Culp Announces Improved Profitability and Liquidity Expectations for First Quarter Fiscal 2021 and Anticipated Impact of Final GILTI Tax Regulations - Seite 2

As a result of the newly enacted regulations, the company expects to record a net non-cash charge in the range of approximately $3.0 to $5.0 million during the first quarter of fiscal 2021, comprised of a non-cash income tax benefit resulting from the re-establishment of certain U.S. Federal net operating loss carryforwards, as well as a non-cash income tax charge to record a full valuation allowance against the company’s U.S. deferred income tax assets. The net non-cash charge will be reflected in the company’s results for the first quarter of fiscal 2021 and represents the company’s preliminary best estimate of the impact of the newly enacted GILTI regulations, but is subject to change in connection with the completion of the company’s quarter-end closing process and the preparation of the unaudited financial statements for the first quarter of fiscal 2021. If this preliminary estimate changes in the future in a material way, an adjustment will be reflected in future filings and reported financial results. Importantly, the enactment of the new GILTI regulations will result in the reestablishment of approximately $18.0 million of U.S. Federal net operating loss carryforwards, which, when combined with the Company’s estimated $4.4 million of existing U.S. Federal net operating loss carryforwards, is expected to benefit the Company’s liquidity going forward.

The company expects to report financial and operating results for the first quarter of fiscal 2021 in early September.

About the Company

Culp, Inc. is one of the world's largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture. The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers. Culp has operations located in the United States, Canada, China, and Haiti.

This release contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Further, forward-looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that the company will realize these expectations, meet its guidance, or that these beliefs will prove correct.