Culp Reports Fiscal 2001 Results Including Restructuring Charge; Fourth Quarter Includes Profit of $0.13 Per Share Before Restructuring and Related Charges.Business Editors HIGH POINT, N.C.--(BUSINESS WIRE)--June 5, 2001 As anticipated, Culp, Inc. (NYSE NYSE See: New York Stock Exchange :CFI CFI abbr. cost, freight, and insurance ) today reported a loss for its fourth quarter and full 2001 fiscal year due to charges from the Company's announced actions to reduce costs and increase efficiency and due to the industry-wide slowdown in demand in the home furnishings furnishings the extra type or quantity of hair on the head, tail, ears or legs, specified for a particular breed. For example, the feathers in setters, the beard in Bearded collies, the eyebrows in Schnauzers. industry. The company indicated that excluding restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and related charges, it was profitable in the fourth fiscal quarter and expects to operate profitably for fiscal 2002 as a whole. For the three months ended April 29, 2001, Culp reported net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $101.1 million compared with $129.4 million a year ago. Including restructuring costs, the Company reported a net loss for the quarter of $1.4 million, or $0.13 per share diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , compared with net income of $3.2 million, or $0.28 per share diluted, in the year-earlier period. Net sales for fiscal 2001 totaled $409.8 million compared with $488.1 million in the year-earlier period. Including restructuring costs, the Company reported a net loss for fiscal 2001 of $8.3 million, or $0.74 per share diluted, compared with net income of $9.4 million, or $0.80 per share diluted, in fiscal 2000. Robert G. Culp, III, chief executive officer, commented, "We had expected to report a net loss for the fourth quarter and full year because of the actions we are taking to reduce costs and ensure Culp's competitive position during this period of reduced demand. Although several key demographic trends suggest basic, underlying growth in demand for home furnishings, our fiscal 2001 year proved to be a challenging time for Culp and the industry as a whole. We believe that the longer term outlook is positive based on the growth projected for such fundamental indicators as new household formations, but the current slowdown in business is clearly going to persist into our fiscal 2002 year. The impact of this softness in incoming orders on our income statement is being aggravated ag·gra·vate tr.v. ag·gra·vat·ed, ag·gra·vat·ing, ag·gra·vates 1. To make worse or more troublesome. 2. To rouse to exasperation or anger; provoke. See Synonyms at annoy. by the continuing decline in international sales that are being affected by the high relative value of the U.S. dollar against foreign currencies. Culp noted that the company earned $1.4 million, or $0.13 per share, in the fourth fiscal quarter before restructuring and related charges. He added, "Our goal is to restore consistent profitability for Culp. We are encouraged by the performance in the fourth quarter when our efficiency was significantly affected by the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of key manufacturing equipment and other major operational changes. Looking at fiscal 2002, we believe that sales for the first fiscal quarter, which is not typically a seasonally strong period for our business, will trail the year-earlier level of $101.9 million. Although this will likely result in a loss for the period, excluding charges related to the restructuring, we believe that this will be less than the loss of $1.8 million, or $0.16 per share, in the year-earlier period. Results in subsequent quarters will be aided by more of the benefit of the restructuring plan and other actions we are taking to reduce costs. For fiscal 2002 as a whole, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about reporting net earnings that will represent a rewarding turnaround and reinforce our potential to restore the company's historical level of profitability. "We recognize the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. factors that historically have influenced demand for housing and home furnishings and remain confident about Culp's opportunity to progress as one of the leading suppliers of upholstery upholstery, general term for household fittings, hangings, curtains, cushions, and covers. It refers to stuffed, padded, and spring-cushioned furniture, such as chairs and sofas, or to the usually decorative materials and fabrics that cover them. fabrics and mattress ticking ticking a coat color pigmentation pattern in which hairs of one color are distributed in small groups throughout the background color, e.g. Australian cattle dog. Called also speckling. . Current market conditions have required us, however, to downsize Downsize Reducing the size of a company by eliminating workers and/or divisions within the company. Notes: When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability. It is sometimes referred to as trimming the fat. and consolidate our operations. The total charges from the restructuring and cost reduction initiatives are now expected to approximate $8.5 million. This is up from our earlier estimate of $6.0 million due principally to additional relocation costs related to the consolidation of capacity in our Culp Decorative Fabrics unit. We recorded $7.4 million of these costs during fiscal 2001 and expect to complete these steps during the first half of fiscal 2002. Our target is to achieve annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost reductions of at least $12 million when this program is fully implemented." Culp concluded, "It is especially noteworthy that we generated sufficient cash from operations for fiscal 2001 to reduce debt and payables related to capital expenditures by $31.2 million. We were in compliance with our credit agreement at the end of the fiscal year and are expecting that internally generated funds will allow us to continue strengthening our balance sheet during fiscal 2002. Our capital expenditures during fiscal 2001 declined from $22.6 million to $8.1 million, and we are budgeting new investments of only $4 million for fiscal 2002." Culp, Inc. is one of the world's largest marketers of upholstery fabrics for furniture and is a leading marketer of mattress ticking for bedding. The Company's fabrics are used principally in the production of residential and commercial furniture and bedding products. This release contains statements that may be deemed "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 disposable income Portion of an individual's income over which the recipient has complete discretion. To assess disposable income, it is necessary to determine total income, including not only wages and salaries, interest and dividend payments, and business profits, but also and general economic conditions. Decreases in these economic indicators Economic indicators The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate. 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Additionally, economic and political instability in international areas could affect the demand for the Company's products.
CULP, INC.
Condensed Financial Highlights
Three Months Ended
-------------------------------------
April 29, April 30,
2001 2000
--------------- ---------------
Net sales $ 101,071,000 $ 129,419,000
Net income (loss) $ (1,427,000) $ 3,191,000
Net income (loss) per share:
Basic $ (0.13) $ 0.28
Diluted $ (0.13) $ 0.28
Average shares outstanding:
Basic 11,212,000 11,213,000
Diluted 11,212,000 11,298,000
Fiscal Year Ended
-------------------------------------
April 29, April 30,
2001 2000
--------------- ---------------
Net sales $ 409,810,000 $ 488,079,000
Net income (loss) $ (8,311,000) $ 9,380,000
Net income (loss) per share:
Basic $ (0.74) $ 0.81
Diluted $ (0.74) $ 0.80
Average shares outstanding:
Basic 11,210,000 11,580,000
Diluted 11,210,000 11,681,000
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