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 January 30, 2000
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 January 30, 2000: 11,215,945
Par Value: $.05
INDEX TO FORM 10-Q
For the period ended January 30, 2000
Part I - Financial Statements Page
- ------------------------------------------ -------
Item 1. Unaudited Interim Consolidated Financial Statements:
Consolidated Statements of Income-Three and Nine Months Ended
January 30, 2000 and January 31, 1999 I-1
Consolidated Balance Sheets-January 30, 2000, January 31, 1999
and May 2, 1999 I-2
Consolidated Statements of Cash Flows---Nine Months Ended
January 30, 2000 and January 31, 1999 I-3
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-18
Market Risk
Part II - Other Information
- -------------------------------------
Item 6. Exhibits and Reports on Form 8-K II-1
Signature II-8
CULP, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 30, 2000 AND JANUARY 31, 1999
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED (UNAUDITED)
---------------------------------------------------------------------------------
Amounts Percent of Sales
------------------------------- -----------------------------
January 30, January 31, % Over
2000 1999 (Under) 2000 1999
-------------- --------------- ------------- -------------- -------------
Net sales $ 113,181 112,093 1.0 % 100.0 % 100.0 %
Cost of sales 94,712 92,911 1.9 % 83.7 % 82.9 %
-------------- --------------- ------------- -------------- -------------
Gross profit 18,469 19,182 (3.7)% 16.3 % 17.1 %
Selling, general and
administrative expenses 13,949 14,100 (1.1)% 12.3 % 12.6 %
-------------- --------------- ------------- -------------- -------------
Income from operations 4,520 5,082 (11.1)% 4.0 % 4.5 %
Interest expense 2,366 2,308 2.5 % 2.1 % 2.1 %
Interest income (8) (10) (20.0)% (0.0)% (0.0)%
Other expense (income), net 229 492 (53.5)% 0.2 % 0.4 %
-------------- --------------- ------------- -------------- -------------
Income before income taxes 1,933 2,292 (15.7)% 1.7 % 2.0 %
Income taxes * 501 753 (33.5)% 25.9 % 32.9 %
-------------- --------------- ------------- -------------- -------------
Net income $ 1,432 1,539 (7.0)% 1.3 % 1.4 %
============== =============== ============= ============== =============
Net income per share $0.13 $0.12 8.3 %
Net income per share, assuming dilution $0.13 $0.12 8.3 %
Dividends per share $0.035 $0.035 0.0 %
Average shares outstanding 11,296 12,995 (13.1)%
Average shares outstanding, assuming dilution 11,389 13,124 (13.2)%
NINE MONTHS ENDED (UNAUDITED)
---------------------------------------------------------------------------------
Amounts Percent of Sales
------------------------------- -----------------------------
January 30, January 31, % Over
2000 1999 (Under) 2000 1999
-------------- --------------- ------------- -------------- -------------
Net sales $ 358,660 350,919 2.2 % 100.0 % 100.0 %
Cost of sales 296,072 297,652 (0.5)% 82.5 % 84.8 %
-------------- --------------- ------------- -------------- -------------
Gross profit 62,588 53,267 17.5 % 17.5 % 15.2 %
Selling, general and
administrative expenses 45,022 44,047 2.2 % 12.6 % 12.6 %
-------------- --------------- ------------- -------------- -------------
Income from operations 17,566 9,220 90.5 % 4.9 % 2.6 %
Interest expense 7,266 7,133 1.9 % 2.0 % 2.0 %
Interest income (41) (82) (50.0)% (0.0)% (0.0)%
Other expense (income), net 1,200 1,866 (35.7)% 0.3 % 0.5 %
-------------- --------------- ------------- -------------- -------------
Income before income taxes 9,141 303 2,916.8 % 2.5 % 0.1 %
Income taxes * 2,952 97 2,943.3 % 32.3 % 32.0 %
-------------- --------------- ------------- -------------- -------------
Net income $ 6,189 206 2,904.4 % 1.7 % 0.1 %
============== =============== ============= ============== =============
Net income per share $0.53 $0.02 2,550.0 %
Net income per share, assuming dilution $0.52 $0.02 2,500.0 %
Dividends per share $0.105 $0.105 0.0 %
Average shares outstanding 11,703 12,997 (10.0)%
Average shares outstanding, assuming dilution 11,816 13,171 (10.3)%
* Percent of sales column is calculated as a % of income before income
taxes.
CULP, INC.
CONSOLIDATED BALANCE SHEETS
JANUARY 30, 2000, JANUARY 31, 1999 AND MAY 2, 1999
Unaudited
(Amounts in Thousands)
Amounts Increase
--------------------------------------- (Decrease) * May 2,
January 30, January 31, ---------------------------------
2000 1999 Dollars Percent 1999
-------------------- --------------- ---------------- ------------- ------------
Current assets
Cash and cash investments $ 568 655 (87) (13.3)% 509
Accounts receivable 65,788 63,090 2,698 4.3 % 70,503
Inventories 80,874 69,210 11,664 16.9 % 67,070
Other current assets 9,016 7,560 1,456 19.3 % 9,633
-------------------- --------------- ---------------- ------------- ------------
Total current assets 156,246 140,515 15,731 11.2 % 147,715
Restricted investments 1,047 3,416 (2,369) (69.4)% 3,340
Property, plant & equipment, net 123,303 125,885 (2,582) (2.1)% 123,310
Goodwill 50,222 51,615 (1,393) (2.7)% 51,269
Other assets 5,388 5,017 371 7.4 % 4,978
-------------------- --------------- ---------------- ------------- ------------
Total assets $ 336,206 326,448 9,758 3.0 % 330,612
==================== =============== ================ ============= ============
Current liabilities
Current maturities of long-term debt $ 1,678 1,678 0 0.0 % 1,678
Accounts payable 35,347 25,808 9,539 37.0 % 25,687
Accrued expenses 20,878 17,317 3,561 20.6 % 21,026
Income taxes payable 903 0 903 100.0 % 0
-------------------- --------------- ---------------- ------------- ------------
Total current liabilities 58,806 44,803 14,003 31.3 % 48,391
Long-term debt 137,052 140,210 (3,158) (2.3)% 140,312
Deferred income taxes 14,583 11,227 3,356 29.9 % 14,583
-------------------- --------------- ---------------- ------------- ------------
Total liabilities 210,441 196,240 14,201 7.2 % 203,286
Shareholders' equity 125,765 130,208 (4,443) (3.4)% 127,326
-------------------- --------------- ---------------- ------------- ------------
Total liabilities and
shareholders' equity $ 336,206 326,448 9,758 3.0 % 330,612
==================== =============== ================ ============= ============
Shares outstanding 11,216 12,995 (1,779) (13.7)% 12,079
==================== =============== ================ ============= ============
* Derived from audited financial statements.
CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 30, 2000 AND JANUARY 31, 1999
Unaudited
(Amounts in Thousands)
NINE MONTHS ENDED
--------------------------------
Amounts
--------------------------------
January 30, January 31,
2000 1999
--------------- ---------------
Cash flows from operating activities:
Net income $ 6,189 206
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 14,481 13,785
Amortization of intangible assets 1,197 1,174
Changes in assets and liabilities:
Accounts receivable 4,715 10,546
Inventories (13,804) 9,984
Other current assets 617 303
Other assets (560) (95)
Accounts payable 4,619 (8,609)
Accrued expenses (148) (973)
Income taxes payable 903 (1,282)
--------------- ---------------
Net cash provided by operating activities 18,209 25,039
--------------- ---------------
Cash flows from investing activities:
Capital expenditures (14,474) (8,500)
Purchases of restricted investments (35) (73)
Purchase of investments to fund deferred compensation liability 0 (735)
Sale of restricted investments 2,328 678
--------------- ---------------
Net cash used in investing activities (12,181) (8,630)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 8,510 2,535
Principal payments on long-term debt (11,770) (16,284)
Change in accounts payable-capital expenditures 5,041 (2,800)
Dividends paid (1,218) (1,365)
Payments to acquire common stock (6,552) (160)
Proceeds from common stock issued 20 8
--------------- ---------------
Net cash used in financing activities (5,969) (18,066)
--------------- ---------------
Increase (decrease) in cash and cash investments 59 (1,657)
Cash and cash investments at beginning of period 509 2,312
--------------- ---------------
Cash and cash investments at end of period $ 568 655
=============== ===============
CULP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands, except per share data)
Capital
Common Stock Contributed Total
------------------------------ in Excess Retained Shareholders'
Shares Amount of Par Value Earnings Equity
- -------------------------------------------------------------------------------------------------------------------------
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 ($0.105 per share) (1,218) (1,218)
Net income 6,189 6,189
Common stock issued in connection
with stock option plans 7,313 20 20
Common stock purchased (870,539) (43) (2,735) (3,774) (6,552)
- -------------------------------------------------------------------------------------------------------------------------
Balance, January 30, 2000 11,215,945 $ 561 $ 35,251 $ 89,953 $ 125,765
=========================================================================================================================
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):
- --------------------------------------------------------------------------------
January 30, 2000 May 2, 1999
- --------------------------------------------------------------------------------
Customers $ 68,082 $ 73,089
Allowance for doubtful accounts (1,485) (1,452)
Reserve for returns and allowances (809) (1,134)
- --------------------------------------------------------------------------------
$ 65,788 $ 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):
- --------------------------------------------------------------------------------
January 30, 2000 May 2, 1999
- --------------------------------------------------------------------------------
Raw materials $ 51,582 $ 40,728
Work-in-process 6,467 6,790
Finished goods 29,795 24,885
- --------------------------------------------------------------------------------
Total inventories valued at FIFO cost 87,844 72,403
Adjustments of certain inventories
to the LIFO cost method (1,478) (1,478)
Adjustments of certain inventories to market (5,492) (3,855)
- --------------------------------------------------------------------------------
$ 80,874 $ 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):
- --------------------------------------------------------------------------------
January 30, 2000 May 2, 1999
- --------------------------------------------------------------------------------
Accounts payable-trade $ 30,069 $ 25,450
Accounts payable-capital expenditures 5,278 237
- --------------------------------------------------------------------------------
$ 35,347 $ 25,687
================================================================================
6. Accrued Expenses
A summary of accrued expenses follows (dollars in thousands):
- --------------------------------------------------------------------------------
January 30, 2000 May 2, 1999
- --------------------------------------------------------------------------------
Compensation and benefits $ 12,514 $ 13,136
Other 8,364 7,890
- --------------------------------------------------------------------------------
$ 20,878 $ 21,026
================================================================================
7. Long-Term Debt
A summary of long-term debt follows (dollars in thousands):
- --------------------------------------------------------------------------------
January 30, 2000 May 2, 1999
- --------------------------------------------------------------------------------
Senior unsecured notes $ 75,000 $ 75,000
Industrial revenue bonds and other obligations 33,519 35,278
Revolving credit facility 24,000 25,000
Revolving line of credit 1,177 0
Obligations to sellers 5,034 6,712
- --------------------------------------------------------------------------------
138,730 141,990
Less current maturities (1,678) (1,678)
- --------------------------------------------------------------------------------
$137,052 $ 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
January 30, 2000, the interest rate was 7.23%.
The company's $6,000,000 revolving line of credit expires on February 28,
2001. However, the line of credit will automatically be extended for an
additional three-month period on each May 31, August 31, November 30 and
February 28 unless the bank notifies the company that the line of credit will
not be extended. On borrowings outstanding at January 30, 2000, the interest
rate was 6.95%.
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 $1,047,000 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 January 30, 2000, the
company was in compliance with these required financial covenants.
At January 30, 2000, 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 January 30, 2000 is approximately $134,000. Net amounts paid under these
agreements increased interest expense by approximately $216,000 and $194,000 for
the nine 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.
8. Cash Flow Information
Payments for interest and income taxes during the period were (dollars in
thousands):
- --------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------
Interest $ 6,202 $ 5,908
Income taxes, net of $1,826 in refunds in 2000 1,398 2,657
================================================================================
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 $4,844,000 of outstanding foreign exchange forward
contracts as of January 30, 2000.
10. Net Income Per Share
The following tables reconcile the numerators and denominators of net
income per share and net income per share, assuming dilution for the three and
nine months ended January 30, 2000 and January 31, 1999:
THREE MONTHS ENDED
--------------------------------------------------------------------------------
January 30, 2000 January 31, 1999
------------------------------------- ---------------------------------------
(Amounts in thousands, Income Shares Per Share Income Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- --------- ----------- ------------- ----------
Net income per
share $1,432 11,296 $0.13 $1,539 12,995 $0.12
========= =========
Effect of dilutive
securities:
Options - 93 - 129
----------- ------------- ----------- -------------
Net income per
share, assuming
dilution $1,432 11,389 $0.13 $1,539 13,124 $0.12
=========== ============= ========= =========== ============= =========
NINE MONTHS ENDED
--------------------------------------------------------------------------
January 30, 2000 January 31, 1999
--------------------------------- ----------------------------------------
(Amounts in thousands, Income Shares Per Share Income Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ----------- --------- ----------- ------------- ----------
Net income per
share $6,189 11,703 $0.53 $206 12,997 $0.02
========= ==========
Effect of dilutive
securities:
Options 113 - 174
----------- ----------- ----------- -----------
Net income per
share, assuming
dilution $6,189 11,816 $0.52 $206 13,171 $0.02
=========== =========== ========= =========== =========== ===========
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 January 30, 2000 and January 31, 1999 are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
January 30, 2000 January 31, 1999
- --------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 87,978 $ 89,557
Mattress Ticking 25,203 22,536
- --------------------------------------------------------------------------------
$ 113,181 $ 112,093
================================================================================
Gross Profit
Upholstery Fabrics $ 11,951 $ 12,645
Mattress Ticking 6,518 6,537
- --------------------------------------------------------------------------------
$ 18,469 $ 19,182
================================================================================
Sales and gross profit for the company's operating segments for the nine
months ended January 30, 2000 and January 31, 1999 are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
January 30, 2000 January 31, 1999
- --------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 281,870 $ 282,260
Mattress Ticking 76,790 68,659
- --------------------------------------------------------------------------------
$ 358,660 $ 350,919
================================================================================
Gross Profit
Upholstery Fabrics $ 43,558 $ 35,920
Mattress Ticking 19,030 17,347
- --------------------------------------------------------------------------------
$ 62,588 $ 53,267
================================================================================
Inventories for the company's operating segments as of January 30, 2000 and
January 31, 1999 are as follows:
(dollars in thousands):
- --------------------------------------------------------------------------------
January 30, 2000 January 31, 1999
- --------------------------------------------------------------------------------
Inventories
Upholstery Fabrics $ 65,788 $ 56,842
Mattress Ticking 15,086 12,368
- --------------------------------------------------------------------------------
$ 80,874 $ 69,210
================================================================================
CULP, INC.
SALES BY SEGMENT/DIVISION
FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 30, 2000 AND JANUARY 31, 1999
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------
Amounts Percent of Total Sales
-------------------------- ----------------------------
January 30, January 31, % Over
Segment/Division 2000 1999 (Under) 2000 1999
- ------------------------------------ ------------ ------------ --------------- ------------- ------------
Upholstery Fabrics
Culp Decorative Fabrics $ 49,654 50,520 (1.7)% 43.9 % 45.1 %
Culp Velvets/Prints 34,050 34,949 (2.6)% 30.1 % 31.2 %
Culp Yarn 4,274 4,088 4.5 % 3.8 % 3.6 %
------------ ------------ --------------- ------------- ------------
87,978 89,557 (1.8)% 77.7 % 79.9 %
Mattress Ticking
Culp Home Fashions 25,203 22,536 11.8 % 22.3 % 20.1 %
------------ ------------ --------------- ------------- ------------
* $ 113,181 112,093 1.0 % 100.0 % 100.0 %
============ ============ =============== ============= ============
NINE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------
Amounts Percent of Total Sales
-------------------------- ----------------------------
January 30, January 31, % Over
Segment/Division 2000 1999 (Under) 2000 1999
- ------------------------------------ ------------ ------------ --------------- ------------- ------------
Upholstery Fabrics
Culp Decorative Fabrics $ 157,067 161,538 (2.8)% 43.8 % 46.0 %
Culp Velvets/Prints 112,042 103,671 8.1 % 31.2 % 29.5 %
Culp Yarn 12,761 17,051 (25.2)% 3.6 % 4.9 %
------------ ------------ --------------- ------------- ------------
281,870 282,260 (0.1)% 78.6 % 80.4 %
Mattress Ticking
Culp Home Fashions 76,790 68,659 11.8 % 21.4 % 19.6 %
------------ ------------ --------------- ------------- ------------
* $ 358,660 350,919 2.2 % 100.0 % 100.0 %
============ ============ =============== ============= ============
* U.S. sales were $86,359 and $88,152 for the third quarter of fiscal 2000 and
fiscal 1999, respectively; and $275,699 and $266,934 for the nine months of
fiscal 2000 and fiscal 1999, respectively. The percentage decrease in U.S. sales
was 2.0% for the third quarter and an increase of 3.3% for the nine months.
CULP, INC.
INTERNATIONAL SALES BY GEOGRAPHIC AREA
FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 30, 2000 AND JANUARY 31, 1999
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------------- ------------------------------
January 30, January 31, % Over
Geographic Area 2000 1999 (Under) 2000 1999
- ---------------------------------- --------------- -------------- -------------- ------------- ------------
North America (Excluding USA) $ 8,476 7,280 16.4 % 31.6 % 30.4 %
Europe 4,698 3,881 21.1 % 17.5 % 16.2 %
Middle East 8,140 6,711 21.3 % 30.3 % 28.0 %
Far East & Asia 4,422 4,993 (11.4)% 16.5 % 20.9 %
South America 523 555 (5.8)% 1.9 % 2.3 %
All other areas 563 521 8.1 % 2.1 % 2.2 %
--------------- -------------- -------------- ------------- ------------
$ 26,822 23,941 12.0 % 100.0 % 100.0 %
=============== ============== ============== ============= ============
NINE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------------- ------------------------------
January 30, January 31, % Over
Geographic Area 2000 1999 (Under) 2000 1999
- ---------------------------------- --------------- -------------- -------------- ------------- ------------
North America (Excluding USA) $ 26,064 23,035 13.1 % 31.4 % 27.4 %
Europe 13,696 14,787 (7.4)% 16.5 % 17.6 %
Middle East 24,092 25,071 (3.9)% 29.0 % 29.9 %
Far East & Asia 14,088 15,296 (7.9)% 17.0 % 18.2 %
South America 1,773 2,793 (36.5)% 2.1 % 3.3 %
All other areas 3,248 3,003 8.2 % 3.9 % 3.6 %
--------------- -------------- -------------- ------------- ------------
$ 82,961 83,985 (1.2)% 100.0 % 100.0 %
=============== ============== ============== ============= ============
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 third quarter represented 23.7% and 21.4% for
2000 and 1999, respectively. Year-to-date international sales represented 23.1%
and 23.9% of total sales for 2000 and 1999, respectively.
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 Nine Months ended January 30, 2000 compared with Three and Nine Months
ended January 31, 1999
Net Sales. Net sales for the third quarter of fiscal 2000 increased by $1.1
million, or 1.0%, compared with the same quarter of fiscal 1999. The company's
sales of upholstery fabrics decreased $1.6 million, or 1.8%, for the quarter
compared with the prior year. Alternatively, the company's sales of mattress
ticking increased $2.7 million, or 11.8%, for the quarter compared with the
prior year. Net sales for the first nine months of fiscal 2000 increased by $7.7
million, or 2.2%, compared with the year-earlier period. The company's sales of
upholstery fabrics and mattress ticking decreased $0.4 million and increased
$8.1 million, respectively, or (0.1)% and 11.8%, respectively, for the first
nine months compared with the same period in 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 0.1% decrease in sales of upholstery fabrics in the first nine months of
fiscal 2000 reflects higher sales of upholstery fabrics to U.S.-based customers
that offset a 25.2% decrease in external Culp Yarn sales and a 1.2% 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 nine months of fiscal 2000
represent 31.4% of total sales for the division compared with 43.1% in the prior
year. Weakness in international sales affected results in the first two quarters
of fiscal 2000, but sales to customers outside the United States were up 12.0%
for the third quarter. The company believes that this increase indicates that it
has established a base of international sales from which to build. This follows
an industry-wide trend of declining international sales of upholstery fabrics
that began in fiscal 1999 after several years of strong growth. During fiscal
1999, the company took 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 appeared 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 third quarter and first nine months 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 third quarter declined 3.7%
to $18.5 million when compared to the year-earlier period, and decreased as a
percentage of net sales from 17.1% (14.1% for upholstery fabrics and 29.0% for
mattress ticking) to 16.3% (13.6% for upholstery fabrics and 25.9% for mattress
ticking). The decrease in gross profit % for upholstery fabrics and mattress
ticking is primarily due to the decrease in upholstery fabric sales of 1.8% and
a product mix change for mattress ticking. For the first nine months, gross
profit increased 17.5% to $62.6 million and increased as a percentage of net
sales from 15.2% (12.7% for upholstery fabrics and 25.3% for mattress ticking)
to 17.5% (15.5% for upholstery fabrics and 24.8% for mattress ticking). The
company has taken a number of actions to increase gross profit, 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 nine
months of fiscal 2000.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses as a percentage of sales for the third quarter of fiscal
2000 were 12.3%, down slightly from 12.6% for the year-earlier period. For the
first nine months, these expenses were unchanged as a percentage of sales at
12.6%. The increase in absolute dollars for the nine months principally reflects
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 $2.4 million and $7.3 million for the
third quarter and first nine months, respectively, increased $58,000 and
$133,000, 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 $229,000 and $1.2 million for the
third quarter and first nine months of fiscal 2000, respectively, versus
$492,000 and $1.9 million, 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 first nine months of fiscal 2000.
Income Taxes. The effective tax rate for the first nine months of fiscal 2000
was 32.3%, up slightly from 32.0% for the year-earlier period.
Net Income Per Share. Net income per share for the third quarter of fiscal 2000
totaled $0.13 per share diluted (based on 11,389,000 average shares outstanding
during the period) compared with $0.12 per share diluted (based on 13,124,000
average shares outstanding during the period) a year ago. For the first nine
months, the company reported net income of $0.52 per share diluted (based on
11,816,000 average shares outstanding during the period) versus net income of
$0.02 per share diluted (based on 13,171,000 average shares outstanding during
the period) in the prior year.
Liquidity and Capital Resources
Liquidity. Cash and cash investments were $0.6 million as of January 30, 2000,
compared with $0.7 million at January 31, 1999, and $0.5 million at the end of
fiscal 1999. Funded debt (long-term debt, including current maturities, less
restricted investments) was $137.7 million at January 30, 2000, down from $138.5
million at January 31, 1999 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 52.3% at January 30, 2000, compared with 51.5% at January
31, 1999, and 52.1% at May 2, 1999. The company's working capital as of January
30, 2000 was $97.4 million, compared with $95.7 million as of January 31, 1999,
and $99.3 million at the close of fiscal 1999.
The company's cash flow from operations was $18.2 million for the first nine
months of fiscal 2000, consisting of $21.9 million from earnings (net income
plus depreciation and amortization) offset by a $3.7 million increase in working
capital. The increase in working capital was primarily due to a $13.8 million
increase in inventories offset by a $4.7 million decrease in accounts
receivable, a $4.6 million increase in accounts payable and a $0.9 million
increase in income taxes payable.
In separate authorizations in June 1998, March 1999, September 1999 and December
1999, the board of directors of the company authorized the use of a total of
$20.0 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 nine months of fiscal 2000, the company
repurchased 870,539 shares at an average price of $7.53 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 January 30, 2000, the company had outstanding borrowings of $24
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 $1.0
million as of January 30, 2000 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 January 30, 2000, the company was in
compliance with these financial covenants.
As of January 30, 2000, 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 $4.8 million of outstanding foreign exchange forward contracts as
of January 30, 2000.
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 nine months of fiscal 2000
totaled $14.5 million compared with $8.5 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 Update
The company did not experience any significant malfunctions or errors in its
operating or business systems when the date changed from 1999 to 2000. Based on
operations since January 1, 2000, the company does not expect any significant
impact on its ongoing business as a result of the "Year 2000 issue." However, it
is possible that the full impact of the date change, which was of concern due to
computer programs that use two digits instead of four digits to define years,
has not been fully recognized. The company believes that any unforeseen problems
are likely to be minor and correctable. In addition, the company could still be
negatively affected if its customers or suppliers are adversely affected by the
Year 2000 or similar issues. The company currently is not aware of any
significant Year 2000 or similar problems that have arisen for its customers and
suppliers.
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 January 30, 2000.
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 January 30, 2000 outstanding balance of the variable rate debt
would be approximately $569,000 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
January 30, 2000 would not have a significant impact on the company's results of
operations or financial position. In addition, the company had approximately
$4.8 million of outstanding foreign exchange forward contracts as of January 30,
2000. 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.
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.
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. The Articles of Amendment
of Culp, Inc. were filed as Exhibit 3(iii) to the
Company's Form 10-Q for the quarter ended October
31, 1999, filed December 15, 1999, 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.
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 November 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 October 31,
1999.
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: March 15, 2000 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)