CULP INC - FORM 8-K - EX-99.(B) - EXHIBIT 99(B) - August 29, 2018

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EX-99.(A) - EXHIBIT 99(A) - CULP INCa51857734ex99a.htm
8-K - CULP, INC. 8-K - CULP INCa51857734.htm
Exhibit 99(b)
Page 1 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
CONSOLIDATED STATEMENTS OF NET INCOME
  
FOR THREE MONTHS ENDED JULY 29, 2018 AND JULY 30, 2017
  
(UNAUDITED)
  
(Amounts in Thousands, Except for Per Share Data)
  
                               
                               
   
THREE MONTHS ENDED
                               
   
Amounts
        
Percent of Sales
   
July 29,
  
July 30
  
% Over
  
July 29,
  
July 30
   
2018
  
2017
  
(Under)
  
2018
  
2017
                               
Net sales
  
$
71,473
      
79,533
      
(10.1
)%
    
100.0
%
    
100.0
 %
Cost of sales
    
60,914
   (1) (2)  
63,068
      
(3.4
)%
    
85.2
%
    
79.3
 % 
Gross profit
    
10,559
      
16,465
      
(35.9
)%
    
14.8
%
    
20.7
  
                                         
Selling, general and
                                        
  administrative expenses
    
8,033
      
9,501
      
(15.5
)%
    
11.2
%
    
11.9
 % 
Restructuring expense
    
451
   (2)  
-
      
100.0
%
    
0.6
%
    
0.0
 % 
Income from operations
    
2,075
      
6,964
      
(70.2
)%
    
2.9
%
    
8.8
 % 
                                         
Interest expense
    
20
      
-
      
100.0
%
    
0.0
%
    
0.0
 % 
Interest income
    
(150
)
    
(131
)
    
14.5
%
    
(0.2
)%
    
(0.2
)%
Other expense
    
257
      
353
      
(27.2
)%
    
0.4
%
    
0.4
 % 
Income before income taxes
    
1,948
      
6,742
      
(71.1
)%
    
2.7
%
    
8.5
 % 
                                         
Income taxes*
    
906
      
1,640
      
(44.8
)%
    
46.5
%
    
24.3
 % 
                                         
Loss from investment in unconsolidated joint venture
    
77
      
118
      
(34.7
)%
    
0.1
%
    
0.1
 % 
Net income
    
965
      
4,984
      
(80.6
)%
    
1.4
%
    
6.3
  
Less: Net income attributable to non-controlling interest
    
(8
)
    
-
      
(100.0
)%
    
(0.0
)%
    
0.0
 % 
Net income attributable to Culp Inc. common shareholders
  
$
957
      
4,984
      
(80.8
)%
    
1.3
%
    
6.3
 % 
                                         
                                         
Net income attributable to Culp Inc. common shareholders per share-basic
  
$
0.08
    
$
0.40
      
(80.0
)%
                
Net income attributable to Culp Inc. common shareholders per share-diluted
  
$
0.08
    
$
0.40
      
(80.0
)%
                
Average shares outstanding-basic
    
12,510
      
12,399
      
0.9
%
                
Average shares outstanding-diluted
    
12,600
      
12,590
      
0.1
%
                
                                         
* Percent of sales column for income taxes is calculated as a % of income before income taxes.
                  
 
Notes
(1)
Cost of sales for the three-month period ending July 29, 2018 includes a $1.6 million restructuring related charge for inventory markdowns.
 
 
(2)
See page 6 for detailed description of charges and adjusted statement of operations excluding restructuring expense and restructuring related charges incurred for the three-month period ending July 29, 2018. There were no restructuring activities noted for the three-month period ending July 30, 2017.
 
 
Page 2 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
CONSOLIDATED BALANCE SHEETS
  
July 29, 2018, JULY 30, 2017 AND APRIL 29, 2018
  
Unaudited
  
(Amounts in Thousands)
  
                               
                               
   
Amounts
                  
         
(Condensed)
  
Increase
      
   
July 29,
  
July 30,
  
(Decrease)
  
* April 29,
   
2018
  
2017
  
Dollars
  
Percent
  
2018
                               
Current assets
                              
Cash and cash equivalents
  
$
8,593
      
18,322
      
(9,729
)
    
(53.1
)%
    
21,228
  
Short-term investments - Available for Sale
    
-
      
2,469
      
(2,469
)
    
(100.0
)%
    
2,451
  
Short-term investments - Held-To-Maturity
    
30,756
      
-
      
30,756
      
100.0
%
    
25,759
  
Accounts receivable
    
23,225
      
22,140
      
1,085
      
4.9
%
    
26,307
  
Inventories
    
54,989
      
55,227
      
(238
)
    
(0.4
)%
    
53,454
  
Other current assets
    
3,852
      
3,441
      
411
      
11.9
%
    
2,870
  
Total current assets
    
121,415
      
101,599
      
19,816
      
19.5
%
    
132,069
  
                                         
Property, plant & equipment, net
    
53,178
      
52,912
      
266
      
0.5
%
    
51,794
  
Goodwill
    
27,222
      
11,462
      
15,760
      
137.5
%
    
13,569
  
Deferred income taxes
    
3,721
      
436
      
3,285
      
753.4
%
    
1,458
  
Long-term Investments - Held-To-Maturity
    
-
      
30,907
      
(30,907
)
    
(100.0
)%
    
5,035
  
Long-term Investments - Rabbi Trust
    
7,671
      
6,714
      
957
      
14.3
%
    
7,326
  
Investment in unconsolidated joint venture
    
1,525
      
1,477
      
48
      
3.2
%
    
1,501
  
Other assets
    
11,640
      
2,397
      
9,243
      
385.6
%
    
5,232
  
                                         
Total assets
  
$
226,372
      
207,904
      
18,468
      
8.9
%
    
217,984
  
                                         
                                         
                                         
Current liabilities
                                        
Accounts payable - trade
  
$
25,070
      
29,112
      
(4,042
)
    
(13.9
)%
    
27,237
  
Accounts payable - capital expenditures
    
862
      
5,647
      
(4,785
)
    
(84.7
)%
    
1,776
  
Deferred revenue
    
634
      
-
      
634
      
100.0
%
    
809
  
Accrued expenses
    
8,176
      
6,075
      
2,101
      
34.6
%
    
9,325
  
Accrued restructuring costs
    
445
      
-
      
445
      
100.0
%
    
-
  
Income taxes payable - current
    
1,244
      
884
      
360
      
40.7
%
    
1,437
  
Total current liabilities
    
36,431
      
41,718
      
(5,287
)
    
(12.7
)%
    
40,584
  
                                         
Line of credit
    
4,000
      
5,000
      
(1,000
)
    
(20.0
)%
    
-
  
Accrued expenses - long-term
    
749
      
-
      
749
      
100.0
%
    
763
  
Contingent consideration - Earn-Out Obligation
    
5,600
      
-
      
5,600
      
100.0
%
    
-
  
Income taxes payable - long-term
    
3,733
      
487
      
3,246
      
666.5
%
    
3,758
  
Deferred income taxes
    
2,150
      
4,253
      
(2,103
)
    
(49.4
)%
    
2,150
  
Deferred compensation
    
7,679
      
6,769
      
910
      
13.4
%
    
7,353
  
                                         
Total liabilities
    
60,342
      
58,227
      
2,115
      
3.6
%
    
54,608
  
                                         
Shareholders' equity
                                        
Shareholders' equity attributable to Culp Inc.
    
161,490
      
149,677
      
11,813
      
7.9
%
    
163,376
  
Non-controlling interest
    
4,540
      
-
      
4,540
      
100.0
%
    
-
  
     
166,030
      
149,677
      
16,353
      
10.9
%
    
163,376
  
                                         
Total liabilities and
                                        
shareholders' equity
  
$
226,372
      
207,904
      
18,468
      
8.9
%
    
217,984
  
                                         
Shares outstanding
    
12,522
      
12,441
      
81
      
0.7
%
    
12,450
  
 
* Derived from audited financial statements.
 
 
Page 3 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE
  
SUMMARY OF CASH AND INVESTMENTS
  
JULY 29, 2018, JULY 30, 2017, AND APRIL 29, 2018
  
Unaudited
  
(Amounts in Thousands)
  
                   
                   
                   
                   
    Amounts
   
July 29,
  
July 30,
  
April 29,
   
2018
  
2017
   2018*
                     
                     
Cash and cash equivalents
  
$
8,593
    
$
18,322
    
$
21,228
  
                         
Short-term investments - Available for Sale
    
-
      
2,469
      
2,451
  
                         
Short-term investments - Held-To-Maturity
    
30,756
      
-
      
25,759
  
                         
Long-term investments - Held-To-Maturity
    
-
      
30,907
      
5,035
  
                         
Total Cash and Investments
  
$
39,349
    
$
51,698
    
$
54,473
  
 
* Derived from audited financial statements.
 
 
Page 4 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
FOR THE THREE MONTHS ENDED JULY 29, 2018 AND JULY 30, 2017
  
Unaudited  
(Amounts in Thousands)
  
             
             
   
THREE MONTHS ENDED
             
   
Amounts
   
July 29,
  
July 30,
   
2018
  
2017
             
Cash flows from operating activities:
            
Net income
  
$
965
      
4,984
  
Adjustments to reconcile net income to net cash (used in)
                
provided by operating activities:
                
Depreciation
    
2,015
      
1,807
  
Amortization of assets
    
145
      
82
  
Stock-based compensation
    
(501
)
    
757
  
Deferred income taxes
    
(2,263
)
    
643
  
Realized loss on sale of short-term investments (Available for Sale)
    
94
      
-
  
Loss on sale of equipment
    
35
      
-
  
Loss from investment in unconsolidated joint venture
    
77
      
118
  
Foreign currency exchange gain (loss)
    
(91
)
    
35
  
Changes in assets and liabilities, net of effects of acquisition of businesses:
                
Accounts receivable
    
2,837
      
2,524
  
Inventories
    
(429
)
    
(3,539
)
Other current assets
    
(989
)
    
(467
)
Other assets
    
34
      
(47
)
Accounts payable
    
(2,494
)
    
(397
)
Deferred revenue
    
(175
)
    
-
  
Accrued expenses and deferrred compensation
    
(1,566
)
    
(4,704
)
Accrued restructuring costs
    
445
      
-
  
Income taxes
    
(75
)
    
608
  
Net cash (used in) provided by operating activities
    
(1,936
)
    
2,404
  
                 
Cash flows from investing activities:
                
Capital expenditures
    
(757
)
    
(2,260
)
Net cash paid for acquistion of businesses
    
(11,971
)
    
-
  
Investment in unconsolidated joint venture
    
(100
)
    
(489
)
Proceeds from the sale of short-term investments (Available for Sale)
    
2,458
      
-
  
Purchase of short-term investments (Available for Sale)
    
(10
)
    
(12
)
Proceeds from the sale of long-term investments (Rabbi Trust)
    
-
      
49
  
Purchase of long-term investments (Rabbi Trust)
    
(302
)
    
(1,267
)
Net cash used in investing activities
    
(10,682
)
    
(3,979
)
                 
Cash flows from financing activities:
                
Proceeds from line of credit
    
11,000
      
5,000
  
Payments on line of credit
    
(7,000
)
    
-
  
Payments on vendor-financed capital expenditures
    
(1,412
)
    
(1,250
)
Dividends paid
    
(1,127
)
    
(3,608
)
Common stock surrendered for withholding taxes payable
    
(1,292
)
    
(1,135
)
Common stock repurchased
    
(72
)
    
-
  
Proceeds from common stock issued
    
-
      
5
  
Net cash provided by (used in) financing activities
    
97
      
(988
)
                 
Effect of exchange rate changes on cash and cash equivalents
    
(114
)
    
90
  
                 
Decrease in cash and cash equivalents
    
(12,635
)
    
(2,473
)
                 
Cash and cash equivalents at beginning of period
    
21,228
      
20,795
  
                 
Cash and cash equivalents at end of period
  
$
8,593
      
18,322
  
                 
                 
Free Cash Flow (1)
  
$
(4,621
)
    
(2,723
)
                 
                 
                 
(1)  Free Cash Flow reconciliation is as follows:
                
   
FY 2019
    
FY 2018
  
A)  Net cash provided by operating activities
  
$
(1,936
)
    
2,404
  
B)  Minus:  Capital Expenditures
    
(757
)
    
(2,260
)
C)  Minus:  Investment in unconsolidated joint venture
    
(100
)
    
(489
)
D)  Minus:  Payments on vendor-financed capital expenditures
    
(1,412
)
    
(1,250
)
E)  Plus:       Proceeds from the sale of long-term investments (Rabbi Trust)
    
-
      
49
  
F)  Minus:   Purchase of long-term investments (Rabbi Trust)
    
(302
)
    
(1,267
)
G)  Effects of exchange rate changes on cash and cash equivalents
    
(114
)
    
90
  
   
$
(4,621
)
    
(2,723
)
                 
 
 
Page 5 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
STATEMENTS OF OPERATIONS BY SEGMENT 
  
FOR THE THREE MONTHS ENDED JULY 29, 2018 AND JULY 30, 2017 
  
(Unaudited) 
  
(Amounts in thousands) 
  
                             
                             
   
THREE MONTHS ENDED
                
                             
   
Amounts
      
 
Percent of Total Sales
   
July 29,
  
July 30,
  
% Over
 
July 29,
  
July 30,
Net Sales by Segment
  
2018
  
2017
  
(Under)
 
 2018  
2017
                             
Mattress Fabrics
  
$
36,983
      
48,429
      
(23.6
)%
    
51.7
%
    
60.9
%
Upholstery Fabrics
    
34,490
      
31,104
      
10.9
%
    
48.3
%
    
39.1
%
                                         
Net Sales
  
$
71,473
      
79,533
      
(10.1
)%
    
100.0
%
    
100.0
%
                                         
                                         
Gross Profit by Segment
                        
 
Gross Profit Margin
                                         
Mattress Fabrics
  
$
5,971
      
9,760
      
(38.8
)%
    
16.1
%
    
20.2
%
Upholstery Fabrics
    
6,153
      
6,705
      
(8.2
)%
    
17.8
%
    
21.6
%
Subtotal
    
12,124
      
16,465
      
(26.4
)%
    
17.0
%
    
20.7
%
                                         
Restructuring related charges
    
(1,565
)
 (1)  
-
      
100.0
%
    
(2.2
)%
    
0.0
%
                                         
Gross Profit
  
$
10,559
      
16,465
      
(35.9
)%
    
14.8
%
    
20.7
%
                                         
Selling, General and Administrative Expenses by Segment
                        
 
Percent of Sales
                                         
Mattress Fabrics
  
$
3,148
      
3,391
      
(7.2
)%
    
8.5
%
    
7.0
%
Upholstery Fabrics
    
3,626
      
3,811
      
(4.9
)%
    
10.5
%
    
12.3
%
Unallocated Corporate expenses
    
1,259
      
2,299
      
(45.2
)%
    
1.8
%
    
2.9
%
Selling, General and Administrative Expenses
  
$
8,033
      
9,501
      
(15.5
)%
    
11.2
%
    
11.9
%
                                         
                                         
Operating Income (loss) by Segment
                        
 
Operating Income (Loss) Margin
                                         
Mattress Fabrics
  
$
2,823
      
6,368
      
(55.7
)%
    
7.6
%
    
13.1
%
Upholstery Fabrics
    
2,527
      
2,895
      
(12.7
)%
    
7.3
%
    
9.3
%
Unallocated corporate expenses
    
(1,259
)
    
(2,299
)
    
(45.2
)%
    
(1.8
)%
    
(2.9
)%
Subtotal
  
$
4,091
      
6,964
      
(41.3
)%
    
5.7
%
    
8.8
%
                                         
Restructuring expense and related charges
    
(2,016
)
 (1)  
-
      
100.0
%
    
(2.8
)%
    
0.0
%
                                         
Operating income
    
2,075
      
6,964
      
(70.2
)%
    
2.9
%
    
8.8
%
                                         
                                         
Return on Capital (2)
                                        
                                         
Mattress Fabrics
    
28.6
%
    
40.3
%
                        
Upholstery Fabrics
    
53.7
%
    
61.6
%
                        
Unallocated Corporate
    
N/A
      
N/A
                          
Consolidated
    
21.4
%
    
28.8
%
                        
                                         
Capital Employed (2) (3)
                                        
                                         
Mattress Fabrics
  
$
83,471
      
74,913
      
11.4
%
                
Upholstery Fabrics
    
19,506
      
19,508
      
(0.0
)%
                
Unallocated Corporate
    
31,118
      
13,801
      
125.5
%
                
Consolidated
  
$
134,095
      
108,222
      
23.9
%
                
                                         
                                         
Depreciation Expense by Segment
                                        
                                         
Mattress Fabrics
  
$
1,800
      
1,612
      
11.7
%
                
Upholstery Fabrics
    
215
      
195
      
10.3
%
                
Depreciation Expense
  
$
2,015
      
1,807
      
11.5
%
                
 
Notes
(1)
See page 6 for detailed description of charges.
 
 
(2)
See pages 8 and 9 of this financial information release for calculations.
   
(3) The capital employed balances are as of July 29, 2018 and July 30, 2017.
 
 
Page 6 of 10
 
CULP, INC.
  
ADJUSTED CONSOLIDATED STATEMENTS OF OPERATIONS
  
FOR THE THREE MONTHS ENDED JULY 29, 2018 AND JULY 30, 2017
  
                                       
                                       
   
THREE MONTHS ENDED (UNAUDITED)
                                       
                             
(3)
        
   
As Reported
              
 
July 29, 2018
    
 
As Reported
          
   
July 29,
 
% of
    
 
% of
 
Adjusted
 
% of
 
July 30,
 
% of
 
% Over
   
2018
 
Sales
 
Adjustments
 
Sales
 
Results
 
Sales
   2017 
 
Sales
 
(Under)
                                           
Net sales
  
$
71,473
      
100.0
%
    
-
      
0.0
%
    
71,473
      
100.0
%
    
79,533
      
100.0
%
    
-10.1
%
Cost of sales
    
60,914
      
85.2
%
    
(1,565
)
    
-2.2
%
 (1)  
59,349
      
83.0
%
    
63,068
      
79.3
%
    
-5.9
%
Gross profit
    
10,559
      
14.8
%
    
(1,565
)
    
-2.2
%
    
12,124
      
17.0
%
    
16,465
      
20.7
%
    
-26.4
%
                                                                         
Selling, general and
                                                                        
  administrative expenses
    
8,033
      
11.2
%
    
-
      
0.0
%
    
8,033
      
11.2
%
    
9,501
      
11.9
%
    
-15.5
%
Restructuring expense
    
451
      
0.6
%
    
(451
)
    
-0.6
%
 (2)  
-
      
0.0
%
    
-
      
0.0
%
    
0.0
%
Income from operations
    
2,075
      
2.9
%
    
(2,016
)
    
-2.8
%
    
4,091
      
5.7
%
    
6,964
      
8.8
%
    
-41.3
%
                                                                         
Interest expense
    
20
      
0.0
%
    
-
      
0.0
%
    
20
      
0.0
%
    
-
      
0.0
%
    
100.0
%
Interest income
    
(150
)
    
-0.2
%
    
-
      
0.0
%
    
(150
)
    
-0.2
%
    
(131
)
    
-0.2
%
    
14.5
%
Other expense
    
257
      
0.4
%
    
-
      
0.0
%
    
257
      
0.4
%
    
353
      
0.4
%
    
-27.2
%
Income before income taxes
    
1,948
      
2.7
%
    
(2,016
)
    
-2.8
%
    
3,964
      
5.5
%
    
6,742
      
8.5
%
    
-41.2
%
 
Notes
(1)
The $1.6 million restructuring related charge represents inventory markdowns associated with the closure of our Anderson, SC plant facility.
 
 
(2)
The $451 restructuring charge represents employee termination benefits associated with the closure of our Anderson, SC plant facility.
   
(3)
Actual reported results were used for comparative purposes as there were no restructuring activities for the three month period ending July 30, 2017.
 
 
Page 7 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA 
  
FOR THE TWELVE MONTHS ENDED JULY 29, 2018 AND JULY 30, 2017 
  
 (UNAUDITED)  
(AMOUNTS IN THOUSANDS)  
                               
                               
                               
                               
   
Quarter Ended
      
                           
Trailing 12
                           
Months
   
10/29/2017
  
1/28/2018
  
4/29/2018
  
7/29/2018
  
7/29/2018
                               
Net income (loss)
  
$
3,976
    
$
(748
)
  
$
12,666
    
$
957
    
$
16,851
  
Income taxes
    
2,108
      
8,208
      
(6,217
)
    
906
      
5,005
  
Interest income, net
    
(91
)
    
(101
)
    
(117
)
    
(130
)
    
(439
)
Restructuring expense and related charges
    
-
      
-
      
-
      
2,016
      
2,016
  
Depreciation and amortization expense
    
1,990
      
2,048
      
2,096
      
2,160
      
8,294
  
Stock based compensation
    
801
      
864
      
(210
)
    
(501
)
    
954
  
Adjusted EBITDA
  
$
8,784
    
$
10,271
    
$
8,218
    
$
5,408
    
$
32,681
  
                                         
                                         
                                         
   
Quarter Ended
        
                                   
Trailing 12
                                   
Months
   
10/30/2016
  
1/29/2017
  
4/30/2017
  
7/30/2017
  
7/30/2017
                                         
Net income
  
$
4,475
    
$
6,347
    
$
6,198
    
$
4,984
    
$
22,004
  
Income taxes
    
2,684
      
643
      
778
      
1,640
      
5,745
  
Interest income, net
    
(15
)
    
(124
)
    
(134
)
    
(131
)
    
(404
)
Restructuring expense and related charges
    
-
      
-
      
-
      
-
      
-
  
Depreciation and amortization expense
    
1,778
      
1,875
      
1,863
      
1,889
      
7,405
  
Stock based compensation
    
896
      
962
      
739
      
757
      
3,354
  
Adjusted EBITDA
  
$
9,818
    
$
9,703
    
$
9,444
    
$
9,139
    
$
38,104
  
                                         
% Over (Under)
    
-10.5
%
    
5.9
%
    
-13.0
%
    
-40.8
%
    
-14.2
%
 
 
Page 8 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
RETURN ON CAPITAL EMPLOYED BY SEGMENT 
  
FOR THE TWELVE MONTHS ENDED JULY 29, 2018 
  
(Amounts in Thousands) 
  
(Unaudited) 
  
                                                                        
   
Operating
Income
                                                                   
   
Twelve
 
 
  

Return on
Avg. Capital
Employed (2)
                                                       
   
Months
Ended
  
Average
Capital
Employed (3)
                                                         
   
July 29, 2018
(1)
                                                           
                                                                         
Mattress Fabrics
  
$
22,310
    
$
77,999
      
28.6
%
                                                      
Upholstery Fabrics
    
10,592
      
19,715
      
53.7
%
                                                      
(less: Unallocated Corporate)
    
(8,314
)
    
17,421
      
N/A
                                                        
Total
  
$
24,588
    
$
115,134
      
21.4
%
                                                      
                                                                               
                                                                               
                                                                               
                                                                               
Average Capital Employed
  
As of the three Months Ended July 29, 2018
  
As of the three Months Ended April 29, 2018
  
As of the three Months Ended January 28, 2018
   
Mattress
  
Upholstery
  
Unallocated
          
Mattress
  
Upholstery
  
Unallocated
          
Mattress
  
Upholstery
  
Unallocated
        
   
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                               
Total assets (4)
  
$
98,064
      
37,386
      
90,922
      
226,372
    
$
95,061
      
39,812
      
83,111
      
217,984
    
$
93,827
      
43,458
      
79,559
      
216,844
  
Total liabilities (5)
    
(14,593
)
    
(17,880
)
    
(27,869
)
    
(60,342
)
    
(17,335
)
    
(18,679
)
    
(18,594
)
    
(54,608
)
    
(18,418
)
    
(22,781
)
    
(23,463
)
    
(64,662
)
                                                                                                 
Subtotal
  
$
83,471
    
$
19,506
    
$
63,053
    
$
166,030
    
$
77,726
    
$
21,133
    
$
64,517
    
$
163,376
    
$
75,409
    
$
20,677
    
$
56,096
    
$
152,182
  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(8,593
)
    
(8,593
)
    
-
      
-
      
(21,228
)
    
(21,228
)
    
-
      
-
      
(22,428
)
    
(22,428
)
Short-term investments - Available-For-Sale
    
-
      
-
      
-
      
-
      
-
      
-
      
(2,451
)
    
(2,451
)
    
-
      
-
      
(2,472
)
    
(2,472
)
Short-term investments - Held-To-Maturity
    
-
      
-
      
(30,756
)
    
(30,756
)
    
-
      
-
      
(25,759
)
    
(25,759
)
    
-
      
-
      
(17,206
)
    
(17,206
)
Long-term investments - Held-To-Maturity
    
-
      
-
      
-
      
-
      
-
      
-
      
(5,035
)
    
(5,035
)
    
-
      
-
      
(13,625
)
    
(13,625
)
Long-term investments - Rabbi Trust
    
-
      
-
      
(7,671
)
    
(7,671
)
    
-
      
-
      
(7,326
)
    
(7,326
)
    
-
      
-
      
(7,176
)
    
(7,176
)
Deferred income taxes - non-current
    
-
      
-
      
(3,721
)
    
(3,721
)
    
-
      
-
      
(1,458
)
    
(1,458
)
    
-
      
-
      
(1,942
)
    
(1,942
)
Income taxes payable - current
    
-
      
-
      
1,244
      
1,244
      
-
      
-
      
1,437
      
1,437
      
-
      
-
      
1,580
      
1,580
  
Income taxes payable - long-term
    
-
      
-
      
3,733
      
3,733
      
-
      
-
      
3,758
      
3,758
      
-
      
-
      
10,940
      
10,940
  
Deferred income taxes - non-current
    
-
      
-
      
2,150
      
2,150
      
-
      
-
      
2,150
      
2,150
      
-
      
-
      
2,096
      
2,096
  
Line of credit
    
-
      
-
      
4,000
      
4,000
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Deferred compensation
    
-
      
-
      
7,679
      
7,679
      
-
      
-
      
7,353
      
7,353
      
-
      
-
      
7,216
      
7,216
  
                                                                                                 
Total Capital Employed
  
$
83,471
    
$
19,506
    
$
31,118
    
$
134,095
    
$
77,726
    
$
21,133
    
$
15,958
    
$
114,817
    
$
75,409
    
$
20,677
    
$
13,079
    
$
109,165
  
                                                                                                 
                                                                                                 
   
As of the three Months Ended October 29, 2017
  
As of the three Months Ended July 30, 2017
                                
   
Mattress
  
Upholstery
  
Unallocated
          
Mattress
  
Upholstery
  
Unallocated
                                        
   
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
                                
                                                                                                 
Total assets (4)
  
$
94,626
      
34,974
      
71,443
      
201,043
    
$
99,190
      
34,491
      
74,223
      
207,904
                                  
Total liabilities (5)
    
(16,150
)
    
(17,225
)
    
(14,588
)
    
(47,963
)
    
(24,277
)
    
(14,983
)
    
(18,967
)
    
(58,227
)
                                
                                                                                                 
Subtotal
  
$
78,476
    
$
17,749
    
$
56,855
    
$
153,080
    
$
74,913
    
$
19,508
    
$
55,256
    
$
149,677
                                  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(15,739
)
    
(15,739
)
    
-
      
-
      
(18,322
)
    
(18,322
)
                                
Short-term investments - Available-For-Sale
    
-
      
-
      
(2,478
)
    
(2,478
)
    
-
      
-
      
(2,469
)
    
(2,469
)
                                
Short-term investments - Held-To-Maturity
    
-
      
-
      
(4,015
)
    
(4,015
)
    
-
      
-
      
-
      
-
                                  
Long-term investments - Held-To-Maturity
    
-
      
-
      
(26,853
)
    
(26,853
)
    
-
      
-
      
(30,907
)
    
(30,907
)
                                
Long-term investments - Rabbi Trust
    
-
      
-
      
(6,921
)
    
(6,921
)
    
-
      
-
      
(6,714
)
    
(6,714
)
                                
Deferred income taxes - non-current
    
-
      
-
      
(491
)
    
(491
)
    
-
      
-
      
(436
)
    
(436
)
                                
Income taxes payable - current
    
-
      
-
      
692
      
692
      
-
      
-
      
884
      
884
                                  
Income taxes payable - long-term
    
-
      
-
      
487
      
487
      
-
      
-
      
487
      
487
                                  
Deferred income taxes - non-current
    
-
      
-
      
4,641
      
4,641
      
-
      
-
      
4,253
      
4,253
                                  
Line of credit
    
-
      
-
      
-
      
-
      
-
      
-
      
5,000
      
5,000
                                  
Deferred compensation
    
-
      
-
      
6,970
      
6,970
      
-
      
-
      
6,769
      
6,769
                                  
                                                                                                 
Total Capital Employed
  
$
78,476
    
$
17,749
    
$
13,148
    
$
109,373
    
$
74,913
    
$
19,508
    
$
13,801
    
$
108,222
                                  
                                                                                                 
                                                                                                 
   
Mattress
  
Upholstery
  
Unallocated
                                                                        
   
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                
                                                                                                 
Average Capital Employed (3)
  
$
77,999
    
$
19,715
    
$
17,421
    
$
115,134
                                                                  
 
Notes:
 
(1)
See reconciliation per page 10 of this financial information release.
   
(2)
Return on average capital employed represents the last twelve months operating income as of July 29, 2018, 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 five periods ending July 29, 2018, April 29, 2018, January 28, 2018, October 29, 2017, and July 30, 2017.
   
(4)
Intangible assets and goodwill are included in unallocated corporate for all periods presented and therfore, have no affect on the capital employed and return on capital employed for both our mattress fabrics and upholstery fabrics segments.
   
(5)
Accrued restructuring costs and certain obligations associated with our acquisitions are included in unallocated coporate for all periods presented and therfore, have no affect on capital employed and return on capital employed for both our mattress fabrics and upholstery fabrics segments.
 
 
Page 9 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE  
RETURN ON CAPITAL EMPLOYED BY SEGMENT 
  
FOR THE TWELVE MONTHS ENDED JULY 30, 2017 
  
(Amounts in Thousands) 
  
(Unaudited) 
  
                                                                        
   
Operating
Income
                                                                   
   
Twelve Months
  
 
Average
Capital
Employed (3)
  

Return on
Avg. Capital
Employed (2)
                                                      
   
Ended
July 30,
                                                          
   
2017
(1)
                                                           
                                                                         
Mattress Fabrics
  
$
27,348
    
$
67,847
      
40.3
%
                                                      
Upholstery Fabrics
    
10,998
      
17,867
      
61.6
%
                                                      
(less: Unallocated Corporate)
    
(9,978
)
    
12,914
      
N/A
                                                        
Total
  
$
28,368
    
$
98,628
      
28.8
%
                                                      
                                                                               
                                                                               
                                                                               
                                                                               
Average Capital Employed
  
As of the three Months Ended July 30, 2017
  
As of the three Months Ended April 30, 2017
  
As of the three Months Ended January 29, 2017
   
Mattress
  
Upholstery
  
Unallocated
           
Mattress
  
Upholstery
  
Unallocated
           
Mattress
  
Upholstery
  
Unallocated
         
   
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                               
Total assets (4)
  
$
99,190
      
34,491
      
74,223
    
$
207,904
    
$
98,087
    
$
32,255
    
$
75,292
    
$
205,634
    
$
90,197
    
$
30,380
    
$
70,479
    
$
191,056
  
Total liabilities
    
(24,277
)
    
(14,983
)
    
(18,967
)
    
(58,227
)
    
(27,619
)
    
(16,249
)
    
(13,136
)
    
(57,004
)
    
(23,126
)
    
(11,960
)
    
(13,656
)
    
(48,742
)
                                                                                                 
Subtotal
  
$
74,913
    
$
19,508
    
$
55,256
    
$
149,677
    
$
70,468
    
$
16,006
    
$
62,156
    
$
148,630
    
$
67,071
    
$
18,420
    
$
56,823
    
$
142,314
  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(18,322
)
    
(18,322
)
    
-
      
-
      
(20,795
)
    
(20,795
)
    
-
      
-
      
(15,659
)
    
(15,659
)
Short-term investments - Available-For-Sale
    
-
      
-
      
(2,469
)
    
(2,469
)
    
-
      
-
      
(2,443
)
    
(2,443
)
    
-
      
-
      
(2,410
)
    
(2,410
)
Long-term investments - Held-To-Maturity
    
-
      
-
      
(30,907
)
    
(30,907
)
    
-
      
-
      
(30,945
)
    
(30,945
)
    
-
      
-
      
(30,832
)
    
(30,832
)
Long-term investments - Rabbi Trust
    
-
      
-
      
(6,714
)
    
(6,714
)
    
-
      
-
      
(5,466
)
    
(5,466
)
    
-
      
-
      
(5,488
)
    
(5,488
)
Income taxes receivable
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Deferred income taxes - non-current
    
-
      
-
      
(436
)
    
(436
)
    
-
      
-
      
(419
)
    
(419
)
    
-
      
-
      
(422
)
    
(422
)
Income taxes payable - current
    
-
      
-
      
884
      
884
      
-
      
-
      
287
      
287
      
-
      
-
      
217
      
217
  
Income taxes payable - long-term
    
-
      
-
      
487
      
487
      
-
      
-
      
467
      
467
      
-
      
-
      
1,817
      
1,817
  
Deferred income taxes - non-current
    
-
      
-
      
4,253
      
4,253
      
-
      
-
      
3,593
      
3,593
      
-
      
-
      
2,924
      
2,924
  
Line of credit
    
-
      
-
      
5,000
      
5,000
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Deferred compensation
    
-
      
-
      
6,769
      
6,769
      
-
      
-
      
5,520
      
5,520
      
-
      
-
      
5,327
      
5,327
  
                                                                                                 
Total Capital Employed
  
$
74,913
    
$
19,508
    
$
13,801
    
$
108,222
    
$
70,468
    
$
16,006
    
$
11,955
    
$
98,429
    
$
67,071
    
$
18,420
    
$
12,297
    
$
97,788
  
                                                                                                 
                                                                                                 
   
As of the three Months Ended October 30, 2016
  
As of the three Months Ended July 31, 2016
                                
   
Mattress
  
Upholstery
  
Unallocated
          
Mattress
  
Upholstery
  
Unallocated
                                        
   
Fabrics
  
Fabrics
  
Corporate
  
Total
  
Fabrics
  
Fabrics
  
Corporate
  
Total
                                
                                                                                                 
Total assets (4)
  
$
81,683
    
$
29,361
    
$
68,083
    
$
179,127
    
$
79,911
    
$
33,550
    
$
69,899
    
$
183,360
                                  
Total liabilities
    
(18,499
)
    
(11,180
)
    
(13,499
)
    
(43,178
)
    
(16,313
)
    
(16,329
)
    
(19,283
)
    
(51,925
)
                                
                                                                                                 
Subtotal
  
$
63,184
    
$
18,181
    
$
54,584
    
$
135,949
    
$
63,598
    
$
17,221
    
$
50,616
    
$
131,435
                                  
Less:
                                                                                                
Cash and cash equivalents
    
-
      
-
      
(13,910
)
    
(13,910
)
    
-
      
-
      
(45,549
)
    
(45,549
)
                                
Short-term investments - Available-For-Sale
    
-
      
-
      
(2,430
)
    
(2,430
)
    
-
      
-
      
(2,434
)
    
(2,434
)
                                
Long-term investments - Held-To-Maturity
    
-
      
-
      
(31,050
)
    
(31,050
)
    
-
      
-
      
-
      
-
                                  
Long-term investments - Rabbi Trust
    
-
      
-
      
(4,994
)
    
(4,994
)
    
-
      
-
      
(4,611
)
    
(4,611
)
                                
Income taxes receivable
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
                                  
Deferred income taxes - non-current
    
-
      
-
      
(581
)
    
(581
)
    
-
      
-
      
(1,942
)
    
(1,942
)
                                
Income taxes payable - current
    
-
      
-
      
513
      
513
      
-
      
-
      
358
      
358
                                  
Income taxes payable - long-term
    
-
      
-
      
3,734
      
3,734
      
-
      
-
      
3,779
      
3,779
                                  
Deferred income taxes - non-current
    
-
      
-
      
1,699
      
1,699
      
-
      
-
      
1,532
      
1,532
                                  
Line of credit
    
-
      
-
      
-
      
-
      
-
      
-
      
7,000
      
7,000
                                  
Deferred compensation
    
-
      
-
      
5,171
      
5,171
      
-
      
-
      
5,031
      
5,031
                                  
                                                                                                 
Total Capital Employed
  
$
63,184
    
$
18,181
    
$
12,736
    
$
94,101
    
$
63,598
    
$
17,221
    
$
13,780
    
$
94,599
                                  
                                                                                                 
                                                                                                 
   
Mattress
  
Upholstery
  
Unallocated
                                                                        
   
Fabrics
  
Fabrics
  
Corporate
  
Total
                                                                
                                                                                                 
Average Capital Employed (3)
  
$
67,847
    
$
17,867
    
$
12,914
    
$
98,628
                                                                  
 
Notes:
 
(1)
See reconciliation per page 10 of this financial information release.
   
(2)
Return on average capital employed represents the last twelve months operating income as of July 30, 2018 divided by average capital employed. Average capital employed does not included cash and cash equivalents, short-term investments - Available-For-Sale, long-term investments - Held-To-Maturity, long-term investments - Rabbie 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 five quarterly periods ending July 30, 2017, April 30, 2017 January 29, 2017, October 30, 2016, and July 31, 2016.
   
(4)
Intangible assets and goodwill are included in unallocated corporate for all periods presented and therfore, have no affect on capital employed and return on capital employed for both our mattress fabrics and upholstery fabrics segments.
 
 
Page 10 of 10
 
CULP, INC. FINANCIAL INFORMATION RELEASE    
CONSOLIDATED STATEMENTS OF OPERATING INCOME 
  
FOR THE TWELVE MONTHS ENDED JULY 29, 2018 AND JULY 30, 2017 
  
(UNAUDITED) 
  
 (AMOUNTS IN THOUSANDS)  
             
 
        
                               
                               
                               
   
Quarter Ended
      
                           
Trailing 12
                           
Months
   
10/29/2017
  
1/28/2018
  
4/29/2018
  
7/29/2018
  
7/29/2018
                               
Mattress Fabrics
  
$
6,562
    
$
6,837
    
$
6,088
    
$
2,823
    
$
22,310
  
Upholstery Fabrics
    
2,374
      
3,510
      
2,181
      
2,527
      
10,592
  
Unallocated Corporate
    
(2,547
)
    
(2,703
)
    
(1,805
)
    
(1,259
)
    
(8,314
)
Subtotal
    
6,389
      
7,644
      
6,464
      
4,091
      
24,588
  
Restructuring expense and related charges
    
-
      
-
      
-
      
(2,016
)
    
(2,016
)
                                         
Operating income
  
$
6,389
    
$
7,644
    
$
6,464
    
$
2,075
    
$
22,572
  
                                         
                                         
   
Quarter Ended (1)
   (1)
                                   
Trailing 12
                                   
Months
   
10/30/2016
  
1/29/2017
  
4/30/2017
  
7/30/2017
  
7/30/2017
                                         
Mattress Fabrics
  
$
7,460
    
$
6,367
    
$
7,153
    
$
6,368
    
$
27,348
  
Upholstery Fabrics
    
2,493
      
3,100
      
2,510
      
2,895
      
10,998
  
Unallocated Corporate
    
(2,654
)
    
(2,532
)
    
(2,493
)
    
(2,299
)
    
(9,978
)
Operating income
  
$
7,299
    
$
6,935
    
$
7,170
    
$
6,964
    
$
28,368
  
                                         
% Over (Under)
    
-12.5
%
    
10.2
%
    
-9.8
%
    
-70.2
%
    
-20.4
%
 
Notes
(1)
We did not have any restructuring activities for the three month periods ending October 30, 2016, January 29, 2017, April 30, 2017, and July 30, 2017.

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