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CFI > SEC Filings for CFI > Form 8-K on 31-Aug-2009All Recent SEC Filings

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Form 8-K for CULP INC


31-Aug-2009

Results of Operations and Financial Condition


Item 2.02 - Results of Operations and Financial Condition

On August 31, 2009, the Company issued a news release to announce its financial results for the first quarter ended August 2, 2009. The news release is attached hereto as Exhibit 99(a).

Also on August 31, 2009, the Company released a Financial Information Release containing additional financial information and disclosures about the Company's first quarter ended August 2, 2009. The Financial Information Release is attached hereto as Exhibit 99(b).

The news release and Financial Information Release contain disclosures about free cash flow, a non-GAAP liquidity measure that the Company defines as net cash provided by operating activities, less cash capital expenditures and capital lease expenditures, plus any proceeds from sales of fixed assets, and plus any excess tax benefits related to stock options exercised. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases and additions to cash and cash equivalents. We note, however, that not all of the Company's free cash flow is available for discretionary spending, as we have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment. Also, free cash flow is used by the Company as a financial goal for purposes of determining management incentive bonuses.


The news release and Financial Information Release contain adjusted income statement information, which reconciles reported and projected income statement information with adjusted results, on a pre-tax basis, which exclude restructuring and related charges. This information constitutes a non-GAAP performance measure. The Company has included this adjusted information in order to show operational performance excluding the effects of restructuring and related charges that occur on an irregular basis. We have presented pre-tax results because the Company's income tax provisions and percentages have been volatile and unpredictable in recent periods. Management believes these presentations aid in the comparison of financial results among comparable financial periods. We note, however, that the usefulness of earnings before income taxes and excluding restructuring and related charges is limited in that these performance measures do not necessarily indicate the likely future financial results of the Company and that the excluded income tax and restructuring charges can and do relate to liabilities or charges that reflect reductions in income, future expenditures, or lower values for our assets and business. Adjusted income statement information is used by management to make operational decisions about our business and to evaluate the financial success of the Company or its individual segments, especially when comparing results among various periods, is used in certain financial covenants in our loan agreements, and is used by the Company as financial goals for purposes of determining management incentive bonuses.

Item 9.01 (d) -- Exhibits

99(a) News Release dated August 31, 2009

99(b) Financial Information Release dated August 31, 2009


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