SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1999
Commission File No. 0-12781
CULP, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1001967
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or other organization)
101 S. Main St., High Point, North Carolina 27261-2686
(Address of principal executive offices) (zip code)
(336) 889-5161
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to the filing requirements for at
least the past 90 days.
YES X NO
Common shares outstanding at October 31, 1999: 11,320,184
Par Value: $.05
<PAGE>
INDEX TO FORM 10-Q
For the period ended October 31, 1999
Part I - Financial Information. Page
- ------------------------------------------ -------
Item 1. Unaudited Interim Consolidated Financial Statements:
Consolidated Statements of Income (Loss)-Three and Six Months Ended I-1
October 31, 1999 and November 1, 1998
Consolidated Balance Sheets-October 31, 1999, November 1, 1998 and
May 2, 1999 I-2
Consolidated Statements of Cash Flows---Six Months Ended October 31, 1999 I-3
and November 1, 1998
Consolidated Statements of Shareholders' Equity I-4
Notes to Consolidated Financial Statements I-5
Sales by Segment/Division I-11
International Sales by Geographic Area I-12
Item 2. Management's Discussion and Analysis of Financial I-13
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About I-19
Market Risk
Part II - Other Information
- -------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders II-1
Item 6. Exhibits and Reports on Form 8-K II-1
Signature II-9
<PAGE>
CULP, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 1999 AND NOVEMBER 1, 1998
(Amounts in Thousands, Except for Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED (UNAUDITED)
---------------------------------------------------------------------------------
Amounts Percent of Sales
------------------------------- -----------------------------
October 31, November 1, % Over
1999 1998 (Under) 2000 1999
-------------- --------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $ 129,542 128,159 1.1 % 100.0 % 100.0 %
Cost of sales 105,835 107,685 (1.7)% 81.7 % 84.0 %
-------------- --------------- ------------- -------------- -------------
Gross profit 23,707 20,474 15.8 % 18.3 % 16.0 %
Selling, general and
administrative expenses 16,035 15,474 3.6 % 12.4 % 12.1 %
-------------- --------------- ------------- -------------- -------------
Income from operations 7,672 5,000 53.4 % 5.9 % 3.9 %
Interest expense 2,484 2,464 0.8 % 1.9 % 1.9 %
Interest income (16) (19) (15.8)% (0.0)% (0.0)%
Other expense (income), net 416 604 (31.1)% 0.3 % 0.5 %
-------------- --------------- ------------- -------------- -------------
Income before income taxes 4,788 1,951 145.4 % 3.7 % 1.5 %
Income taxes * 1,628 644 152.8 % 34.0 % 33.0 %
-------------- --------------- ------------- -------------- -------------
Net income $ 3,160 1,307 141.8 % 2.4 % 1.0 %
============== =============== ============= ============== =============
Net income per share $0.27 $0.10 170.0 %
Net income per share, assuming dilution $0.27 $0.10 170.0 %
Dividends per share $0.035 $0.035 0.0 %
Average shares outstanding 11,749 12,995 (9.6)%
Average shares outstanding, assuming dilution 11,868 13,120 (9.5)%
SIX MONTHS ENDED (UNAUDITED)
---------------------------------------------------------------------------------
Amounts Percent of Sales
------------------------------- -----------------------------
October 31, November 1, % Over
1999 1998 (Under) 2000 1999
-------------- --------------- ------------- -------------- -------------
Net sales $ 245,479 238,826 2.8 % 100.0 % 100.0 %
Cost of sales 201,360 204,741 (1.7)% 82.0 % 85.7 %
-------------- --------------- ------------- -------------- -------------
Gross profit 44,119 34,085 29.4 % 18.0 % 14.3 %
Selling, general and
administrative expenses 31,073 29,947 3.8 % 12.7 % 12.5 %
-------------- --------------- ------------- -------------- -------------
Income from operations 13,046 4,138 215.3 % 5.3 % 1.7 %
Interest expense 4,900 4,825 1.6 % 2.0 % 2.0 %
Interest income (33) (72) (54.2)% (0.0)% (0.0)%
Other expense (income), net 971 1,374 (29.3)% 0.4 % 0.6 %
-------------- --------------- ------------- -------------- -------------
Income (loss) before income taxes 7,208 (1,989) 462.4 % 2.9 % (0.8)%
Income taxes * 2,451 (656) 473.6 % 34.0 % 33.0 %
-------------- --------------- ------------- -------------- -------------
Net income (loss) $ 4,757 (1,333) 456.9 % 1.9 % (0.6)%
============== =============== ============= ============== =============
Net income (loss) per share $0.40 ($0.10) 500.0 %
Net income (loss) per share, assuming dilution $0.39 ($0.10) 490.0 %
Dividends per share $0.07 $0.07 0.0 %
Average shares outstanding 11,906 12,998 (8.4)%
Average shares outstanding, assuming dilution 12,044 13,175 (8.6)%
</TABLE>
* Percent of sales column is calculated as a % of income (loss) before
income taxes.
<PAGE>
CULP, INC.
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1999, NOVEMBER 1, 1998 AND MAY 2, 1999
Unaudited
(Amounts in Thousands)
<TABLE>
<CAPTION>
Amounts Increase
---------------------------------------
October 31, November 1, (Decrease) * May 2,
---------------------------------
1999 1998 Dollars Percent 1999
-------------------- --------------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash investments $ 790 1,177 (387) (32.9)% 509
Accounts receivable 69,749 72,998 (3,249) (4.5)% 70,503
Inventories 78,234 72,392 5,842 8.1 % 67,070
Other current assets 8,865 7,230 1,635 22.6 % 9,633
-------------------- --------------- ---------------- ------------- ------------
Total current assets 157,638 153,797 3,841 2.5 % 147,715
Restricted investments 1,085 3,409 (2,324) (68.2)% 3,340
Property, plant & equipment, net 124,318 126,050 (1,732) (1.4)% 123,310
Goodwill 50,571 54,433 (3,862) (7.1)% 51,269
Other assets 5,064 4,333 731 16.9 % 4,978
-------------------- --------------- ---------------- ------------- ------------
Total assets $ 338,676 342,022 (3,346) (1.0) % 330,612
==================== =============== ================ ============= ============
Current liabilities
Current maturities of long-term debt $ 1,678 1,678 0 0.0 % 1,678
Accounts payable 38,427 32,640 5,787 17.7 % 25,687
Accrued expenses 22,947 17,143 5,804 33.9 % 21,026
Income taxes payable 1,786 0 1,786 100.0 % 0
-------------------- --------------- ---------------- ------------- ------------
Total current liabilities 64,838 51,461 13,377 26.0 % 48,391
Long-term debt 133,875 150,210 (16,335) (10.9)% 140,312
Deferred income taxes 14,583 11,227 3,356 29.9 % 14,583
-------------------- --------------- ---------------- ------------- ------------
Total liabilities 213,296 212,898 398 0.2 % 203,286
Shareholders' equity 125,380 129,124 (3,744) (2.9)% 127,326
-------------------- --------------- ---------------- ------------- ------------
Total liabilities and
shareholders' equity $ 338,676 342,022 (3,346) (1.0)% 330,612
==================== =============== ================ ============= ============
Shares outstanding 11,320 12,995 (1,675) (12.9)% 12,079
==================== =============== ================ ============= ============
</TABLE>
* Derived from audited financial statements.
<PAGE>
CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1999 AND NOVEMBER 1, 1998
Unaudited
(Amounts in Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------
Amounts
--------------------------------
October 31, November 1,
1999 1998
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,757 (1,333)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 9,516 9,198
Amortization of intangible assets 798 829
Changes in assets and liabilities:
Accounts receivable 754 775
Inventories (11,164) 6,202
Other current assets 768 578
Other assets (186) (93)
Accounts payable 7,937 (2,395)
Accrued expenses 1,921 (793)
Income taxes payable 1,786 (1,282)
--------------- ---------------
Net cash provided by operating activities 16,887 11,686
--------------- ---------------
Cash flows from investing activities:
Capital expenditures (10,524) (6,443)
Purchases of restricted investments (27) (66)
Sale of restricted investments 2,282 678
--------------- ---------------
Net cash used in investing activities (8,269) (5,831)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 5,333 2,535
Principal payments on long-term debt (11,770) (6,284)
Change in accounts payable-capital expenditures 4,803 (2,179)
Dividends paid (822) (910)
Payments to acquire common stock (5,901) (160)
Proceeds from common stock issued 20 8
--------------- ---------------
Net cash used in financing activities (8,337) (6,990)
--------------- ---------------
Increase (decrease) in cash and cash investments 281 (1,135)
Cash and cash investments at beginning of period 509 2,312
--------------- ---------------
Cash and cash investments at end of period $ 790 1,177
=============== ===============
</TABLE>
<PAGE>
CULP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Capital
Common Stock Contributed Total
--------------------------------- in Excess Retained Shareholders'
Shares Amount of Par Value Earnings Equity
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, May 3, 1998 13,007,021 $ 650 $ 40,882 $ 89,987 $ 131,519
Cash dividends ($0.14 per share) (1,788) (1,788)
Net income 3,102 3,102
Common stock issued in connection
with stock option plans 10,750 1 34 35
Common stock purchased (938,600) (47) (2,950) (2,545) (5,542)
---------------------------------------------------------------------------------------------------------------------------
Balance, May 2, 1999 12,079,171 604 37,966 88,756 127,326
Cash dividends ($0.07 per share) (822) (822)
Net income 4,757 4,757
Common stock issued in connection
with stock option plans 7,313 20 20
Common stock purchased (766,300) (38) (2,408) (3,455) (5,901)
---------------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1999 11,320,184 $ 566 $ 35,578 $ 89,236 $ 125,380
===========================================================================================================================
</TABLE>
<PAGE>
Culp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Culp, Inc.
and subsidiary include all adjustments, consisting only of normal, recurring
adjustments and accruals, which are, in the opinion of management, necessary for
fair presentation of the results of operations and financial position. Results
of operations for interim periods may not be indicative of future results. The
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements, which are incorporated by
reference in the company's annual report on Form 10-K filed with the Securities
and Exchange Commission on July 30, 1999 for the fiscal year ended May 2, 1999.
================================================================================
================================================================================
2. Accounts Receivable
A summary of accounts receivable follows (dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Customers $ 72,033 $ 73,089
Allowance for doubtful accounts (1,587) (1,452)
Reserve for returns and allowances (697) (1,134)
- --------------------------------------------------------------------------------
$ 69,749 $ 70,503
================================================================================
3. Inventories
Inventories are carried at the lower of cost or market. Cost is determined
for substantially all inventories using the LIFO (last-in, first-out) method.
A summary of inventories follows (dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Raw materials $ 47,698 $ 40,728
Work-in-process 6,627 6,790
Finished goods 30,487 24,885
- --------------------------------------------------------------------------------
Total inventories valued at FIFO cost 84,812 72,403
Adjustments of certain inventories to
the LIFO cost method (1,478) (1,478)
Adjustments of certain inventories
to market (5,100) (3,855)
- --------------------------------------------------------------------------------
$ 78,234 $ 67,070
================================================================================
4. Restricted Investments
Restricted investments were purchased with proceeds from industrial revenue
bond issues and are invested pending application of such proceeds to project
costs or repayment of the bonds. The investments are stated at cost which
approximates market value.
5. Accounts Payable
A summary of accounts payable follows (dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Accounts payable-trade $ 33,387 $ 25,450
Accounts payable-capital expenditures 5,040 237
- --------------------------------------------------------------------------------
$ 38,427 $ 25,687
================================================================================
<PAGE>
6. Accrued Expenses
A summary of accrued expenses follows (dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Compensation and benefits $ 14,490 $ 13,136
Other 8,457 7,890
- --------------------------------------------------------------------------------
$ 22,947 $ 21,026
================================================================================
7. Long-Term Debt
A summary of long-term debt follows (dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Senior unsecured notes $ 75,000 $ 75,000
Industrial revenue bonds and
other obligations 33,519 35,278
Revolving credit facility 22,000 25,000
Revolving line of credit 0 0
Obligations to sellers 5,034 6,712
- --------------------------------------------------------------------------------
135,553 141,990
Less current maturities (1,678) (1,678)
- --------------------------------------------------------------------------------
$ 133,875 $ 140,312
================================================================================
The senior unsecured notes have a fixed coupon rate of 6.76% and an average
remaining term of 9 years. The principal payments become due from March 2006 to
March 2010 with interest payable semi-annually.
The company's revolving credit agreement (the "Credit Agreement") provides
an unsecured multi-currency revolving credit facility, which expires in April
2002, with a syndicate of banks in the United States. The Credit Agreement
provides for a revolving loan commitment of $88,000,000. The agreement requires
payment of a quarterly facility fee in advance. On borrowings outstanding at
October 31, 1999, the interest rate was 6.53%.
The company's $6,000,000 revolving line of credit expires on November 30,
2000. However, the line of credit will automatically be extended for an
additional three-month period on each February 28, May 31, August 31 and
November 30 unless the bank notifies the company that the line of credit will
not be extended. At October 31, 1999, no borrowings were outstanding under the
revolving line of credit.
The industrial revenue bonds (IRBs) are generally due in balloon maturities
which occur at various dates from 2006 to 2013. The IRBs are collateralized by
restricted investments of $1,085,000 and letters of credit for the outstanding
balance of the IRBs and certain interest payments due thereunder.
The company's loan agreements require, among other things, that the company
maintain compliance with certain financial ratios. At October 31, 1999, the
company was in compliance with these required financial covenants.
At October 31, 1999, the company had three interest rate swap agreements
with a bank in order to reduce its exposure to floating interest rates on a
portion of its variable rate borrowings. The following table summarizes certain
data regarding the interest rate swaps:
notational amount interest rate expiration date
$15,000,000 7.3% April 2000
$ 5,000,000 6.9% June 2002
$ 5,000,000 6.6% July 2002
The company believes it could terminate these agreements as of October 31,
1999 for little or no cost based on current market conditions. Net amounts paid
under these agreements increased interest expense by approximately $171,000 and
$119,000 for the six months of fiscal 2000 and 1999, respectively. Management
believes the risk of incurring losses resulting from the inability of the bank
to fulfill its obligation under the interest rate swap agreements to be remote
and that any losses incurred would be immaterial.
<PAGE>
8. Cash Flow Information
Payments for interest and income taxes during the period were (dollars in
thousands):
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
.
Interest $5,197 $ 4,974
Income taxes, net of $1,781 in refunds in 2000 59 2,067
================================================================================
9. Foreign Exchange Forward Contracts
The company generally enters into foreign exchange forward and option
contracts as a hedge against its exposure to currency fluctuations on firm
commitments to purchase certain machinery and equipment and raw materials. The
company had approximately $3,700,000 of outstanding foreign exchange forward
contracts as of October 31, 1999.
10. Net Income (Loss) Per Share
The following tables reconcile the numerators and denominators of net
income (loss) per share and net income (loss) per share, assuming dilution for
the three and six months ended October 31, 1999 and November 1, 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------------------
October 31, 1999 November 1, 1998
------------------------------------------------ ------------------------------------------------
(Amounts in thousands, Income Shares Per Share Income Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------- ------------- ----------- --------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income per share $3,160 11,749 $0.27 $1,307 12,995 $0.10
=========== ==========
Effect of dilutive
securities:
Options - 119 - 125
---------------- ------------- --------------- -------------
Net income per
share, assuming
dilution $3,160 11,868 $0.27 $1,307 13,120 $0.10
================ ============= =========== =============== ============= ==========
SIX MONTHS ENDED
-----------------------------------------------------------------------------------------------------
October 31, 1999 November 1, 1998
------------------------------------------------ ------------------------------------------------
(Amounts in thousands, Income Shares Per Share (Loss) Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------- ------------- ----------- --------------- ------------- ----------
Net income (loss) per share $4,757 11,906 $0.40 ($1,333) 12,998 ($0.10)
=========== ==========
Effect of dilutive
securities:
Options - 138 - 177
---------------- ------------- --------------- -------------
Net income (loss)
per share,
assuming dilution $4,757 12,044 $0.39 ($1,333) 13,175 ($0.10)
================ ============= =========== =============== ============= ==========
</TABLE>
11. Segment Information
The company's operations are classified into two business segments:
upholstery fabrics and mattress ticking. The upholstery fabrics segment
principally manufactures and sells woven jacquards and dobbies, wet and
heat-transfer prints, and woven and tufted velvets primarily to residential and
commercial (contract) furniture manufacturers. The mattress ticking segment
principally manufactures and sells woven jacquards, heat-transfer prints and
pigment prints to bedding manufacturers.
The company internally manages and reports selling, general and
administrative expenses, interest expense, interest income, other expense and
income taxes on a total company basis. Thus, profit by business segment
represents gross profit. In addition, the company internally manages and reports
cash and cash investments, accounts receivable, other current assets, restricted
investments, property, plant and equipment, goodwill and other assets on a total
company basis. Thus, identifiable assets by business segment represent
inventories.
Sales and gross profit for the company's operating segments for the three
months ended October 31, 1999 and November 1, 1998 are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 November 1, 1998
- --------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 103,038 $ 104,668
Mattress Ticking 26,504 23,491
- --------------------------------------------------------------------------------
$ 129,542 $ 128,159
================================================================================
Gross Profit
Upholstery Fabrics $ 17,165 $ 14,739
Mattress Ticking 6,542 5,735
- --------------------------------------------------------------------------------
$ 23,707 $ 20,474
================================================================================
Sales and gross profit for the company's operating segments for the six
months ended October 31, 1999 and November 1, 1998 are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 November 1, 1998
- --------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 193,892 $ 192,703
Mattress Ticking 51,587 46,123
- --------------------------------------------------------------------------------
$ 245,479 $ 238,826
================================================================================
Gross Profit
Upholstery Fabrics $ 31,607 $ 23,275
Mattress Ticking 12,512 10,810
- --------------------------------------------------------------------------------
$ 44,119 $ 34,085
================================================================================
Inventories for the company's operating segments as of October 31, 1999 and
November 1, 1998 are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
October 31, 1999 November 1, 1998
- --------------------------------------------------------------------------------
Inventories
Upholstery Fabrics $ 63,555 $ 60,873
Mattress Ticking 14,679 11,519
- --------------------------------------------------------------------------------
$ 78,234 $ 72,392
================================================================================
<PAGE>
CULP, INC.
SALES BY SEGMENT/DIVISION
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 1999 AND NOVEMBER 1, 1998
(Amounts in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------
Amounts Percent of Total Sales
-------------------------- ----------------------------
October 31, November 1, % Over
Segment/Division 1999 1998 (Under) 2000 1999
- ------------------------------------ ------------ ------------ --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Upholstery Fabrics
Culp Decorative Fabrics $ 56,897 59,573 (4.5)% 43.9 % 46.5 %
Culp Velvets/Prints 41,783 38,728 7.9 % 32.3 % 30.2 %
Culp Yarn 4,358 6,367 (31.6)% 3.4 % 5.0 %
------------ ------------ --------------- ------------- ------------
103,038 104,668 (1.6)% 79.5 % 81.7 %
Mattress Ticking
Culp Home Fashions 26,504 23,491 12.8 % 20.5 % 18.3 %
------------ ------------ --------------- ------------- ------------
* $ 129,542 128,159 1.1 % 100.0 % 100.0 %
============ ============ =============== ============= ============
SIX MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------
Amounts Percent of Total Sales
-------------------------- ----------------------------
October 31, November 1, % Over
Segment/Division 1999 1998 (Under) 2000 1999
- ------------------------------------ ------------ ------------ --------------- ------------- ------------
Upholstery Fabrics
Culp Decorative Fabrics $ 107,413 111,018 (3.2)% 43.8 % 46.5 %
Culp Velvets/Prints 77,992 68,722 13.5 % 31.8 % 28.8 %
Culp Yarn 8,487 12,963 (34.5)% 3.5 % 5.4 %
------------ ------------ --------------- ------------- ------------
193,892 192,703 0.6 % 79.0 % 80.7 %
Mattress Ticking
Culp Home Fashions 51,587 46,123 11.8 % 21.0 % 19.3 %
------------ ------------ --------------- ------------- ------------
* $ 245,479 238,826 2.8 % 100.0 % 100.0 %
============ ============ =============== ============= ============
</TABLE>
* U.S. sales were $97,216 and $94,472 for the second quarter of fiscal 2000 and
fiscal 1999, respectively; and $189,340 and $178,782 for the six months of
fiscal 2000 and fiscal 1999, respectively. The percentage increase in U.S. sales
was 2.9% for the second quarter and an increase of 5.9% for the six months.
<PAGE>
CULP, INC.
INTERNATIONAL SALES BY GEOGRAPHIC AREA
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 1999 AND NOVEMBER 1, 1998
<TABLE>
<CAPTION>
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------------- ------------------------------
October 31, November 1, % Over
Geographic Area 1999 1998 (Under) 2000 1999
- ---------------------------------- --------------- -------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
North America (Excluding USA) $ 9,912 8,502 16.6 % 30.7 % 25.2 %
Europe 6,069 7,223 (16.0)% 18.8 % 21.4 %
Middle East 8,960 10,060 (10.9 % 27.7 % 29.9 %
Far East & Asia 5,357 5,435 (1.4)% 16.6 % 16.1 %
South America 630 1,238 (49.1)% 1.9 % 3.7 %
All other areas 1,398 1,229 13.8 % 4.3 % 3.6 %
--------------- -------------- -------------- ------------- ------------
$ 32,326 33,687 (4.0)% 100.0 % 100.0 %
=============== ============== ============== ============= ============
SIX MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------------- ------------------------------
October 31, November 1, % Over
Geographic Area 1999 1998 (Under) 2000 1999
- ---------------------------------- --------------- -------------- -------------- ------------- ------------
North America (Excluding USA) $ 17,588 15,755 11.6 % 31.3 % 26.2 %
Europe 8,998 10,906 (17.5)% 16.0 % 18.2 %
Middle East 15,952 18,360 (13.1 % 28.4 % 30.6 %
Far East & Asia 9,666 10,303 (6.2)% 17.2 % 17.2 %
South America 1,250 2,238 (44.1)% 2.2 % 3.7 %
All other areas 2,685 2,482 8.2 % 4.8 % 4.1 %
--------------- -------------- -------------- ------------- ------------
$ 56,139 60,044 (6.5)% 100.0 % 100.0 %
=============== ============== ============== ============= ============
</TABLE>
International sales, and the percentage of total sales, for each of the last
five fiscal years follows: fiscal 1995-$57,971 (19%); fiscal 1996-$77,397 (22%);
fiscal 1997-$101,571 (25%); fiscal 1998-$137,223 (29%); and fiscal 1999-$113,354
(23%). International sales for the second quarter represented 25.0% and 26.3%
for 2000 and 1999, respectively. Year-to-date international sales represented
22.9% and 25.1% of total sales for 2000 and 1999, respectively.
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following analysis of the financial condition and results of operations
should be read in conjunction with the Financial Statements and Notes and other
exhibits included elsewhere in this report.
Overview
Culp is one of the largest manufacturers and marketers in the world for
upholstery fabrics for furniture and is one of the leading global producers of
mattress fabrics (or ticking). The company's fabrics are used primarily in the
production of residential and commercial upholstered furniture and bedding
products, including sofas, recliners, chairs, love seats, sectionals, sofa-beds,
office seating and mattress sets. Although Culp markets fabrics at most price
levels, the company emphasizes fabrics that have broad appeal in the promotional
and popular-priced categories of furniture and bedding.
Culp's worldwide leadership as a manufacturer and marketer of upholstery fabrics
and mattress ticking has been achieved through internal expansion and the
integration of strategic acquisitions.
The company's operating segments are upholstery fabrics and mattress ticking,
with related divisions organized within those segments. In upholstery fabrics,
Culp Decorative Fabrics manufactures jacquard and dobby woven fabrics for
residential and commercial furniture. Culp Velvets/Prints manufactures a broad
range of printed and velvet fabrics used primarily for residential and juvenile
furniture. Culp Yarn manufactures specialty filling yarn that is used by Culp
and also marketed to outside customers. In mattress ticking, Culp Home Fashions
manufactures and markets a broad array of fabrics used primarily by bedding
manufacturers.
Three and Six Months ended October 31, 1999 compared with Three and Six Months
ended November 1, 1998
Net Sales. Net sales for the second quarter of fiscal 2000 increased by $1.4
million, or 1.1%, compared with the same quarter of fiscal 1999. The company's
sales of upholstery fabrics decreased $1.6 million, or 1.6%, for the quarter
compared with the prior year. Alternatively, the company's sales of mattress
ticking increased $3.0 million, or 12.8%, for the quarter compared with the
prior year. Net sales for the first six months of fiscal 2000 increased by $6.7
million, or 2.8%, compared with the year-earlier period. The company's sales of
upholstery fabrics and mattress ticking increased $1.2 million and $5.5 million,
respectively, or 0.6% and 11.8%, respectively, for the first six months compared
with the prior year. During the first quarter of fiscal 1999, the company
implemented a major reorganization from six business units to four divisions.
This new corporate alignment grouped related operations together and was
accompanied by several changes in managerial positions. The company believes
that benefits of this move have included improved customer service, more
effective use of design resources and increased manufacturing efficiency.
The 0.6% increase in sales of upholstery fabrics in the first half of fiscal
2000 reflects higher sales of upholstery fabrics to U.S.-based customers that
offset a 34.5% decrease in external Culp Yarn sales and a 6.5% decrease in
international sales. The decrease in external Culp Yarn sales is due primarily
to an increasing percentage of sales to divisions within the company. As a
result, external Culp Yarn sales for the first half of fiscal 2000 represent
31.4% of total sales for the division compared with 45.9% in the prior year.
Weakness in international sales, which the company believes has also affected
other manufacturers of upholstery fabrics, has persisted since the close of
fiscal 1998. The company has taken steps to mitigate the impact of this
industry-wide trend by significantly curtailing production schedules for certain
international-targeted fabrics, introducing a new line of printed cotton
upholstery fabrics and shifting its marketing focus to geographic areas where
demand appears more favorable. The company has a diversified global base of
customers and is seeking to broaden that further to minimize exposure to
economic uncertainties in any geographic area.
The increased sales by Culp Home Fashions (primarily mattress ticking) during
the second quarter and first half of fiscal 2000 marked a continuation of the
longer-term expansion that this division has experienced. The introduction of
new designs and fabric constructions as well as the advantages of the company's
vertical integration are driving Culp's growth in mattress ticking. In
particular, the ability to manufacture the jacquard greige (or unfinished) goods
that are then printed to produce mattress ticking has aided Culp in meeting
faster delivery schedules and providing improved overall customer service.
Gross Profit and Cost of Sales. Gross profit for the second quarter increased
15.8% to $23.7 million when compared to the year-earlier period, and increased
as a percentage of net sales from 16.0% to 18.3%. For the first six months,
gross profit increased 29.4% to $44.1 million and increased as a percentage of
net sales from 14.3% to 18.0%. The increase was due principally to the actions
that the company took during fiscal 1999 to improve profitability, including a
significant reduction in the capacity for manufacturing printed flock fabrics
and an intense effort to reduce operating expenses and raise productivity. The
cost of raw materials has remained relatively stable during the first half of
fiscal 2000.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses as a percentage of sales for the second quarter of
fiscal 2000 were 12.4%, up slightly from 12.1% for the year-earlier period. For
the first six months, these expenses increased slightly as a percentage of sales
to 12.7% versus 12.5% for the prior year. Although the company has ongoing
programs to contain operating expenses, the company is incurring higher costs
related to resources for the design of new fabrics and information systems, as
well as other increased operating expenses intended to support a higher level of
sales.
Interest Expense. Interest expense of $2.5 million and $4.9 million for the
second quarter and first six months, respectively, was unchanged and up $0.1
million, respectively, from a year ago. A lower average amount of borrowings
outstanding was offset by lower capitalized interest related to capital
expenditures and higher average interest rates.
Other Expense. Other expense decreased to $416,000 and $971,000 for the second
quarter and first six months of 2000, respectively, versus $604,000 and
$1,374,000, respectively, for the year-earlier periods. These decreases were due
principally to the incidence of a non-recurring charge in the first quarter of
fiscal 1999 to write-off certain fixed assets and to higher investment income on
the assets related to the nonqualified deferred compensation plan in the second
quarter of fiscal 2000.
Income Taxes. The effective tax rate for the second quarter and first six months
of fiscal 2000 was 34.0%, up slightly from 33.0% for the year-earlier periods.
Net Income (Loss) Per Share. Net income per share for the second quarter of 2000
totaled $0.27 per share diluted compared with $0.10 per share diluted a year
ago. For the first half, the company reported net income of $0.39 per share
diluted versus a net loss of $0.10 per share diluted in the prior year.
Liquidity and Capital Resources
Liquidity. Cash and cash investments were $0.8 million as of October 31, 1999,
compared with $1.2 million at November 1, 1998, and $0.5 million at the end of
fiscal 1999. Funded debt (long-term debt, including current maturities, less
restricted investments) was $134.5 million at October 31, 1999, down from $148.5
million at November 1, 1998 and $138.7 million at May 2, 1999. As a percentage
of total capital (funded debt plus total stockholders' equity), the company's
borrowings amounted to 51.7% at October 31, 1999, compared with 53.5% at
November 1, 1998, and 52.1% at May 2, 1999. The company's working capital as of
October 31, 1999 was $92.8 million, compared with $102.3 million as of November
1, 1998, and $99.3 million at the close of fiscal 1999. The decrease in working
capital since May 2, 1999 is primarily due to an increase of $4.8 million in
accounts payable-capital expenditures.
The company's cash flow from operations was $16.9 million for the first six
months of fiscal 2000, consisting of $15.1 million from earnings (net income
plus depreciation and amortization) and a $1.8 million decrease in working
capital.
In separate authorizations in June 1998, March 1999 and September 1999, the
board of directors of the company authorized the use of a total of $15.0 million
to repurchase the company's common stock. During fiscal 1999, the company
repurchased 938,600 shares at an average price of $5.90 per share under these
authorizations. During the first half of fiscal 2000, the company repurchased
766,300 shares at an average price of $7.70 per share.
Financing Arrangements. In April 1998, Culp completed the sale of $75 million of
senior unsecured notes ("Notes") in a private placement to institutional
investors. The Notes have a fixed coupon rate of 6.76% and an average remaining
term of nine years.
Culp has an $88 million syndicated, unsecured, multi-currency revolving credit
facility. The facility, which expires in April 2002, requires quarterly payments
of interest on all outstanding borrowings and a quarterly facility fee paid in
advance. As of October 31, 1999, the company had outstanding borrowings of $22
million under the credit facility.
The company also has a total of $33.5 million in currently outstanding
industrial revenue bonds ("IRBs") which have been used to finance capital
expenditures. The IRBs are collateralized by restricted investments of $1.1
million as of October 31, 1999 and letters of credit for the outstanding balance
of the IRBs and certain interest payments due thereunder.
The company's loan agreements require, among other things, that the company
maintain certain financial ratios. As of October 31, 1999, the company was in
compliance with these financial covenants.
As of October 31, 1999, the company had three interest rate swap agreements to
reduce its exposure to floating interest rates on a $25 million notional amount.
The effect of these contracts is to "fix" the interest rate payable on $25
million of the company's variable rate borrowings at a weighted average rate of
7.1%. The company also enters into foreign exchange forward and option contracts
to hedge against currency fluctuations with respect to firm commitments to
purchase certain machinery, equipment and raw materials. The company had
approximately $3.7 million of outstanding foreign exchange forward contracts as
of October 31, 1999.
Capital Expenditures. The company maintains an ongoing program of capital
expenditures designed to increase capacity as needed, enhance manufacturing
efficiencies through modernization and increase the company's vertical
integration. Capital expenditures for the first half of fiscal 2000 totaled
$10.5 million compared with $6.4 million in the year-earlier period. The company
currently projects capital spending of approximately $23 million in fiscal 2000.
The company believes that cash flows from operations and funds available under
existing credit facilities and committed IRB financings will be sufficient to
fund capital expenditures and working capital requirements for the foreseeable
future.
Inflation
The cost of the company's raw materials has been generally stable during the
past four quarters. Factors that reasonably can be expected to influence margins
in the future include changes in raw material prices, trends in other operating
costs and overall competitive conditions.
Seasonality
The company's business is slightly seasonal, with increased sales during the
second and fourth fiscal quarters. This seasonality results from one-week
closings of the company's manufacturing facilities, and the facilities of most
of its customers in the United States, during the first and third quarters for
the holiday weeks including July 4th and Christmas.
Year 2000 Considerations
Management has developed and implemented a plan to modify the company's
information technology to recognize the year 2000. Problems with recognition of
dates in the year 2000 are generally referred to as "year 2000 issues." The plan
to address year 2000 issues has three distinct areas of focus; namely,
traditional information systems, technology used in support areas, and
preparedness of suppliers and customers.
The initiative for traditional information systems, which started in 1992, has
led to completion of the assessment, required changes and testing of the
company's operational systems (order entry, billing, sales, finished goods) and
financial systems (payroll, human resources, accounts payable, accounts
receivable, general ledger, fixed assets). The final phase of the traditional
information systems involved the systems that support the company's
manufacturing processes. The programming and testing of these systems was
substantially completed by April 1, 1999, and implementation of these systems
was completed by October 31, 1999. The company does not believe any material
problems will be caused by year 2000 issues with respect to its internal
information systems.
The second area of focus has been an assessment of non-traditional information
technology, which includes the electronics in equipment such as telephone
switches and manufacturing equipment. Inventories of this equipment have been
completed and correspondence has been completed with vendors and suppliers of
this equipment. Based on the results of the inventories and the correspondence
with the vendors, the company believes that any remediation of year 2000 issues
that would be necessary would be immaterial to the company.
The third area of focus is communications with suppliers and customers to
understand their level of readiness and assure a constant flow of materials to
support business plans. Communication to date has shown a high level of
awareness and planning by these parties. The company has contacted its major
trading partners and is unaware of any significant exposures. However, the
nature of the inquiries, which are based on unverifiable responses from its
partners, does not guarantee that all responses were accurate. Additionally, the
company does a significant amount of business internationally, and according to
published reports some areas of the world are not as prepared as the U. S. Some
of the company's customers are distributors and are not the end user of our
product. While most customers have said they expect no problems related to year
2000 issues, we are unable to offer assurances due to the nature of this
business and the inability to assess all areas of the world. If a significant
vendor or customer experiences significant year 2000 problems, the company can
give no assurance that such an occurrence will not have an adverse affect on the
company's results. However, the company believes its action and contingency
plans will minimize these risks and prevent any major interruptions in the flow
of materials and products.
The company believes the most reasonable worst case scenarios related to year
2000 issues involve the disruption of goods and services from the company's
vendors. The overall worst case scenario would result from the interruption of
utility services to the company's manufacturing facilities. Due to seasonal
shutdowns, the majority of the company's manufacturing facilities are normally
closed on January 1. While not all operating schedules have been set, a majority
of the facilities will not be operating on January 1st and 2nd. During this
period there will be teams in the company's locations to test the equipment and
utility service. This schedule will afford a location the benefit of additional
time in which a utility vendor could remediate the problem before normal
production schedules were to be resumed. If an interruption persists, some
production could be shifted to other locations that manufacture similar
products. However, if a problem continues for several days, a loss of revenue
might result. The amount of loss would depend on the amount of time necessary to
remediate the problem and the amount of inventory available ready for shipment.
The company's year 2000 plan is being administered by a team of internal staff
and management. Costs incurred in the company's readiness effort are being
expensed as incurred. Anticipated costs are expected to approximate $800,000 and
to date an estimated $775,000 has been spent. This project, and year 2000 issues
in general, are not expected to have a significant effect on the company's
operations, though no assurance can be given in this regard.
The discussion in this section contains year 2000 readiness disclosures within
the meaning of the Year 2000 Information and Readiness Disclosure Act of 1998.
Forward-Looking Information
The company's quarterly report on Form 10-Q contains statements that could be
deemed "forward-looking statements," within the meaning of the federal
securities laws, including the Private Securities Litigation Reform Act of 1995.
Such statements are inherently subject to risks and uncertainties.
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 characterized by qualifying words
such as "expect," "believe," "estimate," "plan," and "project" and their
derivatives. 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. Because of the
significant percentage of the company's sales derived from international
shipments, 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. Additionally, economic and political instability in
international areas could affect the demand for the company's products.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," effective for periods beginning after June
15, 2000, although early adoption is allowed. This statement establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
The company has not determined the financial impact of adopting this SFAS and
has not determined if it will adopt its provisions prior to its effective date.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company is exposed to market risk from changes in interest rates on debt and
foreign currency exchange rates. The company's market risk sensitive instruments
are not entered into for trading purposes. The company has not experienced any
significant changes in market risk since October 31, 1999.
The company's exposure to interest rate risk consists of floating rate debt
based on the London Interbank Offered Rate plus an adjustable margin under the
company's revolving credit agreement and variable rate debt in connection with
the industrial revenue bonds. To lower or limit overall borrowing costs, the
company enters into interest rate swap agreements to modify the interest
characteristics of portions of its outstanding debt. The agreements entitle the
company to receive or pay to the counterparty (a major bank), on a quarterly
basis, the amounts, if any, by which the company's interest payments covered by
swap agreements differ from those of the counterparty. These amounts are
recorded as adjustments to interest expense. The fair value of the swap
agreements and changes in fair value resulting from changes in market interest
rates are not recognized in the consolidated financial statements. The annual
impact on the company's results of operations of a 100 basis point interest rate
change on the October 31, 1999 outstanding balance of the variable rate debt
would be approximately $537,000 irrespective of any swaps associated with this
debt.
The company's exposure to fluctuations in foreign currency exchange rates is due
primarily to a foreign subsidiary domiciled in Canada and purchases of certain
machinery, equipment and raw materials in foreign currencies. The company's
Canadian subsidiary uses the United States dollar as its functional currency.
The company generally does not use financial derivative instruments to hedge
foreign currency exchange rate risks associated with the Canadian subsidiary.
However, the company generally enters into foreign exchange forward and option
contracts as a hedge against its exposure to currency fluctuations on firm
commitments to purchase certain machinery, equipment and raw materials. The
Canadian subsidiary is not material to the company's consolidated results of
operations; therefore, the impact of a 10% change in the exchange rate at
October 31, 1999 would not have a significant impact on the company's results of
operations or financial position. In addition, the company had approximately
$3.7 million of outstanding foreign exchange forward contracts as of October 31,
1999. As a result, any change in exchange rates would not have a significant
impact on the company's results of operations or financial position as the
foreign exchange forward contracts have "fixed" the exchange rate.
<PAGE>
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the company was held in High Point, North
Carolina on September 21, 1999. Of the 12,040,484 shares of common stock
outstanding on the record date, 11,205,127 shares were present in person or by
proxy.
At the Annual Meeting, shareholders voted on:
- ratifying the appointment of KPMG LLP as the independent auditors of the
company for the current fiscal year, and;
- the election of three directors: Robert T. Davis, Franklin N. Saxon, and
Judith C. Walker, to serve until the 2002 Annual Meeting, and the election
of one director: Dan E. Jacobs to serve until the 2001 Annual Meeting.
A. Proposal to ratify the election of KPMG LLP as independent auditors of the
company for fiscal year 2000:
For 11,190,082
Against 9,167
Abstain 5,878
Broker Non-Votes -0-
B. Proposal for Election of Directors:
Robert T. Davis Franklin N. Saxon
For 11,186,681 For 11,181,349
Against -0- Against -0-
Abstain 18,446 Abstain 23,778
Broker Non-Votes -0- Broker Non-Votes -0-
Judith C. Walker Dan E. Jacobs
For 11,169,950 For 11,158,600
Against -0- Against -0-
Abstain 35,177 Abstain 46,527
Broker Non-Votes -0- Broker Non-Votes -0-
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are filed as part of this report or incorporated by
reference. Management contracts, compensatory plans, and arrangements are marked
with an asterisk (*).
3(i) Articles of Incorporation of the Company, as amended, were
filed as Exhibit 3(i) to the Company's Form 10-Q for the
quarter ended January 29, 1995, filed March 15, 1995,
and are incorporated herein by reference.
3(ii) Restated and Amended Bylaws of the Company, as amended,
were filed as Exhibit 3(b) to the Company's Form 10-K for
the year ended April 28, 1991, filed July 25, 1991, and are
incorporated herein by reference.
3(iii) Articles of Amendment of Culp, Inc. dated October 5, 1999
for the purpose of amending its Restated Charter to fix the
designation, preferences, limitations and relative rights
of a series of its Preferred Stock.
10(a) Loan Agreement dated December 1, 1988 with Chesterfield
County, South Carolina relating to Series 1988 Industrial
Revenue Bonds in the principal amount of $3,377,000 was
filed as Exhibit 10(n) to the Company's Form 10-K for the
year ended April 29, 1989, and is incorporated herein by
reference.
10(b) Loan Agreement dated November 1, 1988 with the Alamance
County Industrial Facilities and Pollution Control
Financing Authority relating to Series A and B Industrial
Revenue Refunding Bonds in the principal amount of
$7,900,000, was filed as exhibit 10(o) to the Company's
Form 10-K for the year ended April 29, 1990, and is
incorporated herein by reference.
10(c) Loan Agreement dated January 5, 1990 with the Guilford
County Industrial Facilities and Pollution Control
Financing Authority, North Carolina, relating to Series
1989 Industrial Revenue Bonds in the principal amount of
$4,500,000, was filed as Exhibit 10(d) to the Company's
Form 10-K for the year ended April 19, 1990, filed on July
15, 1990, and is incorporated herein by reference.
10(d) Loan Agreement dated as of December 1, 1993 between
Anderson County, South Carolina and the Company relating to
$6,580,000 Anderson County, South Carolina Industrial
Revenue Bonds (Culp, Inc. Project) Series 1993, was filed
as Exhibit 10(o) to the Company's Form 10-Q for the quarter
ended January 30, 1994, filed March 16, 1994, and is
incorporated herein by reference.
10(e) Form of Severance Protection Agreement, dated September 21,
1989, was filed as Exhibit 10(f) to the Company's Form 10-K
for the year ended April 29, 1990, filed on July 25, 1990,
and is incorporated herein by reference. (*)
10(f) Lease Agreement, dated January 19, 1990, with Phillips
Interests, Inc. was filed as Exhibit 10(g) to the Company's
Form 10-K for the year ended April 29, 1990, filed on July
25, 1990, and is incorporated herein by reference.
10(g) Management Incentive Plan of the Company, dated August 1986
and amended July 1989, filed as Exhibit 10(o) to the
Company's Form 10-K for the year ended May 3, 1992, filed
on August 4, 1992, and is incorporated herein by
reference. (*)
10(h) Lease Agreement, dated September 6, 1988, with Partnership
74 was filed as Exhibit 10(h) to the Company's Form 10-K
for the year ended April 28, 1991, filed on July 25, 1990,
and is incorporated herein by reference.
10(i) Amendment and Restatement of the Employee's Retirement
Builder Plan of the Company dated May 1, 1981 with
amendments dated January 1, 1990 and January 8, 1990 were
filed as Exhibit 10(p) to the Company's Form 10-K for the
year ended May 3, 1992, filed on August 4, 1992, and is
incorporated herein by reference. (*)
10(j) First Amendment of Lease Agreement dated July 27, 1992 with
Partnership 74 Associates was filed as Exhibit 10(n) to the
Company's Form 10-K for the year ended May 2, 1993, filed
on July 29, 1993, and is incorporated herein by reference.
10(k) Second Amendment of Lease Agreement dated April 16, 1993,
with Partnership 52 Associates was filed as Exhibit 10(l)
to the Company's Form 10-K for the year ended May 2, 1993,
filed on July 29, 1993, and is incorporated herein by
reference.
10(l) 1993 Stock Option Plan was filed as Exhibit 10(o) to the
Company's Form 10-K for the year ended May 2, 1993, filed
on July 29, 1993, and is incorporated herein by reference.
(*)
10(m) First Amendment to Loan Agreement dated as of December 1,
1993 by and between The Guilford County Industrial
Facilities and Pollution Control Financing Authority and
the Company was filed as Exhibit 10(p) to the Company's
Form 10-Q, filed on March 15, 1994, and is incorporated
herein by reference.
10(n) First Amendment to Loan Agreement dated as of December 16,
1993 by and between The Alamance County Industrial
Facilities and Pollution Control Financing Authority and
the Company was filed as Exhibit 10(q) to the Company's
Form 10-Q, filed on March 15, 1994, and is incorporated
herein by reference.
10(o) First Amendment to Loan Agreement dated as of December 16,
1993 by and between Chesterfield County, South Carolina and
the Company was filed as Exhibit 10(r) to the Company's
Form 10-Q, filed on March 15, 1994, and is incorporated
herein by reference.
10(p) Amendment to Lease dated as of November 4, 1994, by and
between the Company and RDC, Inc. was filed as Exhibit
10(w) to the Company's Form 10-Q, for the quarter ended
January 29, 1995, filed on March 15, 1995, and is
incorporated herein by reference.
10(q) Amendment to Lease Agreement dated as of December 14, 1994,
by and between the Company and Rossville Investments, Inc.
(formerly known as A & E Leasing, Inc.), was filed as
Exhibit 10(y) to the Company's Form 10-Q, for the quarter
ended January 29, 1995, filed on March 15, 1995, and is
incorporated herein by reference.
10(r) Interest Rate Swap Agreement between Company and First
Union National Bank of North Carolina dated April 17, 1995,
was filed as Exhibit 10(aa) to the Company's Form 10-K for
the year ended April 30, 1995, filed on July 26, 1995, and
is incorporated herein by reference.
10(s) Performance-Based Stock Option Plan, dated June 21, 1994,
was filed as Exhibit 10(bb) to the Company's Form 10-K for
the year ended April 30, 1995, filed on July 26, 1995, and
is incorporated herein by reference. (*)
10(t) Interest Rate Swap Agreement between Company and First
Union National Bank of North Carolina, dated May 31, 1995
was filed as exhibit 10(w) to the Company's Form 10-Q for
the quarter ended July 30, 1995, filed on September 12,
1995, and is incorporated herein by reference.
10(u) Interest Rate Swap Agreement between Company and First
Union National Bank of North Carolina, dated July 7, 1995
was filed as exhibit 10(x) to the Company's Form 10-Q for
the quarter ended July 30, 1995, filed on September 12,
1995, and is incorporated herein by reference.
10(v) Second Amendment of Lease Agreement dated June 15, 1994
with Partnership 74 Associates was filed as Exhibit 10(v)
to the Company's Form 10-Q for the quarter ended October
29, 1995, filed on December 12, 1995, and is incorporated
herein by reference.
10(w) Lease Agreement dated November 1, 1993 by and between the
Company and Chromatex, Inc. was filed as Exhibit 10(w) to
the Company's Form 10-Q for the quarter ended October 29,
1995, filed on December 12, 1995, and is incorporated
herein by reference.
10(x) Lease Agreement dated November 1, 1993 by and between the
Company and Chromatex Properties, Inc. was filed as Exhibit
10(x) to the Company's Form 10-Q for the quarter ended
October 29, 1995, filed on December 12, 1995, and is
incorporated herein by reference.
10(y) Amendment to Lease Agreement dated May 1, 1994 by and
between the Company and Chromatex Properties, Inc. was
filed as Exhibit 10(y) to the Company's Form 10-Q for the
quarter ended October 29, 1995, filed on December 12, 1995,
and is incorporated herein by reference.
10(z) Canada-Quebec Subsidiary Agreement on Industrial
Development (1991), dated January 4, 1995, was filed as
Exhibit 10(z) to the Company's Form 10-Q for the quarter
ended October 29, 1995, filed on December 12, 1995, and is
incorporated herein by reference.
10(aa) Loan Agreement between Chesterfield County, South Carolina
and the Company dated as of April 1, 1996 relating to Tax
Exempt Adjustable Mode Industrial Development Bonds (Culp,
Inc. Project) Series 1996 in the aggregate principal
amount of $6,000,000 was filed as Exhibit 10(aa) to the
Company's Form 10-K for the year ended April 28, 1996, and
is incorporated herein by reference.
10(bb) Loan Agreement between the Alamance County Industrial
Facilities and Pollution Control Financing Authority, North
Carolina and the Company, dated December 1, 1996, relating
to Tax Exempt Adjustable Mode Industrial Development
Revenue Bonds, (Culp, Inc. Project Series 1996) in the
aggregate amount of $6,000,000 was filed as Exhibit 10(cc)
to the Company's Form 10-Q for the quarter ended January
26, 1997, and is incorporated herein by reference.
10(cc) Loan Agreement between Luzerne County, Pennsylvania and the
Company, dated as of December 1, 1996, relating to
Tax-Exempt Adjustable Mode Industrial Development Revenue
Bonds (Culp, Inc. Project) Series 1996 in the aggregate
principal amount of $3,500,000 was filed as Exhibit 10(dd)
to the Company's Form 10-Q for the quarter ended January
26, 1997, and is incorporated herein by reference.
10(dd) Second Amendment to Lease Agreement between Chromatex
Properties, Inc. and the Company, dated April 17, 1997 was
filed as Exhibit 10(dd) to the Company's Form 10-K for the
year ended April 27, 1997, and is incorporated herein by
reference.
10(ee) Lease Agreement between Joseph E. Proctor (doing business
as JEPCO) and the Company, dated April 21, 1997 was filed
as Exhibit 10(ee) to the Company's Form 10-K for the year
ended April 27, 1997, and is incorporated herein by
reference.
10(ff) $125,000,000 Revolving Loan Facility dated April 23, 1997
by and among the Company and Wachovia Bank of Georgia,
N.A., as agent, and First Union National Bank of North
Carolina, as documentation agent was filed as Exhibit
10(ff) to the Company's Form 10-K for the year ended April
27, 1997, and is incorporated herein by reference.
10(gg) Revolving Line of Credit for $4,000,000 dated April 23,
1997 by and between the Company and Wachovia Bank of North
Carolina, N.A. was filed as Exhibit 10(gg) to the Company's
Form 10-K for the year ended April 27, 1997, and is
incorporated herein by reference.
10(hh) Reimbursement and Security Agreement between Culp, Inc. and
Wachovia Bank of North Carolina, N.A., dated as of April
1, 1997, relating to $3,337,000 Principal Amount,
Chesterfield County, South Carolina Industrial Revenue
Bonds (Culp, Inc. Project) Series 1988 was filed as Exhibit
10(hh) to the Company's Form 10-K for the year ended April
27, 1997, and is incorporated herein by reference.
Additionally, there are Reimbursement and Security
Agreements between Culp, Inc. and Wachovia Bank of North
Carolina, N.A., dated as of April 1, 1997 in the following
amounts and with the following facilities:
$7,900,000 Principal Amount, Alamance County Industrial
Facilities and Pollution Control Financing Authority
Industrial Revenue Refunding Bonds (Culp, Inc. Project)
Series A and B.
$4,500,000 Principal Amount, Guilford County Industrial
Facilities and Pollution Control Financing Authority
Industrial Development Revenue Bonds (Culp, Inc. Project)
Series 1989.
$6,580,000 Principal Amount, Anderson County South Carolina
Industrial Revenue Bonds (Culp, Inc. Project) Series 1993.
$6,000,000 Principal Amount, Chesterfield County, South
Carolina Tax-Exempt Adjustable Mode Industrial Development
Revenue Bonds (Culp, Inc. Project) Series 1996.
$6,000,000 Principal Amount, The Alamance County Industrial
Facilities and Pollution Control Financing Authority
Tax-exempt Adjustable Mode Industrial Development Revenue
Bonds (Culp, Inc. Project) Series 1996.
$3,500,000 Principal Amount, Luzerne County Industrial
Development Authority Tax-Exempt Adjustable Mode Industrial
Development Revenue Bonds (Culp, Inc. Project) Series 1996.
10(ii) Loan Agreement and Reimbursement and Security Agreement
dated July 1, 1997 with the Robeson County Industrial
Facilities and Pollution Control Financing Authority relating
to the issuance of Tax-Exempt Adjustable Mode Industrial
Development Revenue Bonds (Culp, Inc. Project), Series 1997
in the aggregate principal amount of $8,500,000 was filed
as Exhibit 10(ii) to the Company's Form 10-Q for the
quarter ended August 3, 1997, and is incorporated herein by
reference.
10(jj) Asset Purchase Agreement dated as of August 4, 1997 by and
between Culp, Inc., Phillips Weaving Mills, Inc., Phillips
Printing Mills, Inc., Phillips Velvet Mills, Inc., Phillips
Mills, Inc., Phillips Property Company, LLC, Phillips
Industries, Inc. and S. Davis Phillips was filed as Exhibit
(10jj) to the Company's Form 10-Q for the quarter ended
November 2, 1997, and is incorporated herein by reference.
10(kk) Asset Purchase Agreement dated as of October 14, 1997 among
Culp, Inc., Artee Industries, Incorporated, Robert T.
Davis, Robert L. Davis, Trustee u/a dated 8/25/94, Robert
L. Davis, Louis W. Davis, Kelly D. England, J. Marshall
Bradley, Frankie S. Bradley and Mickey R. Bradley was filed
as Exhibit 10(kk) to the Company's Form 10-Q for the
quarter ended November 2, 1997, and is incorporated herein
by reference.
10(ll) Form of Note Purchase Agreement (providing for the issuance
by Culp, Inc. of its $20 million 6.76% Series A Senior
Notes due 3/15/08 and its $55 million 6.76% Series B Senior
Notes due 3/15/10), each dated March 4, 1998, between Culp,
Inc. and each of the following:
1. Connecticut General Life Insurance Company;
2. The Mutual Life Insurance Company of New York;
3. United of Omaha Life Insurance Company;
4. Mutual of Omaha Insurance Company;
5. The Prudential Insurance Company of America;
6. Allstate Life Insurance Company;
7. Life Insurance Company of North America; and
8. CIGNA Property and Casualty Insurance Company
This agreement was filed as Exhibit 10(ll) to the Company's
Form 10-K for the year ended May 3, 1998, and is
incorporated herein by reference.
10(mm) First Amendment to Credit Agreement dated July 22, 1998
among Culp, Inc., Wachovia Bank, N.A., as agent, First
Union National Bank, as documentation agent, and Wachovia
Bank, N.A., First Union National Bank, SunTrust Bank,
Atlanta, and Cooperatieve Centrale
Raiffeisen-Boerenleeenbank B.A., Rabobank Nederland, New
York Branch, as lenders. This amendment was filed as
Exhibit 10(mm) to the Company's Form 10-Q for the quarter
ended August 2, 1998, and is incorporated herein by
reference.
10(nn) Second Amendment to Credit Agreement dated October 26,
1998, among Culp, Inc., Wachovia Bank, N.A., as agent,
First Union National Bank, as documentation agent, and
Wachovia Bank, N.A., First Union National Bank, and
SunTrust Bank, Atlanta, as lenders. This amendment was
filed as Exhibit 10(nn) to the Company's Form 10-Q for the
quarter ended November 1, 1998, and is incorporated herein
by reference.
10(oo) Rights Agreement, dated as of October 8, 1999, between
Culp, Inc. and EquiServe Trust Company, N.A., as Rights
Agent, including the form of Articles of Amendment with
respect to the Series A Participating Preferred Stock
included as Exhibit A to the Rights Agreement, the forms of
Rights Certificate included as Exhibit B to the Rights
Agreement, and the form of Summary of Rights included as
Exhibit C to the Rights Agreement. The Rights Agreement
was filed as Exhibit 99.1 to the Company's Form 8-K dated
October 12, 1999, and is incorporated herein by reference.
27 Financial Data Schedule
(b) Reports on Form 8-K:
The following reports on Form 8-K were filed during the period covered by this
report:
(1) Form 8-K dated August 18, 1999, included under Item 5, Other
Events, included the Company's press release for quarterly earnings and
the Financial Information Release relating to certain financial
information for the quarter ended August 1, 1999.
(2) Form 8-K dated October 12, 1999, included under Item 5, Other
Events, included the September 21, 1999 declaration by the Board of
Directors of the Company of a dividend distribution of one preferred
share purchase right for each outstanding share of common stock, par
value $0.05 per share, of the Corporation and a summary description of
the Rights Agreement. The Rights Agreement and the Company's press
release announcing adoption of the Rights Plan by the Board of Directors
of Culp, Inc. are included as Exhibits 99.1 and 99.2, respectively,
under Item 7.
<PAGE>
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 thereunto duly authorized.
CULP, INC.
(Registrant)
Date: December 15, 1999 By: s/s Phillip W. Wilson
Phillip W. Wilson
Vice President and Chief Financial
and Accounting Officer
(Authorized to sign on behalf
of the registrant and also sign-
ing as principal financial officer)
<PAGE>
ARTICLES OF AMENDMENT
OF
CULP, INC.
The undersigned corporation hereby submits these Articles of Amendment for the
purpose of amending its Restated Charter to fix the designation, preferences,
limitations and relative rights of a series of its Preferred Stock.
1. The name of the corporation is Culp, Inc.
2. The Restated Charter of the corporation is hereby amended by
adding the following provisions, as follows:
Pursuant to the authority vested in the Board of Directors in accordance
with the provisions of its Restated Charter, a series of Preferred Stock
designated as Series A Participating Preferred Stock, $0.05 par value per share,
be, and it hereby is, created, and that the designation and amount thereof and
the powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof (in addition to the provisions in the Restated Charter that
are applicable to the Preferred Stock of all classes and series) are as follows:
Series A Participating Preferred Stock
1. Designation and Amount. The shares of such series of Preferred Stock
shall be designated as "Series A Participating Preferred Stock," par value $0.05
per share, and the number of shares constituting such series shall be 2,000,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, however, that no decrease shall reduce the number of
shares of Series-A Participating Preferred Stock to less than the number of
shares then issued and outstanding plus the number of shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation convertible into Series A
Participating Preferred Stock.
2. Dividends and Distribution.
(a) Subject to the prior and superior rights of the holders of any shares
of any series of capital stock ranking prior and superior to the shares of
Series A Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Participating Preferred Stock, in preference to the holders
of shares of the Corporation's Common Stock, par value $0.05 per share ("Common
Stock"), and of any other shares of any class or series of stock of the
Corporation ranking junior to the Series A Participating Preferred Stock, shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
on the first day of January, April, July and October in each year (each such
date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Participating Preferred Stock, in
an amount per share (rounded to the nearest cent) equal to the greater of
(a)-$1.00 or (b)-the sum of (x)-the Adjustment Number (as defined below) times
the aggregate per share amount of all cash dividends, and (y)-the Adjustment
Number times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Participating Preferred Stock. The "Adjustment
Number" shall initially be one hundred (100). In the event the Corporation shall
at any time after October-12, 1999, declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Board of Directors shall declare a dividend or distribution on the
Series-A Participating Preferred Stock as provided in paragraph-(a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series-A Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(c) Dividends on shares of Series A Participating Preferred Stock shall be
cumulative: (i)-on the first such shares issued, from the date of issuance; and
(ii)-on any such shares issued thereafter, from the Quarterly Dividend Payment
Date next preceding the date of issuance. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Participating Preferred
Stock in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series-A Participating Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be no more than sixty
(60) days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series-A Participating Preferred
Stock shall have the following voting rights:
(a) Each share of Series A Participating Preferred Stock shall entitle the
holder thereof at any time to a number of votes equal to the Adjustment Number
(as in effect at such time) on all matters submitted to a vote of the
shareholders of the Corporation.
(b) Except as otherwise provided herein, in the Restated Charter as from
time to time amended, or by law, the holders of Series A Participating Preferred
Stock and the holders of Common Stock and any other capital stock of the
Corporation having general voting rights shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(c) Except as otherwise provided herein, in the Restated Charter as from
time to time amended, or by law, holders of Series A Participating Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
4. Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in Section-2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Participating Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
Series A Participating Preferred Stock, or to such holders and holders of
any such shares ranking on a parity therewith, upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under paragraph-(a) of this
Section-4, purchase or otherwise acquire such shares at such time and in
such manner.
5. Reacquired Shares. Any shares of Series A Participating Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their retirement and cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein, or in any other Articles of Amendment creating a series of Preferred
Stock or any similar stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock unless, prior thereto,
the holders of shares of Series A Participating Preferred Stock shall have
received $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "Series A Liquidation Preference"). Following the payment of the full
amount of the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i)-the Series A Liquidation Preference by (ii)-the Adjustment Number.
Following the payment of the full amount of the Series A Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of (1)-Series A
Participating Preferred Stock and (2)-Common Stock, respectively, (a)-holders of
Series A Participating Preferred Stock and (b)-holders of shares of Common Stock
shall, subject to the prior rights of all other series of Preferred Stock, if
any, ranking prior thereto, receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to (x)-the Series A Participating Preferred Stock and (y)-the
Common Stock, on a per share basis, respectively.
(b) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, that
rank on a parity with the Series A Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
7. Consolidation, Merger, etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series A
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to the Adjustment Number times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged.
8. No Redemption. Shares of Series A Participating Preferred Stock shall
not be subject to redemption by the Corporation.
9. Ranking. The Series A Participating Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise, and shall rank senior to the Common Stock as to such
matters.
10. Amendment. At any time that any shares of Series A Participating
Preferred Stock are outstanding, the Restated Charter of the Corporation shall
not be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Participating Preferred Stock so
as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Participating Preferred
Stock, voting separately as a single class.
11. Fractional Shares. Series A Participating Preferred Stock may be issued
in fractions of a share that shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Participating Preferred Stock.
3. The foregoing amendment was adopted on the 21st day of September, 1999,
by the directors without shareholder action, which was not required under
Section 55-6-02 of the General Statutes of North Carolina or the Restated
Charter of the Corporation which provides that the Board of Directors may
determine the preferences, limitations and relative rights of the blank-check
preferred stock authorized in the Restated Charter.
This the 5th day of October, 1999.
CULP, INC.
By: Phil W. Wilson
Phil W. Wilson
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-03-1999
<PERIOD-END> OCT-31-1999
<CASH> 790
<SECURITIES> 0
<RECEIVABLES> 72,033
<ALLOWANCES> (2,284)
<INVENTORY> 78,234
<CURRENT-ASSETS> 157,638
<PP&E> 244,361
<DEPRECIATION> (120,043)
<TOTAL-ASSETS> 338,676
<CURRENT-LIABILITIES> 64,838
<BONDS> 0
0
0
<COMMON> 566
<OTHER-SE> 124,814
<TOTAL-LIABILITY-AND-EQUITY> 338,676
<SALES> 245,479
<TOTAL-REVENUES> 245,479
<CGS> 201,360
<TOTAL-COSTS> 201,360
<OTHER-EXPENSES> 31,073
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,900
<INCOME-PRETAX> 7,208
<INCOME-TAX> 2,451
<INCOME-CONTINUING> 4,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,757
<EPS-BASIC> 0.40
<EPS-DILUTED> 0.39
</TABLE>
