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 period ended November 2, 1997
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)
(910) 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 November 2, 1997: 12,683,103
Par Value: $.05
INDEX TO FORM 10-Q
November 2, 1997
Part I - Financial Information. Page
- -------------------------------------------- ------
Item 1. Consolidated Financial Statements:
Statements of Income--Three and Six Months Ended I-1
November 2, 1997 and October 27, 1996
Balance Sheets-November 2, 1997, October 27, 1996, and April 27, 1997 I-2
Statements of Cash Flows---Six Months Ended November 2, 1997 I-3
and October 27, 1996
Statements of Shareholders' Equity I-4
Notes to Financial Statements I-5
Sales by Product Category/Business Unit I-10
International Sales by Geographic Area I-11
Item 2. Management's Discussion and Analysis of Financial I-12
Condition and Results of Operation
Part II - Other Information
- -------------------------------------
Item 1. Legal Proceedings II-1
Item 2. Change in Securities II-1
Item 3. Default Upon Senior Securities II-1
Item 4. Submission of Matters to a Vote of Security Holders II-1
Item 5. Other Information II-2
Item 6. Exhibits and Reports on Form 8-K II-2-II-7
Signatures II-8
CULP, INC.
CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 2, 1997 AND OCTOBER 27, 1996
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED (UNAUDITED)
----------------------------------------------------------------------
Amounts Percent of Sales
-------------------------- --------------------------
November 2, October 27, % Over
1997 1996 (Under) 1998 1997
------------ ------------ ------------ ------------ ------------
Net sales $ 122,926 105,204 16.8 % 100.0 % 100.0 %
Cost of sales 100,191 86,082 16.4 % 81.5 % 81.8 %
------------ ------------ ------------ ------------ ------------
Gross profit 22,735 19,122 18.9 % 18.5 % 18.2 %
Selling, general and
administrative expenses 13,632 11,704 16.5 % 11.1 % 11.1 %
------------ ------------ ------------ ------------ ------------
Income from operations 9,103 7,418 22.7 % 7.4 % 7.1 %
Interest expense 1,820 1,242 46.5 % 1.5 % 1.2 %
Interest income (72) (60) 20.0 % (0.1) % (0.1) %
Other expense (income), net 425 301 41.2 % 0.3 % 0.3 %
------------ ------------ ------------ ------------ ------------
Income before income taxes 6,930 5,935 16.8 % 5.6 % 5.6 %
Income taxes * 2,425 2,225 9.0 % 35.0 % 37.5 %
------------ ------------ ------------ ------------ ------------
Net income $ 4,505 3,710 21.4 % 3.7 % 3.5 %
============ ============ ============ ============ ============
Average shares outstanding 12,668 11,312 12.0 %
Net income per share $0.36 $0.33 9.1 %
Dividends per share $0.0350 $0.0325 7.7 %
SIX MONTHS ENDED (UNAUDITED)
----------------------------------------------------------------------
Amounts Percent of Sales
-------------------------- --------------------------
November 2, October 27, % Over
1997 1996 (Under) 1998 1997
------------ ------------ ------------ ------------ ------------
Net sales $ 222,424 195,733 13.6 % 100.0 % 100.0 %
Cost of sales 182,956 160,691 13.9 % 82.3 % 82.1 %
------------ ------------ ------------ ------------ ------------
Gross profit 39,468 35,042 12.6 % 17.7 % 17.9 %
Selling, general and
administrative expenses 24,548 22,568 8.8 % 11.0 % 11.5 %
------------ ------------ ------------ ------------ ------------
Income from operations 14,920 12,474 19.6 % 6.7 % 6.4 %
Interest expense 3,100 2,424 27.9 % 1.4 % 1.2 %
Interest income (162) (117) 38.5 % (0.1) % (0.1) %
Other expense (income), net 667 696 (4.2) % 0.3 % 0.4 %
------------ ------------ ------------ ------------ ------------
Income before income taxes 11,315 9,471 19.5 % 5.1 % 4.8 %
Income taxes * 3,960 3,551 11.5 % 35.0 % 37.5 %
------------ ------------ ------------ ------------ ------------
Net income $ 7,355 5,920 24.2 % 3.3 % 3.0 %
============ ============ ============ ============ ============
Average shares outstanding 12,649 11,304 11.9 %
Net income per share $0.58 $0.52 11.5 %
Dividends per share $0.0700 $0.0650 7.7 %
* Percent of sales column is calculated as a % of income before income taxes.
CULP, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 2, 1997, OCTOBER 27, 1996 AND APRIL 27, 1997
(Unaudited, Amounts in Thousands)
Amounts Increase
----------------------------
November 2, October 27, (Decrease) * April 27,
------------------------
1997 1996 Dollars Percent 1997
-------------- ----------- ----------- --------- --------
Current assets
Cash and cash investments $ 1,209 744 465 62.5 % 830
Accounts receivable 74,314 52,202 22,112 42.4 % 56,691
Inventories 70,192 52,300 17,892 34.2 % 53,463
Other current assets 6,136 3,697 2,439 66.0 % 5,450
-------------- ----------- ----------- --------- --------
Total current assets 151,851 108,943 42,908 39.4 % 116,434
Restricted investments 8,258 5,379 2,879 53.5 % 11,018
Property, plant & equipment, net 107,377 80,316 27,061 33.7 % 91,231
Goodwill 49,778 22,568 27,210 120.6 % 22,262
Other assets 3,715 2,321 1,394 60.1 % 3,007
-------------- ----------- ----------- --------- --------
Total assets $ 320,979 219,527 101,452 46.2 % 243,952
============== =========== =========== ========= ========
Current Liabilities
Current maturities of long-term dept $ 100 7,100 (7,000) (98.6)% 100
Accounts payable 36,709 26,936 9,773 36.3 % 29,903
Accrued expenses 15,175 16,841 (1,666) (9.9) % 15,074
Income taxes payable 1,034 836 198 23.7 % 1,580
-------------- ----------- ----------- --------- --------
Total current liabilities 53,018 51,713 1,305 2.5 % 46,657
Long-term debt 139,991 72,891 67,100 92.1 % 76,541
Deferred income taxes 9,965 8,088 1,877 23.2 % 9,965
-------------- ----------- ----------- --------- --------
Total liabilities 202,974 132,692 70,282 53.0 % 133,163
Shareholders' equity 118,005 86,835 31,170 35.9 % 110,789
-------------- ----------- ----------- --------- --------
Total liabilities and
shareholders' equity $ 320,979 219,527 101,452 46.2 % 243,952
============== =========== =========== ========= ========
Shares outstanding 12,687 11,339 1,348 11.9 % 12,609
============== =========== =========== ========= ========
* Derived from audited financial
statements.
CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 2, 1997 AND OCTOBER 27, 1996
(Unaudited, Amounts in Thousands)
SIX MONTHS ENDED
--------------------------
Amounts
-------------------------
November 2, October 27,
1997 1996
----------- ------------
Cash flows from operating activities:
Net income $ 7,355 5,920
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 6,869 6,321
Amortization of intangible assets 533 444
Provision for deferred income taxes 0 0
Changes in assets and liabilities, net of the effects
business acquired:
Accounts receivable (17,623) (164)
Inventories (11,813) (4,905)
Other current assets (686) 470
Other assets (188) (22)
Accounts payable 10,668 3,220
Accrued expenses 295 4,277
Income taxes payable (546) 639
----------- -----------
Net cash provided by (used in)operating activities (5,136) 16,200
----------- ------------
Cash flows from investing activities:
Capital expenditures (19,216) (9,676)
Purchases of restricted investments (8,662) (107)
Purchase of investments to fund deferred compensation liability (581) 0
Sale of restricted investments 11,422 2
Business acquired (36,628) 0
----------- ------------
Net cash used in investing activities (53,665) (9,781)
----------- ------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 63,500 1,000
Principal payments on long-term debt (50) (3,050)
Change in accounts payable-capital expenditures (3,862) (3,592)
Dividends paid (889) (735)
Proceeds from common stock issued 481 204
----------- ------------
Net cash provided by (used in) financing activities 59,180 (6,173)
----------- ------------
Increase in cash and cash investments 379 246
Cash and cash investments at beginning of period 830 498
----------- ------------
Cash and cash investments at end of period $ 1,209 744
=========== ============
Culp, Inc.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands, except per share data)
Capital
Contributed Total
Common Stock in Excess Retained Shareholders'
Shares Amount of Par Value Earnings Equity
- -----------------------------------------------------------------------------------------------------
Balance, April 28, 1996 11,290,300 $ 565 $ 16,878 64,003 $ 81,446
Proceeds from public offering
of 1,200,000 shares 1,200,000 60 16,235 16,295
Cash dividends (1,513) (1,513)
($0.13 per share)
Net income 13,770 13,770
Common stock issued in
connection with stock
option plan 118,459 5 786 791
- -----------------------------------------------------------------------------------------------------
Balance, April 27, 1997 12,608,759 630 33,899 76,260 110,789
Cash dividends
($0.07 per share) (889) (889)
Net income 7,355 7,355
Common stock issued in
connection with stock
option plans 78,344 4 746 750
- -----------------------------------------------------------------------------------------------------
Balance, November 2, 1997 12,687,103 $ 634 $ 34,645 82,726 $ 118,005
=====================================================================================================
Culp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting of normal recurring
adjustments) which the management of the company considers necessary for a fair
statement of results for the interim periods. Certain amounts for fiscal year
1997 have been reclassified to conform with the fiscal year 1998 presentation.
Such reclassifications had no effect on net income as previously reported. All
such adjustments are of a normal recurring nature. The results of operations for
the three months and six months ended November 2, 1997 are not necessarily
indicative of the results to be expected for the full year.
================================================================================
2. Accounts Receivable
A summary of accounts receivable follows (dollars in thousands):
- --------------------------------------------------------------------------------
November 2, 1997 April 27, 1997
- --------------------------------------------------------------------------------
Customers $ 76,270 $ 58,568
Allowance for doubtful accounts (1,297) (1,500)
Reserve for returns and allowances ( 659) (377)
- --------------------------------------------------------------------------------
$ 74,314 $ 56,691
================================================================================
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):
- --------------------------------------------------------------------------------
November 2, 1997 April 27, 1997
- --------------------------------------------------------------------------------
Raw materials $ 42,298 $ 32,025
Work-in-process 3,665 4,627
Finished goods 28,256 20,212
- --------------------------------------------------------------------------------
Total inventories valued at FIFO cost 74,219 56,864
Adjustments of certain inventories
to the LIFO cost method (4,027) (3,401)
- --------------------------------------------------------------------------------
$ 70,192 $ 53,463
================================================================================
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):
- --------------------------------------------------------------------------------
November 2, 1997 April 27, 1997
- --------------------------------------------------------------------------------
Accounts payable-trade $ 34,824 $ 24,156
Accounts payable-capital expenditures 1,885 5,747
- --------------------------------------------------------------------------------
$ 36,709 $ 29,903
================================================================================
6. Accrued Expenses
A summary of accrued expenses follows (dollars in thousands):
- -------------------------------------------------------------------------------
November 2, 1997 April 27, 1997
- -------------------------------------------------------------------------------
Compensation and benefits $ 10,564 $ 10,217
Other 4,611 4,857
- -------------------------------------------------------------------------------
$ 15,175 $ 15,074
===============================================================================
7. Long-term Debt
A summary of long-term debt follows (dollars in thousands):
- --------------------------------------------------------------------------------
November 2, 1997 April 27, 1997
- --------------------------------------------------------------------------------
Industrial revenue bonds and other
obligations $ 40,091 $ 31,641
Revolving credit facility 90,000 41,000
Revolving line of credit 4,000 4,000
Seller note payable 6,000 -0-
- --------------------------------------------------------------------------------
$ 140,091 $ 76,641
Less current maturities (100) (100)
- --------------------------------------------------------------------------------
$ 139,991 $ 76,541
================================================================================
On April 23, 1997, the company entered into a revolving credit agreement
(the "Credit Agreement") providing for a five-year unsecured multi-currency
revolving credit facility with a syndicate of banks in the United States and
Europe. The Credit Agreement provides for a revolving loan commitment of
$125,000,000 which declines $5,000,000 at each of four annual dates beginning in
April 1998. The agreement requires payment of a quarterly facility fee in
advance.
The company has a $4,000,000 revolving line of credit which expires on
November 30, 1998 and will automatically be extended for an additional
three-month period on each, February 28, May 31, August 31, and November 30,
unless the bank notifies the company that the line of credit will not be
extended.
On July 17, 1997, the company obtained $8,500,000 of new industrial revenue
bond (IRB) financing related to the expansion of its plant and equipment at its
Lumberton, North Carolina facility. The final maturity of this IRB is the year
2014. The remaining IRBs are substantially due in one-time payments at various
dates from 2008 to 2013 and are collateralized by restricted investments of
$8,258,000 and letters of credit for $41,341,000 at November 2, 1997.
The company's loan agreements require, among other things, that the company
maintain compliance with certain positive and negative financial covenants. At
November 2, 1997, the company was in compliance with these required financial
covenants.
At November 2, 1997, 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 amounts interest rate expiration date
$15,000,000 7.3% April 2000
$ 5,000,000 6.9% June 2002
$ 5,000,000 6.6% July 2002
The company believes it could terminate these agreements as of November 2,
1997 for approximately $457,000. Net amounts paid under these agreements
increased interest expense by approximately $120,000 in 1998 and $142,000 in
1997. 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)
- --------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------
.
Interest $ 3,115 $ 2,411
Income taxes 4,488 2,913
================================================================================
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.
Machinery and equipment and raw material purchases hedged by foreign exchange
forward contracts are valued by using the exchange rate of the applicable
foreign exchange forward contract. The contracts outstanding at November 2, 1997
mature at various dates in fiscal 1998.
10. Acquisition
On August 5, 1997, the company completed the purchase of the business and
certain assets relating to the upholstery fabric businesses operating as
Phillips Weaving Mills, Phillips Velvet Mills, Phillips Printing and Phillips
Mills. Based on the terms of the asset purchase agreement, the transaction is
valued at approximately $37 million, which included cash, seller debt retired, a
note payable to seller and the acquisition costs. The consideration for the
acquisition also included stock options and an agreement for contingent payments
to the selling companies within three years following closing that could range
from $0 to $5,500,000, depending upon the future sales performance of the
Phillips jacquard fabric product line. The transaction has an effective date of
August 4, 1997.
The acquisition has been accounted for by the purchase method of
accounting, and accordingly, the purchase price has been allocated to the assets
acquired and the liabilities assumed based on the estimated fair market values
at the date of acquisition. The cost in excess of net assets of business
acquired will be amortized on a straight-line basis over 40 years. The
preliminary estimated fair values of assets and liabilities acquired are
summarized below:
Inventories $ 4,916
Property, plant and equipment 3,799
Cost in excess of net assets of business acquired 28,732
Accrued expenses (467)
---------------
$ 37,000
===============
11. Subsequent Event
On October 14, 1997, Culp agreed to acquire the business and substantially
all the asets relating to the yarn manufacturing business operating as Artee
Industries, Incorporated. Based on the value of the definitive asset purchase
agreement, the transaction value at closing is estimated to be $17.4 million
(including issuance of Culp common stock, cash, a note and assumption of certain
liabilities). Terms of the purchase also provide the opportunity for additional
consideration of up to $7.2 million contingent upon the profitability of Artee
during Culp's fiscal year ending May 2, 1999. The acquisition will be accounted
for as a purchase, and the results of Artee will therefore be included in Culp's
results from the closing date. Closing of the transaction is expected on May 4,
1998, or possibly earlier, if certain profitability levels are reached. Closing
is contingent upon customary conditions, including the satisfactory completion
of Culp's due diligence and Artee's compliance with a minimum net worth
requirement.
12. New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 128, "Earnings per Share" effective for
financial statements issued for interim and annual periods ending after December
15, 1997. The new standard specifies the computation, presentation and
disclosure requirements for earnings per share for entities with publicly-held
common stock, and early adoption of the standard is prohibited. The company
believes the adoption of this accounting standard will not have a material
impact on earnings per share.
CULP, INC.
SALES BY PRODUCT CATEGORY/BUSINESS UNIT
FOR THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 2, 1997 AND OCTOBER 27, 1996
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
------------------------------------------------------------
Amounts Percent of Total Sales
-------------------- -----------------------
November 2, October 27, % Over
Product Category/Business Unit 1997 1996 (Under) 1998 1997
- ------------------------------ --------- --------- ------------ ---------- ----------
Upholstery Fabrics
Culp Textures $ 24,454 24,001 1.9 % 19.9 % 22.8 %
Rossville/Chromatex 21,602 21,722 (0.6) % 17.6 % 20.6 %
--------- --------- ------------ ---------- ----------
46,056 45,723 0.7 % 37.5 % 43.5 %
Velvets/Prints 43,928 40,233 9.2 % 35.7 % 38.2 %
Phillips 10,725 0 100.0 % 8.7 % 0.0 %
--------- --------- ------------ ---------- ----------
100,709 85,956 17.2 % 81.9 % 81.7 %
Mattress Ticking
Culp Home Fashions 22,217 19,248 15.4 % 18.1 % 18.3 %
--------- --------- ------------ ---------- ----------
* $ 122,926 105,204 16.8 % 100.0 % 100.0 %
========= ========= ============ ========== ==========
SIX MONTHS ENDED (UNAUDITED)
------------------------------------------------------------
Amounts Percent of Total Sales
-------------------- -----------------------
November 2, October 27, % Over
Product Category/Business Unit 1997 1996 (Under) 1998 1997
- ------------------------------ --------- --------- ------------ ---------- ----------
Upholstery Fabrics
Culp Textures $ 46,147 44,802 3.0 % 20.7 % 22.9 %
Rossville/Chromatex 39,723 39,887 (0.4)% 17.9 % 20.4 %
--------- --------- ------------ ---------- ----------
85,870 84,689 1.4 % 38.6 % 43.3 %
Velvets/ Prints 82,325 75,100 9.6 % 37.0 % 38.4 %
Phillips 10,725 0 100.0 % 4.8 % 0.0 %
--------- --------- ------------ ---------- ----------
178,920 159,789 12.0 % 80.4 % 81.6 %
Matress Ticking
Culp Home Fashions 43,504 35,944 21.0 % 19.6 % 18.4 %
--------- --------- ------------ ---------- ----------
* $ 222,424 195,733 13.6 % 100.0 % 100.0 %
========= ========= ============ ========== ==========
*U.S. sales were $87,622 and $79,304 for the three months of
fiscal 1998 and fiscal 1997, respectively;
and $162,029 and $149,860 for the six months of fiscal 1998 and
fiscal 1997, respectively.
The percentage increase in U.S. sales was 10 % for the three months and
an increase of 8 % for the six months.
CULP, INC.
INTERNATIONAL SALES BY GEOGRAPHIC AREA
FOR THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 2, 1997 AND OCTOBER 27, 1996
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------- -------------------------
November 2, October 27, % Over
Geographic Area 1997 1996 (Under) 1998 1997
- ---------------------------- ------------ ----------- ------------ ----------- ----------
North America (Excluding USA) $ 8,162 8,016 1.8 % 23.1 % 30.9 %
Europe 6,624 5,716 15.9 % 18.8 % 22.1 %
Middle East 7,439 5,079 46.5 % 21.1 % 19.6 %
Far East & Asia 9,720 5,019 93.7 % 27.5 % 19.4 %
South America 1,216 632 92.4 % 3.4 % 2.4 %
All other areas 2,143 1,438 49.0 % 6.1 % 5.6 %
------------ ----------- ------------ ----------- ----------
$ 35,304 25,900 36.3 % 100.0 % 100.0 %
============ =========== ============ =========== ==========
SIX MONTHS ENDED (UNAUDITED)
------------------------------------------------------------------
Amounts Percent of Total Sales
------------------------- -------------------------
November 2, October 27, % Over
Geographic Area 1997 1996 (Under) 1998 1997
- ---------------------------- ------------ ----------- ------------ ----------- ----------
North America (Excluding USA) $ 15,206 14,073 8.1 % 25.2 % 30.7 %
Europe 11,125 10,483 6.1 % 18.4 % 22.9 %
Middle East 14,003 9,156 52.9 % 23.2 % 20.0 %
Far East & Asia 15,662 8,815 77.7 % 25.9 % 19.2 %
South America 1,462 999 46.3 % 2.4 % 2.2 %
All other areas 2,937 2,347 25.1 % 4.9 % 5.1 %
------------ ----------- ------------ ----------- ----------
$ 60,395 45,873 31.7 % 100.0 % 100.0 %
============ =========== ============ =========== ==========
International sales, and the percentage of total sales, for each of the last six
fiscal years follows: fiscal 1992-$ 34,094 (18%); fiscal 1993-$ 40,729 (20%);
fiscal 1994-$ 44,038 (18%); fiscal 1995-$ 57,971 (19%); fiscal 1996-$ 77,397
(22%); and fiscal 1997-$ 101,571 (25%). International sales for the second
quarter represented 29% and 25% for 1998 and 1997, respectively. Year-to-date
international sales represented 27% and 23% of total sales for 1998 and 1997,
respectively.
Certain amounts for fiscal year 1997 have been reclassified to conform with the
fiscal year 1998 presentation. Additionally, certain amounts were reclassified
from the fiscal year 1998 first quarter presentation.
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
For the three months ended November 2, 1997, net sales rose 17% to $122.9
million compared with $105.2 million in the year-earlier period. Net income for
the quarter totaled $4.5 million, or $0.36 per share, compared with $3.7
million, or $0.33 per share, for the second quarter of fiscal 1997. The increase
in sales reflected incremental sales from the acquisition of assets related to
Phillips Mills, significantly higher shipments of mattress ticking and, to a
lesser degree, a gain in overall sales of upholstery fabrics to both U.S.-based
and international manufacturers. The growth in demand in some product categories
and to U.S. manufacturers of residential furniture as a group began slowing
during the second half of fiscal 1997. That pattern has continued thus far into
fiscal 1998. Business with U.S.-based customers increased 10% from a year ago
while sales to customers outside the United States rose 36% for the quarter.
International sales are continuing to account for an increasing percentage of
the company's total sales. Demand for the company's products is dependent on the
various factors which affect consumer purchases of upholstered furniture and
bedding, including housing starts and sales of existing homes, the level of
consumer confidence, prevailing interest rates for home mortgages and the
availability of consumer credit.
Three and Six Months Ended November 2, 1997 Compared With Three Months and
Six Months Ended October 27, 1996
Net Sales. Net sales for the second quarter increased by $17.7 million, or
17%, compared with the year-earlier period. The Company's sales of upholstery
fabrics increased $14.7 million, or 17% in the second quarter compared with the
prior year. For the first six months, net sales increased by $26.7 million, or
14%, compared with the year-earlier period. Upholstery fabrics sales increased
$19.1 million, or 12% in the first six months compared with the same period of
last year. The principal factor contributing to the increased sales for the
second quarter and first six months was the contribution of $10.7 million in
sales from the assets purchased from Phillips Mills effective August 4, 1997.
Sales from the Velvets/Prints business unit were up for the quarter and year
to-date periods from the prior year. This unit has continued to benefit from
increased international sales, but the strength in the U.S. dollar relative to
other international currencies has placed pressure on pricing thus far this
fiscal year. Sales from the Culp Textures business unit were up slightly for the
quarter, but shipments by the Rossville/Chromatex unit were slightly lower.
Sales from the Culp Home Fashions unit, which principally consist of mattress
ticking and bedding products, rose 15.4% from last year's second quarter and
21.0% from last year's first half. The overall growth of business within the
United States was not as strong as a year ago, reflecting a trend that initially
became apparent during the second half of fiscal 1997. Sales to U.S-based
customers rose 10% for the second quarter and 8% for the first six months in
comparison to the same periods of 1997. However, excluding the incremental sales
from Phillips, sales to U.S.-based customers decreased slightly for the quarter
and increased 2% for the first half compared to last year. International sales,
consisting primarily of upholstery fabrics increased to $35.3 million for the
quarter, up 36.3% from a year ago, and reached $60.4 million for the first six
months, up 31.7% from last year. International shipments accounted for 29% and
27% of total sales for the quarter and six months, respectively.
Gross Profit and Cost of Sales. Gross profit for the second quarter
increased by $3.6 million and amounted to 18.5% of net sales compared with 18.2%
a year ago. For the first six months, gross profit increased by $22.3 million
and amounted to 17.7% of net sales compared with 17.9% a year ago. The company's
gross profit benefited significantly during the second quarter and first six
months from its international sales growth and the operation of its jacquard
greige goods facility in Canada. Factors which adversely affected gross profit
during the second quarter and first half were slower growth in demand from U.S.
manufacturers of residential furniture, start-up costs related to the expansion
of flock coating and fabric printing in the Velvets/Prints business unit and the
integration of the Phillips velvet products into existing Culp facilities. The
company believes the majority of the start-up and transition issues are now
resolved.
Selling, general and administrative expenses. Selling, general and
administrative expenses were unchanged as a percentage of net sales at 11.1% for
the quarter and down for the first half to 11.0% from 11.5% a year ago. The
company is continuing to incur higher expenses related to expanded resources for
designing new fabrics and increased selling commissions associated with
international sales. The inclusion of the expenses from Phillips Mills also
affected this comparison. These factors were offset in part by steps to contain
operating expenses and by lower accruals as a percentage of net sales for
incentive-based compensation plans.
Interest Expense. Net interest expense for the second quarter of $1.7
million was up from $1.2 million and for the first six months of $2.9 million
was up from $2.3 million a year ago due principally to borrowings related to the
acquisition of Phillips Mills that was completed on August 4, 1997.
Other Expense. Other expense increased $124,000 for the second quarter
compared with a year ago, principally due to incremental amortization of
goodwill associated with the acquisition of Phillips Mills.
Earnings Per Share. Earnings per share for the second quarter of fiscal
1998 totaled $0.36 compared with $0.33 a year ago. For the first half, ernings
per share were $0.58 compared with $0.52 last year. The weighted average number
of outstanding shares increased 12.0% from a year ago, principally due to the
Company's stock offering completed in February 1997.
Liquidity and Capital Resources
Liquidity. Cash and cash investments were $1.2 million as of November 2,
1997 compared with $830,000 at the end of fiscal 1997. Funded debt (long-term
debt, including current maturities, less restricted investments) increased to
$131.8 million at the close of the second quarter, up from $74.6 million as of
October 27, 1996 and $65.6 million at the end of fiscal 1997. Borrowings related
to the acquisition of Phillips Mills were the primary reason for the higher
debt. As a percentage of total capital (funded debt plus total shareholders'
equity), the company's borrowings amounted to 52.8% as of November 2, 1997
compared with 46.2% as of October 27, 1996 and 37.2% at the end of fiscal 1997.
The company's working capital as of November 2, 1997 was $98.8 million compared
with $69.8 million at the close of fiscal 1997.
Cash of $5.1 million was used to fund operating activities, principally
increases in inventories and accounts receivable, during the first six months.
Capital expenditures during the first half totaled $19.2 million. Financing
activities, principally long-term borrowings, provided $59.2 million in cash to
fund operating activities, the acquisition of Phillips Mills and capital
investments.
Financing Arrangements. As of November 2, 1997, the company had outstanding
balances of $90 million under a $125 million syndicated five-year, unsecured,
multi-currency revolving credit facility. The Company also has a total of $40
million in outstanding industrial revenue bonds ("IRBs") which have been used to
finance capital expenditures. The IRBs are collateralized by restricted
investments of $8.3 million as of November 2, 1997 and letters of credit for the
outstanding balance of the IRBs and certain interest payments due thereunder.
Because of federal tax laws, additional IRB financing will not be available to
the Company until the amount of its outstanding IRBs is substantially reduced.
The company's loan agreements require, among other things, that the company
maintain certain financial ratios. As of November 2, 1997, the company was in
compliance with the required financial covenants.
As of November 2, 1997, 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 bank 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
machinery, equipment and certain raw materials when those commitments are
denominated in foreign currencies.
Capital Expenditures. The company maintains a significant program of
capital expenditures designed to increase capacity as needed, enhance
manufacturing efficiencies through modernization and increase the company's
vertical integration. The company currently plans to spend approximately $36
million in fiscal 1998. The company believes that cash flows from operations and
funds available under existing credit facilities will be sufficient to fund
capital expenditures and working capital requirements for the foreseeable
future.
Phillips Mills Acquisition
On August 5, 1997, Culp completed the acquisition of the business and
certain assets relating to the upholstery fabric businesses operating as
Phillips Weaving Mills, Phillips Velvet Mills, Phillips Printing and Phillips
Mills. These operating units were purchased from Phillips Industries, Inc., a
privately owned corporation based in High Point, North Carolina. Based on the
terms of the definitive asset purchase agreement, the transaction is valued for
accounting and reporting purposes at approximately $37 million (including cash,
retirement of debt and a non-compete agreement) under generally accepted
accounting principles. Terms of the purchase also include additional
compensation contingent upon attaining specified future growth objectives and an
option for 100,000 shares of Culp's common stock.
Funds for the cash portion of the transaction were provided from the
company's revolving credit facility.
Pending Acquisition of Artee Industries
On October 14, 1997, Culp agreed to acquire the business and substantially
all the assets relating to the yarn manufacturing business operating as Artee
Industries, Incorporated. Based on the definitive asset purchase agreement, the
transaction value at closing is estimated to be $17.4 million (including
issuance of Culp common stock, cash, a note and assumption of certain
liabilities). Terms of the purchase also provide the opportunity for additional
consideration of up to $7.2 million contingent upon the profitability of Artee
during Culp's fiscal year ending May 2, 1999. The acquisition will be accounted
for as a purchase, and the results of Artee will therefore be included in Culp's
results from the closing date. Closing of the transaction is scheduled to occur
no later than May 4, 1998, but may occur earlier if certain profitability levels
are reached by Artee. Closing is contingent upon various conditions, including
the satisfactory completion of Culp's due diligence and Artee's compliance with
a minimum net worth requirement.
Inflation
Although the company's costs of raw materials have been relatively stable
thus far in fiscal 1998, these expenses are generally higher than a year ago.
Other operating expenses, such as labor, utilities and manufacturing supplies,
have also increased. Competitive conditions have not allowed the company to
offset the impact of these increases fully through higher prices, thereby
putting pressure on profit margins. The net impact on margins will continued to
be influenced by raw material prices, other operating costs and competitive
conditions.
Seasonality
The company's business is slightly seasonal, with increased sales during
the company's 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.
Forward-Looking Information
The company's report on Form 10-Q may contain statements that could be
deemed forward-looking statements that are inherently subject to risks and
uncertainties. Factors that could influence the matters discussed in the
forward-looking statements include the level of housing starts and sales of
existing homes, consumer confidence and trends in disposable income. 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 adversely affect the company. Because of the increasing percentage of the
company's sales that is derived from shipments to customers outside the United
States, the relative value of the U.S. dollar relative to other currencies can
affect the competitiveness of the company's products in international markets.
II-1
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings that are required to be disclosed under this
item.
Item 2. Change in Securities
Item 3. Default Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the company was held in High Point, North
Carolina on September 16, 1997. Of the 12,643,728 shares of common stock
outstanding on the record date, 11,641,246 shares were present in person or by
proxy.
At the Annual Meeting, shareholders voted on:
ratifying the appointment of KPMG Peat Marwick LLP as the independent auditors
of the company for the current fiscal year, and;
the election of three directors: Robert G. Culp, III, Earl M. Honeycutt, and
Patrick H. Norton to serve until the 2000 Annual Meeting;
approving the company's 1997 Performance-Based Option Plan;
A. Proposal to ratify the election of KPMG Peat Marwick LLP as independent
auditors of the company for fiscal year 1998:
For 11,616,703
Against 1,837
Abstain 22,706
Broker Non-Votes -0-
B. Proposal for Election of Directors:
Robert G. Culp, III Patrick H. Norton
For 11,378,075 For 11,377,875
Against -0- Against -0-
Abstain 263,171 Abstain 263,371
Broker Non-Votes -0- Broker Non-Votes -0-
Earl M. Honeycutt
For 11,385,375
Against -0-
Abstain 255,871
Broker Non-Votes -0-
C. Proposal to Approve the Company's 1997 Performance-Based Option Plan
For 11,206,096
Against 402,376
Abstain 32,773
Broker Non-Votes -0-
Item 6. Exhibits and Reports on Form 8-K
(a) 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, 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) 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 28, 1996, 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 28, 1996, 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.
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.
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 August 12, 1997, included under Item 5, Other Events,
disclosure of the company's press release for quarterly earnings and the
company's Financial Information Release relating to the financial infor-
mation for the first quarter ended August 3, 1997.
(2) Form 8-K dated October 15, 1997, included under Item 5, Other Events,
disclosure of the company's press release and financial information
release, both dated October 15, 1997, relating to the acquisition of Artee
Industries, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CULP, INC.
(Registrant)
Date: December 17, 1997 By: s/s Franklin N. Saxon
Franklin N. Saxon
Sr. Vice President and
Chief Financial Officer
(Authorized to sign on behalf
of the registrant and also
signing as principal
accounting officer)
Date: December 17, 1997 By s/s Stephen T. Hancock
Stephen T. Hancock
General Accounting Manager
(Chief Accounting Officer)