CULP INC - FORM 8-K - EX-99.(B) - EXHIBIT 99(B)

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EX-99.(A) - EXHIBIT 99(A) - CULP INC	a50387666ex99a.htm
8-K - CULP, INC. 8-K - CULP INC	a50387666.htm

Exhibit 99(b)

Page 1 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED JULY 29, 2012 AND JULY 31, 2011
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)


	THREE MONTHS ENDED

	Amounts										Percent of Sales
	July 29,			July 31,			% Over				July 29,				July 31,
	2012			2011			(Under)				2012				2011

Net sales	$	69,184			60,270			14.8		%		100.0		%		100.0		%
Cost of sales		56,064			51,392			9.1		%		81.0		%		85.3		%
Gross profit		13,120			8,878			47.8		%		19.0		%		14.7		%

Selling, general and
administrative expenses		7,641			5,757			32.7		%		11.0		%		9.6		%
Income from operations		5,479			3,121			75.6		%		7.9		%		5.2		%

Interest expense		190			220			(13.6	)	%		0.3		%		0.4		%
Interest income		(127	)		(129	)		(1.6	)	%		(0.2	)	%		(0.2	)	%
Other expense		44			65			(32.3	)	%		0.1		%		0.1		%
Income before income taxes		5,372			2,965			81.2		%		7.8		%		4.9		%

Income taxes*		1,848			1,145			61.4		%		34.4		%		38.6		%
Net income	$	3,524			1,820			93.6		%		5.1		%		3.0		%

Net income per share-basic	$	0.28		$	0.14			100.0		%
Net income per share-diluted	$	0.28		$	0.14			100.0		%
Average shares outstanding-basic		12,551			13,061			(3.9	)	%
Average shares outstanding-diluted		12,711			13,205			(3.7	)	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)


	THREE MONTHS ENDED

	Amounts								Percent of Sales
	July 29,		July 31,		% Over				July 29,			July 31,
	2012		2011		(Under)				2012			2011


Income before income taxes (see above)	$	5,372		2,965		81.2		%		7.8	%		4.9	%

Adjusted Income taxes (2)*		1,031		540		90.9		%		19.2	%		18.2	%
Adjusted net income		4,341		2,425		79.0		%		6.3	%		4.0	%

Adjusted net income per share-basic	$	0.35	$	0.19		84.2		%
Adjusted net income per share-diluted	$	0.34	$	0.18		88.9		%
Average shares outstanding-basic		12,551		13,061		(3.9	)	%
Average shares outstanding-diluted		12,711		13,205		(3.7	)	%

(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $59.9 million in net operating loss carryforwards. Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 7 of 7.

(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 7 of 7.

* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 2 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
JULY 29, 2012, JULY 31, 2011 AND APRIL 29, 2012
Unaudited
(Amounts in Thousands)


	Amounts				Increase
	July 29,		July 31,		(Decrease)							* April 29,
	2012		2011		Dollars			Percent				2012

Current assets
Cash and cash equivalents	$	21,889		14,570		7,319			50.2		%		25,023
Short-term investments		5,200		10,443		(5,243	)		(50.2	)	%		5,941
Accounts receivable		20,021		18,905		1,116			5.9		%		25,055
Inventories		44,052		34,858		9,194			26.4		%		36,373
Deferred income taxes		2,337		1,237		1,100			88.9		%		2,467
Assets held for sale		15		75		(60	)		(80.0	)	%		15
Income taxes receivable		-		79		(79	)		(100.0	)	%		-
Other current assets		2,563		2,862		(299	)		(10.4	)	%		1,989
Total current assets		96,077		83,029		13,048			15.7		%		96,863

Property, plant & equipment, net		31,016		30,615		401			1.3		%		31,279
Goodwill		11,462		11,462		-			0.0		%		11,462
Deferred income taxes		2,715		2,191		524			23.9		%		3,205
Other assets		1,890		2,010		(120	)		(6.0	)	%		1,907

Total assets	$	143,160		129,307		13,853			10.7		%		144,716



Current liabilities
Current maturities of long-term debt	$	2,400		2,409		(9	)		(0.4	)	%		2,404
Line of credit		834		-		834			100.0		%		889
Accounts payable - trade		27,284		25,022		2,262			9.0		%		30,663
Accounts payable - capital expenditures		152		342		(190	)		(55.6	)	%		169
Accrued expenses		8,366		5,862		2,504			42.7		%		9,321
Accrued restructuring		40		41		(1	)		(2.4	)	%		40
Deferred income taxes		-		82		(82	)		(100.0	)	%		-
Income taxes payable - current		751		345		406			117.7		%		642
Total current liabilities		39,827		34,103		5,724			16.8		%		44,128

Income taxes payable - long-term		4,131		4,178		(47	)		(1.1	)	%		4,164
Deferred income taxes		705		596		109			18.3		%		705
Long-term debt , less current maturities		6,666		9,079		(2,413	)		(26.6	)	%		6,719

Total liabilities		51,329		47,956		3,373			7.0		%		55,716

Shareholders' equity		91,831		81,351		10,480			12.9		%		89,000

Total liabilities and
shareholders' equity	$	143,160		129,307		13,853			10.7		%		144,716

Shares outstanding		12,656		13,181		(525	)		(4.0	)	%		12,703

* Derived from audited financial statements.

Page 3 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 29, 2012 AND JULY 31, 2011
Unaudited
(Amounts in Thousands)


	THREE MONTHS ENDED

	Amounts
	July 29,			July 31,
	2012			2011

Cash flows from operating activities:
Net income	$	3,524		$	1,820
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation		1,254			1,187
Amortization of other assets		60			56
Stock-based compensation		70			77
Excess tax benefit related to stock-based compensation		(55	)		(31	)
Deferred income taxes		675			502
Foreign currency exchange gains		(80	)		(39	)
Changes in assets and liabilities:
Accounts receivable		4,985			1,322
Inventories		(7,710	)		(6,080	)
Other current assets		(572	)		(486	)
Other assets		(43	)		(14	)
Accounts payable-trade		(3,288	)		54
Accrued expenses		(930	)		(1,750	)
Accrued restructuring		-			(3	)
Income taxes		148			(257	)
Net cash used in operating activities		(1,962	)		(3,642	)

Cash flows from investing activities:
Capital expenditures		(1,008	)		(1,304	)
Purchase of short-term investments		(25	)		(4,761	)
Proceeds from the sale of short-term investments		795			2,032
Net cash used in investing activities		(238	)		(4,033	)

Cash flows from financing activities:
Payments on long-term debt		(50	)		(53	)
Proceeds from common stock issued		-			169
Common stock shares repurchased		(470	)		(1,102	)
Dividends paid		(381	)		-
Excess tax benefit related to stock-based compensation		55			31
Net cash used in financing activities		(846	)		(955	)

Effect of exchange rate changes on cash and cash equivalents		(88	)		19

Decrease in cash and cash equivalents		(3,134	)		(8,611	)

Cash and cash equivalents at beginning of period		25,023			23,181

Cash and cash equivalents at end of period	$	21,889		$	14,570


Free Cash Flow (1)	$	(3,003	)	$	(4,896	)



(1) Free Cash Flow reconciliation is as follows:
	FY 2013			FY 2012
A) Net cash used in operating activities	$	(1,962	)	$	(3,642	)
B) Minus: Capital Expenditures		(1,008	)		(1,304	)
C) Add: Excess tax benefit related to stock-based compensation		55			31
D) Effects of exchange rate changes on cash and cash equivalents		(88	)		19
	$	(3,003	)	$	(4,896	)

Page 4 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED JULY 29, 2012 AND JULY 31, 2011
(Unaudited)
(Amounts in thousands)


	THREE MONTHS ENDED

	Amounts									Percent of Total Sales
	July 29,			July 31,			% Over			July 29,				July 31,
Net Sales by Segment	2012			2011			(Under)			2012				2011

Mattress Fabrics	$	37,964			32,170			18.0	%		54.9		%		53.4		%
Upholstery Fabrics		31,220			28,100			11.1	%		45.1		%		46.6		%

Net Sales	$	69,184			60,270			14.8	%		100.0		%		100.0		%


Gross Profit by Segment										Gross Profit Margin

Mattress Fabrics	$	7,622			5,137			48.4	%		20.1		%		16.0		%
Upholstery Fabrics		5,498			3,741			47.0	%		17.6		%		13.3		%

Gross Profit		13,120			8,878			47.8	%		19.0		%		14.7		%



Selling, General and Administrative expenses by Segment										Percent of Sales

Mattress Fabrics	$	2,391			1,992			20.0	%		6.3		%		6.2		%
Upholstery Fabrics		3,340			2,766			20.8	%		10.7		%		9.8		%
Unallocated Corporate expenses		1,910			999			91.2	%		2.8		%		1.7		%
Selling, general, and administrative expenses		7,641			5,757			32.7	%		11.0		%		9.6		%


Operating Income (loss) by Segment										Operating Income (Loss) Margin

Mattress Fabrics	$	5,230			3,146			66.2	%		13.8		%		9.8		%
Upholstery Fabrics		2,159			974			121.7	%		6.9		%		3.5		%
Unallocated corporate expenses		(1,910	)		(999	)		91.2	%		(2.8	)	%		(1.7	)	%

Operating income		5,479			3,121			75.6	%		7.9		%		5.2		%


Return on Capital (1)

Mattress Fabrics		37.8	%		23.2	%
Upholstery Fabrics		51.6	%		33.2	%
Unallocated Corporate		N/A			N/A
Consolidated		30.6	%		18.9	%

Capital Employed (2)

Mattress Fabrics		56,803			55,994			1.4	%
Upholstery Fabrics		18,967			13,176			44.0	%
Unallocated Corporate		(593	)		350			N/A
Consolidated		75,177			69,520			8.1	%


Depreciation by Segment

Mattress Fabrics	$	1,092			1,029			6.1	%
Upholstery Fabrics		162			158			2.5	%
Subtotal		1,254			1,187			5.6	%

Notes:

(1) See pages 5 and 6 of this financial information release for calculations.

(2) The capital employed balances are as of July 29, 2012 and July 31, 2011.

Page 5 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE THREE MONTHS ENDED JULY 29, 2012

(Amounts in Thousands)

(Unaudited)

	Operating Income
	Three Months
	Ended			Average			Return on
	July 29, 2012 (1)			Capital Employed (3)			Avg. Capital Employed (2)

Mattress Fabrics	$	5,230		$	55,357			37.8	%
Upholstery Fabrics		2,159			16,743			51.6	%
(less: Unallocated Corporate)		(1,910	)		(567	)		N/A
Total	$	5,479		$	71,532			30.6	%




Average Capital Employed	As of the three Months Ended July 29, 2012												As of the three Months Ended April 29, 2012
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total

Total assets		78,098			29,973			35,089			143,160			71,563			33,641			39,512			144,716
Total liabilities		(21,295	)		(11,006	)		(19,028	)		(51,329	)		(17,653	)		(19,123	)		(18,940	)		(55,716	)

Subtotal	$	56,803		$	18,967		$	16,061		$	91,831		$	53,910		$	14,518		$	20,572		$	89,000
Less:
Cash and cash equivalents		-			-			(21,889	)		(21,889	)		-			-			(25,023	)		(25,023	)
Short-term investments		-			-			(5,200	)		(5,200	)		-			-			(5,941	)		(5,941	)
Deferred income taxes - current		-			-			(2,337	)		(2,337	)		-			-			(2,467	)		(2,467	)
Deferred income taxes - non-current		-			-			(2,715	)		(2,715	)		-			-			(3,205	)		(3,205	)
Current maturities of long-term debt		-			-			2,400			2,400			-			-			2,404			2,404
Line of credit		-			-			834			834									889			889
Income taxes payable - current		-			-			751			751			-			-			642			642
Income taxes payable - long-term		-			-			4,131			4,131			-			-			4,164			4,164
Deferred income taxes - non-current		-			-			705			705			-			-			705			705
Long-term debt, less current maturities		-			-			6,666			6,666			-			-			6,719			6,719

Total Capital Employed	$	56,803		$	18,967		$	(593	)	$	75,177		$	53,910		$	14,518		$	(541	)	$	67,887



	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Average Capital Employed (3)	$	55,357		$	16,743		$	(567	)	$	71,532

Notes:

(1) Operating income excludes restructuring and related charges--see reconciliation per page 4 of this financial information release.

(2) Return on average capital employed represents operating income for the three month period ending July 29, 2012 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, long-term debt, including current maturities, line of credit, current and noncurrent deferred tax assets and liabilities, and

income taxes payable.

(3) Average capital employed was computed using the two periods ending July 29, 2012 and April 29, 2012.

Page 6 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE THREE MONTHS ENDED JULY 31, 2011

(Amounts in Thousands)

(Unaudited)

	Operating Income
	Three Months
	Ended			Average			Return on
	July 31, 2011 (1)			Capital Employed (3)			Avg. Capital Employed (2)

Mattress Fabrics	$	3,146		$	54,313			23.2	%
Upholstery Fabrics		974			11,747			33.2	%
(less: Unallocated Corporate)		(999	)		(39	)		N/A
Total	$	3,121		$	66,021			18.9	%




Average Capital Employed	As of the three Months Ended July 31, 2011												As of the three Months Ended May 1, 2011
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total

Total assets		71,325			26,683			31,299			129,307			66,637			25,929			37,485			130,051
Total liabilities		(15,331	)		(13,507	)		(19,118	)		(47,956	)		(14,005	)		(15,612	)		(20,093	)		(49,710	)

Subtotal	$	55,994		$	13,176		$	12,181		$	81,351		$	52,632		$	10,317		$	17,392		$	80,341
Less:
Cash and cash equivalents		-			-			(14,570	)		(14,570	)		-			-			(23,181	)		(23,181	)
Short-term investments		-			-			(10,443	)		(10,443	)		-			-			(7,699	)		(7,699	)
Deferred income taxes - current		-			-			(1,237	)		(1,237	)		-			-			(1,381	)		(1,381	)
Income taxes receivable		-			-			(79	)		(79	)		-			-			(79	)		(79	)
Deferred income taxes - non-current		-			-			(2,191	)		(2,191	)		-			-			(2,518	)		(2,518	)
Current maturities of long-term debt		-			-			2,409			2,409			-			-			2,412			2,412
Deferred income taxes - current								82			82									82			82
Income taxes payable - current		-			-			345			345			-			-			646			646
Income taxes payable - long-term		-			-			4,178			4,178			-			-			4,167			4,167
Deferred income taxes - non-current		-			-			596			596			-			-			596			596
Long-term debt, less current maturities		-			-			9,079			9,079			-			-			9,135			9,135

Total Capital Employed	$	55,994		$	13,176		$	350		$	69,520		$	52,632		$	10,317		$	(428	)	$	62,521



	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Average Capital Employed (3)	$	54,313		$	11,747		$	(39	)	$	66,021

Notes:

(1) Operating income excludes restructuring and related charges--see reconciliation per page 4 of this financial information release.

(2) Return on average capital employed represents operating income for the three month period ending July 31, 2011 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, long-term debt, including current maturities, current and noncurrent deferred tax assets and liabilities, income taxes payable,

and income taxes receivable.

(3) Average capital employed was computed using the two periods ending July 31, 2011 and May 1, 2011.

Page 7 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED ADJUSTED EFFECTIVE INCOME TAX RATE, NET INCOME AND EARNINGS PER SHARE

FOR THE THREE MONTHS ENDED JULY 29, 2012 AND JULY 31, 2011

Unaudited

(Amounts in Thousands)

			THREE MONTHS ENDED

			Amounts
			July 29,			July 31
			2012			2011


Consolidated Effective GAAP Income Tax Rate	(1	)		34.4	%		38.6	%

Non-Cash U.S. Income Tax Expense				(15.0	) %		(18.5	) %

Non-Cash Foreign Income Tax Expense				(0.2	) %		(1.9	) %

Consolidated Adjusted Effective Income Tax Rate	(2	)		19.2	%		18.2	%

	THREE MONTHS ENDED
	As reported					July 29, 2012		As reported					July 31, 2011
	July 29,					Proforma Net		July 31,					Proforma Net
	2012		Adjustments			of Adjustments		2011		Adjustments			of Adjustments

Income before income taxes	$	5,372	$	-		$	5,372	$	2,965	$	-		$	2,965

Income taxes (3)		1,848	$	(817	)	$	1,031		1,145	$	(605	)		540
Net income	$	3,524	$	817		$	4,341	$	1,820	$	605		$	2,425

Net income per share-basic	$	0.28	$	(0.07	)	$	0.35	$	0.14	$	(0.05	)	$	0.19
Net income per share-diluted	$	0.28	$	(0.06	)	$	0.34	$	0.14	$	(0.05	)	$	0.18
Average shares outstanding-basic		12,551		12,551			12,551		13,061		13,061			13,061
Average shares outstanding-diluted		12,711		12,711			12,711		13,205		13,205			13,205

(1) Calculated by dividing consolidated income tax expense by consolidated income before income taxes.

(2) Represents estimated income tax expense for our subsidiaries located in Canada and China divided by consolidated income before income taxes.

(3) Proforma taxes calculated using the Consolidated Adjusted Effective Income Tax Rate as reflected above.

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