Company: CULP
Filing Date: 2025-08-15
Form Type: DEF 14A
Source: 0000950170-25-109242
Chunk: 6

Company: CULP INC
Filing Date: 2025-08-15
Form: DEF 14A
Chunk 6
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) million for fiscal 2025, compared to a consolidated loss from operations of $(11.3) million for fiscal 2024. Excluding such restructuring and related expenses, the Company achieved an adjusted loss from operations of $(9.0) million for fiscal 2025, compared with an adjusted loss from operations of $(10.6) million for the prior year, which represents an approximately 15% year-over-year improvement in adjusted operating performance (adjusted operating income (loss) is a non-GAAP measure - see Appendix A for a reconciliation of adjusted operating income (loss) to the most directly comparable GAAP measure).

The Company’s fiscal 2025 annual cash incentive program tied award opportunities to measures of operating performance, cash flow, and revenue to focus participants on profitability, top line sales growth, cash generation and balance sheet management during a time of continued uncertainty due to the above-referenced industry and macroeconomic challenges. The specific performance measures to which fiscal 2025 cash incentive award opportunities were tied were annual adjusted operating income (loss), adjusted operating cash flow, and net sales, with a weighting of 60% for adjusted annual operating income (loss), 20% for adjusted operating cash flow, and 20% for net sales, in each case, of the applicable reporting unit. For executive officers in the executive shared services reporting unit (which includes corporate senior officers and managers), these measures were based on the consolidated performance of the entire Company. For our executive officer in the mattress fabrics division reporting unit, these measures were based on the performance of our mattress fabrics operating segment. Any earned award for the adjusted operating cash flow and/or net sales components was subject to a downward adjustment of 40% if the adjusted operating income (loss) was below a threshold level set for each of the applicable reporting units, and no bonus could be earned if the adjusted operating income (loss) was significantly below a threshold level set for each of the applicable reporting units. The target goals for each reporting unit were set above internal annual operating plan budgets and required significant year-over-year improvement for each reporting unit to achieve target payout. As such, the performance hurdles for each reporting unit were considered to be challenging in light of business conditions and expectations.

Despite the Company's improvement in adjusted operating income (loss) in fiscal 2025, neither the Company's overall operating performance nor that of the mattress fabrics reporting unit met any of the operating performance thresholds necessary for our executive officers to earn bonus payments in fiscal 2025. As such, no named executive officers