Culp Inc reported financial and operating results for the fourth quarter and fiscal year ended May 1, 2011.
Stock Repurchase Program
The company also announced that its Board of Directors has authorized the expenditure of up to $5.0 million for the repurchase of shares of the company's common stock. Based on the current market value of the common stock, this will allow the company to repurchase approximately five percent of the 13.3 million shares outstanding.
Under the stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under Securities Exchange Act Rule 10b5-1, or otherwise. The amount of shares purchased and the timing of the purchases will be based on working capital requirements, market and general business conditions and other factors, including alternative investment opportunities.
Frank Saxon, chief executive officer of Culp, Inc., stated, "This share repurchase program reflects the company's strong financial position and confidence in our long-term prospects. Our healthy balance sheet and ample liquidity provide us the opportunity to continue to invest in growing our businesses, while also creating value for our shareholders through share repurchases."
Overview
For the three months ended May 1, 2011, net sales were $60.4 million, a 5.5 percent increase compared with $57.2 million a year ago. The company reported net income of $6.0 million, or $0.45 per diluted share, for the fourth quarter of fiscal 2011, compared with a net income of $5.4 million, or $0.41 per diluted share, for the fourth quarter of fiscal 2010.
Net income for the fourth quarter of fiscal 2011 includes a $1.3 million income tax benefit, while net income for the previous year period included an income tax benefit of $436,000. The income tax benefit for the fourth quarter of fiscal 2011 includes a non-cash reversal of a portion of a valuation allowance against net deferred tax assets in the amount of $2.3 million. On a pre-tax basis, the company reported income of $4.7 million compared with pre-tax income of $5.0 million for the fourth quarter of fiscal 2010.
Net sales for fiscal 2011 were $216.8 million, up five percent compared with net sales of $206.4 million in fiscal 2010. Net income for fiscal 2011 was $16.2 million, or $1.22 per diluted share, compared with $13.2 million, or $1.01 per diluted share, in fiscal 2010. Net income for fiscal 2011 included a $1.1 million income tax benefit, while net income for fiscal 2010 included income tax expense of $1.1 million. The income tax benefit for fiscal 2011 includes a non-cash reversal of a valuation allowance against net deferred tax assets relating to future earnings in the amount of $3.6 million. On a pre-tax basis, the company reported income of $15.1 million compared with pre-tax income of $14.3 million in fiscal 2010.
Commenting on the results for the fourth quarter of fiscal 2011, Saxon said, "We are pleased with our fourth quarter performance, concluding a year of sound growth and progress for Culp. These results are especially noteworthy in light of the economic headwinds and significant raw material cost and selling price pressures we faced during the year. Although our operating margins are slightly down for the fiscal year due to these factors, we are encouraged that both our mattress fabrics and upholstery fabrics divisions increased sales and we reported higher pre-tax income as compared with the previous year.
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