UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2005
COMMISSION FILE NO. 0-12781
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
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CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
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B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
CULP, INC.
1823 EASTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27265
There were no material changes in the Plan or the Investment Policy of the Plan.
Culp, Inc. has made no profit sharing contributions during the past five years.
The number of employees participating in the Plan at December 31, 2005 was
1,097. The Retirement Committee administers the Plan, and its members are
Kenneth M. Ludwig, Robert G. Culp, III, and Franklin N. Saxon all employees of
Culp, Inc.
Financial Statements and Exhibits.
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(a) Financial Statements. A list of all financial
statements filed as part of this report, beginning on page 1, is set forth
below:
Financial Statements Page of Report
-------------------- --------------
Report of Independent Registered 1
Public Accounting Firm
Statements of Net Assets Available 2
for Plan Benefits
Statements of Changes in Net Assets 3
Available for Plan Benefits
Notes to Financial Statements 4
Schedule of Assets (Held at End of Year) 8
(b) Exhibit
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Exhibit 1 - Consent of Independent Registered
Public Accounting Firm
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
plan administrator has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
By: Culp, Inc. Plan Administrator
By: The Culp, Inc. Retirement Committee
Date: June 27, 2006
Franklin N. Saxon
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Robert G. Culp, III
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Kenneth M. Ludwig
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Culp, Inc. Employees' Retirement Builder Plan
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TABLE OF CONTENTS
Page No.
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Report of Independent Registered Public Accounting Firm................. 1
Financial Statements
Statements of Net Assets Available for Benefits...................... 2
Statements of Changes in Net Assets Available for Benefits........... 3
Notes to Financial Statements........................................ 4
Supplemental Schedule
Schedule of Assets (Held at End of Year)............................. 8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Retirement Committee of the
Culp, Inc. Employees' Retirement Builder Plan
High Point, North Carolina
We have audited the accompanying statements of net assets available for benefits
of the Culp, Inc. Employees' Retirement Builder Plan as of December 31, 2005 and
2004 and the related statements of changes in net assets available for benefits
for the years ended December 31, 2005, 2004 and 2003. These financial statements
are the responsibility of the Plan Administrator. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Plan's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Plan's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Culp,
Inc. Employees' Retirement Builder Plan as of December 31, 2005 and 2004 and the
changes in its net assets available for plan benefits for the years ended
December 31, 2005, 2004 and 2003 in conformity with accounting principles
generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) at December 31, 2005 is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
June 16, 2006
High Point, NC
Page 1
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2005 and 2004
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ASSETS 2005 2004
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Investments, at fair value (Note C) $33,977,234 $40,147,175
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Receivables
Employer contributions 84,978 123,185
Employee contributions 136,915 192,552
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221,893 315,737
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NET ASSETS AVAILABLE
FOR BENEFITS $34,199,127 $40,462,912
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See accompanying notes to the financial statements. Page 2
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31, 2005, 2004 and 2003
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2005 2004 2003
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ADDITIONS TO NET ASSETS ATTRIBUTED TO
Investment income
Net appreciation in fair value of investments (Note C) $ 1,139,654 $ 1,611,260 $ 4,565,053
Contributions
Employer 1,179,177 1,514,034 1,649,725
Employee 1,981,037 2,483,379 2,623,673
Direct rollovers - 13,736 372
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TOTAL ADDITIONS 4,299,868 5,622,409 8,838,823
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DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO
Benefits paid to participants 10,563,653 3,681,855 4,403,726
Trustee fees (Note D) - - 105,750
Administrative fees (Note D) - - 92,299
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TOTAL DEDUCTIONS 10,563,653 3,681,855 4,601,775
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NET (DECREASE) INCREASE (6,263,785) 1,940,554 4,237,048
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 40,462,912 38,522,358 34,285,310
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END OF YEAR $34,199,127 $40,462,912 $38,522,358
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See accompanying notes to the financial statements. Page 3
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005, 2004 and 2003
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NOTE A - DESCRIPTION OF PLAN
The following description of the Culp, Inc. Employees' Retirement Builder Plan
(the "Plan") provides only general information. Participants should refer to the
summary plan description for a more complete description of the Plan's
provisions.
General
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The Plan is a defined contribution plan covering all full-time employees of
Culp, Inc. and its subsidiaries (the "Company") who have one year of service and
are age twenty-one or older. Employees who have met the length of service
requirement and elect to participate in the Plan may do so on January 1 or July
1. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Contributions
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Each year, participants may contribute from 2% of pretax annual compensation up
to the maximum allowable amount, as defined in the Plan. Participants who have
attained age 50 before the end of the Plan year are eligible to make catch-up
contributions. Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined contributions
plans. Participants direct the investment of their contributions into various
investment options offered by the Plan. The Plan currently offers ten mutual
funds, one common trust fund, and Culp stock as investment options for
participants. In January 1999, the Plan was amended to include safe harbor
provisions. The Company makes matching contributions equal to 100% of the
participant's contribution up to the first 3% of annual compensation plus 50% of
the next 2% of compensation contributed to the plan.
Additional profit sharing amounts may be contributed at the option of the Plan
Sponsor. No profit-sharing contributions were made during the years ended
December 31, 2005, 2004 or 2003. Contributions are subject to certain
limitations.
Participant Accounts
--------------------
Each participant's account is credited with the participant's contribution and
an allocation of (a) the Company's contribution and (b) Plan earnings, and
charged with an allocation of administrative expenses. Allocations are based on
participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting
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Participants are immediately vested in their profit-sharing accounts and their
401(k) contributions, including the matching contributions from the Company and
actual earnings thereon.
Payment of Benefits
-------------------
On termination of service due to death, disability or retirement, or other
reasons, participants receive a lump-sum distribution equal to the value of the
participant's vested interest in the Plan.
Page 4
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005, 2004 and 2003
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NOTE B - SUMMARY OF ACCOUNTING POLICIES
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts of assets and
liabilities and changes therein, and disclosure of contingent assets and
liabilities. Actual results could differ from those estimates.
Valuation of Investments and Income Recognition
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The Plan's investments are stated at fair value. Quoted market prices are used
to value investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year-end. Investments in the common trust fund are
valued at unit values of the respective funds. Purchases and sales of
investments are reported on a trade date basis. Income from investments is
reported as earned on the accrual basis. Dividends are recorded on the
ex-dividend date.
Payment of Benefits
-------------------
Benefits are recorded when paid.
NOTE C - INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets.
2005 2004
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Investments at fair value as determined
by quoted market price:
Common trust fund:
MFS Fixed Fund * $13,697,853 $17,372,097
Registered investment company funds:
MFS Value Fund * 4,991,591 6,107,116
MFS Total Return Fund * 4,368,528 5,026,344
MFS Core Growth Fund * 3,282,143 4,033,321
* Indicates party-in-interest
Page 5
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005, 2004 and 2003
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NOTE C - INVESTMENTS (Continued)
Effective January 2, 2004, the Plan changed their Trustee from Wachovia Bank,
N.A. to MFS Investment Management. In conjunction with this change, participants
were temporarily unable to direct or diversify investments, obtain hardship
withdrawals, or obtain distributions from the Plan during the mandatory blackout
period which began in December 2003 and ceased on January 30, 2004. During this
period, participant accounts were liquidated and transferred to similar
investment vehicles offered by MFS Investment Management, with the exception of
the Company's common stock which was treated as an in-kind transfer.
The Plan's investments (including re-invested interest and dividends, gains and
losses on investments bought and sold, as well as held during the year)
appreciated (depreciated) in value as follows:
2005 2004 2003
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Common and collective trust funds $ 543,608 $ 526,547 $ 767,676
Registered investment company funds 1,190,881 2,377,354 2,773,028
Culp, Inc. common stock * (594,835) (1,292,641) 1,024,349
----------- ----------- -----------
$ 1,139,654 $ 1,611,260 $ 4,565,053
=========== =========== ===========
* Indicates party-in-interest.
NOTE D - PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments are shares of common and collective trust funds and
registered investment companies managed by MFS Investment Management in 2005 and
2004 and Wachovia Bank, N.A. in 2003. MFS Investment Management and Wachovia
Bank, N.A. are trustees as defined by the Plan and, therefore, these
transactions qualify as party-in-interest. No recordkeeping and trustee fees
were paid by the Plan to MFS Investment Management in 2005 and 2004.
Recordkeeping and trustee fees paid by the Plan to Wachovia amounted to $198,049
in 2003.
Certain Plan investments are shares of the Company's common stock. These
transactions qualify as party-in-interest.
NOTE E - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
Page 6
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2005, 2004 and 2003
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NOTE F - TAX STATUS
The Internal Revenue Service has determined and informed the Company by a letter
November 4, 2002, that the Plan and related trust are designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). Although the Plan
has been amended since receiving the determination letter, the Plan
administrator and the Plan's tax counsel believe that the Plan is designed and
currently being operated in compliance with the applicable requirements of the
Internal Revenue Code.
NOTE G - RISKS AND UNCERTAINTIES
The Plan invests in various investment instruments. Investment securities are
exposed to various risks, such as interest rate, market, and credit risks. Due
to the level of risk associated with certain investment securities, it is at
least reasonably possible that changes in the values of investment securities
will occur in the near term and that changes could materially affect the
participants' account balances and the amounts reported in the statement of net
assets available for benefits.
Page 7
SUPPLEMENTAL INFORMATION
CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 56-1001967
PLAN NUMBER 001
December 31, 2005
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` (e) Current
(a) (b) Identity of Issuer (c) Description of Investment (d) Cost ** Value
------ ---------------------------------------- ----------------------------- ----------- -----------
* MFS Fixed Fund 13,697,853 units $13,697,853
* MFS Value Fund 215,619 units 4,991,591
* MFS Total Return Fund 284,224 units 4,368,528
* MFS Core Growth Fund 186,698 units 3,282,143
* MFS International New Discovery Fund 61,432 units 1,464,548
JP Morgan United States Real Estate Fund 64,056 units 1,229,244
Blackrock Aurora Fund 28,905 units 988,247
Calvert Income Fund 53,041 units 888,969
* MFS New Endeavor Fund 53,652 units 741,477
Federated Kaufman Fund 130,902 units 733,050
* MFS Money Market Fund 65,026 units 65,026
* Culp Inc. Common Stock 318,697 shares 1,526,558
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$33,977,234
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* Indicates party-in-interest
** Cost information omitted for participant-directed investments.
Page 8