Culp Reports Improved Second Quarter Earnings; Stronger Cash Position Reflects Benefits of Balance Sheet Management and Restructuring Actions.Business Editors HIGH POINT, N.C.--(BUSINESS WIRE)--Nov. 19, 2001 Culp, Inc. (NYSE NYSE See: New York Stock Exchange :CFI CFI abbr. cost, freight, and insurance ) today reported improved earnings compared with a year ago and a significant strengthening in its cash position for the second quarter of its 2002 fiscal year. The company said that excluding restructuring-related charges, net income for the second quarter was $1.0 million, or $0.09 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. , up from net income a year ago of $342,000, or $0.03 per share. Culp said that net income for the second quarter included bad debt expense of $1.4 million ($0.08 per share after taxes), up from $112,000 a year ago. Culp indicated that it continues to expect to operate profitably for fiscal 2002 as a whole, 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. For the three months ended October 28, 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 $96.4 million compared with $111.0 million a year ago. Including restructuring-related charges, the company reported net income for the second quarter of $857,000 or $0.08 per share diluted. The results for the second quarter brought net sales for the first half of fiscal 2002 to $182.9 million compared with $212.9 million a year ago. Excluding restructuring and related charges, Culp reported a loss for the first half of fiscal 2002 of $375,000, or $0.03 per share diluted, compared with a net loss of $1.4 million, or $0.13 per share diluted, in the year-earlier period. Including restructuring and related charges, the Company reported a loss for the first half of fiscal 2002 of $2.0 million, or $0.18 per share diluted. Culp indicated that bad debt expense for the first half of fiscal 2002 totaled $2.2 million ($0.13 per share after taxes) versus $157,000 in the year-earlier period. "In an especially challenging business environment, Culp is demonstrating the value of the actions we have taken to reduce costs and strengthen our balance sheet," remarked Robert G. Culp, III, chief executive officer. Although sales for the second quarter were 13% lower than a year ago, we still reported a meaningful improvement in profitability. We also achieved sufficient cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses to increase our cash position to $8.6 million at the close of the second quarter, up significantly from $1.2 million at the end of fiscal 2001. Our strategic goal remains to continue enhancing the value and service we provide customers, which ultimately is the key to driving a long-term recovery in our profitability. Although there is considerable uncertainty about the immediate trend in demand, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about operating profitably for fiscal 2002 as a whole, excluding restructuring and related charges. "This is proving to be a period of significant change 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. Several of the largest retail chains have not had sufficient financial liquidity to survive and have had to close. This, in turn, has affected the furniture and bedding manufacturers that we serve. We have been working hard to minimize the impact of this industry-wide slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. on Culp but have still had to recognize considerably higher credit losses in fiscal 2002 due principally to specific problems that two residential furniture customers and one bedding manufacturer have experienced. Culp's overall receivable position does not mirror our experience with these three customers; and based on current facts and trends, we believe our bad debt reserves are adequate." Culp added, "One of the structural benefits of the capacity consolidations that we completed during the first half is a more cohesive cohesive, n the capability to cohere or stick together to form a mass. organization. Linking our design resources more closely with our manufacturing and distribution facilities is helping us adjust to changes in styles and market needs faster with more reliable service. This extends throughout our entire product line 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. . "As we started fiscal 2002, we knew that it would be imperative to manage our working capital and other key components of our balance sheet even more closely to minimize the impact of the industry-wide slowdown on our financial position. Our performance in terms of building liquidity for the second quarter extended the momentum from the first period. Our debt of $110.6 million at the close of the quarter was down $16.0 million from a year ago and was $27.0 million below our long-term borrowings of $137.5 million at the close of fiscal 2000, 18 months ago. Our capital expenditures for fiscal 2002 remain targeted at approximately $4 million, compared with $8.1 million in fiscal 2001." 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 char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by qualifying words such as "expect," "believe," "estimate," "plan" and "project" and their derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. . 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
(Unaudited)
Three Months Ended
October 28, October 29,
2001 2000
-------------- --------------
Net sales $ 96,400,000 $ 110,981,000
Net income $ 857,000 $ 342,000
Net income per share:
Basic $ 0.08 $ 0.03
Diluted $ 0.08 $ 0.03
Net income per diluted share,
excluding restructuring
and related charges(a) $ 0.09 $ 0.03
Average shares outstanding:
Basic 11,221,000 11,209,000
Diluted 11,281,000 11,270,000
Six Months Ended
October 28, October 29,
2001 2000
------------- --------------
Net sales $ 182,863,000 $ 212,859,000
Net (loss) $ (2,025,000) $ (1,414,000)
Net (loss) per share:
Basic $ (0.18) $ (0.13)
Diluted $ (0.18) $ (0.13)
Net (loss) per diluted share,
excluding restructuring
and related charges(a) $ (0.03) $ (0.13)
Average shares outstanding:
Basic 11,221,000 11,209,000
Diluted 11,221,000 11,209,000
(a) Excludes restructuring and related charges of $0.2 million ($0.1
million, or $0.01 per share diluted, after taxes) in the second
quarter of fiscal 2002 and $2.5 million ($1.6 million or $0.15 per
share diluted, after taxes) for the first half of fiscal 2002.
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