UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) August 15, 2005
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Culp, Inc.
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(Exact Name of Registrant as Specified in its Charter)
North Carolina 0-12781 56-1001967
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1823 Eastchester Drive
High Point, North Carolina 27265
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(Address of Principal Executive Offices)
(Zip Code)
(336) 889-5161
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(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))
Forward-Looking Statements
This report 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 expectations for the company's future operations, production
levels, sales, expenses, profit margins, 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. 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.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On August 16, 2005, the Company announced a reduction of its U.S. yarn
manufacturing operations, including the sale of certain assets and the
consolidation of two manufacturing plants into one location, which will involve
exit and disposal charges to be incurred by the Company. The news release
announcing these matters is attached hereto as Exhibit 99.1. The Company's board
determined to take the actions described in Exhibit 99.1 at a meeting on August
15, 2005, for the reasons explained in the news release. As described in the
release, the reduction plan is expected to result in total pre-tax charges of
approximately $5.9 million, of which $5.1 million is expected to be non-cash
items and $800,000 is expected to result in cash expenditures. The Company
anticipates the charges to be made up of approximately $500,000 in termination
benefits, approximately $100,000 in contract termination costs, and $5.3 million
of estimated costs associated with fixed asset write-downs and accelerated
depreciation, and dismantling, disposing and moving equipment and related
assets. All of the charges are expected to be incurred in the Company's second
quarter of fiscal 2006. The sale of assets is expected to be completed
immediately, and the plant consolidation is expected to be completed by October
30, 2005.
Item 9.01. Financial Statements and Exhibits.
(c) The following exhibits are filed as part of this report:
99.1 - News Release dated August 16, 2005.
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.
Date: August 17, 2005
Culp, Inc.
By: /s/ Franklin N. Saxon
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Franklin N. Saxon
President and Chief Operating
Officer
EXHIBIT INDEX
Exhibit Number Exhibit
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99.1 News Release dated August 16, 2005
Exhibit 99.1
Culp Announces Reduction of U.S. Yarn Manufacturing Operations
HIGH POINT, N.C.--(BUSINESS WIRE)--Aug. 16, 2005--Culp, Inc.
(NYSE:CFI) today announced a plan to reduce the company's U.S. yarn
manufacturing operations. Culp has entered into a definitive agreement
to sell the company's polypropylene yarn extrusion equipment located
in Graham, North Carolina, to American Fibers and Yarns Company, one
of Culp's suppliers based in Chapel Hill, North Carolina, for $1.1
million payable immediately. As a result, Culp will close this
operation during the company's second quarter ending October 30, 2005.
Pursuant to the terms of the agreement, the company has a long-term
supply contract with American Fibers and Yarns Company to continue
providing Culp with polypropylene yarn.
The company also announced further reduction of the company's yarn
operations by closing Culp's facility in Shelby, North Carolina, and
consolidating the chenille yarn operations into the Lincolnton, North
Carolina, facility. The company will now outsource the open-end yarns
previously produced at Shelby. Culp will then have one yarn plant in
Lincolnton for producing chenille and wrap-spun yarns and a small
texturizing yarn operation in Graham.
Overall, these actions will reduce the number of Culp associates
by approximately 100 people. The company expects total pre-tax charges
of approximately $5.9 million, of which $5.1 million is expected to be
non-cash items. The charges are expected to be recorded in the second
quarter of fiscal 2006.
Commenting on the announcement, Robert G. Culp, III, chairman and
chief executive officer of Culp, Inc., said, "We believe one of our
strengths as a company has been our agility in responding to a
changing marketplace. We can now purchase polypropylene and open-end
yarns less expensively than we can produce them ourselves, primarily
because of the underutilization of the discontinued facilities. At the
same time, we are excited about the increased opportunities for
development of innovative and value-added performance products with
these strategic suppliers. The reduction of Culp's yarn operations
represents another important step towards bringing our U.S.
manufacturing capacity in line with market demand. With the
consolidation of the chenille and wrap-spun yarn operations into the
Lincolnton plant, we will realize lower manufacturing costs.
Culp added, "We recognize that these changes have necessitated
very difficult decisions regarding our operations and our associates.
We regret the impact of these decisions, but remain committed to
taking whatever steps are necessary to restore the profitability of
our U.S. upholstery fabric operations."
The company expects to announce financial results for the first
quarter of fiscal 2006 on August 31, 2005.
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
expectations for the company's future operations, production levels,
sales, expenses, profit margins, 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. 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.
CONTACT: Culp, Inc., High Point
Investor:
Kathy J. Hardy, 336-888-6209
or
Media:
Kenneth M. Ludwig, 336-889-5161