EX-99.(B) 3 a51763679ex99b.htm EXHIBIT 99(B)
Exhibit 99(b)
Page 1 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME
  
FOR THREE MONTHS ENDED JANUARY 28, 2018 AND JANUARY 29, 2017
  
(UNAUDITED)
  
(Amounts in Thousands, Except for Per Share Data)
  
                             
                             
   
THREE MONTHS ENDED
  
                             
   
Amounts
        
Percent of Sales
  
   
January 28,
    
January 29,
  
% Over
    
January 28,
    
January 29,
  
   
2018
    
2017
  
(Under)
    
2018
    
2017
  
                             
Net sales
  
$
85,310
      
76,169
      
12.0
%
    
100.0
%
    
100.0
%
Cost of sales
    
67,707
      
59,410
      
14.0
%
    
79.4
%
    
78.0
%
        Gross profit
    
17,603
      
16,759
      
5.0
%
    
20.6
%
    
22.0
%
                                         
Selling, general and
                                        
  administrative expenses
    
9,959
      
9,824
      
1.4
%
    
11.7
%
    
12.9
%
         Income from operations
    
7,644
      
6,935
      
10.2
%
    
9.0
%
    
9.1
%
                                         
Interest expense
    
31
      
-
      
100.0
%
    
0.0
%
    
0.0
%
Interest income
    
(132
)
    
(124
)
    
6.5
%
    
(0.2
)%
    
(0.2
)%
Other expense
    
229
      
69
      
231.9
%
    
0.3
%
    
0.1
%
         Income before income taxes
    
7,516
      
6,990
      
7.5
%
    
8.8
%
    
9.2
%
                                         
Income taxes*
    
8,208
      
643
  
N.M.
      
109.2
%
    
9.2
%
                                         
Loss from investment in unconsolidated joint venture
    
56
      
-
      
100.0
%
    
0.1
%
    
0.0
%
        Net (loss) income
  
$
(748
)
    
6,347
  
 
  
N.M.
      
(0.9
)%
    
8.3
%
                                         
Net (loss) income per share-basic
  
$
(0.06
)
  
$
0.52
      
(111.5
)%
                
Net (loss) income per share-diluted
  
$
(0.06
)
  
$
0.51
      
(111.8
)%
                
Average shares outstanding-basic
    
12,436
      
12,313
      
1.0
%
                
Average shares outstanding-diluted
    
12,436
      
12,544
      
(0.9
)%
                
                                         
* Percent of sales column for income taxes is calculated as a % of income before income taxes.
                                  
                                         
N.M. - Not meaningful.
                                        
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
PROFORMA CONSOLIDATED INCOME TAXES AND NET (LOSS) INCOME
  
FOR THREE MONTHS ENDED JANUARY 28, 2018
  
(UNAUDITED)
  
(Amounts in Thousands, Except for Per Share Data)
  
                               
                               
                               
         
Amounts (2)
          
Percent of Sales
  
                               
   
As Reported
          
January 28, 2018
    
As Reported
    
January 28, 2018
  
   
January 28,
     (1)    
Proforma Net
   
January 28,
    
Proforma Net
  
   
2018
    
Adjustments
    
of Adjustments
     2018    
of Adjustments
  
                                   
                                   
Income before income taxes
  
$
7,516
      
-
      
7,516
      
8.8
%
    
8.8
%
                                         
Income taxes*
    
8,208
      
(5,939
)
    
2,269
      
109.2
%
    
30.2
%
                                         
Loss from investment in unconsolidated joint venture
    
56
      
-
      
56
      
0.1
%
    
0.1
%
        Net (loss) income
  
$
(748
)
    
5,939
      
5,191
      
-0.9
%
    
6.1
%
                                         
Net (loss) income per share-basic
  
$
(0.06
)
  
$
0.48
    
$
0.42
                  
Net (loss) income per share-diluted
  
$
(0.06
)
  
$
0.48
    
$
0.42
                  
Average shares outstanding-basic
    
12,436
      
12,436
      
12,436
                  
Average shares outstanding-diluted
    
12,436
      
12,436
      
12,436
                  
 
 
(1)
Adjustments represent the income tax effects of the Tax Cuts and Jobs Act (TCJA) enacted on December 22, 2017, of which $4.8 million pertains to the mandatory repatriation of undistributed earnings and profits associated with our foreign subsidiaries and $1.1 million pertains to the revaluation of our U.S. deferred income taxes and reduction in our annual effective income tax rate pursuant to the TCJA.
 
 
(2)
No proforma adjustments were applicable for the comparative three-month period ending January 29, 2017, as the TCJA was not enacted or effective prior to December 22, 2017. See the above consolidated income statement for the three-month period ending January 29, 2017 for reported amounts.
 
 
*
Percent of sales column for income taxes is calculated as a % of income before income taxes.
 
Page 2 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
CONSOLIDATED STATEMENTS OF NET INCOME
  
FOR NINE MONTHS ENDED JANUARY 28, 2018 AND JANUARY 29, 2017
  
(UNAUDITED)
  
(Amounts in Thousands, Except for Per Share Data)
  
                     
                     
                     
                     
 
NINE MONTHS ENDED
  
                     
 
Amounts
      
Percent of Sales
  
 
January 28,
  
January 29,
  
% Over
  
January 28,
  
January 29,
  
 
2018
  
2017
  
(Under)
  
2018
  
2017
  
                     
Net sales
  
$
245,541
      
232,194
      
5.7
%
    
100.0
%
    
100.0
%
Cost of sales
    
195,668
      
180,115
      
8.6
%
    
79.7
%
    
77.6
%
        Gross profit
    
49,873
      
52,079
      
(4.2
)%
    
20.3
%
    
22.4
%
                                         
Selling, general and
                                        
  administrative expenses
    
28,876
      
29,171
      
(1.0
)%
    
11.8
%
    
12.6
%
         Income from operations
    
20,997
      
22,908
      
(8.3
)%
    
8.6
%
    
9.9
%
                                         
Interest expense
    
69
      
-
      
100.0
%
    
0.0
%
    
0.0
%
Interest income
    
(391
)
    
(164
)
    
138.4
%
    
(0.2
)%
    
(0.1
)%
Other expense
    
903
      
376
      
140.2
%
    
0.4
%
    
0.2
%
         Income before income taxes
    
20,416
      
22,696
      
(10.0
)%
    
8.3
%
    
9.8
%
                                         
Income taxes*
    
11,956
      
6,560
      
82.3
%
    
58.6
%
    
28.9
%
                                         
Loss from investment in unconsolidated joint venture
    
249
      
-
      
100.0
%
    
0.1
%
    
0.0
%
        Net income
  
$
8,211
      
16,136
      
(49.1
)%
    
3.3
%
    
6.9
%
                                         
Net income per share-basic
  
$
0.66
    
$
1.31
      
(49.6
)%
                
Net income per share-diluted
  
$
0.65
    
$
1.29
      
(49.6
)%
                
Average shares outstanding-basic
    
12,425
      
12,302
      
1.0
%
                
Average shares outstanding-diluted
    
12,626
      
12,517
      
0.9
%
                
                                         
                                         
* Percent of sales column for income taxes is calculated as a % of income before income taxes.
                                  
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
PROFORMA CONSOLIDATED INCOME TAXES AND NET INCOME
  
FOR NINE MONTHS ENDED JANUARY 28, 2018
  
(UNAUDITED)
  
(Amounts in Thousands, Except for Per Share Data)
  
                               
                               
                               
       
Amounts (2)
          
Percent of Sales
  
                               
 
 
  As Reported      
 
  January 28, 2018    
As Reported
    
January 28, 2018
  
 
 
  January 28,     (1)
 
 
  Proforma Net    
January 28,
    
Proforma Net
  
    2018  
 
 Adjustments  
 
  of Adjustments      2018    
of Adjustments
  
                                   
                                   
Income before income taxes
  
$
20,416
      
-
      
20,416
      
8.3
%
    
8.3
%
                                         
Income taxes*
    
11,956
      
(5,939
)
    
6,017
      
58.6
%
    
29.5
%
                                         
Loss from investment in unconsolidated joint venture
    
249
      
-
      
249
      
0.1
%
    
0.1
%
        Net  income
  
$
8,211
      
5,939
      
14,150
      
3.3
%
    
5.8
%
                                         
Net income per share-basic
  
$
0.66
    
$
0.48
    
$
1.14
                  
Net income per share-diluted
  
$
0.65
    
$
0.47
    
$
1.12
                  
Average shares outstanding-basic
    
12,425
      
12,425
      
12,425
                  
Average shares outstanding-diluted
    
12,626
      
12,626
      
12,626
                  
 
 
(1)
Adjustments represent the income tax effects of the Tax Cuts and Jobs Act (TCJA) enacted on December 22, 2017, of which $4.8 million pertains to the mandatory repatriation of undistributed earnings and profits associated with our foreign subsidiaries and $1.1 million pertains to the revaluation of our U.S. deferred income taxes and reduction in our annual effective income tax rate pursuant to the TCJA.
 
 
(2)
No proforma adjustments were applicable for the comparative nine-month period ending January 29, 2017, as the TCJA was not enacted or effective prior to December 22, 2017. See the above consolidated income statement for the nine-month period ending January 29, 2017 for reported amounts.
 
 
*
Percent of sales column for income taxes is calculated as a % of income before income taxes.
 
Page 3 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
CONSOLIDATED BALANCE SHEETS
  
JANUARY 28, 2018, JANUARY 29, 2017, AND APRIL 30, 2017
  
Unaudited
  
(Amounts in Thousands)
  
                               
                               
   
Amounts
    
Increase
    
(Condensed)
  
   
January 28,
    
January 29,
    
(Decrease)
    
April 30,
  
   
2018
    
2017
    
Dollars
    
Percent
    
2017
  
                               
Current assets
                              
Cash and cash equivalents
  
$
22,428
      
15,659
      
6,769
      
43.2
%
    
20,795
  
Short-term investments - Available for Sale
    
2,472
      
2,410
      
62
      
2.6
%
    
2,443
  
Short-term investments - Held-To-Maturity
    
17,206
      
-
      
17,206
      
100.0
%
    
-
  
Accounts receivable
    
26,097
      
22,726
      
3,371
      
14.8
%
    
24,577
  
Inventories
    
55,651
      
46,193
      
9,458
      
20.5
%
    
51,482
  
Other current assets
    
3,114
      
2,514
      
600
      
23.9
%
    
2,894
  
Total current assets
    
126,968
      
89,502
      
37,466
      
41.9
%
    
102,191
  
                                         
Property, plant & equipment, net
    
51,838
      
50,333
      
1,505
      
3.0
%
    
51,651
  
Goodwill
    
11,462
      
11,462
      
-
      
0.0
%
    
11,462
  
Deferred income taxes
    
1,942
      
422
      
1,520
      
360.2
%
    
419
  
Long-term Investments - Held-To-Maturity
    
13,625
      
30,832
      
(17,207
)
    
(55.8
)%
    
30,945
  
Long-term Investments - Rabbi Trust
    
7,176
      
5,488
      
1,688
      
30.8
%
    
5,466
  
Investment in unconsolidated joint venture
    
1,518
      
600
      
918
      
153.0
%
    
1,106
  
Other assets
    
2,315
      
2,417
      
(102
)
    
(4.2
)%
    
2,394
  
                                         
Total assets
  
$
216,844
      
191,056
      
25,788
      
13.5
%
    
205,634
  
                                         
                                         
                                         
Current liabilities
                                        
Accounts payable - trade
  
$
32,434
      
22,352
      
10,082
      
45.1
%
    
29,101
  
Accounts payable - capital expenditures
    
1,554
      
4,886
      
(3,332
)
    
(68.2
)%
    
4,767
  
Accrued expenses
    
8,842
      
10,511
      
(1,669
)
    
(15.9
)%
    
11,947
  
Income taxes payable - current
    
1,580
      
217
      
1,363
      
628.1
%
    
287
  
Total current liabilities
    
44,410
      
37,966
      
6,444
      
17.0
%
    
46,102
  
                                         
Accounts payable - capital expenditures
    
-
      
708
      
(708
)
    
(100.0
)%
    
1,322
  
Income taxes payable - long-term
    
10,940
      
1,817
      
9,123
      
502.1
%
    
467
  
Deferred income taxes
    
2,096
      
2,924
      
(828
)
    
(28.3
)%
    
3,593
  
Deferred compensation
    
7,216
      
5,327
      
1,889
      
35.5
%
    
5,520
  
                                         
Total liabilities
    
64,662
      
48,742
      
15,920
      
32.7
%
    
57,004
  
                                         
Shareholders' equity
    
152,182
      
142,314
      
9,868
      
6.9
%
    
148,630
  
                                         
Total liabilities and
                                        
shareholders' equity
  
$
216,844
      
191,056
      
25,788
      
13.5
%
    
205,634
  
                                         
Shares outstanding
    
12,450
      
12,315
      
135
      
1.1
%
    
12,357
  
                                         
*  Derived from audited financial statements.
                                        
 
Page 4 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
SUMMARY OF CASH AND INVESTMENTS  
JANUARY 28, 2018, JANUARY 29, 2017, AND APRIL 30, 2017
  
Unaudited
  
(Amounts in Thousands)
  
             
             
             
             
             
             
     
Amounts
      
 
January 28,
  
January 29,
  
April 30,
  
 
2018
  
2017
  
2017*
 
                 
                 
Cash and cash equivalents
  
$
22,428
    
$
15,659
    
$
20,795
  
                         
Short-term investments - Available for Sale
    
2,472
      
2,410
      
2,443
  
                         
Short-term investments - Held-To-Maturity
    
17,206
      
-
      
-
  
                         
Long-term investments - Held-To-Maturity
    
13,625
      
30,832
      
30,945
  
                         
Total Cash and Investments
  
$
55,731
    
$
48,901
    
$
54,183
  
                         
*  Derived from audited financial statements.
                        
 
Page 5 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
FOR THE NINE MONTHS ENDED JANUARY 28, 2018 AND JANUARY 29, 2017
  
Unaudited
  
(Amounts in Thousands)
  
                 
                 
   
NINE MONTHS ENDED
      
                 
   
Amounts
      
   
January 28,
    
January 29,
      
   
2018
    
2017
      
                 
Cash flows from operating activities:
                
         Net income
  
$
8,211
      
16,136
      
Adjustments to reconcile net income to net cash
                    
provided by operating activities:
                    
Depreciation
    
5,679
      
5,304
      
Amortization of assets
    
248
      
162
      
Stock-based compensation
    
2,422
      
2,619
      
Deferred income taxes
    
(3,020
)
    
3,533
      
Realized loss on sale of short-term investments (Available for Sale)
    
-
      
12
      
Gain on sale of equipment
    
-
      
(71
)
    
Loss from investment in unconsolidated joint venture
    
249
      
-
      
Foreign currency exchange loss (gain)
    
133
      
(18
)
    
Changes in assets and liabilities:
                    
Accounts receivable
    
(923
)
    
340
      
Inventories
    
(3,275
)
    
(137
)
    
Other current assets
    
(27
)
    
90
      
Other assets
    
(37
)
    
51
      
Accounts payable
    
1,715
      
(946
)
    
Accrued expenses and deferrred compensation
    
(1,608
)
    
(668
)
    
Income taxes
    
11,702
      
(1,695
)
    
Net cash provided by operating activities
    
21,469
      
24,712
  
(2)
  
                     
Cash flows from investing activities:
                    
         Capital expenditures
    
(6,657
)
    
(9,253
)
    
         Investment in unconsolidated joint venture
    
(661
)
    
(600
)
    
         Proceeds from the sale of short-term investments (Available for Sale)
    
-
      
2,000
      
         Purchase of short-term investments (Available for Sale)
    
(37
)
    
(8
)
    
         Purchase of long-term investments (Held-To-Maturity)
    
-
      
(31,050
)
    
         Proceeds from the sale of long-term investments (Rabbi Trust)
    
57
      
-
      
         Purchase of long-term investments (Rabbi Trust)
    
(1,699
)
    
(1,431
)
    
         Premium payment on life insurance policy
    
(18
)
    
(18
)
    
         Proceeds from the sale of equipment
    
6
      
80
      
                              Net cash used in investing activities
    
(9,009
)
    
(40,280
)
    
                     
Cash flows from financing activities:
                    
         Proceeds from line of credit
    
10,000
      
7,000
      
         Payments on line of credit
    
(10,000
)
    
(7,000
)
    
         Payments on vendor-financed capital expenditures
    
(3,750
)
    
(1,050
)
    
         Dividends paid
    
(5,722
)
    
(5,292
)
    
         Common stock surrendered for withholding taxes payable
    
(1,530
)
    
(280
)
    
         Payments of debt issuance costs
    
-
      
(2
)
    
         Proceeds from common stock issued
    
111
      
37
      
                              Net cash used in financing activities
    
(10,891
)
    
(6,587
)
(2)
  
                     
Effect of exchange rate changes on cash and cash equivalents
    
64
      
27
      
                     
Increase (decrease) in cash and cash equivalents
    
1,633
      
(22,128
)
    
                     
Cash and cash equivalents at beginning of period
    
20,795
      
37,787
      
                     
Cash and cash equivalents at end of period
  
$
22,428
      
15,659
      
                     
                     
Free Cash Flow (1)
  
$
8,811
      
12,467
  
(2)
  
 
 
(1)  Free Cash Flow reconciliation is as follows:
            
     
FY 2018
    
FY 2017
  
A)
Net cash provided by operating activities
  
$
21,469
      
24,712
  
B)
Minus:  Capital Expenditures
    
(6,657
)
    
(9,253
)
C)
Minus:  Investment in unconsolidated joint venture
    
(661
)
    
(600
)
D)
Minus:  Premium payment on life insurance policy
    
(18
)
    
(18
)
E)
Plus: Proceeds from the sale of equipment
    
6
      
80
  
F)
Minus:  Payments on vendor-financed capital expenditures
    
(3,750
)
    
(1,050
)
G)
Plus: Proceeds from the sale of long-term investments (Rabbi Trust)
    
57
      
-
  
H)
Minus:  Purchase of long-term investments (Rabbi Trust)
    
(1,699
)
    
(1,431
)
I)
Effects of exchange rate changes on cash and cash equivalents
    
64
      
27
  
      
$
8,811
      
12,467
  
                   
 
(2)
During the first quarter of fiscal 2018, we adopted ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." Accordingly, we reclassified certain amounts on our Statement of Cash Flows for the nine months ended January 29, 2017 to conform to the current year's presentation. As a result, our net cash provided by operating activities increased by $475 which was fully offset by a corresponding increase of $475 to  our net cash used in financing activities. Additionally, our free cash flow increased $280.
 
Page 6 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
STATEMENTS OF OPERATIONS BY SEGMENT
  
FOR THE THREE MONTHS ENDED JANUARY 28, 2018 AND JANUARY 29, 2017
  
(Unaudited)
  
                             
(Amounts in thousands)
  
                             
                             
   
THREE MONTHS ENDED
  
                             
   
Amounts
        
 
  
Percent of Total Sales
  
   
January 28,
    
January 29,
    
% Over
  
 
  
January 28,
    
January 29,
  
Net Sales by Segment
  
2018
    
2017
    
(Under)
  
 
  
2018
    
2017
  
                             
Mattress Fabrics
  
$
49,042
      
45,920
      
6.8
%
    
57.5
%
    
60.3
%
Upholstery Fabrics
    
36,268
      
30,249
      
19.9
%
    
42.5
%
    
39.7
%
                                         
     Net Sales
  
$
85,310
      
76,169
      
12.0
%
    
100.0
%
    
100.0
%
                                         
                                         
Gross Profit by Segment
                        
 
  
Gross Profit Margin
  
                                         
Mattress Fabrics
  
$
10,146
      
9,758
      
4.0
%
    
20.7
%
    
21.3
%
Upholstery Fabrics
    
7,457
      
7,001
      
6.5
%
    
20.6
%
    
23.1
%
     Gross Profit
  
$
17,603
      
16,759
      
5.0
%
    
20.6
%
    
22.0
%
                                         
                                         
                                         
Selling, General and Administrative Expenses  by Segment
                        
 
  
Percent of Sales
  
                                         
Mattress Fabrics
  
$
3,309
      
3,391
      
(2.4
)%
    
6.7
%
    
7.4
%
Upholstery Fabrics
    
3,947
      
3,901
      
1.2
%
    
10.9
%
    
12.9
%
Unallocated Corporate expenses
    
2,703
      
2,532
      
6.8
%
    
3.2
%
    
3.3
%
    Selling, General and Administrative Expenses
  
$
9,959
      
9,824
      
1.4
%
    
11.7
%
    
12.9
%
                                         
                                         
Operating Income (loss) by Segment
                        
 
  
Operating Income (Loss) Margin
  
                                         
Mattress Fabrics
  
$
6,837
      
6,367
      
7.4
%
    
13.9
%
    
13.9
%
Upholstery Fabrics
    
3,510
      
3,100
      
13.2
%
    
9.7
%
    
10.2
%
Unallocated corporate expenses
    
(2,703
)
    
(2,532
)
    
6.8
%
    
(3.2
)%
    
(3.3
)%
     Operating income
  
$
7,644
      
6,935
      
10.2
%
    
9.0
%
    
9.1
%
                                         
                                         
Depreciation by Segment
                                        
                                         
Mattress Fabrics
  
$
1,757
      
1,573
      
11.7
%
                
Upholstery Fabrics
    
209
      
220
      
(5.0
)%
                
   Depreciation
  
$
1,966
      
1,793
      
9.6
%
                
 
Page 7 to 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
STATEMENTS OF OPERATIONS BY SEGMENT
  
FOR THE NINE MONTHS ENDED JANUARY 28, 2018 AND JANUARY 29, 2017
  
(Unaudited)
  
                               
(Amounts in thousands)
  
                               
                               
   
NINE MONTHS ENDED
  
                               
   
Amounts
          
 
Percent of Total Sales
  
   
January 28,
    
January 29,
    
% Over
    
 
January 28,
    
January 29,
  
Net Sales by Segment
  
2018
    
2017
    
(Under)
    
 
2018
    
2017
  
                                 
Mattress Fabrics
  
$
146,072
      
141,977
      
2.9
%
    
59.5
%
    
61.1
%
Upholstery Fabrics
    
99,469
      
90,217
      
10.3
%
    
40.5
%
    
38.9
%
                                         
     Net Sales
  
$
245,541
      
232,194
      
5.7
%
    
100.0
%
    
100.0
%
                                         
                                         
Gross Profit by Segment
                          
 
Gross Profit Margin
  
                                         
Mattress Fabrics
  
$
29,641
      
32,414
      
(8.6
)%
    
20.3
%
    
22.8
%
Upholstery Fabrics
    
20,232
      
19,665
      
2.9
%
    
20.3
%
    
21.8
%
     Gross Profit
  
$
49,873
      
52,079
      
(4.2
)%
    
20.3
%
    
22.4
%
                                         
                                         
Selling, General and Administrative Expenses  by Segment
                          
 
Percent of Sales
  
                                         
Mattress Fabrics
  
$
9,868
      
10,185
      
(3.1
)%
    
6.8
%
    
7.2
%
Upholstery Fabrics
    
11,458
      
11,086
      
3.4
%
    
11.5
%
    
12.3
%
Unallocated Corporate expenses
    
7,550
      
7,900
      
(4.4
)%
    
3.1
%
    
3.4
%
     Selling, General, and Administrative Expenses
  
$
28,876
      
29,171
      
(1.0
)%
    
11.8
%
    
12.6
%
                                         
                                         
Operating Income (loss)  by Segment
                          
 
Operating Income (Loss) Margin
  
                                         
Mattress Fabrics
  
$
19,774
      
22,229
      
(11.0
)%
    
13.5
%
    
15.7
%
Upholstery Fabrics
    
8,773
      
8,579
      
2.3
%
    
8.8
%
    
9.5
%
Unallocated corporate expenses
    
(7,550
)
    
(7,900
)
    
(4.4
)%
    
(3.1
)%
    
(3.4
)%
     Operating income
  
$
20,997
      
22,908
      
(8.3
)%
    
8.6
%
    
9.9
%
                                         
                                         
Return on Capital (1)
                                        
                                         
Mattress Fabrics
    
30.1
%
    
38.5
%
                        
Upholstery Fabrics
    
63.3
%
    
64.6
%
                        
Unallocated Corporate
    
N/A
      
N/A
                          
     Consolidated
    
26.3
%
    
32.4
%
                        
                                         
Capital Employed (2)
                                        
                                         
Mattress Fabrics
  
$
88,268
      
80,656
      
9.4
%
                
Upholstery Fabrics
    
20,677
      
18,420
      
12.3
%
                
Unallocated Corporate
    
220
      
(1,288
)
    
N/A
                  
     Consolidated
  
$
109,165
      
97,788
      
11.6
%
                
                                         
                                         
Depreciation by Segment
                                        
                                         
Mattress Fabrics
  
$
5,068
      
4,673
      
8.5
%
                
Upholstery Fabrics
    
611
      
631
      
(3.2
)%
                
   Depreciation
  
$
5,679
      
5,304
      
7.1
%
                
 
Notes:
 
(1) See pages 9 and 10 of this financial information release for calculations.
 
(2) The capital employed balances are as of January 28, 2018 and January 29, 2017.
Page 8 of 10
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA  
FOR THE TWELVE MONTHS ENDED JANUARY 28, 2018 AND JANUARY 29, 2017  
(UNAUDITED)  
(AMOUNTS IN THOUSANDS)    
                           
                           
                           
 
 
  
Quarter Ended
          
                             
 
  
Trailing 12
  
                             
 
  
Months
  
     
4/30/2017
      
7/30/2017
      
10/29/2017
      
1/28/2018
      
1/28/2018
  
                                         
Net income (loss)
  
$
6,198
    
$
4,984
    
$
3,976
    
$
(748
)
  
$
14,410
  
Income taxes
    
778
      
1,640
      
2,108
      
8,208
      
12,734
  
Interest income, net
    
(134
)
    
(131
)
    
(91
)
    
(101
)
    
(457
)
Depreciation and amortization expense
    
1,863
      
1,889
      
1,990
      
2,048
      
7,790
  
Stock based compensation
    
739
      
757
      
801
      
864
      
3,161
  
Adjusted EBITDA
  
$
9,444
    
$
9,139
    
$
8,784
     $ 
10,271
     $ 
37,638
  
                                         
                                         
                                         
 
 
  
Quarter Ended
          
                                 
 
  
Trailing 12
  
                                 
 
  
Months
  
 
 
  
5/1/2016
      
7/31/2016
      
10/30/2016
      
1/29/2017
      
1/29/2017
  
                                         
Net income
  
$
3,601
    
$
5,313
    
$
4,475
    
$
6,347
    
$
19,736
  
Income taxes
    
3,566
      
3,233
      
2,684
      
643
      
10,126
  
Interest income, net
    
(26
)
    
(25
)
    
(15
)
    
(124
)
    
(190
)
Depreciation and amortization expense
    
1,830
      
1,813
      
1,778
      
1,875
      
7,296
  
Stock based compensation
    
778
      
761
      
896
      
962
      
3,397
  
Adjusted EBITDA
  
$
9,749
    
$
11,095
    
$
9,818
    
$
9,703
     $ 
40,365
  
                                         
% Over (Under)
    
-3.1
%
    
-17.6
%
    
-10.5
%
    
5.9
%
    
-6.8
%
 
Page 9 of 10
 
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
 
RETURN ON CAPITAL EMPLOYED BY SEGMENT
  
 
FOR THE NINE MONTHS ENDED JANUARY 28, 2018
  
 
(Amounts in Thousands)
  
 
(Unaudited)
  
             
 
Operating Income
        
 
Nine Months
  
Average
  
Return on
  
 
Ended
  
Capital
  
Avg. Capital
  
 
January 28, 2018 (1)
  
Employed (3)
  
Employed (2)
  
             
Mattress Fabrics
  
$
19,774
    
$
87,723
      
30.1
%
Upholstery Fabrics
    
8,773
      
18,485
      
63.3
%
(less: Unallocated Corporate)
    
(7,550
)
    
89
      
N/A
  
Total
  
$
20,997
    
$
106,297
      
26.3
%
 
 
Average Capital Employed
  
As of the three Months Ended January 28, 2018
    
As of the three Months Ended October 29, 2017
    
As of the three Months Ended July 30, 2017
  
   
Mattress
    
Upholstery
    
Unallocated
          
Mattress
    
Upholstery
    
Unallocated
           
Mattress
    
Upholstery
    
Unallocated
         
   
Fabrics
    
Fabrics
    
Corporate
    
Total
    
Fabrics
    
Fabrics
    
Corporate
    
Total
    
Fabrics
    
Fabrics
    
Corporate
    
Total
  
                                                                         
Total assets
  
$
106,686
      
43,458
      
66,700
      
216,844
    
$
107,517
      
34,974
      
58,552
      
201,043
    
$
112,112
      
34,491
      
61,301
      
207,904
  
Total liabilities
    
(18,418
)
    
(22,781
)
    
(23,463
)
    
(64,662
)
    
(16,150
)
    
(17,225
)
    
(14,588
)
    
(47,963
)
    
(24,277
)
    
(14,983
)
    
(18,967
)
    
(58,227
)
                                                                                                 
Subtotal
  
$
88,268
    
$
20,677
    
$
43,237
    
$
152,182
    
$
91,367
    
$
17,749
    
$
43,964
    
$
153,080
    
$
87,835
    
$
19,508
    
$
42,334
    
$
149,677
  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(22,428
)
    
(22,428
)
    
-
      
-
      
(15,739
)
    
(15,739
)
    
-
      
-
      
(18,322
)
    
(18,322
)
Short-term investments - Available-For-Sale
    
-
      
-
      
(2,472
)
    
(2,472
)
    
-
      
-
      
(2,478
)
    
(2,478
)
    
-
      
-
      
(2,469
)
    
(2,469
)
Short-term investments - Held-To-Maturity
    
-
      
-
      
(17,206
)
    
(17,206
)
    
-
      
-
      
(4,015
)
    
(4,015
)
    
-
      
-
      
-
      
-
  
Long-term investments - Held-To-Maturity
    
-
      
-
      
(13,625
)
    
(13,625
)
    
-
      
-
      
(26,853
)
    
(26,853
)
    
-
      
-
      
(30,907
)
    
(30,907
)
Long-term investments - Rabbi Trust
    
-
      
-
      
(7,176
)
    
(7,176
)
    
-
      
-
      
(6,921
)
    
(6,921
)
    
-
      
-
      
(6,714
)
    
(6,714
)
Deferred income taxes - non-current
    
-
      
-
      
(1,942
)
    
(1,942
)
    
-
      
-
      
(491
)
    
(491
)
    
-
      
-
      
(436
)
    
(436
)
Income taxes payable - current
    
-
      
-
      
1,580
      
1,580
      
-
      
-
      
692
      
692
      
-
      
-
      
884
      
884
  
Income taxes payable - long-term
    
-
      
-
      
10,940
      
10,940
      
-
      
-
      
487
      
487
      
-
      
-
      
487
      
487
  
Deferred income taxes - non-current
    
-
      
-
      
2,096
      
2,096
      
-
      
-
      
4,641
      
4,641
      
-
      
-
      
4,253
      
4,253
  
Line of credit
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
5,000
      
5,000
  
Deferred compensation
    
-
      
-
      
7,216
      
7,216
      
-
      
-
      
6,970
      
6,970
      
-
      
-
      
6,769
      
6,769
  
Total Capital Employed
  
$
88,268
    
$
20,677
    
$
220
    
$
109,165
    
$
91,367
    
$
17,749
    
$
257
    
$
109,373
    
$
87,835
    
$
19,508
    
$
879
    
$
108,222
  
 
 
 
 
As of the three Months Ended April 30, 2017         
                                                                  
 
 
 Mattress  
 
Upholstery
  
 
 Unallocated                                                                         
 
 
 Fabrics  
 
Fabrics
  
 
 Corporate  
 
Total
                                                                  
                                                                                                 
Total assets
  
$
111,041
      
32,255
      
62,338
      
205,634
                                                                  
Total liabilities
    
(27,619
)
    
(16,249
)
    
(13,136
)
    
(57,004
)
                                                                
                                                                                                 
Subtotal
  
$
83,422
    
$
16,006
    
$
49,202
    
$
148,630
                                                                  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(20,795
)
    
(20,795
)
                                                                
Short-term investments - Available-For-Sale
    
-
      
-
      
(2,443
)
    
(2,443
)
                                                                
Short-term investments - Held-To-Maturity
    
-
      
-
      
-
      
-
                                                                  
Long-term investments - Held-To-Maturity
    
-
      
-
      
(30,945
)
    
(30,945
)
                                                                
Long-term investments - Rabbi Trust
    
-
      
-
      
(5,466
)
    
(5,466
)
                                                                
Deferred income taxes - non-current
    
-
      
-
      
(419
)
    
(419
)
                                                                
Income taxes payable - current
    
-
      
-
      
287
      
287
                                                                  
Income taxes payable - long-term
    
-
      
-
      
467
      
467
                                                                  
Deferred income taxes - non-current
    
-
      
-
      
3,593
      
3,593
                                                                  
Line of credit
    
-
      
-
      
-
      
-
                                                                  
Deferred compensation
    
-
      
-
      
5,520
      
5,520
                                                                  
                                                                                                 
Total Capital Employed
  
$
83,422
    
$
16,006
    
$
(999
)
  
$
98,429
                                                                  
                                                                                                 
                                                                                                 
 
 
  
Mattress
  
 
  
Upholstery
  
 
  
Unallocated
                                                                          
 
 
  
Fabrics
  
 
  
Fabrics
  
 
  
Corporate
  
 
  
Total
                                                                  
                                                                                                 
Average Capital Employed (3)
  
$
87,723
    
$
18,485
    
$
89
    
$
106,297
                                                                  
 
Notes:
 
(1)
See reconciliation per page 6 of this financial information release.
 
 
(2)
Return on average capital employed represents operating income for the nine month period ending January 28, 2018 divided by three quarters times four quarters to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments - Available- For-Sale, short-term investments - Held-To-Maturity, long-term investments - Held-To-Maturity, long-term investments - Rabbi Trust, noncurrent deferred income tax assets and liabilities, income taxes receivable and payable, line of credit, and deferred compensation.
 
 
(3)
Average capital employed was computed using the quarterly four periods ending January 28, 2018, October 29, 2017, July 30, 2017 and April 30, 2017.
 
Page 10 of 10
 
 
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
 
RETURN ON CAPITAL EMPLOYED BY SEGMENT
  
 
FOR THE NINE MONTHS ENDED JANUARY 29, 2017
  
 
(Amounts in Thousands)
  
 
(Unaudited)
  
             
 
Operating Income
            
 
Nine Months
  
Average
  
Return on
  
 
Ended
  
Capital
  
Avg. Capital
  
 
January 29, 2017 (1)
  
Employed (3)
  
Employed (2)
  
             
Mattress Fabrics
  
$
22,229
    
$
77,035
      
38.5
%
Upholstery Fabrics
    
8,579
      
17,712
      
64.6
%
(less: Unallocated Corporate)
    
(7,900
)
    
(536
)
    
N/A
  
Total
  
$
22,908
    
$
94,211
      
32.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Capital Employed
 
As of the three Months Ended January 29, 2017
    
As of the three Months Ended October 30, 2016
    
As of the three Months Ended July 31, 2016
  
 
 
Mattress
  
Upholstery
  
Unallocated
        
Mattress
    
Upholstery
    
Unallocated
           
Mattress
    
Upholstery
    
Unallocated
         
 
 
Fabrics
  
Fabrics
  
Corporate
  
Total
    
Fabrics
    
Fabrics
    
Corporate
    
Total
    
Fabrics
    
Fabrics
    
Corporate
    
Total
  
                                                                       
Total assets
  
$
103,782
    
$
30,380
    
$
56,894
    
$
191,056
    
$
94,700
    
$
29,361
    
$
55,066
    
$
179,127
    
$
92,959
    
$
33,550
    
$
56,851
    
$
183,360
  
Total liabilities
    
(23,126
)
    
(11,960
)
    
(13,656
)
    
(48,742
)
    
(18,499
)
    
(11,180
)
    
(13,499
)
    
(43,178
)
    
(16,313
)
    
(16,329
)
    
(19,283
)
    
(51,925
)
                                                                                                 
Subtotal
  
$
80,656
    
$
18,420
    
$
43,238
    
$
142,314
    
$
76,201
    
$
18,181
    
$
41,567
    
$
135,949
    
$
76,646
    
$
17,221
    
$
37,568
    
$
131,435
  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(15,659
)
    
(15,659
)
    
-
      
-
      
(13,910
)
    
(13,910
)
    
-
      
-
      
(45,549
)
    
(45,549
)
Short-term investments - Available For Sale
    
-
      
-
      
(2,410
)
    
(2,410
)
    
-
      
-
      
(2,430
)
    
(2,430
)
    
-
      
-
      
(2,434
)
    
(2,434
)
Long-term investments - Held-To-Maturity
    
-
      
-
      
(30,832
)
    
(30,832
)
    
-
      
-
      
(31,050
)
    
(31,050
)
    
-
      
-
      
-
      
-
  
Long-term investments - Rabbi Trust
    
-
      
-
      
(5,488
)
    
(5,488
)
    
-
      
-
      
(4,994
)
    
(4,994
)
    
-
      
-
      
(4,611
)
    
(4,611
)
Income taxes receivable
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Deferred income taxes - non-current
    
-
      
-
      
(422
)
    
(422
)
    
-
      
-
      
(581
)
    
(581
)
    
-
      
-
      
(1,942
)
    
(1,942
)
Income taxes payable - current
    
-
      
-
      
217
      
217
      
-
      
-
      
513
      
513
      
-
      
-
      
358
      
358
  
Income taxes payable - long-term
    
-
      
-
      
1,817
      
1,817
      
-
      
-
      
3,734
      
3,734
      
-
      
-
      
3,779
      
3,779
  
Deferred income taxes - non-current
    
-
      
-
      
2,924
      
2,924
      
-
      
-
      
1,699
      
1,699
      
-
      
-
      
1,532
      
1,532
  
Line of credit
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
7,000
      
7,000
  
Deferred compensation
    
-
      
-
      
5,327
      
5,327
      
-
      
-
      
5,171
      
5,171
      
-
      
-
      
5,031
      
5,031
  
Total Capital Employed
  
$
80,656
    
$
18,420
    
$
(1,288
)
  
$
97,788
    
$
76,201
    
$
18,181
    
$
(281
)
  
$
94,101
    
$
76,646
    
$
17,221
    
$
732
    
$
94,599
  
 
 
 
 
 
As of the three Months Ended May 1, 2016
                                                                  
 
 
Mattress
  
Upholstery
  
 
 Unallocated                                                                          
 
 
Fabrics
  
Fabrics
  
 
 Corporate  
 
  
Total
                                                                  
                                                                                                 
Total assets
  
$
94,878
    
$
29,463
    
$
50,801
    
$
175,142
                                                                  
Total liabilities
    
(20,241
)
    
(12,438
)
    
(13,651
)
    
(46,330
)
                                                                
                                                                                                 
Subtotal
  
$
74,637
    
$
17,025
    
$
37,150
    
$
128,812
                                                                  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(37,787
)
    
(37,787
)
                                                                
Short-term investments - Available For Sale
    
-
      
-
      
(4,359
)
    
(4,359
)
                                                                
Long-term investments - Held-To-Maturity
    
-
      
-
      
-
      
-
                                                                  
Long-term investments - Rabbi Trust
    
-
      
-
      
(4,025
)
    
(4,025
)
                                                                
Income taxes receivable
    
-
      
-
      
(155
)
    
(155
)
                                                                
Deferred income taxes - non-current
    
-
      
-
      
(2,319
)
    
(2,319
)
                                                                
Income taxes payable - current
    
-
      
-
      
180
      
180
                                                                  
Income taxes payable - long-term
    
-
      
-
      
3,841
      
3,841
                                                                  
Deferred income taxes - non-current
    
-
      
-
      
1,483
      
1,483
                                                                  
Line of credit
    
-
      
-
      
-
      
-
                                                                  
Deferred compensation
    
-
      
-
      
4,686
      
4,686
                                                                  
                                                                                                 
Total Capital Employed
  
$
74,637
    
$
17,025
    
$
(1,305
)
  
$
90,357
                                                                  
                                                                                                 
                                                                                                 
 
 
Mattress
  
Upholstery
  
 
Unallocated
                                                                          
 
 
Fabrics
  
Fabrics
  
 
Corporate
  
 
  
Total
                                                                  
                                                                                                 
Average Capital Employed (3)
  
$
77,035
    
$
17,712
    
$
(536
)
  
$
94,211
                                                                  
 
 
Notes:
 
(1)
See reconciliation per page 6 of this financial information release.
 
 
(2)
Return on average capital employed represents operating income for the nine month period ending January 29, 2017 divided by three quarters times four quarters to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments - Available-For-Sale, long-term investments - Held-To-Maturity, long-term investments - Rabbi Trust, noncurrent deferred tax assets and liabilities, income taxes receivable and payable, line of credit, and deferred compensation.
 
 
(3)
Average capital employed was computed using the four periods ending January 29, 2017, October 30, 2016, July 31, 2016 and May 1, 2016.