Culp Reports Third Quarter Gains; Net Income Increases 33% to New Third-Quarter Record.HIGH POINT, N.C.--(BUSINESS WIRE)--Feb. 18, 1998--Culp, Inc. (NYSE NYSE See: New York Stock Exchange :CFI CFI abbr. cost, freight, and insurance ) today reported higher sales and earnings for the third fiscal quarter ended February 1, 1998. For the three months ended February 1, 1998, Culp reported that 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 increased 22% to $118.5 million compared with $97.5 million a year ago. Net income for the quarter increased 33% to $4.0 million compared with $3.0 million. Earnings per share increased 19% to $0.32 on 12.7 million average shares outstanding versus $0.27 on 11.3 million average shares outstanding in the year-earlier period. The gain for the third quarter brought net sales for the first nine months to $340.9 million, up 16% from $293.2 million in the first nine months of fiscal 1997. Net income for the first nine months increased 27% to $11.4 million versus $8.9 million. Earnings per share increased 14% to $0.90 on 12.7 million average shares outstanding versus $0.79 on 11.3 million average shares outstanding in the year-earlier period. The increase of 12% in the average number of shares outstanding for the third quarter and first nine months was due principally to the Company's secondary stock offering completed in February 1997. The Company noted that $11.2 million of the increase in net sales for the third quarter was attributable to the Phillips Mills acquisition that was completed in August 1997. The Company's effective tax rate for the third quarter was 22% compared with 38% a year ago. The lower rate was due principally to increased tax benefits related to the Company's international sales. The reduced tax rate also reflected a higher proportion of earnings from the Company's Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. subsidiary that is taxed at a lower effective rate. "We have now achieved record earnings in 21 consecutive quarters versus the comparable year-earlier period," said Robert G. Culp, III, chief executive officer. "One of the strategic initiatives that has contributed to that consistency is the use of Culp's strong financial position to complement our ongoing internal progress with the acquisition of complementary businesses. The gains in sales for the third quarter and first nine months were aided by the contribution of Phillips Mills which we acquired earlier this year. We also completed the acquisition of the Wetumpka Yarn operations during the third quarter and earlier this month completed the previously announced acquisition of Artee Industries. Transactions such as the purchase of Phillips Mills have enabled us to broaden our product line and customer base, while the Wetumpka and Artee Industries acquisitions extended our vertical integration into the manufacturing and marketing of spun and chenille che·nille n. 1. A soft tufted cord of silk, cotton, or worsted used in embroidery or for fringing. 2. Fabric made of this cord, commonly used for bedspreads or rugs. yarns. The trend toward consolidation continues at all levels within 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, and our intent is to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. other opportunities as they may occur over the longer term." Culp added, "Industry-wide demand for certain categories 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 from U.S.-based residential furniture customers has not been especially strong in the current fiscal year. We achieved higher sales for the third quarter, aided principally by the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. contribution from acquisitions, further growth in international shipments and continuing gains in sales of 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. . The positive momentum in shipments of mattress ticking by our Home Fashions business unit reflects the successful introduction of new textures and patterns as well as our investment in increased capacity to meet customers' needs. "We are continuing to realize strong growth in our international business. Shipments to customers 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. were up 45% for the third quarter and are expected to set a new record for fiscal 1998 as a whole. Our competitive position is benefiting from the introduction of more patterns designed for the preferences of specific markets. The addition of new customers is expanding our marketing coverage, and we are also being aided by the capital investment made in printed flock flock 1. a group of one species of animal or bird which eats or travels or is kept together, e.g. flock of sheep, of wild geese. 2. wool or cotton particles or debris used as stuffing or packing. fabrics that are especially popular in a number of international areas." Culp added, "We have already begun integrating the resources of Wetumpka Yarn and Artee Industries into the design functions of our business units. Our entry into the spun and chenille yarn business offers an exciting opportunity to accelerate our design activities. Our staff of designers and support personnel has never been more experienced, and we have the physical resources to support their design and development of proprietary patterns and styles. We have now moved most of our design personnel into the new Design Center in Burlington, North Carolina Burlington is a city in North Carolina, a state of the United States of America. It is the principal city of the Burlington, North Carolina Metropolitan Statistical Area which encompasses all of Alamance County. . This facility will encourage the sharing of design ideas among business units and provide a unique environment for customers to participate in the development of new patterns. Our focus on design is directly related to our goal of superior customer service which includes the need to provide distinctive fabrics to our worldwide base of customers." Culp concluded, "During the fourth fiscal quarter, we expect to strengthen our capital structure with the closing of a private placement of $75 million of senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes. The notes are expected to have a fixed coupon rate Coupon rate In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year. of 6.76% and an average term of 10 years. The proceeds will be used to repay borrowings under the Company's bank credit facility, thereby enhancing our financial flexibility." Culp, Inc. is the world's largest manufacturer and marketer of upholstery fabrics for furniture and is a leading producer of mattress ticking for bedding. The Company's fabrics are used primarily in the production of residential and commercial furniture and bedding products. This Release contains statements that could be deemed "forward- looking statements" within the meaning of the federal securities laws, which statements are inherently subject to risks and uncertainties. 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. 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 adversely affect the Company. In addition, the value of the U.S. dollar relative to other currencies can affect the competitiveness of the Company's products in international markets. -0-
CULP, INC.
Condensed Financial Highlights
(Unaudited)
Three Months Ended
February 1, January 26,
1998 1997
Net sales $118,457,000 $97,468,000
Net income 4,002,000 3,010,000
Earnings per share
Basic $ 0.32 $ 0.27
Diluted $ 0.31 $ 0.26
Average shares outstanding
Basic 12,692,000 11,342,000
Diluted 12,986,000 11,653,000
Nine Months Ended
February 1, January 26,
1998 1997
Net sales $340,881,000 $293,201,000
Net income 11,357,000 8,930,000
Earnings per share
Basic $ 0.90 $ 0.79
Diluted $ 0.88 $ 0.77
Average shares outstanding
Basic 12,663,000 11,317,000
Diluted 12,964,000 11,618,000
CONTACT: Culp, High Point Franklin N. Saxon, 910/888-6266 |
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