SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended April 27, 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
incorporation or other organization) Identification No.)
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)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.05/Share
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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation SK is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[]
As of July 8, 1997, 12,643,728 shares of common stock were outstanding.
The aggregate market value of the voting stock held by non-affiliates of the
registrant on that date was $165,275,478 based on the closing sales price of
such stock as quoted through the New York Stock Exchange Automated Quotation
System (NYSE), assuming, for purposes of this report, that all executive
officers and directors of the registrant are affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
PART II
Portions of the Company's Annual Report to Shareholders for the fiscal
year ended April 27, 1997 are incorporated by reference into Items 5,6,7 and 8.
PART III
The Company's Proxy Statement dated August 1, 1997 in connection with
its Annual Meeting of Shareholders to be held on September 16, 1997 is
incorporated by reference into Items 10, 11, 12 and 13.
EXHIBITS INDEX BEGINS ON PAGE 26
CULP, INC.
FORM 10-K REPORT
TABLE OF CONTENTS
Item No. Page
PART I
1. Business
General Development.................................................................................4
Business ...........................................................................................4
Business Units .....................................................................................5
Capital Expenditures................................................................................6
Industry Segment....................................................................................7
Industry Overview...................................................................................7
Products............................................................................................8
Manufacturing......................................................................................10
Product Design and Styling.........................................................................11
Distribution.......................................................................................11
Sources and Availability of Raw Materials..........................................................12
Competition........................................................................................12
Environmental and Other Regulations................................................................12
Employees..........................................................................................13
Customers and Sales................................................................................14
Backlog............................................................................................14
2. Properties..............................................................................................15
3. Legal Proceedings.......................................................................................16
4. Submission of Matters to a Vote of Security Holders....................................................16
PART II
5. Market for the Registrant's Common Stock
and Related Stockholder Matters.......................................................................16
6. Selected Financial Data.................................................................................16
7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.........................................................16
8. Consolidated Financial Statements and Supplementary Data................................................16
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................................................................17
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PART III
10. Directors and Executive Officers of the
Registrant............................................................................................17
11. Executive Compensation..................................................................................17
12. Security Ownership of Certain
Beneficial Owners and Management......................................................................17
13. Certain Relationships and Related
Transactions..........................................................................................17
PART IV
14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K...............................................................................18
Documents filed as part of this report..................................................................18
Exhibits................................................................................................19
Reports on Form 8-K.....................................................................................24
Financial Statement Schedules...........................................................................24
Signatures .............................................................................................25
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PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT
THE COMPANY. Culp, Inc. (the Company) manufactures and markets
upholstery fabrics and mattress tickings primarily for use in the furniture
(residential, commercial and juvenile) and bedding industries on a worldwide
basis. The Company's executive offices are located in High Point, North
Carolina.. The Company was organized as a North Carolina corporation in 1972.
BUSINESS
Culp believes it is the largest manufacturer and marketer of furniture
upholstery fabrics in the world and is a leading global producer of mattress
fabrics (known as mattress ticking). The Company's fabrics are used principally
in the production of residential and commercial furniture and bedding products,
including sofas, recliners, chairs, loveseats, sectionals, sofa-beds, office
seating, panel systems and mattress sets. Culp markets one of the broadest
product lines in its industry, with a wide range of fabric constructions,
patterns, colors, textures and finishes. This breadth is made possible by Culp's
extensive manufacturing capabilities that include a variety of weaving, printing
and finishing operations and the ability to produce various yarns and unfinished
base fabrics (known as greige goods) used in its products. Culp's staff of over
50 designers uses Computer Aided Design (CAD) systems to develop the Company's
own patterns and styles. Culp's product line currently includes more than 2,000
upholstery fabric patterns and 600 mattress ticking styles. Although Culp
markets fabrics at most price levels, the Company has emphasized fabrics that
have a broad appeal in the "good" and "better" price categories of furniture and
bedding.
Culp markets its products worldwide, with sales to customers in over
fifty (50) countries. The Company's international sales have increased from
$44.0 million in fiscal 1994 to $101.6 million in fiscal 1997. Although
shipments to U.S.-based customers continue to account for most of the Company's
sales, Culp's success in building a global presence has led to an increasing
proportion of sales to international accounts (25.5% of net sales for fiscal
1997). The Company's network of 30 international sales agents represents Culp's
products in major furniture and bedding markets outside the United States.
Culp has eleven (11) manufacturing facilities, with a combined total of
2.3 million square feet, that are located in North Carolina (5), South Carolina
(2), Pennsylvania (2), Georgia (1) and Quebec, Canada (1). The Company's
distribution system is designed to offer customers fast, responsive delivery.
Products are shipped directly to customers from the Company's manufacturing
facilities, as well as from three regional distribution facilities strategically
located in High Point, North Carolina, Los Angeles, California, and Tupelo,
Mississippi, which are areas of high concentration of furniture manufacturing.
In addition, the Company maintains an inventory of upholstery fabrics at a
warehouse facility in Grand Rapids, Michigan to supply large commercial
furniture manufacturers in that area.
Culp's position as a leading global marketer of upholstery fabrics and mattress
ticking has been achieved through internal expansion and strategic acquisitions.
The most recent acquisitions include
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Rossville/Chromatex in fiscal 1994 and Rayonese in fiscal 1995. Each of these
acquisitions has been successfully integrated into the Company's operations and
has contributed to Culp's growth.
BUSINESS UNITS
Culp's organization encompasses four business units: (i) Culp Textures,
(ii) Rossville/Chromatex, (iii) Velvets/Prints and (iv) Culp Home Fashions. Each
of these business units is accorded considerable autonomy and is responsible for
designing, manufacturing and marketing its respective product lines.
Considerable synergies exist among the business units, including the sharing of
common raw materials made internally, such as polypropylene yarns, certain dyed
and spun yarns, greige goods and printed heat-transfer paper. Products
manufactured at one business unit's facility are commonly transferred to another
business unit's facility for additional value-added processing steps. For
example, jacquard greige goods manufactured at Rayonese (part of Culp Home
Fashions) are shipped to a Velvets/Prints' facility where printed fabrics are
produced using various printing and finishing equipment. The following table
sets forth certain information for each of the Company's business units
CULP'S BUSINESS UNITS
MAJOR FISCAL 1997 PERCENT OF FISCAL
PRODUCT CATEGORY BUSINESS UNIT NET SALES 1997 SALES PRODUCT LINES (BASE CLOTH, IF APPLICABLE)
- ---------------- ------------- --------- ---------- -----------------------------------------
Upholstery
Fabrics Culp Textures $88.2 million 22.1% Woven jacquards
Woven dobbies
Rossville/Chromatex $79.5 million 20.0% Woven jacquards
Woven dobbies
Velvets/Prints $156.5 million 39.2% Wet prints (flock)
Heat-transfer prints (jacquard, flock)
Woven velvet
Tufted velvets (woven polyester)
===================================================================================================================
Mattress Ticking Culp Home Fashions $74.7 million 18.7% Woven jacquards
Heat-transfer prints (jacquard,
knit, sheeting)
Pigment prints (jacquard, knit,
sheeting, non-woven)
===================================================================================================================
CULP TEXTURES. Culp Textures manufactures and markets jacquard and
dobby woven fabrics used primarily for residential and commercial furniture.
Culp Textures' manufacturing facilities are located in Burlington and Graham,
North Carolina and Pageland, South Carolina. Culp Textures has become
increasingly vertically integrated, complementing its extensive weaving
capabilities with the ability to extrude, dye and texturize yarn. Many of the
designs marketed by Culp Textures feature intricate, complicated patterns such
as floral and abstract designs. Culp Textures accounts for the majority of the
Company's sales to the commercial furniture market. The Company maintains an
inventory at a third-party warehouse in Grand Rapids, Michigan to supply fabrics
marketed by Culp Textures to large commercial furniture manufacturers on a "just
in time" basis.
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ROSSVILLE/CHROMATEX. Rossville/Chromatex was acquired in fiscal 1994
and includes manufacturing facilities in Rossville, Georgia and West Hazelton,
Pennsylvania. This acquisition expanded the Company's capacity for jacquard and
dobby woven fabrics marketed principally for residential furniture. Although
Rossville/Chromatex markets fabrics to many of the same customers served by Culp
Textures, the patterns produced by Rossville/Chromatex have generally featured
more textured and chenille yarns. Rossville/Chromatex has been particularly
successful in spinning its own novelty yarns to produce textured fabrics that
embody "country" patterns.
VELVETS/PRINTS. Velvets/Prints, Culp's largest business unit,
manufactures and markets a broad range of printed and velvet fabrics. These
include wet-printed designs on flock-base fabrics, heat-transfer prints on
jacquard and flock-base fabrics, woven velvets and tufted velvets. These fabrics
typically offer manufacturers richly colored patterns and textured surfaces.
Recent product development improvements in manufacturing processes have
significantly enhanced the quality of printed flock fabrics which are
principally used for residential furniture. These fabrics are also used for
other upholstered products such as baby car seats. These fabrics are
manufactured at Burlington, North Carolina and Anderson, South Carolina, and
will be manufactured at Lumberton, North Carolina when that facility is
operational. A portion of the Company's current capital expenditures are
directed toward expanding its capacity for printed fabrics. The Company's new
wet-printing facility in Lumberton, North Carolina will produce fabrics to be
marketed by the Velvets/Prints business unit. Culp has installed in Burlington
the Company's first flock coating line (which produces flock-base or greige
goods) to further vertically integrate its production of wet-printed flock
fabrics. This operation began production in the fourth quarter of fiscal 1997.
CULP HOME FASHIONS. Culp Home Fashions principally markets mattress
ticking to bedding manufacturers. These fabrics encompass woven jacquard ticking
as well as heat-transfer and pigment-printed ticking on a variety of base
fabrics, including jacquard, knit, poly/cotton sheeting and non-woven materials.
Culp Home Fashions has successfully blended its diverse printing and finishing
capabilities with its access to a variety of base fabrics to offer innovative
designs to bedding manufacturers for mattress products. Printed jacquard fabrics
represent Culp Home Fashions' fastest growing product line, offering customers
better values with designs and textures of more expensive fabrics. Jacquard
greige goods printed by Culp Home Fashions are provided by the business unit's
Rayonese facility and Culp Textures jacquard weaving facility. The expansion of
the Rayonese capacity has been an important factor in the ability of this
business unit to increase its market share. Moreover, the additional Rayonese
capacity has allowed the Company to increase vertical integration by supplying
narrow-width jacquard greige goods to the Velvets/Prints business unit for the
production of printed jacquard upholstery fabrics. Culp Home Fashions'
manufacturing facilities are located in Stokesdale, North Carolina and St.
Jerome, Quebec.
CAPITAL EXPENDITURES
Over the past six fiscal years, the Company has invested over $100
million in capital expenditures to expand its manufacturing capacity, install
more efficient production equipment and vertically integrate its operations.
These expenditures have included, among other things, the installation of narrow
and wide-width weaving machines and additional printing equipment to support the
growth in woven and printed upholstery fabrics and mattress ticking. The Company
spent approximately $27.0 million in capital expenditures during fiscal 1997. A
substantial portion of fiscal 1997's expenditures
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were targeted to expand the Company's printing capacity to support sales growth
in wet-printed flock fabrics and to vertically integrate the production of
unprinted flock greige goods. As a result of expenditures to date, the Company
believes it has been able to support a substantially higher level of sales, as
well as lower its production costs and enhance its overall relative competitive
position.
INDUSTRY SEGMENT
The Company operates in one segment and is principally involved in the
designing, manufacturing and marketing of upholstery fabrics and mattress
ticking used in the furniture (residential, commercial and juvenile) and bedding
industries on a world-wide basis.
INDUSTRY OVERVIEW
Culp markets products worldwide to manufacturers and distributors that
operate in three principal markets and several specialty markets:
RESIDENTIAL FURNITURE. This market includes upholstered furniture sold
to consumers. Products include sofas, recliners, chairs, loveseats, sectionals
and sofa-beds.
COMMERCIAL FURNITURE. This market includes upholstered office seating
and panel systems sold primarily to be used in offices and institutional
settings.
BEDDING. This market includes mattresses and box springs.
SPECIALTY MARKETS. This category represents several other markets,
including juvenile furniture (baby car seats and baby items), "top of the bed"
(comforters and bedspreads), outdoor furniture, recreational vehicle seating,
automotive aftermarket (slip-on seat covers) and retail fabric stores.
The upholstery fabric manufacturing industry is fragmented. Although
several major firms compete in this market, no one firm is dominant. Conversely,
the mattress ticking industry is concentrated among relatively few large
suppliers. According to Furniture/Today, a leading trade publication, annual
sales of upholstery fabrics in the United States for residential applications
are approximately $2 billion. A recent survey conducted for Culp by an
independent international consulting firm estimated annual sales of upholstery
fabrics outside the United States to be more than $4 billion.
Trends in upholstery fabrics and mattress ticking demand generally
parallel trends in demand for consumer purchases of furniture and bedding.
Factors influencing consumer purchases of home furnishings include the number of
household formations, growth in the general population, the demographic profile
of the population, consumer confidence, employment levels, the amount of
disposable income, consumer debt levels, housing starts and existing home sales.
The long-term trend in U.S. demand for furniture and bedding has been one of
moderate growth, although there have been some occasional, temporary periods of
modest downturns in sales due principally to changes in economic conditions.
The Company believes that demographic trends are supporting long-term
growth in the U.S. residential furniture and bedding industries. In particular,
as "baby boomers" (people born between 1946
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and 1964) mature to the 35-to-64 year age group over the next decade, they will
be reaching their highest earning power. This age group includes the largest
consumers of residential furniture. Furthermore, statistics show that the
average size of new homes has increased in recent years, which generally results
in increased purchases of furnishings per home.
There is an established trend toward consolidation in the furniture
industry at all levels. Furniture/Today has reported that the ten largest U.S.
furniture manufacturers accounted for approximately 38% of the total industry
sales in 1996, up from a 23% share eleven years earlier. This trend is likely to
continue due to several factors, including the need to invest significant
capital to maintain modern manufacturing and distribution facilities and to
supply the furniture needs of increasingly large furniture retailers. The
Company believes that, as this trend continues, opportunities may increasingly
exist for large upholstery fabric manufacturers capable of supplying the product
requirements of large furniture manufacturers on a timely basis.
Although the demand for home furnishings in more developed
international geographic regions such as Western Europe is relatively mature,
major areas such as Eastern Europe, the Middle East and Asia-Pacific are
experiencing significant increases in sales of furniture and home furnishings.
Consumers in these areas are attracted to designs that mirror American tastes,
and U.S.-based manufacturers such as Culp have been able to capitalize on this
preference. Production costs of fabrics involve a relatively low labor
component, which provides an advantage for a Company with modern, efficient
manufacturing equipment and systems. The large size of the furniture and bedding
markets within the United States has led to a fabric manufacturing industry that
features ready access to a broad range of raw materials, large manufacturers
with lower costs resulting from economies of scale and the ready availability of
new designs and patterns. The Company believes that these characteristics enable
Culp to compete effectively in international markets.
PRODUCTS
The Company's products include principally upholstery fabrics and
mattress ticking.
UPHOLSTERY FABRICS. The Company derives the majority of its revenues
from the sale of upholstery fabrics primarily to the residential and commercial
(contract) furniture markets. Sales of upholstery fabrics were 81% of sales in
fiscal 1997, 81% in 1996, and 83% in 1995. The Company has emphasized fabrics
and patterns that have broad appeal at promotional to medium prices, generally
ranging from $2.25 per yard to $7.00 per yard.
MATTRESS TICKING. The Company manufactures mattress ticking (fabric
used for covering mattresses and box springs) for sale to bedding manufacturers.
Sales of mattress ticking constituted 19% of sales in fiscal 1997, 19% in 1996,
and 17% in 1995.
The Company has emphasized fabrics and patterns which have broad appeal
at prices generally ranging from $1.20 to $7.00 per yard.
The Company's upholstery fabrics and mattress ticking can each be
broadly grouped under the three main categories of wovens, prints and velvets.
The following table indicates the product lines
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within each of these categories, a brief description of their characteristics
and identification of their principal end-use markets.
CULP FABRIC CATEGORIES
UPHOLSTERY FABRICS CHARACTERISTICS PRINCIPAL MARKETS
WOVENS:
Jacquards Elaborate, complex designs such as florals and tapestries in Residential furniture
traditional, transitional and contemporary styles. Woven on Commerical furniture
intricate looms using a wide variety of synthetic and natural
yarns.
Dobbies Geometric designs such as plaids, stripes and solids Residential furniture
in Residential furniture traditional and country Commerical furniture
styles. Woven on less complicated Commercial
furniture looms using a variety of weaving
constructions and primarily synthetic yarns.
PRINTS:
Wet prints Contemporary patterns with deep, rich colors on a nylon flock Residential furniture
base fabric for a very soft texture and excellent wearability. Juvenile furniture
Produced by screen printing directly onto the base fabric.
Heat-transfer prints Sharp, intricate designs on flock or jacquard base fabrics. Residential furniture
Plush feel (flocks), deep colors (jacquards) and excellent Juvenile furniture
wearability. Produced by using heat and pressure to transfer
color from printed paper onto base fabric.
VELVETS:
Woven velvets Basic designs such as plaids and semi-plains in traditional and Residential furniture
contemporary styles with a plush feel. Woven with a short-cut
pile using various weaving methods and synthetic yarns.
Tufted velvets Lower cost production process of velvets in which synthetic Residential furniture
yarns are punched into a base polyester fabric for texture.
Similar designs as woven velvets.
MATTRESS TICKING CHARACTERISTICS PRINCIPAL MARKETS
WOVENS:
Jacquards Florals and other intricate designs. Woven on complex looms Bedding
using a wide variety of synthetic and natural yarns.
PRINTS:
Heat-transfer prints Sharp, detailed designs. Produced by using heat and pressure to Bedding
transfer color from printed paper onto base fabrics, including
woven jacquards, knits and poly/cotton sheetings.
Pigment prints Variety of designs produced economically by screen printing Bedding
pigments onto a variety of base fabrics, including jacquards,
knits, poly/cotton sheeting and non-wovens.
===================================================================================================================
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Although fabrics marketed for upholstery applications and those used
for mattress ticking may have similar appearances, mattress ticking must be
manufactured on weaving and printing equipment in wider widths to accommodate
the physical size of box springs and mattresses. The Company's products include
all major types of coverings, except for leather, that manufacturers use today
for furniture and bedding. The Company also markets fabrics for certain
specialty markets, but these do not currently represent a material portion of
the Company's business.
MANUFACTURING
Substantially all of the upholstery fabric and mattress ticking
currently marketed by Culp is produced at the Company's eleven manufacturing
facilities. These plants encompass a total of 2.3 million square feet and
include yarn extrusion, spinning, dyeing and texturizing equipment, narrow and
wide-width jacquard looms, dobby and woven velvet looms, tufting machines,
printing equipment for pigment, heat-transfer and wet printing, as well as
fabric finishing equipment. Culp is actively pursuing ISO certification for its
manufacturing facilities. ISO certification is an international recognition of a
Company's ability to deliver high quality products and services. Culp's
facilities at Stokesdale, North Carolina, which produces mattress ticking, and
at Anderson, South Carolina, which produces woven velvet upholstery fabric, were
awarded ISO-9002 certification during fiscal 1997. Additionally, the Company's
facility at Pageland, South Carolina, which produces jacquard and dobby
upholstery fabric, was awarded ISO-9002 certification in fiscal 1998 prior to
the filing of this report. The Company expects to complete the ISO certification
process at additional facilities in the near future.
The Company's woven fabrics are made from various types of synthetic
and natural yarn, such as polypropylene, polyester, acrylic, rayon, nylon or
cotton. The Company currently extrudes and spins a portion of its own needs for
yarn and purchases the remainder from outside suppliers. Although the Company
believes it will to continue to rely on suppliers for the majority of its yarn
requirements, the percentage of internally generated yarn is expected to
increase as additional extrusion equipment for polypropylene yarn is added over
the next two years. Yarn is woven into various fabrics on jacquard, dobby or
velvet weaving equipment. Once the weaving is completed, the fabric can be
printed or finished using a variety of processes. Culp purchases a significant
amount of greige goods (unfinished, uncolored base fabrics) from other suppliers
to be printed at the Company's plants, but has increased its internal production
capability for jacquard greige goods. The acquisition of Rayonese in fiscal 1995
increased the Company's capacity to produce its own jacquard greige goods. Culp
has installed additional airjet weaving machines at Rayonese to significantly
increase its capacity for jacquard greige goods.
During the fourth quarter of fiscal 1997, the Company installed its
first flock coating line to produce flock greige goods to be used primarily as
the base cloth for wet and heat-transfer-printed flock products. Flock fabrics
are produced by the application of very short nylon fibers onto a poly/cotton
woven base fabric to create a velvet effect. During the flock coating process,
the fibers are bonded onto the base fabric with an adhesive substance by
utilizing an electrostatic charging procedure which causes the fibers to
vertically align with the base fabric.
Tufted velvet fabrics are produced by tufting machines which insert an
acrylic or polypropylene yarn through a polyester woven base fabric creating
loop pile surface material which is then sheared to create a velvet surface.
Tufted velvet fabrics are typically lower-cost fabrics utilized in the Company's
lower-priced product mix.
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The Company's printing operations include pigment and heat-transfer
methods, as well as wet printing. The Company also produces its own printed
heat-transfer paper, another component of vertical integration. Wet printing is
the most recent addition to the Company's printing capabilities, and the Company
purchased a plant in Lumberton, North Carolina in January 1997 to approximately
double its wet-printing capacity.
PRODUCT DESIGN AND STYLING
Although design trends within the Company's markets are generally not
subject to radical change, the introduction of new fabrics and designs is an
important aspect of Culp's service to its customers. Accordingly, Culp's success
is largely dependent on the Company's ability to market fabrics with appealing
designs and patterns. Culp has a staff of over 50 designers involved in the
design and development of new patterns and styles, including designers with
experience in designing products for specific international markets. Culp uses
CAD systems in the development of new fabrics which assists the Company in
providing a very flexible design program. These systems have enabled the
Company's designers to experiment with new ideas and involve customers more
actively in the process. The use of CAD systems also has supported the Company's
emphasis on integrating manufacturing considerations into the early phase of a
new design. The completion of a new design center in fiscal 1998 will enable
most of the Company's designers to be located in the same facility to facilitate
the sharing of design ideas and CAD and other technologies. The new design
center should enhance the Company's merchandising and marketing efforts by
providing an environment in which customers can be shown new products as well as
participate in product development initiatives.
The process of developing new designs involves maintaining an awareness
of broad fashion and color trends both in the United States and internationally.
These concepts are blended with input from the Company's customers to develop
new fabric designs and styles. Most of these designs are introduced by Culp at
major trade conferences that occur twice a year in the United States (January
and July) and annually in several major international markets.
DISTRIBUTION
The majority of the Company's products are shipped directly from its
manufacturing facilities. This "direct ship" program is primarily utilized by
large manufacturers. Generally, small and medium-size residential furniture
manufacturers use one of the Company's three regional distribution facilities
which have been strategically positioned in areas which have a high
concentration of residential furniture manufacturers - High Point, North
Carolina, Los Angeles, California and Tupelo, Mississippi. In addition, the
Company maintains an inventory of upholstery fabric at a warehouse in Grand
Rapids, Michigan to supply large commercial furniture manufacturers in that area
on a "just in time" basis. The Company closely monitors demand in each
distribution territory to decide which patterns and styles to hold in inventory.
These products are available on demand by customers and are usually shipped
within 48 hours of receipt of an order. Substantially all of the Company's
shipments of mattress ticking are made from its manufacturing facilities in
Stokesdale, North Carolina and St.
Jerome, Quebec, Canada.
In international markets, Culp sells primarily to distributors that
maintain inventories of upholstery fabrics for resale to furniture
manufacturers. The Company plans to explore the establishment of distribution
facilities in certain areas outside the United States to support increasing
international sales. SOURCES AND AVAILABILITY OF RAW MATERIALS
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Raw materials account for more than half of the Company's total
production costs. The Company purchases various types of synthetic and natural
yarns (polypropylene, polyester, acrylic, nylon, rayon and cotton), various
types of greige goods (poly/cotton wovens and flocks, polyester wovens,
poly/rayon and poly/cotton jacquard wovens, polyester knits, poly/cotton
sheeting and non-wovens), polypropylene resins, nylon flock fibers, rayon
staple, latex adhesives, dyes and chemicals from a variety of suppliers. The
Company has made a significant investment in becoming more vertically integrated
and producing more of its jacquard greige goods, polypropylene yarns, package
dyed yarns and printed heat-transfer paper internally. As a result, a larger
portion of its raw materials are comprised of more basic commodities such as
rayon staple, undyed yarns, polypropylene resin chips, certain polyester warp
yarns, unprinted heat-transfer paper and unflocked poly/cotton base fabric. Most
of the Company's raw materials are available from more than one primary source,
and prices of such materials fluctuate depending upon current supply and demand
conditions and the general rate of inflation. Many of the Company's basic raw
materials are petrochemical products or are produced from such products, and
therefore the Company's raw material costs are particularly sensitive to changes
in petrochemical prices. Generally, the Company has not had significant
difficulty in obtaining raw materials.
The Company currently relies on one supplier for most of its flock
greige goods. Due to the limited supply of flock greige goods, there can be no
assurance that the Company will be able to obtain sufficient quantities of flock
greige goods at economical prices if its existing supply is interrupted. In
addition, although the Company began operating its own flock coating
manufacturing line to produce flock greige goods during the fourth quarter of
fiscal 1997, the manufacturing process for this fabric differs substantially
from the weaving and other processes used in producing the Company's other
fabrics. Accordingly, unforeseen technological difficulties or other matters
could materially delay the Company's production of flock greige goods.
COMPETITION
The Company believes its principal upholstery fabrics competitors are
the Burlington House Fabrics division of Burlington Industries, Inc., Joan
Fabrics Corporation, Malden Mills, Inc., the Mastercraft division of Collins &
Aikman Company, Microfibres, Inc., and Quaker Fabric Corporation. Conversely,
the mattress ticking market is concentrated in a few relatively large suppliers.
The Company believes its principal mattress ticking competitors are Bekaert
Textiles B.V., Blumenthal Print Works, Inc., Burlington House Fabrics division
of Burlington Industries, Inc. and Tietex, Inc. Although the Company believes it
is the largest supplier of furniture upholstery fabrics and a leading supplier
of mattress ticking to the bedding industry, some of the Company's competitors
are larger overall and have greater financial resources than the Company.
Competition for the Company's products is based primarily on price, design,
quality, timing of delivery and service.
ENVIRONMENTAL AND OTHER REGULATIONS
The Company is subject to various federal and state laws and
regulations, including the Occupational Safety and Health Act and federal and
state environmental laws, as well as similar laws
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governing its Rayonese facility in Canada. The Company periodically reviews its
compliance with such laws and regulations in an attempt to minimize the risk of
material violations.
The Company's operations involve a variety of materials and processes
that are subject to environmental regulation. Under current law, environmental
liability can arise from previously owned properties, leased properties and
properties owned by third parties, as well as from properties currently owned
and leased by the Company. Environmental liabilities can also be asserted by
adjacent landowners or other third parties in toxic tort litigation.
In addition, under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA"), and analogous
state statutes, liability can be imposed for the disposal of waste at sites
targeted for cleanup by federal and state regulatory authorities. Liability
under CERCLA is strict as well as joint and several. The Company has accrued
reserves for environmental matters based on information presently available.
Based on this information and the Company's established reserves, the Company
does not believe that environmental matters will have a material adverse effect
on either the Company's financial condition or results of operations. However,
there can be no assurance that the costs associated with environmental matters
will not increase in the future.
In its pre-acquisition examination of its new Lumberton facility, the
Company discovered certain chlorinated solvents in the soil and groundwater
which are believed to have originated from an adjacent property. The Company and
the then owner of the Lumberton facility agreed to exclude the area of the
property known to be affected from the property that the Company acquired. The
Company has not been and believes that it will not be deemed a responsible party
with respect to such known contamination and accordingly that such contamination
will not have a material adverse effect on the Company's operations or financial
condition, although there can be no assurance that other portions of the
Lumberton property may not become affected in the future or that other
environmental issues may not arise.
In 1992, the Company discovered soil and groundwater contamination at
its Stokesdale, North Carolina facility, which had been purchased in 1986
pursuant to an agreement in which the seller of the facility indemnified the
Company against environmental contamination on the property. The Company has
taken action to remediate the contamination of this facility and reached a
monetary settlement in 1995 with the former owner of the property under the
former owner's indemnification obligations to the Company. In addition, the
United States Environmental Protection Agency has obtained a judgment against
the owner and lessor of the Company's plant in West Hazelton, Pennsylvania
relating to remediation of soil and groundwater contamination at the West
Hazelton facility. No claim has been asserted against the Company in connection
with the judgment or the contamination at the West Hazelton facility, and the
Company is fully indemnified against any such claims by the owner of that
facility and the related corporation from which the Company purchased the assets
located at the facility.
EMPLOYEES
As of April 27, 1997, the Company had 3,146 employees. All of the
hourly employees at the Company's facility in West Hazelton, Pennsylvania and
all of the hourly employees at the Rayonese facility in Canada (approximately
15% of the Company's workforce) are represented by a union. The collective
bargaining agreement with respect to the hourly employees at the Pennsylvania
plant expires in 1999. Additionally, the collective bargaining agreement with
respect to the Rayonese hourly employees expires in
-13-
1999. The Company is not aware of any efforts to organize any more of its
employees and believes its relations with its employees are good.
CUSTOMERS AND SALES
Culp's size, broad product line, diverse manufacturing base and
effective distribution system enable it to market products to over 2,000
customers. Major customers are leading manufacturers of upholstered furniture,
including Bassett, Furniture Brands International (Broyhill, Thomasville and
Lane), Lifestyles International (Berkline, Universal, Benchcraft, Drexel,
Henredon and others), Flexsteel, La-Z-Boy and LADD (Clayton Marcus, Barclay,
Pennsylvania House and American Drew). Representative customers for the
Company's fabrics for commercial furniture include Herman Miller, HON Industries
and Steelcase. In the mattress ticking area, Culp's customer base includes
leading bedding manufacturers such as Sealy, Serta, Simmons and Spring Air.
Culp's customers also include many small and medium-size furniture and bedding
manufacturers. In international markets, Culp sells upholstery fabrics primarily
to distributors that maintain inventories for resale to furniture manufacturers.
The following table sets forth the Company's net sales by geographic
area by amount and percentage of total net sales for the three most recent
fiscal years.
NET SALES BY GEOGRAPHIC AREA
(dollars in thousands)
FISCAL 1997 FISCAL 1996 FISCAL 1995
----------- ----------- ------------
United States..................$297,308 74.5% $274,270 78.0% $250,055 81.2%
-------- ----- -------- ----- -------- -----
North America (excluding
U.S.).......................... 27,479 6.9 23,528 6.7 16,707 5.4
Europe......................... 25,245 6.3 18,927 5.4 19,177 6.2
Middle East.................... 23,505 5.9 15,609 4.4 6,081 2.0
Asia and Pacific Rim........... 19,646 4.9 12,124 3.4 8,969 2.9
South America.................. 2,604 0.7 2,753 0.8 3,749 1.2
All other areas................ 3,092 0.8 4,456 1.3 3,288 1.1
------ -------- ------ --- ----- ---
Subtotal....................... 101,571 25.5 77,397 22.0 57,971 18.8
------- ------- ------ ---- ------ ----
Total..........................$398,879 100.0% $351,667 100.0% $308,026 100.0%
======== =========== ======== ====== ======== ======
BACKLOG
Because a large portion of the Company's customers have an opportunity
to cancel orders, it is difficult to predict the amount of the backlog that is
"firm." Many customers may cancel orders before goods are placed into
production, and some may cancel at a later time. In addition, the Company
markets a significant portion of its sales through its Regional Warehouse System
from in-stock order positions. On April 27, 1997, the portion of the backlog
with confirmed shipping dates prior to June 2, 1997 was $30.3 million, and on
April 28, 1996, the portion of the backlog with confirmed shipping dates prior
to June 3, 1996 was $34.5 million.
-14-
ITEM 2. PROPERTIES
The Company's headquarters are located in High Point, North Carolina,
and the Company currently operates eleven (11) manufacturing facilities and
three (3) regional distribution facilities. The Company has an agreement to
warehouse inventory at a regional distribution facility in Grand Rapids,
Michigan operated by a third party. The following is a summary of the Company's
principal administrative, manufacturing and distribution facilities. The
manufacturing facilities are organized by business unit.
APPROX.
TOTAL AREA EXPIRATION
LOCATION PRINCIPAL USE (SQ. FT.) OF LEASE (1)
- -------- ------------- -------- ------------
o HEADQUARTERS AND DISTRIBUTIONS
CENTERS:
High Point, North Carolina Corporate headquarters 33,000 2015
High Point, North Carolina Regional distribution 65,000 2008
Los Angeles, California (3) Regional distribution 45,000 1997
Tupelo, Mississippi Regional distribution 35,000 2002
o CULP TEXTURES:
Graham, North Carolina (2) Manufacturing 341,000 N/A
Burlington, North Carolina (2) Manufacturing and distribution 302,000 N/A
Pageland, South Carolina (2) Manufacturing 96,000 N/A
o ROSSVILLE/CHROMATEX:
Rossville, Georgia (4) Manufacturing and distribution 396,000 1998
West Hazelton, Pennsylvania Manufacturing 110,000 2013
West Hazelton, Pennsylvania Manufacturing and distribution 100,000 2008
o VELVETS/PRINTS:
Burlington, North Carolina Manufacturing and distribution 275,000 2021
Lumberton, North Carolina (2) Manufacturing 107,000 N/A
Anderson, South Carolina (2) Manufacturing 99,000 N/A
o CULP HOME FASHIONS:
Stokesdale, North Carolina (2) Manufacturing and distribution 140,000 N/A
St. Jerome, Quebec, Canada (2) Manufacturing and distribution 202,000 N/A
-------------------------------------------
(1) Includes all options to renew
(2) Owned by the Company
(3) The Company has a lease which expires in 2007 (including all options to
renew) for a 35,000 square foot building in Los Angeles, California, and
will be used as a regional distribution facility.
(4) The Company has a lease which expires in 2018 (including all options to
renew) for a 290,000 square foot facility in Chattanooga, Tennessee and
will be used as a manufacturing and distribution facility.
-15-
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings to which the Company, or its
subsidiaries, is a party or of which any of their property is the subject that
are required to be disclosed under this item.
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of shareholders
during the fourth quarter ended April 27, 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED STOCKHOLDER MATTERS
Information with respect to the market for the Company's
common stock and related shareholder matters is included in the Company's Annual
Report to Shareholders for the year ended April 27, 1997, in the Consolidated
Statements of Shareholders' Equity (dividend information), in the Selected
Quarterly Data under the caption "Stock Data," in the Selected Annual Data under
the caption "Stock Data," in the Corporate Directory, under the caption "Stock
Listing" on the back cover page, which information is herein incorporated by
reference.
ITEM 6. SELECTED FINANCIAL DATA
This information is included in the Company's above referenced
Annual Report to Shareholders, under the caption "Selected Annual Data," and is
herein incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition
and Results of Operations is included in the Company's above referenced Annual
Report to Shareholders under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and is herein incorporated by
reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data
are included in the Company's above referenced Annual Report to Shareholders,
and are herein incorporated by reference. Item 14 of this report contains
specific page number references to the consolidated financial statements and
supplementary data included in the Annual Report.
-16-
EXCEPT FOR SUCH PORTIONS OF THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED APRIL 27, 1997 THAT ARE EXPRESSLY INCORPORATED BY
REFERENCE INTO THIS REPORT, SUCH REPORT IS NOT TO BE DEEMED FILED AS
PART OF THIS FILING.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the two years ended April 27, 1997 and any subsequent
interim periods, there were no changes of accountants and/or disagreements on
any matters of accounting principles or practices or financial statement
disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to executive officers and directors
of the Company is included in the Company's definitive Proxy Statement to be
filed pursuant to Regulation 14A of the Securities and Exchange Commission,
under the caption "Nominees, Directors and Executive Officers" and "Reports Of
Securities Ownership," which information is herein incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation is included
in the Company's definitive Proxy Statement to be filed pursuant to Regulation
14A of the Securities and Exchange Commission, under the caption "Executive
Compensation," which information is herein incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information with respect to the security ownership of certain
beneficial owners and management is included in the Company's definitive Proxy
Statement to be filed pursuant to Regulation 14A of the Securities and Exchange
Commission, under the caption "Voting Securities," which information is herein
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information with respect to certain relationships and related
transactions is included in the Company's definitive Proxy Statement to be filed
pursuant to Regulation 14A of the Securities and Exchange Commission, under the
subcaption "Certain Relationships and Related Transactions," which information
is herein incorporated by reference.
-17-
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
A) DOCUMENTS FILED AS PART OF THIS REPORT:
1. CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of Culp, Inc.
and subsidiary from the Company's Annual Report to Shareholders for the year
ended April 27, 1997, are incorporated by reference into this report.
Page of Annual
Report to
Shareholders
Item [Exhibit 13(a)]
Consolidated Balance sheets - April 27, 1997 and...............................................12
April 28, 1996
Consolidated Statements of Income -
for the years ended April 27, 1997,
April 28, 1996 and April 30, 1995............................................................13
Consolidated Statements of Shareholders' Equity -
for the years ended April 27, 1997,
April 28, 1996 and April 30, 1995............................................................14
Consolidated Statements of Cash Flows -
for the years ended April 27, 1997,
April 28, 1996 and April 30, 1995............................................................15
Consolidated Notes to Financial Statements.....................................................16
Report of Independent Auditors ................................................................24
2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules are omitted because they are
not applicable, or not required, or because the required information is included
in the consolidated financial statements or notes thereto.
-18-
3. EXHIBITS
The following exhibits are attached at the end of this report,
or incorporated by reference herein. 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.
4(a) Form of Common Stock Certificate of the Company was filed
as Exhibit 4(a) to Amendment No. 1 to the Company's
registration statement No. 2-85174, filed on August 30,
1983, and is 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.
-19-
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 Employees'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.
-20-
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.
-21-
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.
-22-
10(ee) Lease Agreement between Joseph E. Proctor (doing business
as JEPCO) and the Company, dated April 21, 1997.
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.
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.
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.
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.
13(a) Copy of the Company's 1997 Annual Report to Shareholders,
for the year ended April 27, 1997, furnished for
information only except with respect to those portions
incorporated by reference into this report.
-23-
22 List of subsidiaries of the Company.
24(a) Consent of Independent Public Auditors in connection with
the registration statements of Culp, Inc. on Form S-8
(File Nos. 33-13310, 33-37027, 33-80206, 33-62843, and
333-27519), dated March 20, 1987, September 18, 1990,
June 13, 1994, September 22, 1995, and May 21, 1997.
25(a) Power of Attorney of Harry R. Culp, dated June 2, 1997
25(b) Power of Attorney of Howard L. Dunn, Jr., dated June 20,
1997
25(c) Power of Attorney of Baxter P. Freeze., dated June 3,
1997
25(d) Power of Attorney of Earl M. Honeycutt, dated June 2,
1997.
25(e) Power of Attorney of Patrick H. Norton, dated June 16,
1997.
25(f) Power of Attorney of Earl N. Phillips, Jr., dated June 1,
1997
25(g) Power of Attorney of Bland W. Worley., dated June 4,
1997.
27 Financial Data Schedule
B) REPORTS ON FORM 8-K:
The Company filed the following report on Form 8-K during the quarter
ended April 27, 1997:
(1) Form 8-K dated February 4, 1997, 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 January 26, 1997.
C) EXHIBITS:
The exhibits to this Form 10-K are filed at the end of this Form 10-K
immediately preceded by an index. A list of the exhibits begins on page 28 under
the subheading "Exhibits Index".
D) FINANCIAL STATEMENT SCHEDULES:
See Item 14(a) (2)
-24-
SIGNATURES
Pursuant to the requirements of Section 13 of the
Securities Exchange Act of 1934, CULP, INC. has caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on
the 25th day of July, 1997.
CULP, INC.
By /s/ Robert G. Culp, III
Robert G. Culp, III
(Chairman and Chief Executive Officer)
By: /s/ Franklin N. Saxon
Franklin N. Saxon
(Sr. Vice President and Chief
Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on the
- -------------------------.
/s/ Robert G. Culp, III /s/ Franklin N. Saxon
Robert G. Culp, III Franklin N. Saxon
(Chairman of the (Director)
Board of Directors)
/s/ Earl N. Phillips, Jr.* /s/ Harry R. Culp *
Earl N. Phillips, Jr. Harry R. Culp
(Director) (Director)
/s/ Howard L. Dunn, Jr.* /s/ Baxter P. Freeze *
Howard L. Dunn, Jr. Baxter P. Freeze
(Director) (Director)
/s/ Earl M. Honeycutt* /s/ Bland W. Worley *
Earl M. Honeycutt Bland W. Worley
(Director) (Director)
/s/ Patrick H. Norton*
Patrick H. Norton
(Director)
* By Franklin N. Saxon, Attorney-in-Fact, pursuant to Powers of Attorney
filed with the Securities and Exchange Commission.
-25-
EXHIBITS INDEX
EXHIBIT NO. EXHIBIT
10(dd) Second Amendment to Lease Agreement between Chromatex Properties, Inc. and the
Company, dated April 17, 1997.
10(ee) Lease Agreement between Joseph E. Proctor (doing business as JEPCO) and the
Company, dated April 21, 1997.
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.
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.
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.
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.
13(a) Copy of the Company's 1997 Annual Report to Shareholders, for the year ended April
27, 1997, furnished for information only except with respect to those portions
incorporated by reference into this report.
22 List of subsidiaries of the Company.
24(a) Consent of Independent Public Auditors in connection with the registration
statements of Culp, Inc. on Form S-8 (File Nos. 33-13310, 33-37027, 33-80206,
33-62843, and 333-27519), dated March 20, 1987, September 18, 1990, June 13, 1994,
September 22, 1995, and May 21, 1997.
25(a) Power of Attorney of Harry R. Culp, dated June 2, 1997
25(b) Power of Attorney of Howard L. Dunn, Jr. dated June 20, 1997.
25(c) Power of Attorney of Baxter P. Freeze., dated June 3, 1997
25(d) Power of Attorney of Earl M. Honeycutt, dated June 3, 1997.
25(e) Power of Attorney of Patrick H. Norton, dated June 2, 1997.
25(f) Power of Attorney of Earl N. Phillips, Jr., dated June 1, 1997
25(g) Power of Attorney of Bland W. Worley, dated June 4, 1997.