UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 30, 2005
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Culp, Inc.
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(Exact Name of Registrant as Specified in its Charter)
North Carolina 0-12781 56-1001967
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(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1823 Eastchester Drive
High Point, North Carolina 27265
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(Address of Principal Executive Offices)
(Zip Code)
(336) 889-5161
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former name or address, if changed from last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
INDEX
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Page
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Item 1.01 - Entry into a Material Definitive Agreement 3
Item 2.02 - Results of Operations and Financial Condition 3
Item 9.01(c) - Exhibits 4
Signatures 5
Exhibits
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1.01. Entry into a Material Definitive Agreement.
On August 30, 2005, Culp, Inc. (the "Company") and Wachovia Bank, National
Association (formerly, Wachovia Bank, N.A.) (referred to herein as "Wachovia")
entered into a Sixth Amendment to Amended and Restated Credit Agreement (the
"Agreement") to amend and renew the Company's working capital line of credit
with Wachovia. The Agreement provides for an unsecured line of credit in the
amount of $8,000,000, to be used for working capital and to support letters of
credit, which in total are not to exceed $5,500,000, required by the Company for
various aspects of its operations. The line of credit has a term expiring August
31, 2006 and bears interest at LIBOR plus an adjustable margin based on the
company's debt/EBITDA ratio, as defined in the agreement. The fees for this
amendment were $5,000. The financial covenants applicable to the Company
under the Agreement include the following:
o quarterly EBITDA targets (based upon the latest four quarters), with EBITDA
being calculated excluding restructuring and related charges and other
non-cash charges (with a limit on the amount of cash restructuring
charges).
o an interest and lease coverage test.
o funded debt to tangible capital ratio not to exceed 60%.
o $5,000,000 annual limit on capital expenditures.
o dividend restrictions (unchanged from prior agreement).
o a liquidity requirement providing that from October 31, 2005 until March
15, 2006, the Company must maintain collected deposit balances with
Wachovia of at least $7,500,000. This $7,500,000 million deposit
requirement is contingent upon the company's successful completion of a
real estate loan, as described below.
A copy of the Sixth Amendment to Amended and Restated Credit Agreement is filed
herewith as Exhibit 99(c), and the description provided above is qualified by
reference to the complete terms of the Agreement as set forth in Exhibit 99(c).
In addition, on August 30, 2005, the Company executed a Real Estate Loan
Commitment Letter (the "Letter") with Wachovia, providing that Wachovia would
commit until October 31, 2005 to make a five year term loan to the Company in an
amount expected to be approximately $4,060,000, to finance and to be secured by
a lien on the Company's headquarters building in High Point, North Carolina. The
loan will bear interest at LIBOR plus an adjustable margin based on the
company's debt/EBITDA ratio, as defined in the agreement, and will be payable
monthly on a 15-year amortization schedule, with a final balloon payment due
five years from closing. The commitment contains other terms and is subject to
certain conditions and contingencies, as set forth in the Letter. The fees for
this amendment were $1,500.
A copy of the Letter is filed herewith as Exhibit 99(d), and the description
provided above is qualified by reference to the complete terms of the Letter as
set forth in Exhibit 99(d).
The Company anticipates that the real estate term loan described above will be
closed during October 2005.
Item 2.02 - Results of Operations and Financial Condition
On August 31, 2005, the Company issued a news release to announce its financial
results for the first quarter ended July 31, 2005. The news release is attached
hereto as Exhibit 99(a).
Also on August 31, 2005, the Company released a Financial Information Release
containing additional financial information and disclosures about the Company's
first quarter ended July 31, 2005. The Financial Information Release is attached
hereto as Exhibit 99(b).
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The news release and Financial Information Release contain disclosures about
free cash flow, a non-GAAP performance measure, that management believes
provides useful information to investors because it measures the Company's
available cash flow for potential debt repayment, stock repurchases and
additions to cash and cash equivalents. In addition, the news release and
Financial Information Release contain proforma income statement information,
which reconciles the reported and projected income statement information with
proforma results, which exclude restructuring and related charges and credits.
The Company has included this proforma information in order to show operational
performance excluding the effects of restructuring and related charges and
credits that are not expected to occur on a regular basis. Management believes
this presentation aids in the comparison of financial results among comparable
financial periods. In addition, this information is used by management to make
operational decisions about the Company's business, is used in certain financial
covenants in the Company's loan agreement, and is used by the Company as a
financial goal for purposes of determining management incentive bonuses.
Forward Looking Information. This report and the exhibits hereto contain
statements that may be deemed "forward-looking statements" within the meaning of
the federal securities laws, including the Private Securities Litigation Reform
Act of 1995 (Section 27A of the Securities Act of 1933 and Section 27A of the
Securities and Exchange Act of 1934). Such statements are inherently subject to
risks and uncertainties. Further, forward-looking statements are intended to
speak only as of the date on which they are made. Forward-looking statements are
statements that include projections, expectations or beliefs about future events
or results or otherwise are not statements of historical fact. Such statements
are often but not always characterized by qualifying words such as "expect,"
"believe," "estimate," "plan" and "project" and their derivatives, and include
but are not limited to statements about the company's future operations,
production levels, sales, SG&A or other expenses, margins, gross profit,
operating income, earnings or other performance measures. Factors that could
influence the matters discussed in such statements include the level of housing
starts and sales of existing homes, consumer confidence, trends in disposable
income, and general economic conditions. Decreases in these economic indicators
could have a negative effect on the company's business and prospects. Likewise,
increases in interest rates, particularly home mortgage rates, and increases in
consumer debt or the general rate of inflation, could affect the Company
adversely. Changes in consumer tastes or preferences toward products not
produced by the Company could erode demand for the Company's products. In
addition, strengthening of the U.S. dollar against other currencies could make
the Company's products less competitive on the basis of price in markets outside
the United States. Also, economic and political instability in international
areas could affect the company's operations or sources of goods in those areas,
as well as demand for the company's products in international markets. Finally,
unanticipated delays or costs in executing restructuring actions could cause the
cumulative effect of restructuring actions to fail to meet the objectives set
forth by management. Other factors that could affect the matters discussed in
forward-looking statements are included in the company's periodic reports filed
with the Securities and Exchange Commission.
Item 9.01 (c) -- Exhibits
99(a) News Release dated August 31, 2005
99(b) Financial Information Release dated August 31, 2005
99(c) Sixth Amendment to Amended and Restated Credit Agreement dated August 30,
2005
99(d) Real Estate Loan Commitment Letter dated August 30, 2005
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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 hereunto duly authorized.
CULP, INC.
(Registrant)
By: /s/ Franklin N. Saxon
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Franklin N. Saxon
President and Chief Operating Officer
By: /s/ Kenneth R. Bowling
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Kenneth R. Bowling
Vice President-Finance, Treasurer
Dated: August 31, 2005
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