SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 29, 2000
Commission File No. 0-12781
CULP, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1001967
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or other organization)
101 S. Main St., High Point, North Carolina 27261-2686
(Address of principal executive offices) (zip code)
(336) 889-5161
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934
during the preceding 12 months and (2) has been subject to the filing
requirements for at least the past 90 days.
YES X NO
Common shares outstanding at October 29, 2000: 11,208,720
Par Value: $.05
This amendment reflects the restatement of the financial statements as of
October 29, 2000, April 30, 2000 and October 31, 1999 due to not properly
recognizing certain gains that occurred in 1999 and 1998. See note 12 to the
consolidated financial statements in Item 1 for a description of the
restatement.
INDEX TO FORM 10-Q
For the period ended October 29, 2000
Part I - Financial Statements. Page
------------------------------------------ -------
Item 1. Unaudited Interim Consolidated Financial Statements:
Consolidated Statements of Income (Loss)-Three and Six Months Ended I-1
October 29, 2000 and October 31, 1999
Consolidated Balance Sheets-October 29, 2000, October 31, 1999 and I-2
April 30, 2000
Consolidated Statements of Cash Flows---Six Months Ended October 29, I-3
2000 and October 31, 1999
Consolidated Statements of Shareholders' Equity I-4
Notes to Consolidated Financial Statements I-5
Sales by Segment/Division I-11
International Sales by Geographic Area I-12
Item 2. Management's Discussion and Analysis of Financial I-13
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About I-18
Market Risk
Part II - Other Information
-------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders II-1
Item 6. Exhibits and Reports on Form 8-K II-2
Signature II-9
CULP, INC.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 29, 2000
AND OCTOBER 31, 1999
(Amounts in Thousands, Except for Per Share Data)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------
Amounts Percent of Sales
----------------------- -----------------------
October 29, October 31, % Over
2000 1999 (Under) 2001 2000
----------- ---------- ----------- ----------- -----------
Net sales $ 110,981 129,542 (14.3) % 100.0 % 100.0 %
Cost of sales 94,094 105,835 (11.1) % 84.8 % 81.7 %
----------- ---------- ----------- ----------- -----------
Gross profit 16,887 23,707 (28.8) % 15.2 % 18.3 %
Selling, general and
administrative expenses 13,491 16,035 (15.9) % 12.2 % 12.4 %
----------- ---------- ----------- ----------- -----------
Income from operations 3,396 7,672 (55.7) % 3.1 % 5.9 %
Interest expense 2,285 2,484 (8.0) % 2.1 % 1.9 %
Interest income (15) (16) (6.3) % (0.0)% (0.0)%
Other expense (income), net 575 416 38.2 % 0.5 % 0.3 %
----------- ---------- ----------- ----------- -----------
Income before income taxes 551 4,788 (88.5) % 0.5 % 3.7 %
Income taxes * 209 1,628 (87.2) % 37.9 % 34.0 %
----------- ---------- ----------- ----------- -----------
Net income $ 342 3,160 (89.2) % 0.3 % 2.4 %
=========== ========== =========== =========== ===========
Net income per share $0.03 $0.27 (88.9) %
Net income per share, assuming dilution $0.03 $0.27 (88.9) %
Dividends per share $0.035 $0.035 0.0 %
Average shares outstanding 11,209 11,749 (4.6) %
Average shares outstanding, assuming dilution 11,270 11,868 (5.0) %
SIX MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------
Amounts Percent of Sales
----------------------- -----------------------
October 29, October 31, % Over
2000 1999 (Under) 2001 2000
----------- ---------- ----------- ----------- -----------
Net sales $ 212,859 245,479 (13.3) % 100.0 % 100.0 %
Cost of sales 181,798 201,360 (9.7) % 85.4 % 82.0 %
----------- ---------- ----------- ----------- -----------
Gross profit 31,061 44,119 (29.6) % 14.6 % 18.0 %
Selling, general and
administrative expenses 27,269 31,073 (12.2) % 12.8 % 12.7 %
----------- ---------- ----------- ----------- -----------
Income from operations 3,792 13,046 (70.9) % 1.8 % 5.3 %
Interest expense 4,608 4,900 (6.0) % 2.2 % 2.0 %
Interest income (22) (33) (33.3) % (0.0)% (0.0)%
Other expense (income), net 1,316 971 35.5 % 0.6 % 0.4 %
----------- ---------- ----------- ----------- -----------
Income (loss) before income taxes (2,110) 7,208 (129.3) % (1.0)% 2.9 %
Income taxes * (696) 2,451 (128.4) % 33.0 % 34.0 %
----------- ---------- ----------- ----------- -----------
Net income (loss) $ (1,414) 4,757 (129.7) % (0.7)% 1.9 %
=========== ========== =========== =========== ===========
Net income (loss) per share ($0.13) $0.40 (132.5) %
Net income (loss) per share, assuming dilution ($0.13) $0.39 (133.3) %
Dividends per share $0.07 $0.07 0.0 %
Average shares outstanding 11,209 11,906 (5.9) %
Average shares outstanding, assuming dilution 11,209 12,044 (6.9) %
* Percent of sales column is calculated as a % of income (loss) before income taxes.
CULP, INC.
CONSOLIDATED BALANCE SHEETS
OCTOBER 29, 2000, OCTOBER 31, 1999 AND APRIL 30, 2000
Unaudited
(Amounts in Thousands)
Amounts Increase
-------------------------- (Decrease) (1)(2)
(2) October 29, (2)October 31, ------------------------- April 30,
2000 1999 Dollars Percent 2000
-------------- ---------- ------------ ---------- ---------
Current assets
Cash and cash investments $ 744 790 (46) (5.8) % 1,007
Accounts receivable 63,991 69,749 (5,758) (8.3) % 75,223
Inventories 72,967 78,234 (5,267) (6.7) % 74,471
Other current assets 11,003 8,865 2,138 24.1 % 10,349
-------------- ---------- ------------ ---------- ---------
Total current assets 148,705 157,638 (8,933) (5.7) % 161,050
Restricted investments 0 1,085 (1,085) (100.0) % 0
Property, plant & equipment, net 120,023 124,318 (4,295) (3.5) % 126,407
Goodwill 49,176 50,571 (1,395) (2.8) % 49,873
Other assets 6,508 6,166 342 5.5 % 6,650
-------------- ---------- ------------ ---------- ---------
Total assets $ 324,412 339,778 (15,366) (4.5) % 343,980
============== ========== ============ ========== =========
Current liabilities
Current maturities of
long-term debt $ 1,678 1,678 0 0.0 % 1,678
Accounts payable 30,351 38,427 (8,076) (21.0) % 37,287
Accrued expenses 22,404 22,947 (543) (2.4) % 22,108
Income taxes payable 0 1,786 (1,786) (100.0) % 0
-------------- ---------- ------------ ---------- ---------
Total current liabilities 54,433 64,838 (10,405) (16.0) % 61,073
Long-term debt 125,079 133,875 (8,796) (6.6) % 135,808
Deferred income taxes 17,459 14,583 2,876 19.7 % 17,459
-------------- ---------- ------------ ---------- ---------
Total liabilities 196,971 213,296 (16,325) (7.7) % 214,340
Shareholders' equity 127,441 126,482 959 0.8 % 129,640
-------------- ---------- ------------ ---------- ---------
Total liabilities and
shareholders' equity $ 324,412 339,778 (15,366) (4.5) % 343,980
============== ========== ============ ========== =========
Shares outstanding 11,209 11,320 (111) (1.0) % 11,209
============== ========== ============ ========== =========
(1) Derived from audited financial statements.
(2) As restated (see note 12 to the consolidated financial statements)
CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 29, 2000 AND OCTOBER 31, 1999
Unaudited
(Amounts in Thousands)
SIX MONTHS ENDED
------------------------
Amounts
------------------------
October 29, October 31,
2000 1999
----------- -----------
Cash flows from operating activities:
Net income (loss) $ (1,414) 4,757
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 10,043 9,516
Amortization of intangible assets 798 798
Changes in assets and liabilities:
Accounts receivable 11,232 754
Inventories 1,504 (11,164)
Other current assets (654) 768
Other assets 241 (186)
Accounts payable (859) 7,937
Accrued expenses 296 1,921
Income taxes payable 0 1,786
----------- -----------
Net cash provided by operating activities 21,187 16,887
----------- -----------
Cash flows from investing activities:
Capital expenditures (3,659) (10,524)
Purchases of restricted investments 0 (27)
Purchase of investments to fund deferred compensation liability (200) 0
Sale of restricted investments 0 2,282
----------- -----------
Net cash used in investing activities (3,859) (8,269)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 0 5,333
Principal payments on long-term debt (10,729) (11,770)
Change in accounts payable-capital expenditures (6,077) 4,803
Dividends paid (785) (822)
Payments to acquire common stock 0 (5,901)
Proceeds from common stock issued 0 20
----------- -----------
Net cash used in financing activities (17,591) (8,337)
----------- -----------
Increase (decrease) in cash and cash investments (263) 281
Cash and cash investments at beginning of period 1,007 509
----------- -----------
Cash and cash investments at end of period $ 744 790
=========== ===========
CULP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in thousands, except share and per share data)
Capital
Common Stock Contributed Total
------------------- in Excess Retained Shareholders'
Shares Amount of Par Value Earnings Equity
---------------------------------------------------------------------------------------------------
Balance, May 2, 1999 (1) 12,079,171 $ 604 $ 37,966 $ 89,858 $ 128,428
Cash dividends ($0.14 per share) (1,611) (1,611)
Net income 9,380 9,380
Common stock issued in connection
with stock option plans 13,813 1 78 79
Common stock purchased (884,264) (45) (2,778) (3,813) (6,636)
---------------------------------------------------------------------------------------------------
Balance, April 30, 2000 (1) 11,208,720 560 35,266 93,814 129,640
Cash dividends ($0.07 per share) (785) (785)
Net loss (1,414) (1,414)
---------------------------------------------------------------------------------------------------
Balance, October 29, 2000 (1) 11,208,720 $ 560 $ 35,266 $ 91,615 $ 127,441
===================================================================================================
(1) As restated (see note 12 to the consolidated financial statements)
Culp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Culp, Inc.
and subsidiary include all adjustments, which are, in the opinion of management,
necessary for fair presentation of the results of operations and financial
position. All of these adjustments are of a normal recurring nature except as
disclosed in note 12 to the financial statements. Results of operations for
interim periods may not be indicative of future results. The unaudited
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements, which are included in the company's annual
report on Form 10-K filed with the Securities and Exchange Commission for the
fiscal year ended April 30, 2000.
================================================================================
================================================================================
2. Accounts Receivable
A summary of accounts receivable follows (dollars in thousands):
--------------------------------------------------------------------------------
October 29, 2000 April 30, 2000
--------------------------------------------------------------------------------
Customers $ 66,884 $ 77,981
Allowance for doubtful accounts (1,500) (1,477)
Reserve for returns and allowances (1,393) (1,281)
--------------------------------------------------------------------------------
$ 63,991 $ 75,223
================================================================================
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):
--------------------------------------------------------------------------------
October 29, 2000 April 30, 2000
--------------------------------------------------------------------------------
Raw materials $ 39,947 $ 43,661
Work-in-process 6,278 5,970
Finished goods 27,635 25,733
--------------------------------------------------------------------------------
Total inventories valued at FIFO cost 73,860 75,364
Adjustments of certain inventories to the
LIFO cost method (893) (893)
--------------------------------------------------------------------------------
$ 72,967 $ 74,471
================================================================================
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):
--------------------------------------------------------------------------------
October 29, 2000 April 30, 2000
--------------------------------------------------------------------------------
Accounts payable-trade $ 25,620 $ 26,479
Accounts payable-capital expenditures 4,731 10,808
--------------------------------------------------------------------------------
$ 30,351 $ 37,287
================================================================================
6. Accrued Expenses
A summary of accrued expenses follows (dollars in thousands):
--------------------------------------------------------------------------------
October 29, 2000 April 30, 2000
--------------------------------------------------------------------------------
Compensation and benefits $ 14,128 $ 14,748
Other 8,276 7,360
--------------------------------------------------------------------------------
$ 22,404 $ 22,108
================================================================================
7. Long-Term Debt
A summary of long-term debt follows (dollars in thousands):
--------------------------------------------------------------------------------
October 29, 2000 April 30, 2000
--------------------------------------------------------------------------------
Senior unsecured notes $ 75,000 $ 75,000
Industrial revenue bonds and other obligations 32,401 32,452
Revolving credit facility 16,000 25,000
Obligations to sellers 3,356 5,034
--------------------------------------------------------------------------------
126,757 137,486
Less current maturities (1,678) (1,678)
--------------------------------------------------------------------------------
$ 125,079 $ 135,808
================================================================================
The senior unsecured notes have a fixed coupon rate of 6.76% and an average
remaining term of 8 years. The principal payments become due from March 2006 to
March 2010 with interest payable semi-annually.
The company's revolving credit agreement (the "Credit Agreement") provides
an unsecured multi-currency revolving credit facility, which expires in April
2002, with a syndicate of banks in the United States. The Credit Agreement
provides for a revolving loan commitment of $88,000,000. The agreement requires
payment of a quarterly facility fee in advance. In July 2000, the company
amended the Credit Agreement to amend certain covenants. Additionally, the
amendment increased the interest rate from LIBOR plus 0.80% to 0.90% to LIBOR
plus 1.10% to 1.60%. The specified pricing matrix will be in effect for the
remainder of fiscal 2001 and is based on the company's debt to EBITDA ratio, as
defined by the agreement. On borrowings outstanding at October 29, 2000, the
interest rate was 8.12% (LIBOR plus 1.50%).
The company's $6,000,000 revolving line of credit expires on November 30,
2001. However, the line of credit 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. At October 29, 2000, no borrowings were outstanding under the
revolving line of credit.
The industrial revenue bonds (IRBs) are generally due in balloon maturities
which occur at various dates from 2006 to 2013. The IRBs are collateralized by
letters of credit for the outstanding balance of the IRBs and certain interest
payments due thereunder.
The company's loan agreements require, among other things, that the company
maintain compliance with certain financial ratios. At October 29, 2000, the
company was in compliance with these financial covenants.
At October 29, 2000, the company had two 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:
notional amount interest rate expiration date
$ 5,000,000 6.9% June 2002
$ 5,000,000 6.6% July 2002
The company could terminate these agreements as of October 29, 2000 and
receive approximately $30,000. Net amounts received/paid under interest rate
swap agreements decreased interest expense by approximately $14,000 for the six
months of fiscal 2001 and increased interest expense by approximately $171,000
for the six months of fiscal 2000. 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):
--------------------------------------------------------------------------------
2001 2000
--------------------------------------------------------------------------------
.
Interest $ 4,625 $ 5,197
Income taxes, net of $29 and $1,781 in refunds
in 2001 and 2000, respectively 69 59
================================================================================
9. Foreign Exchange Forward Contracts
The company generally enters into foreign exchange forward and option
contracts as a hedge against its exposure to currency fluctuations on firm
commitments to purchase certain machinery and equipment and raw materials. The
company had approximately $1,647,000 of outstanding foreign exchange forward
contracts as of October 29, 2000.
10. Net Income (Loss) Per Share
The following tables reconcile the numerators and denominators of net
income (loss) per share and net income (loss) per share, assuming dilution for
the three and six months ended October 29, 2000 and October 31, 1999:
THREE MONTHS ENDED
----------------------------------------------------------------------
October 29, 2000 October 31, 1999
--------------------------------- ----------------------------------
(Amounts in thousands, Income Shares Per Share Income Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ----------- --------- ----------- ----------- ---------
Net income per share $342 11,209 $0.03 $3,160 11,749 $0.27
===== =====
Effect of dilutive
securities:
Options - 61 - 119
----------- ---------- ----------- ----------
Net income per share,
assuming dilution $342 11,270 $0.03 $3,160 11,868 $0.27
=========== ========== ========= =========== ========== ========
SIX MONTHS ENDED
----------------------------------------------------------------------
October 29, 2000 October 31, 1999
--------------------------------- ----------------------------------
(Amounts in thousands, (Loss) Shares Per Share Income Shares Per Share
except per share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ----------- --------- ----------- ----------- --------
Net income (loss) per
share ($1,414) 11,209 ($0.13) $4,757 11,906 $0.40
===== =====
Effect of dilutive
securities:
Options - - - 138
----------- ---------- ----------- ----------
Net income (loss) per
share,assuming
dilution ($1,414) 11,209 ($0.13) $4,757 12,044 $0.39
=========== ========== ========= =========== ========== ========
11. Segment Information
The company's operations are classified into two business segments:
upholstery fabrics and mattress ticking. The upholstery fabrics segment
principally manufactures and sells woven jacquards and dobbies, wet and
heat-transfer prints, and woven and tufted velvets primarily to residential and
commercial (contract) furniture manufacturers. The mattress ticking segment
principally manufactures and sells woven jacquards, heat-transfer prints and
pigment prints to bedding manufacturers.
The company internally manages and reports selling, general and
administrative expenses, interest expense, interest income, other expense and
income taxes on a total company basis. Thus, profit by business segment
represents gross profit. In addition, the company internally manages and reports
cash and cash investments, accounts receivable, other current assets, restricted
investments, property, plant and equipment, goodwill and other assets on a total
company basis. Thus, identifiable assets by business segment represent
inventories.
Sales and gross profit for the company's operating segments for the three
months ended October 29, 2000 and October 31, 1999 are as follows:
(dollars in thousands):
--------------------------------------------------------------------------------
October 29, 2000 October 31, 1999
--------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 82,999 $ 103,038
Mattress Ticking 27,982 26,504
--------------------------------------------------------------------------------
$ 110,981 $ 129,542
================================================================================
Gross Profit
Upholstery Fabrics $ 9,355 $ 17,165
Mattress Ticking 7,532 6,542
--------------------------------------------------------------------------------
$ 16,887 $ 23,707
================================================================================
Sales and gross profit for the company's operating segments for the six
months ended October 29, 2000 and October 31, 1999 are as follows:
(dollars in thousands):
--------------------------------------------------------------------------------
October 29, 2000 October 31, 1999
--------------------------------------------------------------------------------
Net sales
Upholstery Fabrics $ 157,925 $ 193,892
Mattress Ticking 54,934 51,587
--------------------------------------------------------------------------------
$ 212,859 $ 245,479
================================================================================
Gross Profit
Upholstery Fabrics $ 17,268 $ 31,607
Mattress Ticking 13,793 12,512
--------------------------------------------------------------------------------
$ 31,061 $ 44,119
================================================================================
Inventories for the company's operating segments as of October 29, 2000 and
October 31, 1999 are as follows:
(dollars in thousands):
--------------------------------------------------------------------------------
October 29, 2000 October 31, 1999
--------------------------------------------------------------------------------
Inventories
Upholstery Fabrics $ 57,042 $ 63,555
Mattress Ticking 15,925 14,679
--------------------------------------------------------------------------------
$ 72,967 $ 78,234
================================================================================
12. Restatement
During January 2001, the company terminated the nonqualified deferred
compensation plan covering officers and certain other associates. As a result,
the company surrendered the life insurance contracts related to the nonqualified
plan in order to pay the participants. The proceeds from those life insurance
contracts resulted in an amount greater than had previously been recorded by the
company attributable to gains that occurred in 1999 and 1998. In order to
properly reflect these gains, the company restated its financial statements and
certain disclosures previously reported in its financial statements as of
October 29, 2000, April 30, 2000 and October 31, 1999. The effect of the
correction for these gains increased other assets and retained earnings by
$1,102,000 in the consolidated balance sheets as of October 29, 2000, April 30,
2000 and October 31, 1999, respectively.
CULP, INC.
SALES BY SEGMENT/DIVISION
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 29, 2000 AND OCTOBER 31, 1999
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------
Amounts Percent of Total Sales
------------------- ---------------------
October 29, October 31, % Over
Segment/Division 2000 1999 (Under) 2001 2000
---------------------------- --------- --------- ----------- --------- ---------
Upholstery Fabrics
Culp Decorative Fabrics $ 46,792 56,897 (17.8) % 42.2 % 43.9 %
Culp Velvets/Prints 32,073 41,783 (23.2) % 28.9 % 32.3 %
Culp Yarn 4,134 4,358 (5.1) % 3.7 % 3.4 %
--------- --------- ----------- --------- ---------
82,999 103,038 (19.4) % 74.8 % 79.5 %
Mattress Ticking
Culp Home Fashions 27,982 26,504 5.6 % 25.2 % 20.5 %
--------- --------- ----------- --------- ---------
* $ 110,981 129,542 (14.3) % 100.0 % 100.0 %
========= ========= =========== ========= =========
SIX MONTHS ENDED (UNAUDITED)
--------------------------------------------------------
Amounts Percent of Total Sales
------------------- ---------------------
October 29, October 31, % Over
Segment/Division 2000 1999 (Under) 2001 2000
---------------------------- --------- --------- ----------- --------- ---------
Upholstery Fabrics
Culp Decorative Fabrics $ 88,325 107,413 (17.8) % 41.5 % 43.8 %
Culp Velvets/Prints 62,147 77,992 (20.3) % 29.2 % 31.8 %
Culp Yarn 7,453 8,487 (12.2) % 3.5 % 3.5 %
--------- --------- ----------- --------- ---------
157,925 193,892 (18.6) % 74.2 % 79.0 %
Mattress Ticking
Culp Home Fashions 54,934 51,587 6.5 % 25.8 % 21.0 %
--------- --------- ----------- --------- ---------
* $ 212,859 245,479 (13.3) % 100.0 % 100.0 %
========= ========= =========== ========= =========
* U.S. sales were $87,022 and $97,216 for the second quarter of fiscal 2001 and
fiscal 2000, respectively; and $169,312 and $189,340 for the six months of
fiscal 2001 and fiscal 2000, respectively. The percentage decrease in U.S. sales
was 10.5% for the second quarter and a decrease of 10.6% for the six months.
CULP, INC.
INTERNATIONAL SALES BY GEOGRAPHIC AREA
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 29, 2000
AND OCTOBER 31, 1999
(Amounts in thousands)
THREE MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------
Amounts Percent of Total Sales
------------------------ -----------------------
October 29, October 31, % Over
Geographic Area 2000 1999 (Under) 2001 2000
-------------------------- ------------ ---------- ---------- ---------- ----------
North America (Excluding USA) $ 9,556 9,912 (3.6)% 39.9 % 30.7 %
Europe 1,807 6,069 (70.2)% 7.5 % 18.8 %
Middle East 5,489 8,960 (38.7)% 22.9 % 27.7 %
Far East & Asia 5,590 5,357 4.3 % 23.3 % 16.6 %
South America 279 630 (55.7)% 1.2 % 1.9 %
All other areas 1,238 1,398 (11.4)% 5.2 % 4.3 %
------------ ---------- ---------- ---------- ----------
$ 23,959 32,326 (25.9)% 100.0 % 100.0 %
============ ========== ========== ========== ==========
SIX MONTHS ENDED (UNAUDITED)
--------------------------------------------------------------
Amounts Percent of Total Sales
------------------------ -----------------------
October 29, October 31, % Over
Geographic Area 2000 1999 (Under) 2001 2000
-------------------------- ------------ ---------- ---------- ---------- ----------
North America (Excluding USA) $ 17,951 17,588 2.1 % 41.2 % 31.3 %
Europe 3,259 8,998 (63.8)% 7.5 % 16.0 %
Middle East 10,532 15,952 (34.0)% 24.2 % 28.4 %
Far East & Asia 8,826 9,666 (8.7) % 20.3 % 17.2 %
South America 585 1,250 (53.2)% 1.3 % 2.2 %
All other areas 2,394 2,685 (10.8)% 5.5 % 4.8 %
------------ ---------- ---------- ---------- ----------
$ 43,547 56,139 (22.4)% 100.0 % 100.0 %
============ ========== ========== ========== ==========
International sales, and the percentage of total sales, for each of the last
five fiscal years follows: fiscal 1996-$77,397 (22%); fiscal 1997-$101,571
(25%); fiscal 1998-$137,223 (29%); fiscal 1999-$113,354 (23%); and fiscal
2000-$111,104 (23%). International sales for the second quarter represented
21.6% and 25.0% for 2001 and 2000, respectively. Year-to-date international
sales represented 20.5% and 22.9% of total sales for 2001 and 2000,
respectively.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following analysis of the financial condition and results of operations
should be read in conjunction with the Financial Statements and Notes and other
exhibits included elsewhere in this report. As discussed in Note 12 to the
Consolidated Financial Statements, the company has restated its previously
issued Consolidated Financial Statements as of October 29, 2000, April 30, 2000
and October 31, 1999. As a result, certain disclosures in item 2 (Management's
Discussion and Analysis of Financial Condition and Results of Operations) have
been restated as well.
Overview
Culp is one of the largest integrated marketers in the world for upholstery
fabrics for furniture and is one of the leading global producers of mattress
fabrics (or ticking). The company's fabrics are used primarily in the production
of residential and commercial upholstered furniture and bedding products,
including sofas, recliners, chairs, love seats, sectionals, sofa-beds, office
seating and mattress sets. Although Culp markets fabrics at most price levels,
the company emphasizes fabrics that have broad appeal in the promotional and
popular-priced categories of furniture and bedding.
Culp's worldwide leadership as a marketer of upholstery fabrics and
mattress ticking has been achieved through internal expansion and the
integration of strategic acquisitions.
The company's operating segments are upholstery fabrics and mattress
ticking, with related divisions organized within those segments. In upholstery
fabrics, Culp Decorative Fabrics markets jacquard and dobby woven fabrics for
residential and commercial furniture. Culp Velvets/Prints markets a broad range
of printed and velvet fabrics used primarily for residential and juvenile
furniture. Culp Yarn manufactures specialty filling yarn that is used by Culp
and also marketed to outside customers. In mattress ticking, Culp Home Fashions
markets a broad array of fabrics used by bedding manufacturers.
Three and Six Months ended October 29, 2000 compared with Three and Six Months
ended October 31, 1999
Net Sales. Net sales for the second quarter of fiscal 2001 decreased by
14.3% to $111.0 million. Sales of upholstery fabrics decreased 19.4% to $83.0
million, and sales of mattress ticking increased 5.6% to $28.0 million. Net
sales for the first six months of fiscal 2001 decreased by $32.6 million, or
13.3%, compared with the year-earlier period. The company's sales of upholstery
fabrics decreased $36.0 million, or 18.6%, for the first six months compared
with the prior year. Conversely, the company's sales of mattress ticking
increased $3.4 million, or 6.5%, for the first six months compared with the
prior year. International sales were down 25.9% and 22.4% for the quarter and
six months, respectively. The company had expected that results for the second
quarter would be down from the year-earlier period but would represent an
improvement compared with the first quarter which included sales of $101.9
million and a loss of $1.8 million. Key factors influencing the year-to-year
comparisons for the second quarter were continued weakness in consumer spending
on home furnishings, especially in the promotional price category, and further
increases in the relative strength of the dollar, which has significantly
affected Culp's sales to customers outside the United States. The decline in
sales of upholstery fabrics was offset in part from increased sales by Culp Home
Fashions (primarily mattress ticking). Culp's growth in mattress ticking
continues to be driven by the introduction of new designs and fabric
constructions as well as the advantages of the company's vertical integration.
Sales in the company's third fiscal quarter are typically lower than in the
second period due to holidays and scheduled, seasonal plant shutdowns. Based on
that historical pattern and current trends, the company believes that it may
report a modest loss in the third quarter. At this time, the company expects to
close the year on a profitable note in the final quarter, but is uncertain
whether the expected improvement in the fourth period will result in a profit
for the year as a whole. The trend in results over the remainder of this fiscal
year will be determined by a number of factors including the overall trend in
consumer spending on home furnishings and the fluctuation of the dollar relative
to other currencies.
Gross Profit and Cost of Sales. Gross profit declined 28.8% for the second
quarter versus a year ago and decreased as a percentage of net sales from 18.3%
to 15.2%. For the first six months, gross profit decreased 29.6% to $31.1
million and decreased as a percentage of net sales from 18.0% to 14.6%. The
decline was due principally to lower sales volume for the period which led to
unfavorable cost variances in the company's upholstery fabrics operation. The
company has taken steps to lower expenses by consolidating certain operations
and reducing personnel, but these actions were not sufficient to offset the
impact of the significantly lower sales.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the second quarter decreased as a percentage of
sales from 12.4% to 12.2%. For the first six months, these expenses increased
slightly as a percentage of sales to 12.8% versus 12.7% for the prior year. The
dollar amount of these expenses declined 15.9% and 12.2% for the quarter and six
months, respectively, reflecting the company's actions to reduce expenses and
the fact that a portion of these expenses is variable based on the level of
sales. The company did incur severance costs during the second quarter in
connection with the actions taken to reduce selling and administrative expenses.
Interest Expense. Interest expense of $2.3 million and $4.6 million for the
second quarter and first six months, respectively, was down $0.2 million and
$0.3 million, respectively, from a year ago due to slightly lower average
borrowings.
Other Expense. Other expense increased to $0.6 million and $1.3 million for the
second quarter and first six months of 2001, respectively, versus $0.4 million
and $1.0 million, respectively, for the year-earlier periods. These increases
were principally due to lower investment income on assets related to the
nonqualified deferred compensation plan.
Income Taxes. The effective tax rate for the first six months of fiscal 2001 was
33.0%, down slightly from 34.0% for the year-earlier period.
Net Income (Loss) Per Share. Net income per share for the second quarter of
fiscal 2001 totaled $0.03 per share diluted (based on 11,270,000 average shares
outstanding during the period) compared with $0.27 per share diluted (based on
11,868,000 average shares outstanding during the period) a year ago. For the
first half, the company reported a net loss of ($0.13) per share diluted (based
on 11,209,000 average shares outstanding during the period) compared with net
income of $0.39 per share diluted (based on 12,044,000 average shares
outstanding during the period) in the prior year.
Liquidity and Capital Resources
Liquidity. Cash and cash investments were $0.7 million as of October 29, 2000,
compared with $0.8 million at October 31, 1999, and $1.0 million at the end of
fiscal 2000. Funded debt (long-term debt, including current maturities, less
restricted investments) was $126.8 million at October 29, 2000, compared with
$134.5 million at October 31, 1999 and $137.5 million at April 30, 2000. As a
percentage of total capital (funded debt plus total stockholders' equity), the
company's borrowings amounted to 49.9% at October 29, 2000, compared with 51.5%
at October 31, 1999 and April 30, 2000. The company's working capital as of
October 29, 2000 was $94.3 million, compared with $92.8 million as of October
31, 1999, and $100.0 million at the close of fiscal 2000.
The company's cash flow from operations was $21.2 million for the first six
months of fiscal 2001, consisting of $9.4 million from operations (net loss plus
depreciation and amortization) plus $11.8 million from the decrease in working
capital. The decrease in working capital was primarily due to a $11.2 million
decrease in accounts receivable and a $1.5 million decrease in inventories
offset by a $0.9 million decrease in accounts payable and a $0.7 million
increase in other current assets.
In separate authorizations in June 1998, March 1999, September 1999 and December
1999, the board of directors of the company authorized the use of a total of
$20.0 million to repurchase the company's common stock. Over the past two fiscal
years, the company has invested $12.2 million to repurchase a total of 1.8
million shares. No purchases were made during the first six months of fiscal
2001 under these authorizations.
Financing Arrangements. Culp has outstanding $75 million of senior unsecured
notes with a fixed coupon rate of 6.76% and an average remaining term of eight
years.
Culp has an $88 million syndicated, unsecured, multi-currency revolving credit
facility. The facility, which expires in April 2002, requires quarterly payments
of interest on all outstanding borrowings and a quarterly facility fee paid in
advance. In July 2000, the company amended the credit facility to amend certain
covenants. The amendment also increased the interest rate from LIBOR plus 0.80%
to 0.90% to LIBOR plus 1.10% to 1.60%. The specified pricing matrix will be in
effect for the remainder of fiscal 2001 and is based on the company's debt to
EBITDA ratio, as defined by the facility. As of October 29, 2000, the company
had outstanding balances of $16 million under the credit facility.
The company also has a total of $32.4 million in currently outstanding
industrial revenue bonds ("IRBs") which have been used to finance capital
expenditures. The IRBs are collateralized by letters of credit for the
outstanding balance of the IRBs and certain interest payments due thereunder.
The company's loan agreements require, among other things, that the company
maintain compliance with certain financial ratios. As of October 29, 2000, the
company was in compliance with these financial covenants.
As of October 29, 2000, the company had two interest rate swap agreements to
reduce its exposure to floating interest rates on a $10 million notional amount.
The effect of these contracts is to "fix" the interest rate payable on $10
million of the company's variable rate borrowings at a weighted average rate of
6.8%. The company also enters into foreign exchange forward and option contracts
to hedge against currency fluctuations with respect to firm commitments to
purchase certain machinery, equipment and raw materials. The company had
approximately $1.6 million of outstanding foreign exchange forward contracts as
of October 29, 2000.
Capital Expenditures. The company maintains an ongoing program of capital
expenditures designed to increase capacity as needed, enhance manufacturing
efficiencies through modernization and increase the company's vertical
integration. Capital expenditures for the first six months of fiscal 2001
totaled $3.7 million compared with $10.5 million in the year-earlier period. The
company plans for total capital spending for fiscal 2001 to be approximately $16
million.
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.
Restatement
During January 2001, the company terminated the nonqualified deferred
compensation plan covering officers and certain other associates. As a result,
the company surrendered the life insurance contracts related to the nonqualified
plan in order to pay the participants. The proceeds from those life insurance
contracts resulted in an amount greater than had previously been recorded by the
company attributable to gains that occurred in 1999 and 1998. In order to
properly reflect these gains, the company restated its financial statements and
certain disclosures previously reported in its financial statements as of
October 29, 2000, April 30, 2000 and October 31, 1999. The effect of the
correction for these gains increased other assets and retained earnings by
$1,102,000 in the consolidated balance sheets as of October 29, 2000, April 30,
2000 and October 31, 1999, respectively.
Inflation
The cost of certain of the company's raw materials, principally fibers from
petroleum derivatives, has increased somewhat; but overall operating expenses
are remaining generally stable. Factors that reasonably can be expected to
influence margins in the future include changes in raw material prices, trends
in other operating costs and overall competitive conditions.
Seasonality
The company's business is slightly seasonal, with relatively stronger sales
during the second and fourth fiscal quarters. This seasonality results from
one-week closings of the company's manufacturing facilities, and the facilities
of most of its customers in the United States, during the first and third
quarters for the holiday weeks including July 4th and Christmas.
Forward-Looking Information
The company's quarterly report on Form 10-Q contains 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. Such
statements are inherently subject to risks and uncertainties. Forward-looking
statements are statements that include projections, expectations or beliefs
about future events or results or otherwise are not statements of historical
fact. Such statements are often characterized by qualifying words such as
"expect," "believe," "estimate," "plan," and "project" and their derivatives.
Factors that could influence the matters discussed in such statements include
the level of housing starts and sales of existing homes, consumer confidence,
trends in disposable income and general economic conditions. Decreases in these
economic indicators could have a negative effect on the company's business and
prospects. Likewise, increases in interest rates, particularly home mortgage
rates, and increases in consumer debt or the general rate of inflation, could
affect the company adversely. Because of the significant percentage of the
company's sales derived from international shipments, strengthening of the U.S.
dollar against other currencies could make the company's products less
competitive on the basis of price in markets outside the United States.
Additionally, economic and political instability in international areas could
affect the demand for the company's products.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." As amended, this new standard is effective
for fiscal years beginning after June 15, 2000, which will be effective for the
company's fiscal year 2002. This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. The company has not
determined the financial impact of adopting this SFAS and has not determined if
it will adopt its provisions prior to its effective date.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The company is exposed to market risk from changes in interest rates on debt and
foreign currency exchange rates. The company's market risk sensitive instruments
are not entered into for trading purposes. The company has not experienced any
significant changes in market risk since October 29, 2000.
The company's exposure to interest rate risk consists of floating rate debt
based on the London Interbank Offered Rate plus an adjustable margin under the
company's revolving credit agreement and variable rate debt in connection with
the industrial revenue bonds. To lower or limit overall borrowing costs, the
company enters into interest rate swap agreements to modify the interest
characteristics of portions of its outstanding debt. The agreements entitle the
company to receive or pay to the counterparty (a major bank), on a quarterly
basis, the amounts, if any, by which the company's interest payments covered by
swap agreements differ from those of the counterparty. These amounts are
recorded as adjustments to interest expense. The fair value of the swap
agreements and changes in fair value resulting from changes in market interest
rates are not recognized in the consolidated financial statements. The annual
impact on the company's results of operations of a 100 basis point interest rate
increase on the October 29, 2000 outstanding balance of the variable rate debt
would be approximately $470,000 irrespective of any swaps associated with this
debt.
The company's exposure to fluctuations in foreign currency exchange rates is due
primarily to a foreign subsidiary domiciled in Canada and purchases of certain
machinery, equipment and raw materials in foreign currencies. The company's
Canadian subsidiary uses the United States dollar as its functional currency.
The company generally does not use financial derivative instruments to hedge
foreign currency exchange rate risks associated with the Canadian subsidiary.
However, the company generally enters into foreign exchange forward and option
contracts as a hedge against its exposure to currency fluctuations on firm
commitments to purchase certain machinery, equipment and raw materials. The
Canadian subsidiary is not material to the company's consolidated results of
operations; therefore, a 10% change in the exchange rate at October 29, 2000
would not have a significant impact on the company's results of operations or
financial position. In addition, the company had approximately $1.6 million of
outstanding foreign exchange forward contracts as of October 29, 2000. As a
result, any change in exchange rates would not have a significant impact on the
company's results of operations or financial position as the foreign exchange
forward contracts have "fixed" the exchange rate with respect to these purchase
commitments.
Part II - OTHER INFORMATION
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 26, 2000. Of the 11,208,720 shares of common
stock outstanding on the record date of July 24, 2000, 10,370,634 shares
were present in person or by proxy.
At the Annual Meeting, shareholders voted on:
- ratifying the appointment of KPMG LLP as the independent auditors of
the company for the current fiscal year, and;
- the election of three directors: Robert G. Culp, III, Patrick H.
Norton, and Patrick B. Flavin to serve until the 2003 Annual Meeting,
and the election of one director: H. Bruce English to serve until the
2001 Annual Meeting.
- an amendment to the company's 1993 Stock Option Plan to (i) increase
the number of shares available for issuance thereunder from 809,500
to 1,159,500 and (ii) add Section 14 thereof so that options granted
under the Plan shall not be subject to repricing.
A. Proposal to ratify the election of KPMG LLP as independent
auditors of the company for fiscal year 2001:
For 10,331,461
Against 17,969
Abstain 21,204
B. Proposal for Election of Directors:
Robert G. Culp, III Patrick H. Norton
---------------------------- ---------------------------
For 9,094,663 For 9,308,591
Withheld 1,275,971 Withheld 1,062,043
Patrick B. Flavin H. Bruce English
---------------------------- ---------------------------
For 9,319,965 For 9,309,252
Withheld 1,050,669 Withheld 1,061,382
C. Proposal to Amend 1993 Stock Option Plan
For 9,062,752
Against 1,273,144
Abstain 34,738
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are filed as part of this report or
incorporated by reference. Management contracts, compensatory plans,
and arrangements are marked with an asterisk (*).
3(i) Articles of Incorporation of the Company, as
amended, were filed as Exhibit 3(i) to the
Company's Form 10-Q for the quarter ended January
29, 1995, filed March 15, 1995, and are
incorporated herein by reference.
3(ii) Restated and Amended Bylaws of the Company,
as amended, were filed as Exhibit 3(b) to the
Company's Form 10-K for the year ended April 28,
1991, filed July 25, 1991, and are incorporated
herein by reference.
3(iii) Articles of Amendment of Culp, Inc. dated October
5, 1999 for the purpose of amending its Restated
Charter to fix the designation, preferences,
limitations and relative rights of a series of
its Preferred Stock. The Articles of Amendment
of Culp, Inc. were filed as Exhibit 3(iii) to the
Company's Form 10-Q for the quarter ended October
31, 1999, filed December 15, 1999, and are
incorporated herein by reference.
10(a) Loan Agreement dated December 1, 1988 with
Chesterfield County, South Carolina relating to
Series 1988 Industrial Revenue Bonds in the
principal amount of $3,377,000 was filed as
Exhibit 10(n) to the Company's Form 10-K for the
year ended April 29, 1989, and is incorporated
herein by reference.
10(b) Loan Agreement dated November 1, 1988 with the
Alamance County Industrial Facilities and
Pollution Control Financing Authority relating to
Series A and B Industrial Revenue Refunding Bonds
in the principal amount of $7,900,000, was filed
as exhibit 10(o) to the Company's Form 10-K for
the year ended April 29, 1990, and is
incorporated herein by reference.
10(c) Loan Agreement dated January 5, 1990 with the
Guilford County Industrial Facilities and
Pollution Control Financing Authority, North
Carolina, relating to Series 1989 Industrial
Revenue Bonds in the principal amount of
$4,500,000, was filed as Exhibit 10(d) to the
Company's Form 10-K for the year ended April 29,
1990, filed on July 25, 1990, and is incorporated
herein by reference.
10(d) Loan Agreement dated as of December 1, 1993
between Anderson County, South Carolina and the
Company relating to $6,580,000 Anderson County,
South Carolina Industrial Revenue Bonds (Culp,
Inc. Project) Series 1993, was filed as Exhibit
10(o) to the Company's Form 10-Q for the quarter
ended January 30, 1994, filed March 16, 1994, and
is incorporated herein by reference.
10(e) Form of Severance Protection Agreement, dated
September 21, 1989, was filed as Exhibit 10(f) to
the Company's Form 10-K for the year ended April
29, 1990, filed on July 25, 1990, and is
incorporated herein by reference. (*)
10(f) Lease Agreement, dated January 19, 1990, with
Phillips Interests, Inc. was filed as Exhibit
10(g) to the Company's Form 10-K for the year
ended April 29, 1990, filed on July 25, 1990, and
is incorporated herein by reference.
10(g) Management Incentive Plan of the Company, dated
August 1986 and amended July 1989, filed as
Exhibit 10(o) to the Company's Form 10-K for the
year ended May 3, 1992, filed on August 4, 1992,
and is incorporated herein by reference. (*)
10(h) Lease Agreement, dated September 6, 1988, with
Partnership 74 was filed as Exhibit 10(h) to the
Company's Form 10-K for the year ended April 28,
1991, filed on July 25, 1990, and is incorporated
herein by reference.
10(i) Amendment and Restatement of the Employee's
Retirement Builder Plan of the Company dated May
1, 1981 with amendments dated January 1, 1990 and
January 8, 1990 were filed as Exhibit 10(p) to
the Company's Form 10-K for the year ended May 3,
1992, filed on August 4, 1992, and is
incorporated herein by reference. (*)
10(j) First Amendment of Lease Agreement dated July 27,
1992 with Partnership 74 Associates was filed as
Exhibit 10(n) to the Company's Form 10-K for the
year ended May 2, 1993, filed on July 29, 1993,
and is incorporated herein by reference.
10(k) Second Amendment of Lease Agreement dated April
16, 1993, with Partnership 52 Associates was
filed as Exhibit 10(l) to the Company's Form 10-K
for the year ended May 2, 1993, filed on July 29,
1993, and is incorporated herein by reference.
10(l) 1993 Stock Option Plan was filed as Exhibit 10(o)
to the Company's Form 10-K for the year ended May
2, 1993, filed on July 29, 1993, and is
incorporated herein by reference. (*)
10(m) First Amendment to Loan Agreement dated as of
December 1, 1993 by and between The Guilford
County Industrial Facilities and Pollution
Control Financing Authority and the Company was
filed as Exhibit 10(p) to the Company's Form
10-Q, filed on March 15, 1994, and is
incorporated herein by reference.
10(n) First Amendment to Loan Agreement dated as of
December 16, 1993 by and between The Alamance
County Industrial Facilities and Pollution
Control Financing Authority and the Company was
filed as Exhibit 10(q) to the Company's Form
10-Q, filed on March 15, 1994, and is
incorporated herein by reference.
10(o) First Amendment to Loan Agreement dated as of
December 16, 1993 by and between Chesterfield
County, South Carolina and the Company was filed
as Exhibit 10(r) to the Company's Form 10-Q,
filed on March 15, 1994, and is incorporated
herein by reference.
10(p) Amendment to Lease dated as of November 4, 1994,
by and between the Company and RDC, Inc. was
filed as Exhibit 10(w) to the Company's Form
10-Q, for the quarter ended January 29, 1995,
filed on March 15, 1995, and is incorporated
herein by reference.
10(q) Amendment to Lease Agreement dated as of December
14, 1994, by and between the Company and
Rossville Investments, Inc. (formerly known as A
& E Leasing, Inc.), was filed as Exhibit 10(y) to
the Company's Form 10-Q, for the quarter ended
January 29, 1995, filed on March 15, 1995, and is
incorporated herein by reference.
10(r) Interest Rate Swap Agreement between Company and
First Union National Bank of North Carolina dated
April 17, 1995, was filed as Exhibit 10(aa) to
the Company's Form 10-K for the year ended April
30, 1995, filed on July 26, 1995, and is
incorporated herein by reference.
10(s) Performance-Based Stock Option Plan, dated June
21, 1994, was filed as Exhibit 10(bb) to the
Company's Form 10-K for the year ended April 30,
1995, filed on July 26, 1995, and is incorporated
herein by reference. (*)
10(t) Interest Rate Swap Agreement between Company and
First Union National Bank of North Carolina,
dated May 31, 1995 was filed as exhibit 10(w) to
the Company's Form 10-Q for the quarter ended
July 30, 1995, filed on September 12, 1995, and
is incorporated herein by reference.
10(u) Interest Rate Swap Agreement between Company and
First Union National Bank of North Carolina,
dated July 7, 1995 was filed as exhibit 10(x) to
the Company's Form 10-Q for the quarter ended
July 30, 1995, filed on September 12, 1995, and
is incorporated herein by reference.
10(v) Second Amendment of Lease Agreement dated June
15, 1994 with Partnership 74 Associates was filed
as Exhibit 10(v) to the Company's Form 10-Q for
the quarter ended October 29, 1995, filed on
December 12, 1995, and is incorporated herein by
reference.
10(w) Lease Agreement dated November 1, 1993 by and
between the Company and Chromatex, Inc. was filed
as Exhibit 10(w) to the Company's Form 10-Q for
the quarter ended October 29, 1995, filed on
December 12, 1995, and is incorporated herein by
reference.
10(x) Lease Agreement dated November 1, 1993 by and
between the Company and Chromatex Properties,
Inc. was filed as Exhibit 10(x) to the Company's
Form 10-Q for the quarter ended October 29, 1995,
filed on December 12, 1995, and is incorporated
herein by reference.
10(y) Amendment to Lease Agreement dated May 1, 1994 by
and between the Company and Chromatex Properties,
Inc. was filed as Exhibit 10(y) to the Company's
Form 10-Q for the quarter ended October 29, 1995,
filed on December 12, 1995, and is incorporated
herein by reference.
10(z) Canada-Quebec Subsidiary Agreement on
Industrial Development (1991), dated January 4,
1995, was filed as Exhibit 10(z) to the Company's
Form 10-Q for the quarter ended October 29, 1995,
filed on December 12, 1995, and is incorporated
herein by reference.
10(aa) Loan Agreement between Chesterfield County, South
Carolina and the Company dated as of April 1,
1996 relating to Tax Exempt Adjustable Mode
Industrial Development Bonds (Culp, Inc.
Project) Series 1996 in the aggregate principal
amount of $6,000,000 was filed as Exhibit 10(aa)
to the Company's Form 10-K for the year ended
April 28, 1996, and is incorporated herein by
reference.
10(bb) Loan Agreement between the Alamance County
Industrial Facilities and Pollution Control
Financing Authority, North Carolina and the
Company, dated December 1, 1996, relating to Tax
Exempt Adjustable Mode Industrial Development
Revenue Bonds, (Culp, Inc. Project Series 1996)
in the aggregate amount of $6,000,000 was filed
as Exhibit 10(cc) to the Company's Form 10-Q for
the quarter ended January 26, 1997, and is
incorporated herein by reference.
10(cc) Loan Agreement between Luzerne County,
Pennsylvania and the Company, dated as of
December 1, 1996, relating to Tax-Exempt
Adjustable Mode Industrial Development Revenue
Bonds (Culp, Inc. Project) Series 1996 in the
aggregate principal amount of $3,500,000 was
filed as Exhibit 10(dd) to the Company's Form
10-Q for the quarter ended January 26, 1997, and
is incorporated herein by reference.
10(dd) Second Amendment to Lease Agreement between
Chromatex Properties, Inc. and the Company, dated
April 17, 1997 was filed as Exhibit 10(dd) to
the Company's Form 10-K for the year ended April
27, 1997, and is incorporated herein by reference.
10(ee) Lease Agreement between Joseph E. Proctor (doing
business as JEPCO) and the Company, dated April
21, 1997 was filed as Exhibit 10(ee) to the
Company's Form 10-K for the year ended April 27,
1997, and is incorporated herein by reference.
10(ff) $125,000,000 Revolving Loan Facility dated April
23, 1997 by and among the Company and Wachovia
Bank of Georgia, N.A., as agent, and First Union
National Bank of North Carolina, as documentation
agent was filed as Exhibit 10(ff) to the
Company's Form 10-K for the year ended April 27,
1997, and is incorporated herein by reference.
10(gg) Revolving Line of Credit for $4,000,000 dated
April 23, 1997 by and between the Company and
Wachovia Bank of North Carolina, N.A. was filed as
Exhibit 10(gg) to the Company's Form 10-K for the
year ended April 27, 1997, and is incorporated
herein by reference.
10(hh) Reimbursement and Security Agreement between Culp,
Inc. and Wachovia Bank of North Carolina, N.A.,
dated as of April 1, 1997, relating to $3,337,000
Principal Amount, Chesterfield County, South
Carolina Industrial Revenue Bonds (Culp, Inc.
Project) Series 1988 was filed as Exhibit 10(hh)
to the Company's Form 10-K for the year ended
April 27, 1997, and is incorporated herein by
reference.
Additionally, there are Reimbursement and Security
Agreements between Culp, Inc. and Wachovia Bank of
North Carolina, N.A., dated as of April 1, 1997 in
the following amounts and with the following
facilities:
$7,900,000 Principal Amount, Alamance County
Industrial Facilities and Pollution Control
Financing Authority Industrial Revenue Refunding
Bonds (Culp, Inc. Project) Series A and B.
$4,500,000 Principal Amount, Guilford County
Industrial Facilities and Pollution Control
Financing Authority Industrial Development Revenue
Bonds (Culp, Inc. Project) Series 1989.
$6,580,000 Principal Amount, Anderson County South
Carolina Industrial Revenue Bonds (Culp, Inc.
Project) Series 1993.
$6,000,000 Principal Amount, Chesterfield County,
South Carolina Tax-Exempt Adjustable Mode
Industrial Development Revenue Bonds (Culp, Inc.
Project) Series 1996.
$6,000,000 Principal Amount, The Alamance County
Industrial Facilities and Pollution Control
Financing Authority Tax-exempt Adjustable Mode
Industrial Development Revenue Bonds (Culp, Inc.
Project) Series 1996.
$3,500,000 Principal Amount, Luzerne County
Industrial Development Authority Tax-Exempt
Adjustable Mode Industrial Development Revenue
Bonds (Culp, Inc. Project) Series 1996.
10(ii) Loan Agreement and Reimbursement and Security
Agreement dated July 1, 1997 with the Robeson
County Industrial Facilities and Pollution Control
Financing Authority relating to the issuance of
Tax-Exempt Adjustable Mode Industrial Development
Revenue Bonds (Culp, Inc. Project), Series 1997 in
the aggregate principal amount of $8,500,000 was
filed as Exhibit 10(ii) to the Company's Form 10-Q
for the quarter ended August 3, 1997, and is
incorporated herein by reference.
10(jj) Asset Purchase Agreement dated as of August 4,
1997 by and between Culp, Inc., Phillips Weaving
Mills, Inc., Phillips Printing Mills, Inc.,
Phillips Velvet Mills, Inc., Phillips Mills, Inc.,
Phillips Property Company, LLC, Phillips
Industries, Inc. and S. Davis Phillips was filed
as Exhibit (10jj) to the Company's Form 10-Q for
the quarter ended November 2, 1997, and is
incorporated herein by reference.
10(kk) Asset Purchase Agreement dated as of October 14,
1997 among Culp, Inc., Artee Industries,
Incorporated, Robert T. Davis, Robert L. Davis,
Trustee u/a dated 8/25/94, Robert L. Davis, Louis
W. Davis, Kelly D. England, J. Marshall Bradley,
Frankie S. Bradley and Mickey R. Bradley was filed
as Exhibit 10(kk) to the Company's Form 10-Q for
the quarter ended November 2, 1997, and is
incorporated herein by reference.
10(ll) Form of Note Purchase Agreement (providing for
the issuance by Culp, Inc. of its $20 million
6.76% Series A Senior Notes due 3/15/08 and its
$55 million 6.76% Series B Senior Notes due
3/15/10), each dated March 4, 1998, between Culp,
Inc. and each of the following:
1. Connecticut General Life Insurance Company;
2. The Mutual Life Insurance Company of New York;
3. United of Omaha Life Insurance Company;
4. Mutual of Omaha Insurance Company;
5. The Prudential Insurance Company of America;
6. Allstate Life Insurance Company;
7. Life Insurance Company of North America; and
8. CIGNA Property and Casualty Insurance Company
This agreement was filed as Exhibit 10(ll) to the
Company's Form 10-K for the year ended May 3,
1998, and is incorporated herein by
reference.
10(mm) First Amendment to Credit Agreement dated July
22, 1998 among Culp, Inc., Wachovia Bank, N.A.,
as agent, First Union National Bank, as
documentation agent, and Wachovia Bank, N.A.,
First Union National Bank, SunTrust Bank,
Atlanta, and Cooperatieve Centrale
Raiffeisen-Boerenleeenbank B.A., Rabobank
Nederland, New York Branch, as lenders. This
amendment was filed as Exhibit 10(mm) to the
Company's Form 10-Q for the quarter ended August
2, 1998, and is incorporated herein by reference.
10(nn) Second Amendment to Credit Agreement dated
October 26, 1998, among Culp, Inc., Wachovia
Bank, N.A., as agent, First Union National Bank,
as documentation agent, and Wachovia Bank, N.A.,
First Union National Bank, and SunTrust Bank,
Atlanta, as lenders. This amendment was filed as
Exhibit 10(nn) to the Company's Form 10-Q for the
quarter ended November 1, 1998, and is
incorporated herein by reference.
10(oo) Rights Agreement, dated as of October 8, 1999,
between Culp, Inc. and EquiServe Trust Company,
N.A., as Rights Agent, including the form of
Articles of Amendment with respect to the Series
A Participating Preferred Stock included as
Exhibit A to the Rights Agreement, the forms of
Rights Certificate included as Exhibit B to the
Rights Agreement, and the form of Summary of
Rights included as Exhibit C to the Rights
Agreement. The Rights Agreement was filed as
Exhibit 99.1 to the Company's Form 8-K dated
October 12, 1999, and is incorporated herein by
reference.
10(pp) Third Amendment to Credit Agreement dated April
28, 2000, among Culp, Inc., Wachovia Bank, N.A.,
as agent, First Union National Bank, as
documentation agent, and Wachovia Bank, N.A.,
First Union National Bank, and Suntrust Bank, as
lenders. This amendment was filed as Exhibit
10(pp) to the Company's Form 10-K for the year
ended April 30, 2000, and is incorporated herein
by reference.
10(qq) Fourth Amendment to Credit Agreement dated July
30, 2000, among Culp, Inc., Wachovia Bank, N.A.,
as agent, First Union National Bank, as
documentation agent, and Wachovia Bank, N.A.,
First Union National Bank, and Suntrust Bank, as
lenders. This amendment was filed as Exhibit
10(qq) to the Company's Form 10-Q for the quarter
ended July 30, 2000, and is incorporated herein
by reference.
10(rr) Amendments to 1993 Stock Option Agreement dated
September 26, 2000. This amendment was filed as
Exhibit 10(rr) to the Company's Form 10-Q for the
quarter ended October 29, 2000, and is
incorporated herein by reference. (*)
27 Financial Data Schedule
(b) Reports on Form 8-K:
The following reports on Form 8-K were filed during the period covered
by this report:
(1) Form 8-K dated August 22, 2000, included under Item 5,
Other Events, the Company's press release for quarterly earnings
and the Financial Information Release relating to certain
financial information for the quarter ended July 30, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CULP, INC.
(Registrant)
Date: April 25, 2001 By: s/s Phillip W. Wilson
Phillip W. Wilson
Vice President and Chief Financial
and Accounting Officer
(Authorized to sign on behalf
of the registrant and also sign-
ing as principal financial officer)