FORM 11K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
COMMISSION FILE NO. 0-12781
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
- ------------------------------------------------------------------------------
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
- ------------------------------------------------------------------------------
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
CULP, INC.
101 SOUTH MAIN STREET
P.O. BOX 2686
HIGH POINT, NORTH CAROLINA 27261-2686
There were no material changes in the Plan or the Investment
Policy of the Plan. Culp, Inc. has made no profit sharing contributions
during the past five years. The approximate number of employees
participating in the Plan at December 31, 1998 was 1,825. The Retirement
Committee administers the Plan, and its members are Phillip W. Wilson,
Kenneth M. Ludwig and Robert G. Culp, III, all employees of Culp, Inc.
Financial Statements and Exhibits.
(a) Financial Statements. A list of all financial statements
filed as part of this report, beginning on page 1, is set forth below:
Financial Statement Page of Report
Report of Independent Accountants 1
Statements of Net Assets Available 2
for Plan Benefits
Statements of Changes in Net Assets 3
Available for Plan Benefits
Notes to Financial Statements 4
<PAGE>
(b) Exhibits. No exhibits are filed with this annual report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the plan administrator has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
By: Culp, Inc. Plan Administrator
By: The Culp, Inc. Retirement Committee
Date: June 29, 1999
Robert G. Culp, III
-------------------
Phillip W. Wilson
-------------------
Kenneth M. Ludwig
-------------------
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Retirement Committee of the
Culp, Inc. Employees' Retirement Builder Plan
High Point, North Carolina
We have audited the accompanying statements of net assets available for plan
benefits of the Culp, Inc. Employees' Retirement Builder Plan as of December
31, 1998 and 1997 and the related statements of changes in net assets
available for plan benefits for each of the years in the three year period
ended December 31, 1998. These financial statements are the responsibility
of the Plan Administrator. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the
Culp, Inc. Employees' Retirement Builder Plan as of December 31, 1998 and
1997 and the changes in its net assets available for plan benefits for each
of the years in the three year period ended December 31, 1998 in conformity
with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules presented
on pages 12 through 15 are presented for the purpose of additional analysis
and are not a required part of the basic financial statements. The
supplemental schedules on pages 12 and 13 are supplemental information
required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
supplemental information for the years ended December 31, 1998, 1997 and 1996
has been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole. The supplemental information for the years ended December 31, 1995
and 1994 was audited by us and our report dated March 15, 1996 expressed an
unqualified opinion on such information in relation to the basic financial
statements for those years taken as a whole.
Dixon Odom PLLC
High Point, North Carolina
March 25, 1999
Page 1
<PAGE>
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1998 1997
----------- -----------
<S> <C> <C>
Investments, at fair value $25,965,403 $25,814,249
Receivables
Employer contributions 104,007 176,879
Employee contributions 261,725 432,309
----------- -----------
TOTAL ASSETS 26,331,135 26,423,437
=========== ===========
LIABILITIES
Accounts payable 441 751
----------- -----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $26,330,694 $26,422,686
=========== ===========
</TABLE>
See accompanying notes. Page 2
<PAGE>
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Years Ended December 31, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------- ---------- ---------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO
<S> <C> <C> <C>
Net income from investment in a common trust $ 1,566,882 $ 2,327,091 $ 1,390,480
Appreciation (depreciation) in fair value of
Culp, Inc. Stock Fund (3,904,082) 1,424,837 1,080,348
Dividend income from Culp, Inc. Stock Fund 281 20,216 32,073
Interest income from participant loan fund 135 - -
Contributions
Employer 1,255,704 987,617 870,394
Employees 3,107,175 2,386,222 2,110,867
Direct rollovers 355,722 68,171 -
Loan principal 603 - -
----------- ---------- ----------
TOTAL ADDITIONS 2,382,420 7,214,154 5,484,162
----------- ---------- ----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO
Benefits paid to participants 2,403,439 1,562,644 1,591,272
Insurance 4,167 7,869 9,126
Trustee fees 66,203 27,193 50,457
Loan repayment 603 - -
---------- ---------- ----------
TOTAL DEDUCTIONS 2,474,412 1,597,706 1,650,855
---------- ---------- ----------
NET INCREASE (DECREASE) (91,992) 5,616,448 3,833,307
NET ASSETS AVAILABLE FOR
PLAN BENEFITS
Beginning of year 26,422,686 20,806,238 16,972,931
---------- ---------- ----------
END OF YEAR $26,330,694 $26,422,686 $20,806,238
=========== =========== ===========
</TABLE>
See accompanying notes. Page 3
<PAGE>
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
- --------------------------------------------------------------------------------
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
- -------------------
The financial statements of the Plan are prepared using the accrual method of
accounting.
Estimates
- ---------
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
Valuation of Investments and Income Recognition
- -----------------------------------------------
Investments in common trust funds are stated at fair value based on the values
of the respective instruments held by each fund as determined by the quoted
market prices on the last day of the plan year. Investments in common stocks are
stated at fair value as determined by the quoted market prices on the last day
of the plan year. The cost of securities sold is determined based on average
cost.
Purchases and sales of investments are reported on a trade date basis. Income
from investments is reported as earned on the accrual basis. Dividends are
recorded on the ex-dividend date.
Payment of Benefits
- -------------------
Benefits are recorded when paid.
Allocated Insurance Contracts
- -----------------------------
Assets related to life insurance purchased through the Plan are excluded from
plan assets.
NOTE B - DESCRIPTION OF PLAN
The following description of the Culp, Inc. Employees' Retirement Builder Plan
provides only general information. Participants should refer to the summary plan
description for a more complete description of the Plan's provisions.
General
- -------
The Plan is a defined contribution plan covering all full-time employees of
Culp, Inc. (the Company) and its subsidiaries who have one year of service and
are age twenty-one or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
Effective January 1, 1998 and July 1, 1998, employees of Phillips Mills, Inc.
and the Wetumpka division of Dan River, Inc. were admitted into the Plan and
must meet the above general requirements in order to participate in the Plan.
Page 4
<PAGE>
NOTE B - DESCRIPTION OF PLAN (Continued)
Contributions
- -------------
The Plan was established in 1982 as a profit-sharing plan to which contributions
determined by the Board of Directors of Culp, Inc. could be made on a
discretionary basis. No profit-sharing contributions were made during 1998, 1997
or 1996.
In November 1986, the Plan was amended to include provisions for 401(k)
contributions and several related investment options. Participants may
contribute from 2% to 15% of their annual compensation as 401(k) contributions.
The Company makes a matching contribution equal to 50% of the participant's
contribution up to the first 5% of annual compensation. Participants may elect
to have contributions invested in 25% increments in a value fund, a guaranteed
insurance contract fund, a Culp, Inc. stock fund, or a balanced fund.
Contributions are subject to certain limitations.
In addition to its contributions to the Plan, the Company paid administrative
expenses on behalf of the Plan which totaled $0 for the year ended December 31,
1998, $0 for the year ended December 31, 1997 and $8,988 for the year ended
December 31, 1996.
Participant Accounts
- --------------------
401(k) contributions are credited on a specific identification basis. Income of
the respective funds is allocated based on participants' account balances. Upon
retirement, death or termination, the participant or beneficiary may elect to
receive either a lump sum amount equal to the vested portion of his account, or
an annuity contract of equivalent value. Upon termination, life insurance
coverage purchased through the Plan may be either converted to cash or
transferred to the participant.
Vesting
- -------
Participants are immediately vested in their profit-sharing accounts and their
401(k) contributions, including the matching contributions from the Company and
actual earnings thereon.
Payment of Benefits
- -------------------
On termination of service, a participant may elect to receive either a lump-sum
distribution or monthly or annual installments over a term not to exceed the
lesser of fifteen years or life expectancy of the participant and the designated
beneficiary.
Participant Loans
- -----------------
Culp, Inc. acquired Artee Industries, Inc. in 1998 and amended the Plan
effective August 1, 1998 to allow existing loan balances from Artee Industries,
Inc. to enter the Plan. No new loans may be established under this amendment. As
of December 31, 1998, there was one loan outstanding with a balance of $3,366.
Page 5
<PAGE>
NOTE C - INVESTMENT FUNDS
The following information summarizes the financial condition of the Plan by
investment option as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
December 31, 1998
- ---------------------------------------------------------------------------------------------------------------
Guaranteed
Participant Insurance Life
Loan Value Contract Insurance Stock Balanced
Fund Fund Fund Fund Fund Fund Total
--------- ---------- ----------- -------- ---------- ----------- -------------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Investments $ 3,366 $6,407,546 $ 9,927,482 $ - $ 3,831,663 $5,795,346 $ 25,965,403
Receivables
Employer contributions - 22,483 40,152 - 21,820 19,552 104,007
Employee contributions - 60,508 95,975 - 55,683 49,559 261,725
--------- ---------- ----------- ------- ---------- ----------- ------------
TOTAL ASSETS 3,366 6,490,537 10,063,609 - 3,909,166 5,864,457 26,331,135
LIABILITIES
Accounts payable - - 441 - - - 441
-------- ---------- ------------ -------- ---------- ----------- -----------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $ 3,366 $6,490,537 $ 10,063,168 $ - $ 3,909,166 $5,864,457 $ 26,330,694
======== ========== ============= ======== ========== =========== ===========
December 31, 1997
- ---------------------------------------------------------------------------------------------------------------
Guaranteed
Participant Insurance Life
Loan Value Contract Insurance Stock Balanced
Fund Fund Fund Fund Fund Fund Total
---------- ---------- ------------ -------- ---------- ----------- -----------
ASSETS
Investments $ - $5,261,068 $ 8,969,261 $ - $ 6,495,731 $5,088,189 $ 25,814,249
Receivables
Employer contributions - 34,943 71,240 - 40,687 30,009 176,879
Employee contributions - 91,197 162,562 - 102,820 75,730 432,309
---------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL ASSETS - 5,387,208 9,203,063 - 6,639,238 5,193,928 26,423,437
LIABILITIES
Accounts payable - - 751 - - - 751
---------- ---------- ----------- -------- ---------- ----------- ------------
NET ASSETS
AVAILABLE FOR
PLAN BENEFITS $ - $5,387,208 $ 9,202,312 $ - $ 6,639,238 $5,193,928 $ 26,422,686
========== ========== =========== ======== ========== =========== ============
</TABLE>
Page 6
<PAGE>
NOTE C - INVESTMENT FUNDS (Continued)
The following information summarizes the changes in net assets available for
plan benefits by investment option for the years ended December 31, 1998, 1997
and 1996:
<TABLE>
<CAPTION>
Year Ended December 31, 1998
- ---------------------------------------------------------------------------------------------------------------
Guaranteed
Participant Insurance Life
Loan Value Contract Insurance Stock Balanced
Fund Fund Fund Fund Fund Fund Total
--------- ---------- ----------- -------- ---------- ----------- ------------
ADDITIONS TO NET
ASSETS ATTRIBUTED TO
<S> <C> <C> <C> <C> <C> <C> <C>
Net income from investment in
a common trust $ - $466,424 $ 514,987 $ - $ - $585,471 $1,566,882
Depreciation in fair value of
Culp, Inc. Stock Fund - - - - (3,904,082) - (3,904,082)
Dividend income from Culp, Inc.
Stock Fund - 58 107 - 68 48 281
Interest income from participant
loan fund - - - - 67 68 135
Contributions
Employer - 294,547 439,865 - 291,083 230,209 1,255,704
Employees - 763,667 1,033,877 5,790 728,033 575,808 3,107,175
Direct rollovers 3,969 92,900 73,414 - 96,850 88,589 355,722
Loan principal - - - - 301 302 603
--------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL ADDITIONS 3,969 1,617,596 2,062,250 5,790 (2,787,680) 1,480,495 2,382,420
--------- ---------- ----------- -------- ---------- ----------- ------------
DEDUCTIONS FROM NET
ASSETS ATTRIBUTED TO
Benefits paid to participants - 444,279 1,367,074 5,790 289,443 296,853 2,403,439
Insurance - 607 1,528 - 605 1,427 4,167
Trustee fees - 15,043 24,125 - 13,052 13,983 66,203
Loan repayment 603 - - - - - 603
--------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL DEDUCTIONS 603 459,929 1,392,727 5,790 303,100 312,263 2,474,412
--------- ---------- ----------- -------- ---------- ----------- ------------
NET INCREASE
(DECREASE) 3,366 1,157,667 669,523 - (3,090,780) 1,168,232 (91,992)
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Beginning of year - 5,387,208 9,202,312 - 6,639,238 5,193,928 26,422,686
Fund transfers - (54,338) 191,333 - 360,708 (497,703) -
--------- ---------- ----------- -------- ----------- ---------- ------------
END OF YEAR $ 3,366 $6,490,537 $10,063,168 $ - $ 3,909,166 $5,864,457 $26,330,694
========= ========== =========== ======== =========== ========== ============
</TABLE>
Page 7
<PAGE>
NOTE C - INVESTMENT FUNDS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
- ---------------------------------------------------------------------------------------------------------------
Guaranteed
Participant Insurance Life
Loan Value Contract Insurance Stock Balanced
Fund Fund Fund Fund Fund Fund Total
--------- ---------- ----------- -------- ---------- ----------- ------------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO
<S> <C> <C> <C> <C> <C> <C> <C>
Net income from investment in
a common trust $ - $981,246 $483,155 $ - $ - $862,690 $2,327,091
Appreciation in fair value of
Culp, Inc. Stock Fund - - - - 1,424,837 - 1,424,837
Dividend income from Culp, Inc.
Stock Fund - - - - 20,216 - 20,216
Contributions
Employer - 195,678 386,973 - 228,362 176,604 987,617
Employees - 499,405 884,821 5,590 561,414 434,992 2,386,222
Direct rollovers - 17,482 - - 17,482 33,207 68,171
--------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL ADDITIONS - 1,693,811 1,754,949 5,590 2,252,311 1,507,493 7,214,154
--------- ---------- ----------- -------- ---------- ----------- ------------
DEDUCTIONS FROM NET
ASSETS ATTRIBUTED TO
Benefits paid to participants - 132,373 926,649 5,590 303,065 194,967 1,562,644
Insurance - 624 4,408 - 1,124 1,713 7,869
Trustee fees - 4,611 10,931 - 6,509 5,142 27,193
--------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL DEDUCTIONS - 137,608 941,988 5,590 310,698 201,822 1,597,706
--------- ---------- ----------- -------- ---------- ----------- ------------
NET INCREASE - 1,556,203 812,961 - 1,941,613 1,305,671 5,616,448
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Beginning of year - 3,566,525 8,575,602 - 4,744,903 3,919,208 20,806,238
Fund transfers - 264,480 (186,251) - (47,278) (30,951) -
--------- ---------- ----------- --------- ----------- ---------- ------------
END OF YEAR $ - $5,387,208 $ 9,202,312 $ - $ 6,639,238 $5,193,928 $ 26,422,686
========= ========== =========== ========= ============ ========== ============
</TABLE>
Page 8
<PAGE>
NOTE C - INVESTMENT FUNDS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1996
- ---------------------------------------------------------------------------------------------------------------
Guaranteed
Participant Insurance Life
Loan Value Contract Insurance Stock Balanced
Fund Fund Fund Fund Fund Fund Total
--------- ---------- ----------- -------- ---------- ----------- ------------
ADDITIONS TO NET ASSETS
ATTRIBUTED TO
<S> <C> <C> <C> <C> <C> <C> <C>
Net income from investment in
a common trust $ - $ 540,670 $ 441,212 $ - $ - $ 408,598 $ 1,390,480
Appreciation in fair value of
Culp, Inc. Stock Fund - - - - 1,080,348 - 1,080,348
Dividend income from Culp, Inc.
Stock Fund - - - - 32,073 - 32,073
Contributions
Employer - 150,672 391,215 - 155,581 172,926 870,394
Employees - 391,122 910,076 10,604 378,196 420,869 2,110,867
--------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL ADDITIONS - 1,082,464 1,742,503 10,604 1,646,198 1,002,393 5,484,162
--------- ---------- ----------- -------- ---------- ----------- ------------
DEDUCTIONS FROM NET
ASSETS ATTRIBUTED TO
Benefits paid to participants - 72,284 1,006,442 10,604 303,316 198,626 1,591,272
Insurance - 744 5,669 - 731 1,982 9,126
Trustee fees - 7,892 23,003 - 9,598 9,964 50,457
--------- ---------- ----------- -------- ---------- ----------- ------------
TOTAL DEDUCTIONS - 80,920 1,035,114 10,604 313,645 210,572 1,650,855
--------- ---------- ----------- -------- ---------- ----------- ------------
NET INCREASE - 1,001,544 707,389 - 1,332,553 791,821 3,833,307
NET ASSETS AVAILABLE
FOR PLAN BENEFITS
Beginning of year - 2,407,144 8,101,720 - 3,011,066 3,453,001 16,972,931
Fund transfers - 157,837 (233,507) - 401,284 (325,614) -
--------- ---------- ----------- -------- ---------- ----------- ------------
END OF YEAR $ - $3,566,525 $ 8,575,602 $ - $4,744,903 $ 3,919,208 $ 20,806,238
========= ========= =========== ======== ========= =========== ============
</TABLE>
Page 9
<PAGE>
NOTE D - INVESTMENTS
The following table presents the fair value of investments at December 31, 1998
and 1997. Investments that represent 5% or more of the Plan's net assets are
separately identified.
1998 1997
----------- -----------
Investments at fair value as determined by quoted
market price:
Common trust funds:
First Union Funds Value Portfolio Trust $ 6,407,546 $ 5,261,068
Common trust fund - Money Market Stable
Investment Fund 9,927,482 8,969,261
First Union Funds Balanced Portfolio Trust 5,795,346 5,088,189
Culp, Inc. common stock 3,831,663 6,495,731
Investments at cost which approximates fair value:
Participant loans 3,366 -
----------- -----------
$25,965,403 $25,814,249
=========== ===========
The Plan's investments (including investments bought, sold, and held during the
year) have appreciated (depreciated) in value as follows:
1998 1997 1996
---------- ---------- ----------
Investments at fair value as determined by
quoted market price:
Common trust funds $ 1,566,882 $2,327,091 $1,390,480
Culp, Inc. common stock (3,904,082) 1,424,837 1,080,348
----------- ---------- ----------
$(2,337,200) $3,751,928 $2,470,828
=========== ========== ==========
NOTE E - ACCOUNTS OF TERMINATED PARTICIPANTS
Included in net assets available for plan benefits at December 31, 1998 and 1997
is $264,232 and $446,180, respectively, allocated to the accounts of persons who
elected to withdraw from the Plan or who were terminated but have not yet been
paid.
NOTE F - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
Page 10
<PAGE>
NOTE G - INCOME TAX STATUS
The Plan obtained its last determination letter on June 15, 1995, in which the
Internal Revenue Service stated that the Plan, as then designed, constituted a
qualified trust under Section 401(a) of the Internal Revenue Code and is
therefore exempt from federal income taxes under provisions of Section 501. The
Plan has been amended since receiving the determination letter. However, the
plan administrator and the Plan's tax counsel believe that the Plan is designed
and currently being operated in compliance with the applicable requirements of
the Internal Revenue Code. Therefore, they believe that the Plan was qualified
and the related trust was tax-exempt as of the financial statement date.
NOTE H - RELATED PARTY TRANSACTIONS
Certain plan investments are shares of mutual funds managed by First Union
National Bank. First Union National Bank is the trustee as defined by the Plan
and, therefore, these transactions qualify as party-in-interest.
Page 11
