American Fibers & Yarns Acquires Culp Polypropylene Operation
HIGH POINT, N.C.--(BUSINESS
WIRE)--Aug. 16, 2005--Culp, Inc. (NYSE: CFI) today announced a plan to reduce the company's yarn manufacturing operations. Culp has entered into a definitive agreement to sell the company's polypropylene yarn extrusion equipment located in U.S. , to American Fibers and Yarns Company, one of Culp's suppliers based in Graham, North Carolina , for $1.1 million payable immediately. Chapel Hill, North Carolina
As a result, Culp will close this operation during the company's second quarter ending
October 30, 2005. Pursuant to the terms of the agreement, the company has a long-term supply contract with American Fibers and Yarns Company to continue providing Culp with polypropylene yarn.
The company also announced further reduction of the company's yarn operations by closing Culp's facility in
, and consolidating the chenille yarn operations into the Lincolnton, Shelby, North Carolina , facility. The company will now outsource the open-end yarns previously produced at North Carolina . Culp will then have one yarn plant in Lincolnton for producing chenille and wrap-spun yarns and a small texturizing yarn operation in Shelby Graham.
Overall, these actions will reduce the number of Culp associates by approximately 100 people. The company expects total pre-tax charges of approximately $5.9 million, of which $5.1 million is expected to be non-cash items. The charges are expected to be recorded in the second quarter of fiscal 2006.