Culp announces results for Q2 fiscal 2009
Culp Inc reported financial and operating results for the second quarter and six months ended November 2, 2008. For the three months ended November 2, 2008, net sales were $52.3 million compared with $64.3 million a year ago. The company reported a net loss of $40.9 million, or $3.23 per diluted share, for the second quarter of fiscal 2009, compared with net income of $1.6 million, or $0.12 per diluted share, for the second quarter of fiscal 2008.
For the six months ended November 2, 2008, the company reported net sales of $ 111.6 million compared with $129.6 million for the same period a year ago. Net loss for the first six months of fiscal 2009 was $40.1 million, or $3.17 per diluted share, compared with net income of $2.4 million, or $0.19 per diluted share, for the same period last year.
The company recorded restructuring and related charges, including fixed asset impairment charges, of $11.8 million (of which $11.0 million is non-cash) during the second quarter of fiscal 2009 related to its upholstery fabrics segment.
In addition, the company recorded a $4.8 million asset impairment charge as a result of the carrying value of its upholstery fabric fixed assets exceeding their fair value, as calculated under Statement of Financial Accounting Standards No. 144. The cash charges incurred include $0.4 million in lease termination expense related to the consolidations in the company's China operation and $0.4 million in employee termination costs related to SG&A staffing reductions.
The company also announced that it entered into a contract, dated December 4, 2008, providing for the sale of its headquarters building in High Point, North Carolina, for a purchase price of $4.0 million. The contract also contemplates that the company would lease the building back from the purchaser for an initial term of three years. The contract is subject to the purchaser's ability to obtain financing and right to terminate during a due diligence period ending January 9, 2009, and is also subject to approval by Culp's lenders.
The proceeds of the sale would be used by the company to pay down the bank loan that is currently secured by the building, which has a balance of approximately $6.2 million. The remaining balance of the loan would become an unsecured term loan from the same bank lender, subject to a one percent increase in the interest rate on the loan, and due in one payment on June 30, 2010. The closing on the sale is anticipated to occur on or before January 30, 2009.
Frank Saxon, chief executive officer of Culp, Inc., said, "The results for the second quarter include several substantial charges primarily related to the economic impact of the unprecedented business environment we are facing. These charges are mostly non-cash and do not have any significant effect on our operations or compliance with our loan covenants. Our financial position remains solid and we have generated $6.9 million in cashflow from operations in the first six months of this fiscal year.