Culp's 4Q sales drop 16.8%
By Furniture Today Staff -- Furniture Today, June 15, 2003
High Point — Fabric and ticking supplier Culp reported net income of $3.3 million in its fiscal fourth quarter ended April 27, compared with a $1.6 million loss a year earlier.
Excluding restructuring and related charges in both periods, the company said its earnings amounted to $3.9 million versus net income of $4.4 million in the fourth quarter of fiscal 2002.
Sales of $90.2 million in the latest quarter were down 16.8% from a year ago, with upholstery fabric sales down 17.2% and mattress ticking down 15.5%.
The company said that reflected the soft economy, distractions related to the war in Iraq and rising unemployment.
Rob Culp, chief executive officer, said the company strengthened its balance sheet and ended the fiscal year with a comfortable cash cushion despite challenging conditions for the industry.
He said earnings and margins for the fiscal year showed improvement, excluding the cumulative effect of an accounting change.
For the year, sales of $339 million were down 11.2% from fiscal 2002.
The decline in upholstery fabric sales, Culp said, was partly the result of the company's exit from the wet print flock business at the end of 2002, as well as reduced overall demand and an increase in imported fabrics and leather sales.
Including restructuring charges and the cumulative effect of an accounting change, the company had a $24.9 million loss in the latest year, compared with a loss of $3.4 million for fiscal 2002.
Excluding those charges and the effect of the accounting change, the company said it had net income of $9 million in fiscal 2003 compared with income of $4.9 million a year earlier.
"We are already realizing the benefits of our CDF (Culp Decorative Fabrics) restructuring initiative with the reduction in fixed manufacturing costs as a result of plant consolidations and the improvement in our operating efficiencies," Culp said.
"As a result of our solid execution, Culp made significant progress in meeting our key financial objectives for fiscal 2003 — to strengthen our balance sheet, increase margins, improve the profitability of our sales mix and generate free cash flow," he added.
Despite this, the company is projecting a loss in the first quarter amounting to 6 cents to 13 cents per share.
"We expect the year-over-year decline in sales for the upholstery fabric segment to be somewhat greater than the decline in the fourth quarter of fiscal 2003," Culp said.
"However, we have recently seen improving order rates for mattress ticking and expect that the decline in sales for this segment will be substantially less than in the fourth quarter of 2003," he said.
Culp said it prepaid $19.7 million of its debt in the fourth quarter, reducing its long-term debt to $76.5 million, down from $108.5 million at the end of fiscal 2002.
| Culp Inc. | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 4/27 | 2003 | 2002 | Change |
| (a) Includes a $25,000 pretax restructuring credit in the 2003 quarter and a $9.1 million pretax restructuring charge in the 2002 quarter. The 2002 quarter also includes a $1.7 million income tax benefit. (b) Based on average shares outstanding of 11.6 million in the 2003 quarter, 11.3 million in the 2002 quarter, 11.5 million in the 2003 year and 11.2 million in the 2002 year. (c) Includes pretax restructuring charges of $13 million in the 2003 year and $10.4 million in the 2002 year and income tax benefits of $1.6 million in the 2003 year and $2.7 million in the 2002 year. The 2003 year also includes a $24.2 million extraordinary charge, the cumulative effect of an accounting change. |
|||
| Sales | $90,227,000 | $108,397,000 | (16.8%) |
| Operating income | 5,864,000 | 8,782,000 | (33.2%) |
| Net income (a) | 3,272,000 | (1,585,000) | — |
| Earnings per share (b) | 0.28 | (0.14) | — |
| Year ended 4/27 | 2003 | 2002 | Change |
| Sales | $338,980,000 | $381,878,000 | (11.2%) |
| Operating income | 17,533,000 | 14,798,000 | 18.5% |
| Net income (c) | (24,887,000) | (3,440,000) | — |
| Earnings per share (b) | (2.17) | (0.31) | — |
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