- --------------------------------------------------------------------------------
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 August 1, 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 August 1, 1999: 12,040,484
Par Value: $.05
<PAGE>
INDEX TO FORM 10-Q
For the period ended August 1, 1999
Part I - Financial Information. Page
- --------------------------------------------------------------------------------
Item 1. Unaudited Interim Consolidated Financial Statements:
Consolidated Statements of Income (Loss)--Three Months Ended
August 1, 1999 and August 2, 1998 I-1
Consolidated Balance Sheets-August 1, 1999, August 2, 1998 and May 2, 1999 I-2
Consolidated Statements of Cash Flows---Three Months Ended August 1, 1999
and August 2, 1998 I-3
Consolidated Statements of Shareholders' Equity I-4
Notes to Consolidated Financial Statements I-5
Sales by Segment/Division I-10
International Sales by Geographic Area I-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations I-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk I-18
- --------------------------------------------------------------------------------
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K II-1
Signature II-8
<PAGE>
Item 1. Financial Statements
CULP, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THREE MONTHS ENDED AUGUST 1, 1999 AND AUGUST 2, 1998
<TABLE>
<CAPTION>
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED (UNAUDITED)
----------------------------------------------------------------------------------
Amounts Percent of Sales
------------------------------ ------------------------------
August 1, August 2, % Over
1999 1998 (Under) 2000 1999
-------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net sales $ 115,937 110,667 4.8 % 100.0 % 100.0 %
Cost of sales 95,525 97,056 (1.6)% 82.4 % 87.7 %
-------------- -------------- ------------- -------------- --------------
Gross profit 20,412 13,611 50.0 % 17.6 % 12.3 %
Selling, general and
administrative expenses 15,038 14,473 3.9 % 13.0 % 13.1 %
-------------- -------------- ------------- -------------- --------------
Income (loss) from operations 5,374 (862) 723.4 % 4.6 % (0.8)%
Interest expense 2,416 2,361 2.3 % 2.1 % 2.1 %
Interest income (17) (53) (67.9)% (0.0)% (0.0)%
Other expense (income), net 555 770 (27.9)% 0.5 % 0.7 %
-------------- -------------- ------------- -------------- --------------
Income (loss) before income taxes 2,420 (3,940) 161.4 % 2.1 % (3.6)%
Income taxes * 823 (1,300) 163.3 % 34.0 % 33.0 %
-------------- -------------- ------------- -------------- --------------
Net income (loss) $ 1,597 (2,640) 160.5 % 1.4 % (2.4)%
============== ============== ============= ============== ==============
Net income (loss) per share $0.13 ($0.20) 165.0 %
Net income (loss) per share, assuming dilution $0.13 ($0.20) 165.0 %
Dividends per share $0.035 $0.035 0.0 %
Average shares outstanding 12,063 13,000 (7.2)%
Average shares outstanding, assuming dilution 12,219 13,203 (7.5)%
</TABLE>
* Percent of sales column is calculated as a % of income (loss) before income
taxes.
<PAGE>
CULP, INC.
CONSOLIDATED BALANCE SHEETS
AUGUST 1, 1999, AUGUST 2, 1998 AND MAY 2, 1999
Unaudited
(Amounts in Thousands)
<TABLE>
<CAPTION>
Amounts Increase
----------------------------------- (Decrease)
August 1, August 2, -------------------------------- * May 2,
1999 1998 Dollars Percent 1999
----------------- --------------- ---------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash investments $ 1,097 1,520 (423) (27.8)% 509
Accounts receivable 61,984 63,833 (1,849) (2.9)% 70,503
Inventories 75,337 79,358 (4,021) (5.1)% 67,070
Other current assets 10,860 7,511 3,349 44.6 % 9,633
----------------- --------------- ---------------- ------------- ------------
Total current assets 149,278 152,222 (2,944) (1.9)% 147,715
Restricted investments 1,684 4,074 (2,390) (58.7)% 3,340
Property, plant & equipment, net 120,971 127,287 (6,316) (5.0)% 123,310
Goodwill 50,920 54,798 (3,878) (7.1)% 51,269
Other assets 4,969 4,317 652 15.1 % 4,978
----------------- --------------- ---------------- ------------- ------------
Total assets $ 327,822 342,698 (14,876) (4.3)% 330,612
================= =============== ================ ============= ============
Current liabilities
Current maturities of long-term debt $ 1,678 3,250 (1,572) (48.4)% 1,678
Accounts payable 26,099 31,710 (5,611) (17.7)% 25,687
Accrued expenses 20,309 13,856 6,453 46.6 % 21,026
Income taxes payable 798 0 798 100.0 % 0
----------------- --------------- ---------------- ------------- ------------
Total current liabilities 48,884 48,816 68 0.1 % 48,391
Long-term debt 136,228 154,383 (18,155) (11.8)% 140,312
Deferred income taxes 14,583 11,227 3,356 29.9 % 14,583
----------------- --------------- ---------------- ------------- ------------
Total liabilities 199,695 214,426 (14,731) (6.9)% 203,286
Shareholders' equity 128,127 128,272 (145) (0.1)% 127,326
----------------- --------------- ---------------- ------------- ------------
Total liabilities and
shareholders' equity $ 327,822 342,698 (14,876) (4.3)% 330,612
================= =============== ================ ============= ============
Shares outstanding 12,040 12,995 (955) (7.3)% 12,079
================= =============== ================ ============= ============
* Derived from audited financial statements.
</TABLE>
<PAGE>
CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 1, 1999 AND AUGUST 2, 1998
Unaudited
(Amounts in Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
Amounts
--------------------------------
August 1, August 2,
1999 1998
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,597 (2,640)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 4,759 4,376
Amortization of intangible assets 399 398
Changes in assets and liabilities:
Accounts receivable 8,519 9,940
Inventories (8,267) (764)
Other current assets (1,227) 297
Other assets (41) (11)
Accounts payable 270 (3,017)
Accrued expenses (717) (4,080)
Income taxes payable 798 (1,282)
--------------- ---------------
Net cash provided by operating activities 6,090 3,217
--------------- ---------------
Cash flows from investing activities:
Capital expenditures (2,420) (2,858)
Purchases of restricted investments (15) (53)
Sale of restricted investments 1,671 0
--------------- ---------------
Net cash used in investing activities (764) (2,911)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 3,333 2,071
Principal payments on long-term debt (7,417) (75)
Change in accounts payable-capital expenditures 142 (2,487)
Dividends paid (423) (455)
Payments to acquire common stock (393) (160)
Proceeds from common stock issued 20 8
--------------- ---------------
Net cash used in financing activities (4,738) (1,098)
--------------- ---------------
Increase (decrease) in cash and cash investments 588 (792)
Cash and cash investments at beginning of period 509 2,312
--------------- ---------------
Cash and cash investments at end of period $ 1,097 1,520
=============== ===============
</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>
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 ($0.035 per share) (423) (423)
Net income 1,597 1,597
Common stock issued in connection
with stock option plans 7,313 20 20
Common stock purchased (46,000) (2) (145) (246) (393)
- --------------------------------------------------------------------------------------------------------------------------
Balance, August 1, 1999 12,040,484 $ 602 $ 37,841 $ 89,684 $ 128,127
==========================================================================================================================
</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):
- --------------------------------------------------------------------------------
August 1, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Customers $ 64,690 $ 73,089
Allowance for doubtful accounts (1,564) (1,452)
Reserve for returns and allowances (1,142) (1,134)
- --------------------------------------------------------------------------------
$ 61,984 $ 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):
- --------------------------------------------------------------------------------
August 1, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Raw materials $ 45,540 $ 40,728
Work-in-process 6,206 6,790
Finished goods 29,313 24,885
- --------------------------------------------------------------------------------
Total inventories valued at FIFO cost 81,059 72,403
Adjustments of certain inventories to the
LIFO cost method (1,478) (1,478)
Adjustments of certain inventories to market (4,244) (3,855)
- --------------------------------------------------------------------------------
$ 75,337 $ 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):
- --------------------------------------------------------------------------------
August 1, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Accounts payable-trade $ 25,720 $ 25,450
Accounts payable-capital expenditures 379 237
- --------------------------------------------------------------------------------
$ 26,099 $ 25,687
================================================================================
<PAGE>
6. Accrued Expenses
A summary of accrued expenses follows (dollars in thousands):
- --------------------------------------------------------------------------------
August 1, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Compensation and benefits $ 11,425 $ 13,136
Other 8,884 7,890
- --------------------------------------------------------------------------------
$ 20,309 $ 21,026
================================================================================
7. Long-Term Debt
A summary of long-term debt follows (dollars in thousands):
- --------------------------------------------------------------------------------
August 1, 1999 May 2, 1999
- --------------------------------------------------------------------------------
Senior unsecured notes $ 75,000 $ 75,000
Industrial revenue bonds and other
obligations 33,519 35,278
Revolving credit facility 20,000 25,000
Revolving line of credit 3,333 0
Obligations to sellers 6,054 6,712
- --------------------------------------------------------------------------------
137,906 141,990
Less current maturities (1,678) (1,678)
- --------------------------------------------------------------------------------
$ 136,228 $ 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
August 1, 1999, the interest rate was 6.31%.
The company's $6,000,000 revolving line of credit expires on August 31,
2000. However, the line of credit will automatically be extended for an
additional three-month period on each November 30, February 28, May 31 and
August 31 unless the bank notifies the company that the line of credit will not
be extended. On borrowings outstanding at August 1, 1999, the interest rate was
6.35%.
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 $1,684,000 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 August 1, 1999, the
company was in compliance with these required financial covenants.
At August 1, 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 estimated amount at which the company could terminate these agreements
as of August 1, 1999 is approximately $149,000. Net amounts paid under these
agreements increased interest expense by approximately $92,000 and $59,000 for
the three 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 $1,340 $ 1,231
Income taxes 1,186 1,637
================================================================================
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 August 1, 1999.
10. Net Income (Loss) Per Share
The following table reconciles the numerators and denominators of net
income (loss) per share and net income (loss) per share, assuming dilution for
the three-month periods ended August 1, 1999 and August 2, 1998:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------------------
August 1, 1999 August 2, 1998
------------------------------------------------ ------------------------------------------------
(Amounts in thousands, Income Shares Per Share (Loss) Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------- ------------- ----------- --------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)
per share $1,597 12,063 $0.13 ($2,640) 13,000 ($0.20)
=========== ==========
Effect of dilutive
securities:
Options - 156 - 203
---------------- ------------- --------------- -------------
Net income (loss)
per share,
assuming dilution $1,597 12,219 $0.13 ($2,640) 13,203 ($0.20)
================ ============= =========== =============== ============= ==========
</TABLE>
P
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.
<PAGE>
Sales, gross profit and inventories for the company's operating segments
are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 90,854 $ 88,035
Mattress Ticking 25,083 22,632
- --------------------------------------------------------------------------------
$ 115,937 $ 110,667
================================================================================
Gross Profit
Upholstery Fabrics $ 14,442 $ 8,536
Mattress Ticking 5,970 5,075
- --------------------------------------------------------------------------------
$ 20,412 $ 13,611
================================================================================
Inventories
Upholstery Fabrics $ 63,304 $ 68,018
Mattress Ticking 12,033 11,340
- --------------------------------------------------------------------------------
$ 75,337 $ 79,358
================================================================================
<PAGE>
CULP, INC.
SALES BY SEGMENT/DIVISION
FOR THREE MONTHS ENDED AUGUST 1, 1999 AND AUGUST 2, 1998
<TABLE>
<CAPTION>
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------
Amounts Percent of Total Sales
-------------------------- ----------------------------
August 1, August 2, % Over
Segment/Division 1999 1998 (Under) 2000 1999
- ------------------------------------ ------------ ------------ --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Upholstery Fabrics
Culp Decorative Fabrics $ 50,516 51,445 (1.8)% 43.6 % 46.5 %
Culp Velvets/Prints 36,209 29,994 20.7 % 31.2 % 27.1 %
Culp Yarn 4,129 6,596 (37.4)% 3.6 % 6.0 %
------------ ------------ --------------- ------------- ------------
90,854 88,035 3.2 % 78.4 % 79.5 %
Mattress Ticking
Culp Home Fashions 25,083 22,632 10.8 % 21.6 % 20.5 %
------------ ------------ --------------- ------------- ------------
* $ 115,937 110,667 4.8 % 100.0 % 100.0 %
============ ============ =============== ============= ============
</TABLE>
* U.S. sales were $92,124 and $84,310 for the three months of fiscal 2000 and
fiscal 1999, respectively.The percentage increase in U.S. sales was 9.3% for the
three months.
<PAGE>
CULP, INC.
INTERNATIONAL SALES BY GEOGRAPHIC AREA
FOR THREE MONTHS ENDED AUGUST 1, 1999 AND AUGUST 2, 1998
(Amounts in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------------- ------------------------------
August 1, August 2, % Over
Geographic Area 1999 1998 (Under) 2000 1999
- ---------------------------------- --------------- -------------- -------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
North America (Excluding USA) $ 7,676 7,253 5.8 % 32.2 % 27.5 %
Europe 2,929 3,683 (20.5)% 12.3 % 14.0 %
Middle East 6,992 8,300 (15.8)% 29.4 % 31.5 %
Far East & Asia 4,309 4,868 (11.5)% 18.1 % 18.5 %
South America 620 1,000 (38.0)% 2.6 % 3.8 %
All other areas 1,287 1,253 2.7 % 5.4 % 4.8 %
--------------- -------------- -------------- ------------- ------------
$ 23,813 26,357 (9.7)% 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 first quarter represented 20.5% and 23.8% 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 by bedding
manufacturers.
Three Months ended August 1, 1999 compared with Three Months ended
August 2, 1998
Net Sales. Net sales for the first quarter of fiscal 2000 increased by $5.3
million, or 4.8%, compared with fiscal 1999. The company's sales of upholstery
fabrics and mattress ticking increased $2.8 million and $2.5 million,
respectively, or 3.2% and 10.8%, respectively, for the quarter 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 this move is
aiding its growth through improved customer service, more effective use of
design resources and increased manufacturing efficiency.
The increase in sales of upholstery fabrics reflects higher sales of
upholstery fabrics to U.S.-based customers that offset a 9.7% decrease in
international sales. 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 first quarter of fiscal 2000 marked a continuation of the longer-term
expansion that this division has experienced. The introduction of new designs
and fabric constructions and 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 first quarter
increased 50.0% to $20.4 million and increased as a percentage of net sales from
12.3% to 17.6%. 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 is remaining relatively stable in fiscal 2000.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses as a percentage of sales for the first quarter of fiscal
2000 were 13.0%, down slightly from 13.1% for the year-earlier period. The
company has ongoing programs to contain operating expenses and believes that if
the company meets its goal of increased net sales there will be improved
economies of scale, leading to a decline in this percentage.
Interest Expense. Interest expense of $2.4 million for the first quarter
was unchanged 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.
<PAGE>
Other Expense. Other expense decreased to $555,000 for the first quarter
versus $770,000 a year ago due principally to the incidence of a non-recurring
charge in the year-earlier period to write-off certain fixed assets.
Income Taxes. The effective tax rate for the first quarter of fiscal 2000
was 34.0%, up slightly from 33.0% for the year-earlier period.
Net Income (Loss) Per Share. Net income per share for the first quarter of
2000 totaled $0.13 per share diluted compared with a net loss per share diluted
of ($0.20) a year ago.
Liquidity and Capital Resources Liquidity. Cash and cash investments were
$1.1 million as of August 1, 1999, compared with $1.5 million at August 2, 1998,
and $509,000 at the end of fiscal 1999. Funded debt (long-term debt, including
current maturities, less restricted investments) was $136.2 million at August 1,
1999, down from $153.6 million at August 2, 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 51.5% at August 1, 1999, compared
with 54.5% at August 2, 1998, and 52.1% at May 2, 1999. The company's working
capital as of August 1, 1999 was $100.4 million, compared with $103.4 million as
of August 2, 1998, and $99.3 million at the close of fiscal 1999.
The company's cash flow from operations was $6.1 million for the first
quarter of fiscal 2000, consisting of $6.8 million from earnings (net income
plus depreciation and amortization) offset by a $665,000 increase in working
capital.
In separate authorizations in June 1998 and March 1999, the board of
directors of the company authorized the use of a total of $10.0 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 quarter of fiscal 2000, the company repurchased
46,000 shares at an average price of $8.55 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 August 1, 1999, the company had outstanding balances of
$20 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 $1.7
million as of August 1, 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 compliance with certain financial ratios. As of August 1, 1999, the
company was in compliance with these financial covenants.
As of August 1, 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 August 1, 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 quarter of fiscal 2000 totaled
$2.4 million compared with $2.9 million in the year-earlier period. The company
currently projects capital spending of approximately $20 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.
<PAGE>
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 a plan to modify the company's information
technology to recognize the year 2000. The plan 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 substantial 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 company is
currently focused on modifying the remaining 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 substantially completed by June 30, 1999. The remaining system
implementations are scheduled for completion during the second quarter of fiscal
2000 (ending October 31, 1999).
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 initiated with vendors and
suppliers of this equipment. The company is currently evaluating the vendor
responses and testing the equipment. After the testing phase is complete, the
company will conduct a review of the inventories and the testing procedures,
with this phase expected to also be completed during the second quarter of
fiscal 2000.
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 a response rate in the
60% - 70% range, and at the present time no material problems or concerns are
indicated by these responses. However, if a significant vendor or customer is
non-compliant, the company can give no assurance that such occurrence will not
have an adverse affect on the company's results. The company believes its action
plans will minimize these risks and prevent any major interruptions in the flow
of materials and products.
Formal contingency plans will not be formulated unless the company has
identified specific areas where there is a substantial risk of year 2000
problems occurring. No such areas have been identified.
The 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
$700,000 has been spent. This project, and the year 2000 issue 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. 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 the
international area 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.
<PAGE>
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 August 1, 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 August 1, 1999 outstanding balance of the variable rate debt would
be approximately $550,000 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 August
1, 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 August 1,
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 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.
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.
27 Financial Data Schedule
(b) Reports on Form 8-K:
The following report on Form 8-K was filed during the period covered by this
report:
(1) Form 8-K dated June 2, 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 May 2, 1999.
<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: September 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)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Apr-30-2000
<PERIOD-START> May-03-1999
<PERIOD-END> Aug-01-1999
<CASH> 1,097
<SECURITIES> 0
<RECEIVABLES> 64,690
<ALLOWANCES> (2,706)
<INVENTORY> 75,337
<CURRENT-ASSETS> 149,278
<PP&E> 237,180
<DEPRECIATION> (116,209)
<TOTAL-ASSETS> 327,822
<CURRENT-LIABILITIES> 48,884
<BONDS> 0
0
0
<COMMON> 602
<OTHER-SE> 127,525
<TOTAL-LIABILITY-AND-EQUITY> 327,822
<SALES> 115,937
<TOTAL-REVENUES> 115,937
<CGS> 95,525
<TOTAL-COSTS> 95,525
<OTHER-EXPENSES> 15,038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,416
<INCOME-PRETAX> 2,420
<INCOME-TAX> 823
<INCOME-CONTINUING> 1,597
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,597
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.13
</TABLE>
