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) December 1, 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
- ----------------------------- ------------------------- ------------------
(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
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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))
INDEX
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Page
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Item 2.02 - Results of Operations and Financial Condition 3
Item 9.01(c) - Exhibits 3
Signature 4
Exhibits
2
Item 2.02 - Results of Operations and Financial Condition
On December 1, 2005, the Company issued a news release to announce its financial
results for the second quarter ended October 30, 2005. The news release is
attached hereto as Exhibit 99(a).
Also on December 1, 2005, the Company released a Financial Information Release
containing additional financial information and disclosures about the Company's
second quarter ended October 30, 2005. 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 and goodwill
impairment. The Company has included this proforma information in order to show
operational performance excluding the effects of restructuring and related
charges and goodwill impairment 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 agreement, 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. 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 9.01 (c) -- Exhibits
99(a) News Release dated December 1, 2005
99(b) Financial Information Release dated December 1, 2005
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 and Chief Operating Officer
By: Kenneth R. Bowling
------------------
Vice President-Finance, Treasurer
Dated: December 1, 2005
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4
Exhibit 99(a)
Culp Announces Second Quarter Fiscal 2006 Results
HIGH POINT, N.C.--(BUSINESS WIRE)--Dec. 1, 2005--Culp, Inc. (NYSE:CFI)
today reported financial and operating results for the fiscal 2006 second
quarter and six months ended October 30, 2005.
Overview
For the three months ended October 30, 2005, net sales were $67.0 million
compared with $75.4 million a year ago. The company reported a net loss of $4.2
million, or $0.36 per diluted share, for the second quarter of fiscal 2006
compared with a net loss of $4.2 million, or $0.36 per diluted share, for the
second quarter of fiscal 2005. The financial results for the second quarter of
fiscal 2006 include $3.8 million, or $0.33 per diluted share, in restructuring
and related charges, after taxes. Excluding these charges, net loss for the
second fiscal quarter was $332,000, or $0.03 per diluted share. The results for
the second quarter of fiscal 2005 include restructuring and related charges and
goodwill impairment of $4.7 million, or $0.41 per diluted share, after taxes.
Excluding these charges, net income for the second fiscal quarter of 2005 was
$505,000, or $0.04 per diluted share. (A reconciliation of the net income (loss)
and net income (loss) per share calculations has been set forth on Page 6.)
For the six months ended October 30, 2005, the company reported net sales
of $129.3 million compared with $143.3 million for the same period a year ago.
Net loss for the first six months of fiscal 2006 was $8.1 million, or $0.70 per
diluted share, compared with a net loss of $5.2 million, or $0.45 per diluted
share, for the same period last year. Excluding restructuring and related
charges, net loss for the first six months of fiscal 2006 was $960,000, or $0.08
per diluted share. Excluding restructuring and related charges and goodwill
impairment, net loss for the first six months of fiscal 2005 was $589,000, or
$0.05 per diluted share.
Robert G. Culp, III, chairman of the board and chief executive officer of
Culp, Inc., said, "During the first six months of fiscal 2006, we have been
implementing ambitious strategic plans in our operating segments - mattress
ticking and upholstery fabrics. We are pleased with how much we have
accomplished this year with respect to these operational initiatives. While we
are not yet profitable in the upholstery fabrics segment, it is gratifying to
see the improvement in this segment's operating results for the first six months
on a year-over-year basis. Although the transition to a leaner and more agile
business model is affecting our reported financial results, we believe we are
taking the right steps to be competitive and position the company for growth
over the long term in today's global marketplace.
"Like others in our industry, our company's second quarter was affected by
a shortage of polyurethane foam used in furniture and bedding and by surcharges
for raw materials, both of which factors are related to disruptions from the
hurricane activity on the Gulf Coast. In response, we implemented surcharges in
October to our customers in both operating segments. We expect that these
factors will continue to affect our business over the next quarter, although to
a diminishing extent.
Mattress Fabrics Segment
Mattress fabric (known as mattress ticking) sales for the second quarter
were $24.0 million compared with $26.9 million for the second quarter of fiscal
2005. On a unit volume basis, total yards sold declined by 2.3 percent over the
second quarter of fiscal 2005. The average selling price for mattress ticking
declined by 8.1 percent for the second quarter compared with the same period
last year, primarily related to prices for the damask product line. This pricing
trend reflects the ongoing shift mattress manufacturers are making to less
expensive common border ticking, which is the fabric that goes on the side of
mattresses and box springs. Sales in this segment were also affected by the
industry-wide shortage of polyurethane foam used by mattress manufacturers.
Operating income for this segment was $1.7 million, or 6.9 percent of sales,
compared with $2.7 million, or 10.0 percent of sales, for the prior-year period.
Operating income in this segment was affected by a customs assessment totaling
$375,000 related to products imported in prior periods, which reduced operating
margin by approximately 160 basis points. Additionally, these results reflect
higher raw material prices that were not fully offset by the company's customer
surcharges and manufacturing variances related to the start-up of the capital
project.
"Mattress ticking now accounts for over a third of Culp's overall business
and we believe we have a strong competitive position in the marketplace," added
Culp. "We are pleased to show improvement in our operating margins over the
first quarter of fiscal 2006 as we have worked toward completing our capital
project. During the second quarter, we began to ramp up production at our new
Stokesdale, North Carolina, weaving operation and made excellent progress. We
expect to realize further productivity gains in this operation in the third
quarter and reach our target productivity levels by the end of fiscal 2006. We
believe we are well positioned to achieve improved operating results in the
second half of this year compared with those of the prior year period.
Upholstery Fabrics Segment
Sales for this segment were $43.0 million, an 11.3 percent decline compared
with $48.5 million in the second quarter of fiscal 2005. Total yards sold
declined by 9.5 percent, while average selling prices were down 2.6 percent
compared with the second quarter of fiscal 2005. 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. However, the lower sales of U.S. produced fabrics
were partially offset by higher sales of Culp's offshore produced fabrics. The
shortage of polyurethane foam used by furniture manufacturers also affected
sales for the quarter. Operating loss for the second quarter of fiscal 2006 was
$69,000, compared with operating income of $216,000, for the same period a year
ago. These results also reflect higher raw material prices that were not fully
offset by the company's customer surcharges. For the first six months of fiscal
2006, operating losses were substantially reduced to $448,000 compared with $2.4
million in the prior year period.
Culp said, "With respect to our U.S. upholstery fabric operations, through
the first half of this year we have taken aggressive actions to substantially
reduce our U.S. manufacturing costs and capacity and selling, general and
administrative expenses. During this period we consolidated two velvet
manufacturing operations, consolidated our finished goods distribution and
design centers, closed two yarn manufacturing plants and announced a strategic
alliance to outsource our decorative fabrics finishing operation. Additionally,
we combined our sales, design and customer service activities for Culp
Decorative Fabrics and Culp Velvets/Prints, the two divisions within the
upholstery fabrics segment, resulting in a more unified approach for our
customers. With the changes we have made since the beginning of fiscal 2006, we
have reduced our selling, general and administrative expenses for upholstery
fabrics by 33 percent compared with the first six months of fiscal 2005.
"Once our outsourcing initiative for finishing services is completed, which
is expected by the end of February 2006, 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. As a result of these
past restructuring actions, the book value of our U.S. based upholstery fabrics
fixed assets is projected to be about $15 million by the end of the third
quarter of fiscal 2006, compared with approximately $52 million at the end of
fiscal 2004. Our objective is to attain a sustainable and profitable business
model in the U.S. that, in conjunction with our offshore operations, will
support our customers' fabric requirements.
"Our non-U.S. operations continue to report favorable growth trends," Culp
continued. "Sales of upholstery fabrics produced outside our U.S. manufacturing
plants, including fabrics produced at our China facility, were up 79 percent
year-over-year, and accounted for 29 percent of Culp's upholstery fabric sales
for the quarter. We are enthusiastic about the innovative products we are now
offering our customers and believe our non-U.S. produced business represents a
significant growth opportunity for Culp."
Balance Sheet
"We have continued to focus on improving our balance sheet through this
period of transition," Culp noted. "As previously announced, the company's $8.0
million unsecured credit facility was extended by one year in August. At the end
of the second quarter, we closed on a long-term mortgage on our corporate
headquarters for $4.3 million. Our balance sheet reflects $12.9 million in cash
and cash equivalents compared with $5.1 million at the end of fiscal 2005.
Additionally, we have continued to closely manage our inventories and have
reduced them by $8.7 million, or 17 percent, since the end of the first quarter
of fiscal 2006, primarily in our upholstery fabrics segment."
Outlook
Commenting on the business outlook, Culp remarked, "The third fiscal
quarter is typically a slower period for our industry due to holiday vacation
schedules. Additionally, we expect the polyurethane foam shortage and surcharges
for raw materials will continue to affect our business, although at a
diminishing rate as the quarter progresses. Overall, we anticipate a larger
year-over-year decline in sales than the decline of 11 percent in the second
quarter. With respect to our mattress ticking segment, we expect sales will show
a decline over the third quarter a year ago, but to a slightly lesser extent
than the decline in the second quarter. Operating income and margins in this
segment are expected to improve over the same period last year due to the
benefits from our capital project. In the upholstery fabrics segment, we expect
continued growth in sales of fabrics produced outside the U.S. However, we
believe sales of domestically produced upholstery fabrics will continue to
reflect weak demand, resulting in a larger overall segment year-over-year
decline than we had in the second quarter. Even with lower sales, we believe
this segment's operating results will show year-over-year improvement with an
operating loss for our third quarter that is less severe than the operating loss
of $2.0 million for the same period of 2005.
"Considering these factors, we expect the company to report a loss in the
third quarter in the range of $0.07 to $0.12 per diluted share, excluding
restructuring and related charges. 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 for our domestic
upholstery fabrics operations and the impact of raw material costs."
"The company estimates that restructuring and related charges of
approximately $900,000 ($600,000, net of taxes, or $0.05 per diluted share) will
be incurred during the third fiscal quarter. Including the restructuring and
related charges, the company expects to report a net loss for the third fiscal
quarter of $0.12 to $0.17 per diluted share." (A reconciliation of the projected
net loss per share calculation has been set forth on Page 6.)
In closing, Culp remarked, "Our primary focus for fiscal 2006 is to restore
Culp to profitability. As we continue to work through this important period of
transition, we are encouraged by the positive results of the strategic changes
we have made throughout our operations. The substantial cost and capacity
reductions we have made in our U.S. upholstery fabric operations are moving us
closer to our goal of being profitable in this segment. Our non-U.S. produced
upholstery fabric business, including our China platform, continues to show
favorable trends and we believe there are additional opportunities for extending
our global market reach and capabilities. We have strengthened our
cost-competitive position on a global basis in mattress ticking and look forward
to realizing the full benefits of the capital project in this segment. Overall,
we believe we will see continued progress during the second half of fiscal 2006
with improved operating results for both the upholstery fabrics and mattress
ticking segments over the same period last year."
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 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. 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.
CULP, INC.
Condensed Financial Highlights
(Unaudited)
Three Months Ended Six Months Ended
------------------------- ---------------------------
October 30, October 31, October 30, October 31,
2005 2004 2005 2004
------------ ------------ ------------- -------------
Net sales $67,006,000 $75,406,000 $129,348,000 $143,255,000
Net loss $(4,152,000) $(4,193,000) $ (8,093,000) $ (5,245,000)
Net loss per
share:
Basic $ (0.36) $ (0.36) $ (0.70) $ (0.45)
Diluted $ (0.36) $ (0.36) $ (0.70) $ (0.45)
Net income (loss)
per share, diluted,
excluding
restructuring and
related charges
and goodwill
impairment (a) $ (0.03) $ 0.04 $ (0.08) $ (0.05)
Average shares
outstanding:
Basic 11,559,000 11,549,000 11,555,000 11,548,000
Diluted 11,559,000 11,549,000 11,555,000 11,548,000
(a) Excludes restructuring and related charges of $6.2 million ($3.8 million,
or $0.33 per diluted share, after taxes) for the second quarter of fiscal
2006. Excludes restructuring and related charges of $11.5 million ($7.1
million or $0.62 per diluted share, after taxes) for the first six months
of fiscal 2006.
Excludes restructuring and related charges and goodwill impairment of $7.5
million ($4.7 million, or $0.41 per diluted share, after taxes) for the second
quarter of fiscal 2005. Excludes restructuring and related charges and goodwill
impairment of $7.5 million ($4.7 million or $0.40 per diluted share, after
taxes) for the first six months of fiscal 2005.
Reconciliation of Net Loss as Reported to Pro Forma Net Income (Loss)
(Unaudited)
Three Months Ended Six Months Ended
------------------------- -------------------------
October 30, October 31, October 30, October 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net loss, as
reported $(4,152,000) $(4,193,000) $(8,093,000) $(5,245,000)
Restructuring and
related charges
and goodwill
impairment, net
of income taxes 3,820,000 4,698,000 7,133,000 4,656,000
------------ ------------ ------------ ------------
Pro forma net
(loss) income $ (332,000) $ 505,000 $ (960,000) $ (589,000)
============== ============ ============ ============
Reconciliation of Net Loss Per Share as Reported to
Pro Forma Net Income (Loss) Per Share
(Unaudited)
Three Months Ended Six Months Ended
------------------------- -------------------------
October 30, October 31, October 30, October 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net loss, as
reported $ (0.36) $ (0.36) $ (0.70) $ (0.45)
Restructuring and
related charges
and goodwill
impairment, net
of income taxes 0.33 0.41 0.62 0.40
Effect of rounding 0.00 (0.01) 0.00 0.00
------------ ------------ ------------ ------------
Pro forma net
(loss) income per
share $ (0.03) $ 0.04 $ (0.08) $ (0.05)
============ ============ ============ ============
Culp Inc.
Reconciliation of Projected Range of Net Loss Per Share
to Projected Range of Pro Forma Net Loss Per Share
(Unaudited)
Three Months
Ending
January 29,
2006
-----------------
Projected range of net loss
per diluted share $(0.12)-$(0.17)
Projected restructuring and
related charges, net of income taxes 0.05
-----------------
Projected range of pro forma net loss
per diluted share $(0.07)-$(0.12)
=================
CONTACT: Culp, Inc.
Investor Contact:
Kenneth R. Bowling, 336-881-5630
or
Media Contact:
Kenneth M. Ludwig, 336-889-5161
Exhibit 99(b)
Page 1 of 7
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET LOSS
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 30, 2005 AND OCTOBER 31, 2004
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED
------------------------------------------------------------------------
Amounts Percent of Sales
-------------------------- ----------------------------
October 30, October 31, % Over October 30, October 31,
2005 2004 (Under) 2005 2004
------------ ------------ ------------ ------------- -------------
Net sales $ 67,006 75,406 (11.1)% 100.0 % 100.0 %
Cost of sales 61,455 65,839 (6.7)% 91.7 % 87.3 %
------------ ------------ ------------ ------------- -------------
Gross profit 5,551 9,567 (42.0)% 8.3 % 12.7 %
Selling, general and
administrative expenses 6,526 8,838 (26.2)% 9.7 % 11.7 %
Goodwill impairment 0 5,126 (100.0)% 0.0 % 6.8 %
Restructuring expense 4,412 1,292 241.5 % 6.6 % 1.7 %
------------ ------------ ------------ ------------- -------------
Loss from operations (5,387) (5,689) 5.3 % (8.0)% (7.5)%
Interest expense 942 937 0.5 % 1.4 % 1.2 %
Interest income (19) (29) (34.5)% (0.0)% (0.0)%
Other expense 214 173 23.7 % 0.3 % 0.2 %
------------ ------------ ------------ ------------- -------------
Loss before income taxes (6,524) (6,770) 3.6 % (9.7)% (9.0)%
Income taxes* (2,372) (2,577) (8.0)% 36.4 % 38.1 %
------------ ------------ -- ------------- -------------
----------
Net loss $ (4,152) (4,193) 1.0 % (6.2)% (5.6)%
============ ============ ============ ============= =============
Net loss per share-basic ($0.36) ($0.36) 0.0 %
Net loss per share-diluted ($0.36) ($0.36) 0.0 %
Net income (loss) per share, diluted, excluding restructuring ($0.03) $0.04 (175.0)%
and related charges and goodwill impairment (see proforma
statement on page 6)
Average shares outstanding-basic 11,559 11,549 0.1 %
Average shares outstanding-diluted 11,559 11,549 0.1 %
SIX MONTHS ENDED
----------------------------------------------------------------------
Amounts Percent of Sales
-------------------------- ----------------------------
October 30, October 31, % Over October 30, October 31,
2005 2004 (Under) 2005 2004
------------ ------------ ------------ ------------- -------------
Net sales $ 129,348 143,255 (9.7)% 100.0 % 100.0 %
Cost of sales 117,240 125,013 (6.2)% 90.6 % 87.3 %
------------ ------------ ------------ ------------- -------------
Gross profit 12,108 18,242 (33.6)% 9.4 % 12.7 %
Selling, general and
administrative expenses 16,382 18,118 (9.6)% 12.7 % 12.6 %
Goodwill impairment 0 5,126 (100.0)% 0.0 % 3.6 %
Restructuring expense 6,238 1,154 440.6 % 4.8 % 0.8 %
------------ ------------ ------------ ------------- -------------
Loss from operations (10,512) (6,156) (70.8)% (8.1)% (4.3)%
Interest expense 1,892 1,877 0.8 % 1.5 % 1.3 %
Interest income (35) (56) (37.5)% (0.0)% (0.0)%
Other expense 347 387 (10.3)% 0.3 % 0.3 %
------------ ------------ ------------ ------------- -------------
Loss before income taxes (12,716) (8,364) (52.0)% (9.8)% (5.8)%
Income taxes* (4,623) (3,119) 48.2 % 36.4 % 37.3 %
------------ ------------ ------------ ------------- -------------
Net loss $ (8,093) (5,245) (54.3)% (6.3)% (3.7)%
============ ============ ============ ============= =============
Net loss per share-basic ($0.70) ($0.45) 55.6 %
Net loss per share-diluted ($0.70) ($0.45) 55.6 %
Net loss per share, diluted, excluding restructuring ($0.08) ($0.05) 60.0 %
and related charges and goodwill impairment (see proforma
statement on page 7)
Average shares outstanding-basic 11,555 11,548 0.1 %
Average shares outstanding-diluted 11,555 11,548 0.1 %
* 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
OCTOBER 30, 2005, OCTOBER 31, 2004 AND MAY 1, 2005
Unaudited
(Amounts in Thousands)
Amounts Increase
------------------------------------ (Decrease)
October 30, October 31, ------------------------------- * May 1,
2005 2004 Dollars Percent 2005
------------------- --------------- --------------- ------------ -----------
Current assets
Cash and cash equivalents $ 12,883 16,505 (3,622) (21.9)% 5,107
Accounts receivable 26,919 26,590 329 1.2 % 28,824
Inventories 43,449 48,528 (5,079) (10.5)% 50,499
Deferred income taxes 7,054 4,980 2,074 41.6 % 7,054
Other current assets 1,846 3,100 (1,254) (40.5)% 2,691
------------------- --------------- --------------- ------------ -----------
Total current assets 92,151 99,703 (7,552) (7.6)% 94,175
Property, plant & equipment, net 54,212 76,062 (21,850) (28.7)% 66,032
Goodwill 4,114 4,114 0 0.0 % 4,114
Deferred income taxes 14,541 834 13,707 100.0 % 10,086
Other assets 1,521 1,327 194 14.6 % 1,716
------------------- --------------- --------------- ------------ -----------
Total assets $ 166,539 182,040 (15,501) (8.5)% 176,123
=================== =============== =============== ============ ===========
Current liabilities
Current maturities of long-term debt $ 8,346 594 7,752 1,305.1 % 8,110
Accounts payable 16,613 15,192 1,421 9.4 % 22,852
Accrued expenses 10,669 11,962 (1,293) (10.8)% 9,556
Accrued restructuring 5,486 5,458 28 0.5 % 5,850
Income taxes payable 1,023 0 1,023 (100.0)% 1,544
------------------- --------------- --------------- ------------ -----------
Total current liabilities 42,137 33,206 8,931 26.9 % 47,912
Long-term debt , less current maturities 46,584 50,569 (3,985) (7.9)% 42,440
------------------- --------------- --------------- ------------ -----------
Total liabilities 88,721 83,775 4,946 5.9 % 90,352
Shareholders' equity 77,818 98,265 (20,447) (20.8)% 85,771
------------------- --------------- --------------- ------------ -----------
Total liabilities and
shareholders' equity $ 166,539 182,040 (15,501) (8.5)% 176,123
=================== =============== =============== ============ ===========
Shares outstanding 11,559 11,550 9 0.1 % 11,551
=================== =============== =============== ============ ===========
* Derived from audited financial statements
Page 3 of 7
CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 30, 2005 AND OCTOBER 31, 2004
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
--------------------------------
Amounts
--------------------------------
October 30, October 31,
2005 2004
--------------- --------------
Cash flows from operating activities:
Net loss $ (8,093) (5,245)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 9,836 6,900
Amortization of other assets 51 70
Stock-based compensation 104 104
Goodwill impairment 0 5,126
Deferred income taxes (4,455) (696)
Restructuring expense 6,238 1,154
Changes in assets and liabilities:
Accounts receivable 1,905 4,129
Inventories 7,050 517
Other current assets 845 (1,466)
Other assets 149 153
Accounts payable (5,623) 1,228
Accrued expenses 1,113 (1,066)
Accrued restructuring (3,510) (440)
Income taxes payable (521) (1,850)
--------------- --------------
Net cash provided by operating activities 5,089 8,618
--------------- --------------
Cash flows from investing activities:
Capital expenditures (4,875) (5,556)
Proceeds from the sale of buildings and equipment 3,950 0
--------------- --------------
Net cash used in investing activities (925) (5,556)
--------------- --------------
Cash flows from financing activities:
Payments on vendor-financed capital expenditures (799) (1,273)
Proceeds from issuance of long-term debt 4,380 133
Proceeds from common stock issued 31 15
--------------- --------------
Net cash provided by (used in) financing activities 3,612 (1,125)
--------------- --------------
Increase in cash and cash equivalents 7,776 1,937
Cash and cash equivalents at beginning of period 5,107 14,568
--------------- --------------
Cash and cash equivalents at end of period $ 12,883 16,505
=============== ==============
Free Cash Flow (1) $ 3,365 1,789
=============== ==============
- -----------------------------------------------------------------------------------------------------------------------
(1) Free Cash Flow reconciliation is as follows: 2nd Qtr 2nd Qtr
FY 2006 FY 2005
-----------------------------------
A) Net cash provided by operating activities $ 5,089 8,618
B) Minus: Capital Expenditures (4,875) (5,556)
C) Add: Proceeds from the sale of buildings and equipment 3,950 0
D) Minus: Payments on vendor-financed capital expenditures (799) (1,273)
--------------- --------------
$ 3,365 1,789
=============== ==============
- -----------------------------------------------------------------------------------------------------------------------
Page 4 of 7
CULP, INC. FINANCIAL INFORMATION RELEASE
SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT/DIVISION
FOR THE THREE MONTHS ENDED OCTOBER 30, 2005 AND OCTOBER 31, 2004
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
-------------------------------------------------------------------------
Amounts Percent of Total Sales
--------------------------- ------------------------------
October 30, October 31, % Over October 30, October 31,
Net Sales by Segment 2005 2004 (Under) 2005 2004
- ------------------------------------------------ ------------- ----------- ---------- ------------- --------------
Mattress Fabrics $ 23,990 26,886 (10.8)% 35.8 % 35.7 %
Upholstery Fabrics 43,016 48,520 (11.3)% 64.2 % 64.3 %
------------- ----------- ---------- ------------- --------------
Net Sales $ 67,006 75,406 (11.1)% 100.0 % 100.0 %
============= =========== ========== ============= ==============
Gross Profit by Segment Gross Profit Margin
- ------------------------------------------------ ------------------------------
Mattress Fabrics $ 3,302 4,461 (26.0)% 13.8 % 16.6 %
Upholstery Fabrics 4,000 6,230 (35.8)% 9.3 % 12.8 %
------------- ----------- ---------- ------------- --------------
Subtotal 7,302 10,691 (31.7)% 10.9 % 14.2 %
Restructuring related charges (1,751)(1) (1,124) (2) (55.8)% (2.6)% (1.5)%
------------- ----------- ---------- ------------- --------------
Gross Profit $ 5,551 9,567 (42.0)% 8.3 % 12.7 %
============= =========== ========== ============= ==============
Sales, General and Administrative expenses by Segment Percent of Sales
- ------------------------------------------------------ ------------------------------
Mattress Fabrics $ 1,636 1,784 (8.3)% 6.8 % 6.6 %
Upholstery Fabrics 4,069 6,016 (32.4)% 9.5 % 12.4 %
Unallocated Corporate expenses 821 1,038 (20.9)% 1.2 % 1.4 %
------------- ----------- ---------- ------------- --------------
Selling, General and Administrative expenses $ 6,526 8,838 (26.2) 9.7 % 11.7 %
============= =========== ======= ============= ==============
Operating Income (loss) by Segment Operating Income (Loss) Margin
- ------------------------------------------------ ------------------------------
Mattress Fabrics $ 1,666 2,676 (37.7)% 6.9 % 10.0 %
Upholstery Fabrics (69) 216 (131.9)% (0.2)% 0.4 %
Unallocated corporate expenses (821) (1,039) 21.0 % (1.2)% (1.4)%
------------- ----------- ---------- ------------- --------------
Subtotal 776 1,853 (58.1)% 1.2 % 2.5 %
Goodwill impairment 0 (5,126) (3)(100.0)% 0.0 % (6.8)%
Restructuring and related charges (6,163)(1) (2,416) (2)(155.1)% (9.2)% (3.2)%
------------- ----------- ---------- ------------- --------------
Operating loss $ (5,387) (5,689) 5.3 % (8.0)% (7.5)%
============= =========== ========== ============= ==============
Depreciation by Segment
- ------------------------------------------------
Mattress Fabrics $ 893 915 (2.4)%
Upholstery Fabrics 1,417 2,408 (41.2)%
------------- ----------- ----------
Subtotal 2,310 3,323 (30.5)%
Accelerated Depreciation 1,355 215 530.2 %
------------- ----------- ----------
Total Depreciation $ 3,665 3,538 3.6 %
============= =========== ==========
(1) The $1.8 million represents restructuring related charges of $1.3 million
of accelerated depreciation associated with the closing of the company's
facility in Shelby, NC and consolidating the chenille yarn operations into
the Lincolnton, NC facility, $331,000 for inventory markdowns, $104,000
for accelerated depreciation associated with the closing of the company's
finishing facility located in Burlington, NC, and $65,000 for termination
benefit expenses. The $6.2 million represents restructuring and related
charges of $2.1 million for write-downs of buildings and equipment, $1.6
million for accrued termination benefits, $1.3 million of accelerated
depreciation associated with the closing of the company's facility in
Shelby, NC and consolidating the chenille yarn operations into the
Lincolnton, NC facility, $395,000 for asset movement costs, $331,000 for
inventory markdowns, $328,000 for lease termination costs, and $104,000
for accelerated depreciation associated with the closing of the company's
finishing facility located in Burlington, NC.
(2) The $1.1 million represents restructuring related charges of $910,000 and
$215,000 for inventory markdowns and accelerated deprecation associated
with the closing of the company's facility in Pageland, SC and
consolidating those operations into the Graham, NC facility. The $2.4
million represents restructuring and related charges of $1.0 million for
accrued termination benefits, $910,000 for inventory markdowns, $278,000
for write-downs of buildings and equipment, and $215,000 for accelerated
depreciation associated with the closing of the company's facility in
Pageland, SC and consolidating those operations into the Graham, NC
facility.
(3) The $5.1 million represents a goodwill impairment charge related to the
Culp Decorative Fabrics division within the upholstery fabrics segment.
Page 5 of 7
CULP, INC. FINANCIAL INFORMATION RELEASE
SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT/DIVISION
FOR THE SIX MONTHS ENDED OCTOBER 30, 2005 AND OCTOBER 31, 2004
(Amounts in thousands)
SIX MONTHS ENDED (UNAUDITED)
------------------------------------------------------------------------
Amounts Percent of Total Sales
--------------------------- -----------------------------
October 30, October 31, % Over October 30, October 31,
Net Sales by Segment 2005 2004 (Under) 2005 2004
- -------------------------------------------------- ------------- ----------- ---------- ------------- -------------
Mattress Fabrics $ 46,905 52,839 (11.2)% 36.3 % 36.9 %
Upholstery Fabrics 82,443 90,416 (8.8)% 63.7 % 63.1 %
------------- ----------- ---------- ------------- -------------
Net Sales $ 129,348 143,255 (9.7)% 100.0 % 100.0 %
============= =========== ========== ============= =============
Gross Profit by Segment Gross Profit Margin
- -------------------------------------------------- ------------------------------
Mattress Fabrics $ 6,397 9,255 (30.9)% 13.6 % 17.5 %
Upholstery Fabrics 7,957 10,186 (21.9)% 9.7 % 11.3 %
------------- ----------- ---------- ------------- -------------
Subtotal 14,354 19,441 (26.2)% 11.1 % 13.6 %
Restructuring related charges (2,246)(1) (1,199) (4) (87.3)% (1.7)% (0.8)%
------------- ----------- ---------- ------------- -------------
Gross Profit $ 12,108 18,242 (33.6)% 9.4 % 12.7 %
============= =========== ========== ============= =============
Sales, General and Administrative expenses by Segment Percent of Sales
- ----------------------------------------------------------------- -----------------------------
Mattress Fabrics $ 3,373 3,679 (8.3)% 7.2 % 7.0 %
Upholstery Fabrics 8,404 12,589 (33.2)% 10.2 % 13.9 %
Unallocated Corporate expenses 1,583 1,850 (14.4)% 1.2 % 1.3 %
------------- ----------- ---------- ------------- -------------
Subtotal 13,360 18,118 (26.3) 10.3 12.6 %
Restructuring related charges 3,022 (2) 0 100.0 % 2.3 % 0.0 %
------------- ----------- ---------- ------------- -------------
Selling, General and Administrative expenses $ 16,382 18,118 (9.6) 12.7 % 12.6 %
============= =========== ========== ============= =============
Operating Income (loss) by Segment Operating Income (Loss) Margin
- -------------------------------------------------- ------------------------------
Mattress Fabrics $ 3,024 5,575 (45.8)% 6.4 % 10.6 %
Upholstery Fabrics (448) (2,403) 81.4 % (0.5)% (2.7)%
Unallocated corporate expenses (1,582) (1,849) 14.4 % (1.2)% (1.3)%
------------- ----------- ---------- ------------- -------------
Subtotal 994 1,323 (24.9)% 0.8 % 0.9 %
Goodwill impairment 0 (5,126) (5) (100.0)% 0.0 % (3.6)%
Restructuring and related charges (11,506)(3) (2,353) (4) (389.0)% (8.9)% (1.6)%
------------- ----------- ---------- ------------- -------------
Operating loss $ (10,512) (6,156) (70.8)% (8.1)% (4.3)%
============= =========== ========== ============= =============
Depreciation by Segment
- --------------------------------------------------
Mattress Fabrics $ 1,749 1,831 (4.5)%
Upholstery Fabrics 3,216 4,854 (33.7)%
------------- ----------- ----------
Subtotal 4,965 6,685 (25.7)%
Accelerated Depreciation 4,871 215 2,165.6 %
------------- ----------- ----------
Total Depreciation $ 9,836 6,900 42.6 %
============= =========== ==========
(1) The $2.3 million represents restructuring related charges of $1.3 million
of accelerated depreciation associated with the closing of the company's
facility in Shelby, NC and consolidating the chenille yarn operations into
the Lincolnton, NC facility, $495,000 for accelerated depreciation on
equipment associated with the consolidation of the Burlington, NC and
Anderson, SC manufacturing facilities within the CVP division, $331,000 for
inventory markdowns, $104,000 for accelerated depreciation associated with
the closing of the company's finishing facility located in Burlington, NC,
and $65,000 for termination benefit expenses.
(2) The $3.0 million represents accelerated depreciation associated with the
design and distribution centers sold in June of 2005.
(3) The $11.5 million represents restructuring and related charges of $3.5
million for accelerated depreciation associated with the design and
distribution centers sold in June of 2005 and equipment associated with the
consolidation of the Burlington, NC and Anderson, SC manufacturing
facilities within the CVP division, $2.9 million for write-downs of
buildings and equipment, $1.6 million for asset movement costs, $1.5
million for termination benefits, $1.3 million for accelerated depreciation
associated with the closing of the company's facility in Shelby, NC and
consolidating the chenille yarn operations into the Lincolnton, NC
facility, $378,000 for lease termination costs, $331,000 for inventory
markdowns, $104,000 for accelerated depreciation associated with the
closing of the company's finishing facility located in Burlington, NC.
(4) The $1.2 million represents restructuring related charges of $910,000 and
$215,000 for inventory markdowns and accelerated depreciation associated
with the closing of the company's facility in Pageland, SC and
consolidating those operations into the Graham, NC facility, $75,000 for
equipment dismantling charges related to the closing of the Lumberton, NC
manufacturing facility. The $2.4 million represents restructuring and
related charges of $910,000 for inventory markdowns, $876,000 for accrued
termination benefits, $278,000 for write-downs of buildings and equipment,
$215,000 for accelerated depreciation associated with the closing of the
company's facility in Pageland, SC and consolidating those operations into
the Graham, NC facility, and $75,000 for equipment dismantling charges
related to the closing of the Lumberton, NC manufacturing facility.
(5) The $5.1 million represents a goodwill impairment charge related to the
Culp Decorative Fabrics division within the upholstery fabrics segment.
Page 6 of 7
CULP, INC.
PROFORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS ENDED OCTOBER 30, 2005 AND OCTOBER 31, 2004
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED
---------------------------------------------------------------------------------------------------------------
October 30, 2005 October 31, 2004
As Reported Proforma As Reported Proforma Proforma
October % of Adjust- % of Net of % of October % of Adjust- % of Net of % of % Over
30, 2005 Sales ments Sales Adjustments Sales 31, 2004 Sales ments Sales Adjustments Sales (Under)
--------------- --------------- ------------------ --------------- -------------- ----------------- --------
Net sales $ 67,006 100.0% 0 67,006 100.0% 75,406 100.0% 0 75,406 100.0% -11.1%
Cost of sales 61,455 91.7% (1,751) -2.6%(1) 59,704 89.1% 65,839 87.3% (1,124) -1.5%(3) 64,715 85.8% -7.7%
--------------- --------------- ------------------ --------------- -------------- ---------------- --------
Gross profit 5,551 8.3% (1,751) -2.6% 7,302 10.9% 9,567 12.7% (1,124) -1.5% 10,691 14.2% -31.7%
Selling,
general and
administrative
expenses 6,526 9.7% 0 0.0% 6,526 9.7% 8,838 11.7% 0 0.0% 8,838 11.7% -26.2%
Goodwill
impairment 0 0.0% 0 0.0% 0 0.0% 5,126 6.8% (5,126) -6.8%(4) 0 0.0% 0.0%
Restructuring
expense 4,412 6.6% (4,412) -6.6%(2) 0 0.0% 1,292 1.7% (1,292) -1.7%(5) 0 0.0% 0.0%
--------------- --------------- ------------------ --------------- -------------- ---------------- --------
Income (loss)
from
operations (5,387) -8.0% (6,163) -9.2% 776 1.2% (5,689) -7.5% (7,542) -10.0% 1,853 2.5% -58.1%
Interest
expense 942 1.4% 0 0.0% 942 1.4% 937 1.2% 0 0.0% 937 1.2% 0.5%
Interest income (19) 0.0% 0 0.0% (19) 0.0% (29) 0.0% 0 0.0% (29) 0.0% -34.5%
Other expense 214 0.3% 0 0.0% 214 0.3% 173 0.2% 0 0.0% 173 0.2% 23.7%
--------------- --------------- ------------------ --------------- -------------- ---------------- --------
Income (loss)
before income
taxes (6,524) -9.7% (6,163) -9.2% (361) -0.5% (6,770) -9.0% (7,542) -10.0% 772 1.0% -146.8%
Income taxes (6) (2,372) 36.4% (2,343) 38.0% (29) 8.0% (2,577) 38.1% (2,844) 37.7% 267 34.6% -110.9%
--------------- --------------- ------------------ --------------- -------------- ---------------- --------
Net income
(loss) $ (4,152) -6.2% (3,820) -5.7% (332) -0.5% (4,193) -5.6% (4,698) -6.2% 505 0.7% -165.8%
=============== =============== ================== =============== ============== ================ ========
Net income (loss)
per share-basic ($0.36) ($0.33) ($0.03) ($0.36) ($0.41) $0.04
Net income (loss)
per share-diluted ($0.36) ($0.33) ($0.03) ($0.36) ($0.41) $0.04
Average shares
outstanding-basic 11,559 11,559 11,559 11,549 11,549 11,549
Average shares
outstanding
-diluted 11,559 11,559 11,559 11,549 11,549 11,722
Notes:
(1) The $1.8 million represents restructuring related charges of $1.3 million
of accelerated depreciation associated with the closing of the company's
facility in Shelby, NC and consolidating the chenille yarn operations into
the Lincolnton, NC facility, $331,000 for inventory markdowns, $104,000 for
accelerated depreciation associated with the closing of the company's
finishing facility located in Burlington, NC, and $65,000 for termination
benefits.
(2) The $4.4 million represents restructuring charges of $2.1 million for
write-downs of buildings and equipment, $1.5 million for accrued
termination benefits, $395,000 for asset movement costs, and $328,000 for
lease termination costs.
(3) The $1.1 million represents restructuring related charges of $910,000 and
$215,000 for inventory markdowns and accelerated depreciation associated
with the closing of the company's facility in Pageland, SC and
consolidating those operations into the Graham, NC facility.
(4) The $5.1 million represents a goodwill impairment charge related to the
Culp Decorative Fabrics division within the upholstery fabrics segment.
(5) The $1.3 million represents restructuring charges of $1.0 million for
accrued termination benefits and $278,000 for write-downs of buildings and
equipment.
(6) The percent of net sales column for income taxes is calculated as a % of
income (loss) before income taxes.
Page 7 of 7
CULP, INC.
PROFORMA CONSOLIDATED STATEMENTS OF LOSS
FOR THE SIX MONTHS ENDED OCTOBER 30, 2005 AND OCTOBER 31, 2004
(Amounts in Thousands, Except for Per Share Data)
SIX MONTHS ENDED
------------------------------------------------------------------------------------------------------------------
October 30, 2005 October 31, 2004
As Reported Proforma As Reported Proforma Proforma
October % of Adjust- % of Net of % of October 31, % of Adjust- % of Net of % of % Over
30, 2005 Sales ments Sales Adjustments Sales 2004 Sales ments Sales Adjustments Sales (Under)
--------------- --------------- ------------------ ----------------- -------------- ---------------- --------
Net sales $129,348 100.0% 0 129,348 100.0% 143,255 100.0% 0 143,255 100.0% -9.7%
Cost of sales 117,240 90.6% (2,246) -1.7%(1) 114,994 88.9% 125,013 87.3% (1,199) -0.8%(4) 123,814 86.4% -7.1%
--------------- --------------- ------------------ ----------------- -------------- ---------------- --------
Gross profit 12,108 9.4% (2,246) -1.7% 14,354 11.1% 18,242 12.7% (1,199) -0.8% 19,441 13.6% -26.2%
Selling,
general and
administrative
expenses 16,382 12.7% (3,022) -2.3%(2) 13,360 10.3% 18,118 12.6% 0 0.0% 18,118 12.6% -26.3%
Goodwill
impairment 0 0.0% 0 0.0% 0 0.0% 5,126 3.6% (5,126) -3.6%(6) 0 0.0% 0.0%
Restructuring
expense 6,238 4.8% (6,238) -4.8%(3) 0 0.0% 1,154 0.8% (1,154) -0.8%(5) 0 0.0% 0.0%
--------------- --------------- ------------------ ----------------- -------------- ---------------- --------
Income (loss)
from
operations (10,512) -8.1% (11,506) -8.9% 994 0.8% (6,156) -4.3% (7,479) -5.2% 1,323 0.9% -24.9%
Interest
expense 1,892 1.5% 0 0.0% 1,892 1.5% 1,877 1.3% 0 0.0% 1,877 1.3% 0.8%
Interest income (35) 0.0% 0 0.0% (35) 0.0% (56) 0.0% 0 0.0% (56) 0.0% -37.5%
Other expense 347 0.3% 0 0.0% 347 0.3% 387 0.3% 0 0.0% 387 0.3% -10.3%
--------------- --------------- ------------------ ----------------- -------------- ---------------- --------
Loss before
income taxes (12,716) -9.8% (11,506) -8.9% (1,210) -0.9% (8,364) -5.8% (7,479) -5.2% (885) -0.6% 36.7%
Income taxes
(7) (4,623) 36.4% (4,373) 38.0% (250) 20.7% (3,119) 37.3% (2,823) 37.7% (296) 33.5% -15.7%
--------------- --------------- ------------------ ----------------- -------------- ---------------- --------
Net loss $ (8,093) -6.3% (7,133) -5.5% (960) -0.7% (5,245) -3.7% (4,656) -3.3% (589) -0.4% 63.1%
=============== =============== ================== ================= ============== ================ ========
Net loss per
share-basic ($0.70) ($0.62) ($0.08) ($0.45) ($0.40) ($0.05)
Net loss per
share-diluted ($0.70) ($0.62) ($0.08) ($0.45) ($0.40) ($0.05)
Average shares
outstanding-
basic 11,555 11,555 11,555 11,548 11,548 11,548
Average shares
outstanding-
diluted 11,555 11,555 11,555 11,548 11,548 11,548
Notes:
(1) The $2.3 million represents restructuring related charges of $1.3 million
of accelerated depreciation associated with the closing of the company's
facility in Shelby, NC and consolidating the chenille yarn operations into
the Lincolnton, NC facility, $495,000 for accelerated depreciation
associated with the consolidation of the Burlington, NC and Anderson, SC
manufacturing facilities within the CVP division, $331,000 for inventory
markdowns, $104,000 for accelerated depreciation associated with the
closing of the company's finishing facility located in Burlington, NC, and
$65,000 for termination benefit expenses.
(2) The $3.0 million represents accelerated depreciation associated with the
design and distribution centers sold in June of 2005.
(3) The $6.2 million represents restructuring expenses of $2.9 million for
write- downs of buildings and equipment, $1.6 million for asset movement
costs, $1.5 million for termination benefits, and $378,000 for lease
termination costs.
(4) The $1.2 million represents restructuring related charges of $910,000 and
$215,000 for inventory markdowns and accelerated depreciation associated
with the closing of the company's facility in Pageland, SC and
consolidating those operations into the Graham, NC facility, and $75,000
for equipment dismantling charges related to the closing of the Lumberton,
NC manufacturing facility.
(5) The $1.2 million represents restructuring expenses of $876,000 for accrued
termination benefits and $278,000 for write-downs of buildings and
equipment.
(6) The $5.1 million represents a goodwill impairment charge related to the
Culp Decorative Fabrics division within the upholstery fabrics segment.
(7) The percent of net sales column for income taxes is calculated as a % of
loss before income taxes.