marketing strategies, and global production capabilities to enhance our leadership position and sustain Culp’s competitive advantage,” added Brown.

 

      Upholstery Fabrics Segment

 

      Sales for this segment were $36.1 million for the fourth quarter, up 50 percent compared with sales of $24.0 million in the fourth quarter of fiscal 2020, which was impacted by the COVID-19 pandemic.  For fiscal 2021, upholstery fabric sales were $142.1 million, up 14 percent compared with $124.8 million in fiscal 2020.

 

      “We were very pleased by the strong growth in sales and operating performance for the upholstery fabric segment during the fourth quarter and the fiscal 2021 year,” said Boyd Chumbley, president of the company’s upholstery fabrics division.  “We successfully navigated the significant headwinds we

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CULP Announces Results for Fourth Quarter and Fiscal 2021

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June 16, 2021

 

were facing going into the quarter, including customer supply chain constraints and container availability, as well as the impact of the Chinese New Year holiday timing, to deliver better than expected results.  We executed well on our product driven strategy and continued to benefit from the strength and flexibility of our platform in Asia, including our stable, long-term supplier relationships and our expanded cut and sew capabilities in Vietnam.  

 

      “Our growth for the fourth quarter and the fiscal 2021 year was driven by strong industry demand in our residential business, as well as the benefits of market share gains and product innovation with our popular LiveSmart® portfolio of products.  This growth was partially offset by lower sales for our hospitality business, which remained under pressure due to pandemic-related disruptions affecting the travel and leisure industries.  

 

      “Our improved operating performance for the fourth quarter and fiscal 2021, as compared to the prior-year periods, reflects the significant increase in sales for our residential business, offset somewhat by unfavorable China foreign exchange rate fluctuations and reduced demand in our hospitality business.

 

      “Looking ahead, we are encouraged by the continuing strong backlog in our residential upholstery business and the expected recovery in our hospitality segment.  We are confident in our ability to meet this demand, and we believe our recent price increase at the end of the fourth quarter will help offset the ongoing China foreign exchange rate fluctuations.  We are also excited to be expanding our capacity for cut and sewn upholstery kits with a new production facility in Haiti, which is expected to be completed during the second quarter of fiscal 2022.  While we expect that certain near-term headwinds, including rising freight and raw material costs, may temporarily pressure our business during fiscal 2022, we are confident in our ability to navigate these headwinds and believe our business is well positioned for the long term. Above all, we remain focused on providing innovative products that meet the changing demands of our valued customers,” added Chumbley.

 

Balance Sheet

 

      “We are pleased to end fiscal 2021 with a strong financial position,” added Ken Bowling, executive vice president and chief financial officer of Culp, Inc.  “As of May 2, 2021, we reported $46.9 million in total cash and investments and no outstanding borrowings, up from our $38.7 million net cash position as of the end of fiscal 2020.  We generated cash flow from operations of $21.5 million and free cash flow of $14.4 million for the year, compared with cash flow from operations of $5.0 million and free cash flow of $1.5 million for the prior year.  (See reconciliation table on page 14.)  This year-over-year improvement reflects higher earnings and a focused attention on working capital management throughout the year.  During fiscal 2021, we spent $6.7 million in capital expenditures and $892,000 in acquisition-related expenses.  We also returned $5.3 million to shareholder through regular quarterly dividends.”  

 

Dividends and Share Repurchases

 

      The company announced that its Board of Directors has approved the payment of a quarterly cash dividend of 11 cents per share.  This compares with 10.5 cents per share paid for the same period last year, reflecting an increase of five percent.  At an annual indicated dividend of 44 cents per share, the yield is 2.57 percent, based upon yesterday’s closing stock price of $17.14 per share.  The next quarterly payment will be made on July 16, 2021, to shareholders of record as of July 9, 2021.

 

      On March 2, 2021, the Board of Directors reinstated the company’s share repurchase plan, which was previously suspended in April 2020 due to economic uncertainty relating to the COVID-19 pandemic.  The company did not repurchase any shares during the fourth quarter of fiscal 2021, leaving the full $5.0 million available under the share repurchase program approved by the Board in March 2020.  

 

Conference Call

 

      CULP will hold a conference call to discuss financial results for the fourth quarter and fiscal 2021 year on June 17, 2021, at 11:00 a.m. Eastern Time.   A live webcast of this call can be accessed on the investor relations section of the company’s website, www.culp.com.  A replay of the webcast will be available for 30 days on the investor relations section of the company’s website, beginning at 2:00 p.m. Eastern Time on June 17, 2021.

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About the Company

 

      CULP is one of the world’s largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture.  The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at CULP’s manufacturing facilities and fabrics sourced through other suppliers.  CULP has manufacturing and sourcing capabilities located in the United States, Canada, China, Haiti, Turkey, and Vietnam.

 

Forward Looking Statements

 

      This release contains “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 21E of the Securities and Exchange Act of 1934).  Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements.  Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise.  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,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding potential acquisitions, future economic or industry trends, public health epidemics, or future developments.  There can be no assurance that we will realize these expectations, meet our guidance, or that these beliefs will prove correct.

 

      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 our 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 us adversely.  The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations.  Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products.  Changes in tariffs or trade policy, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States.  Strengthening of the U.S. dollar against other currencies could make our products less competitive based on price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places.  Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets.  The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the global coronavirus pandemic currently affecting countries around the world, could also adversely affect our operations and financial performance.  In addition, the impact of potential goodwill or intangible asset impairments could affect our financial results.  Finally, increases in market prices for petrochemical products can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability.  Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission.  A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur.

 

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CULP, INC.

CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)

FOR THREE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

Notes

 

 

 

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(4) Percent of sales column for income tax expense is calculated as a % of loss before income taxes from discontinued operation.

 

(5) During the three-month period ending May 3, 2020, we incurred asset impairment charges totaling $13.7 million that pertained to goodwill and certain intangible assets. Of this $13.7 million, $11.5 million, and $2.2 million were associated with the mattress fabrics segment and upholstery fabrics segment, respectively.

 

(6) The presentation of income tax (expense) benefit between continuing operations and discontinued operation has been revised from amounts for the three-months ended May 3, 2020, previously reported on our Form 8-K dated June 30, 2020. This revision mostly relates to an income tax charge of $2.3 million for the establishment of a full valuation allowance against a U.S. capital loss carryforward that was associated with the sale of our entire ownership interest in eLuxury, LLC during the fourth quarter of fiscal 2020. This $2.3 million income tax charge was originally reported as part of our continuing operations on our Form 8-K dated June 30, 2020 and is now being reported as part of our discontinued operation under the revised presentation. This revision relates solely to the presentation of income tax (expense) benefit as between our continuing operations and discontinued operation. As a result, the revision has no effect on total amount of income tax expense, net income, and comprehensive income for the fourth quarter of fiscal 2020 and has no effect on the amounts reported for the full fiscal year 2020.

 

(7) See page 17 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the three-month periods May 2, 2021, and May 3, 2020, which include certain charges and credits.

 

 

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CULP, INC.

CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)

FOR TWELVE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

Notes

 

 

 

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(4) Percent of sales column for income tax benefit is calculated as a % of loss before income taxes from discontinued operation.

 

(5) During the fiscal year ending May 3, 2020, we incurred asset impairment charges totaling $13.7 million that pertained to goodwill and certain intangible assets. Of this $13.7 million, $11.5 million, and $2.2 million were associated with the mattress fabrics segment and upholstery fabrics segment, respectively.

 

(6) See page 18 for our Reconciliation of Selected Income Statement Information to Adjusted Results for the fiscal years ending May 2, 2021, and May 3, 2020, which include certain charges and credits.

 

 

 

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CULP, INC.

CONSOLIDATED BALANCE SHEETS

MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

* Derived from audited financial statements.

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 12

June 16, 2021

 

CULP, INC.

SUMMARY OF CASH, INVESTMENTS, AND DEBT

MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

* Derived from audited financial statements,

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 13

June 16, 2021

 

 

CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 14

June 16, 2021

 

 

 

Notes

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 15

June 16, 2021

 

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

 

Notes

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 16

June 16, 2021

 

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE TWELVE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

Notes

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 17

June 16, 2021

 

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THE THREE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

 

Notes

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 18

June 16, 2021

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THE TWELVE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

Notes

 

 

 

 

(4) The $4.9 million adjustment for the year ending May 2, 2021, mostly represents an $8.5 million non-cash income tax charge to record a full valuation allowance against the company’s U.S. net deferred income tax assets, partially offset by a $3.6 million non-cash income tax benefit resulting from the re-establishment of certain U.S. Federal net operating loss carryforwards in connection with U.S. Treasury regulations enacted during the first quarter regarding Global Intangible Low-Taxed Income (“GILTI”) tax provisions of the Tax Cuts and Jobs Act of 2017.

 

 

 

 

 

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CULP Announces Results for Fourth Quarter and Fiscal 2021

Page 19

June 16, 2021

 

 

 

CULP, INC.

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

FOR THE TWELVE MONTHS ENDED MAY 2, 2021, AND MAY 3, 2020

Unaudited

(Amounts in Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-END-