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) September 27, 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 27261
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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, growth in competition from imported fabrics and home
furnishings could increase overall competition, especially price competition,
for the Company's products. 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.
Item 2.05. Costs Associated with Exit or Disposal Activities.
On October 3, 2005, the Company announced a plan to form a strategic alliance
with Synthetics Finishing, a division of TSG Incorporated, in which Synthetics
Finishing will provide finishing services to the Company for its domestically
produced decorative upholstery fabrics. The Company will close its finishing
plant in Burlington, North Carolina, 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 September 27, 2005, for the
reasons explained in the news release. As described in the release, the plant
closing is expected to result in total pre-tax charges of approximately $2.7
million, of which $2.1 million is expected to be non-cash items and $600,000 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 $2.1 million of estimated costs
associated with fixed asset write-downs and accelerated depreciation, and
dismantling, disposing and moving equipment. The charges are expected to be
incurred in the Company's second and third quarters of fiscal 2006. The plant
closing is expected to be completed in January 2006.
Item 9.01. Financial Statements and Exhibits.
(c) The following exhibits are filed as part of this report:
99.1 - News Release dated October 3, 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: October 3, 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 October 3, 2005
Exhibit 99.1
Culp Announces Strategic Alliance for Decorative Upholstery
Fabric Finishing Services
HIGH POINT, N.C.--(BUSINESS WIRE)--Oct. 3, 2005--Culp, Inc. (NYSE:CFI)
today announced a plan to strategically align with Synthetics Finishing, a
division of TSG Incorporated, to provide finishing services to Culp for its
domestically produced decorative upholstery fabrics. Synthetics Finishing has
over 100 years experience as a leading U.S. commission finisher and, in addition
to finishing services, will collaborate with Culp on research and product
development activities. As a result, Culp will close its finishing plant in
Burlington, North Carolina, thereby reducing the number of Culp associates by
approximately 100 people. This transition is expected to be completed in January
2006.
The company expects total pre-tax charges of approximately $2.7 million, of
which $2.1 million is expected to be non-cash items. The charges are expected to
be recorded in the second and third quarters of fiscal 2006.
"We are delighted to have the opportunity to extend our relationship with
Culp into this new strategic partnership," noted Jack Rosenstein, chairman of
TSG Incorporated. "Both of our companies share the same commitment to customer
service and we look forward to providing the high quality of fabric finishing
that their customers have learned to expect. Likewise, we are both focused on
innovation and growth and we are excited about working together to expand our
capabilities."
Commenting on the announcement, Robert G. Culp, III, chairman and chief
executive officer of Culp, Inc., said, "As the global marketplace continues to
evolve, we are transitioning Culp's business model to one that is more agile and
less capital intensive. We believe that establishing a cooperative manufacturing
alliance with an experienced supplier such as Synthetics Finishing will allow us
to maintain the same high standards of quality control and service for our
customers on a more cost-effective basis. In addition, we are excited about the
increased opportunities for development of innovative applications to enhance
fabric performance.
"Once this initiative is completed, Culp will have three U.S. manufacturing
facilities operating in the upholstery fabrics segment - one for velvet fabrics,
one for decorative fabrics and one for specialty yarns. In addition, we have a
growing operation in China. We are pleased with the progress we are making as we
transition our business and position the company for growth over the long term,"
added Culp.
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, growth in competition from imported fabrics and home
furnishings could increase overall competition, especially price competition,
for the Company's products. 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.
CONTACT: Culp, Inc.
Investors: Kathy J. Hardy, 336-888-6209
or
Media: Kenneth M. Ludwig, 336-889-5161