Culp Sales Decline 18 Percent

December 4, 2008  by in UnCategorized   

By Home Furnishings Business in Bedroom on December 2008 High Point-based Culp, a manufacturer of upholstery and mattress fabrics, announced Thursday that sales in its second quarter declined more than 18 percent to $53.3 million and it has been hit with non-cash charges that contributed to a net loss of $40.9 million. The company recorded net income of $1.6 million in the same period of 2007.

The company also announced that it has entered into a contract to sell its High Point headquarters building for $4 million and lease it back from the purchaser in a move that will enable it to pay down its bank loan on the property.

Non-cash charges include $31.2 million for the establishment of a valuation allowance against all of the company’s net deferred tax assets. CEO Frank Saxon 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 cash flow from operations in the first six months of this fiscal year.”

On a pre-tax basis, the company reported a second-quarter loss of $10.3 million (versus income of $1.5 million a year ago). The pre-tax results for the second quarter of the company’s current fiscal year include non-cash restructuring charges of $11 million related to fixed assets and inventories. There were also cash restructuring charges of $840,000 related to lease and employee terminations.

Mattress fabric sales declined 22 percent to $28 million during the quarter while sales in upholstery fabrics declined 14.5 percent to $24.2 million.