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a6193942.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) March 1, 2010

Culp, Inc.

(Exact Name of Registrant as Specified in its Charter)

North Carolina		0-12781		56-1001967
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

	1823 Eastchester Drive High Point, North Carolina 27265
	(Address of Principal Executive Offices) (Zip Code)

	(336) 889-5161
	(Registrant’s Telephone Number, Including Area Code)

	Not Applicable
	(Former name or address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INDEX

	Page

Item 2.02 - Results of Operations and Financial Condition	3

Item 9.01(d) - Exhibits	4

Signature	5

Exhibits	6

Forward Looking Information. This report and the exhibits hereto contain statements that may be deemed “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 27A of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties. Further, forward-looking statements are intended to speak only as of the date on which they are made. 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,” “estimate,” “plan” and “project” and their derivatives, and include but are not limited to statements about the company’s future operations, production levels, sales, SG&A or other expenses, margins, gross profit, operating income, earnings or other performance measures. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on the company’s business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect the company adversely. Changes in consumer tastes or preferences toward products not produced by the company could erode demand for the company’s products. Strengthening of the U.S. dollar against other currencies could make the company’s products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on the company’s sales in the U.S. of products produced in those countries. Also, economic and political instability in international areas could affect the company’s operations or sources of goods in those areas, as well as demand for the company’s products in international markets. Finally, unanticipated delays or costs in executing restructuring actions could cause the cumulative effect of restructuring actions to fail to meet the objectives set forth by management. Other factors that could affect the matters discussed in forward-looking statements are included in the company’s periodic reports filed with the Securities and Exchange Commission, including the “Risk Factors” section in the company’s most recent annual report of Form 10-K filed with the Securities and Exchange Commission on July 16, 2009 for the fiscal year ended May 3, 2009.

Item 2.02 – Results of Operations and Financial Condition

On March 1, 2010, we issued a news release to announce our financial results for the third quarter ended January 31, 2010. The news release is attached hereto as Exhibit 99(a).

Also on March 1, 2010, we released a Financial Information Release containing additional financial information and disclosures about our third quarter ended January 31, 2010. 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 the effects of exchange rate changes on cash and cash equivalents. 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.

The news release and Financial Information Release contain disclosures about return on capital, both for the entire company and for individual business segments. We define return on capital as operating income (on an annualized basis if at a point other than the end of the fiscal year) divided by average capital employed. Operating income excludes restructuring and related charges, and average capital employed is calculated over rolling two – five fiscal periods, depending on which quarter is being presented. Details of these calculations and a reconciliation to information from our GAAP financial statements is set forth in the Financial Information Release. We believe return on capital is an accepted measure of earnings efficiency in relation to capital employed, but it is a non-GAAP performance measure that is not defined or calculated in the same manner by all companies. This measure should not be considered in isolation or as an alternative to net income or other performance measures, but we believe it provides useful information to investors by comparing the operating income we produce to the asset base used to generate that income. Also, annualized operating income does not necessarily indicate results that would be expected for the full fiscal year. We note that, particularly for return on capital measured at the segment level, not all assets are allocated to our operating segments, and there are assets held at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the asset base used to calculate that segment’s return on capital. Thus, the average return on capital for the company’s segments will generally be higher than the company’s overall return on capital. Management uses return on capital to evaluate the company’s earnings efficiency and the relative performance of its segments, and return on capital is also used as a financial goal for purposes of determining certain management incentive compensation awards.

Item 9.01 (d) -- Exhibits

99(a) News Release dated March 1, 2010

99(b) Financial Information Release dated March 1, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			CULP, INC.
			(Registrant)

	By:		/s/ Kenneth R. Bowling
			Chief Financial Officer
			(principal financial officer)

	By:		/s/ Thomas B. Gallagher, Jr.
			Corporate Controller
			(principal accounting officer)

Dated: March 1, 2010

EXHIBIT INDEX

	Exhibit Number		Exhibit

	99(a)		News Release dated March 1, 2010
	99(b)		Financial Information Release dated March 1, 2010

a6193942ex99a.htm

Exhibit 99(a)

CULP ANNOUNCES RESULTS FOR THIRD QUARTER FISCAL 2010

HIGH POINT, N.C. (March 1, 2010) ─ Culp, Inc. (NYSE: CFI) today reported financial and operating results for the third quarter ended January 31, 2010.

Highlights for the third quarter of fiscal 2010 include the following:

Net sales were $54.0 million, up 21 percent from the third quarter of last year, with mattress fabric segment sales up seven percent and upholstery fabrics segment sales up 39 percent. This is the company’s first overall sales gain in two years and the first sales gain in upholstery fabrics in three years.

§	Pre-tax income was $3.8 million, or 7.1 percent of net sales, compared with $17,000 in the prior year period.

§	Net income was $3.0 million, or $0.23 per diluted share, the highest in almost six years. These results compare with a net loss of ($450,000), or ($0.04) per share, in the prior year quarter.

§	The mattress fabrics segment had another strong operating performance for the quarter with solid sales and profitability.

§	The upholstery fabrics segment showed substantial profit improvement for the quarter compared with the previous year period and reported the highest quarterly profit in over 5 years.

§	The company’s financial position remains very solid at quarter end, with cash and cash equivalents of $19.0 million exceeding total debt of $16.4 million.

The projection for the fourth quarter of fiscal 2010 is for overall sales to increase approximately 12 to 16 percent over the prior year period. Mattress fabric sales are expected to be up by approximately 10 to 14 percent and upholstery fabrics sales up approximately 13 to 17 percent compared with the prior year. Pre-tax income for the fourth quarter of fiscal 2010 is expected to be in the range of $3.5 to $4.2 million.

Overview

For the three months ended January 31, 2010, net sales were $54.0 million, a 21 percent increase compared with $44.6 million a year ago. The company reported net income of $3.0 million, or $0.23 per diluted share, for the third quarter of fiscal 2010, compared with a net loss of ($450,000), or ($0.04) per share, for the third quarter of fiscal 2009. The results for the third quarter of fiscal 2009 included restructuring and related pre-tax charges of approximately $777,000.

Frank Saxon, chief executive officer of Culp, Inc., said, “We are pleased with Culp’s strong performance for the third quarter. We achieved a 21 percent gain in overall sales from the third quarter of last year, marking the first year-over-year sales gain for the company in two years. We are encouraged that the consumer appears to be slowly returning to the marketplace. Our mattress fabrics business has continued to perform well with solid sales and profitability. During the third quarter, we have seen a significant improvement in our upholstery fabrics performance primarily due to a better macro economic environment and favorable results from our sales and marketing initiatives. We are also realizing the benefits of a lean and agile operating platform in both business segments, as well as recent capital expenditures in our mattress fabrics business. We have established a strong competitive position in both businesses. Culp represents a stable and reliable supplier in today’s market with a proven ability to execute. Our strong financial position is another key advantage in these uncertain economic times and provides us with greater operating flexibility going forward.”

Mattress Fabrics Segment

Mattress fabric sales for the third quarter of fiscal 2010 were $27.0 million, a seven percent increase compared with $25.2 million for the prior year period.

“Our mattress fabrics business has continued to be a strong performer with higher sales and improved profitability this quarter compared with a challenging third quarter last year,” said Saxon. “These results reflect the benefits of the ongoing investments we have made to develop an efficient and scalable manufacturing platform. In addition, we also benefitted from other operational initiatives. During the third quarter, we began the installation of state-of-the-art finishing equipment for our growing knit business and will complete the project during the fourth quarter. In the next four months, we are making additional capital investments, including expanding capacity for both knit and woven product lines, as well as completing an energy efficiency initiative in our Canadian operation that will have an environmental benefit and reduce our operating costs going forward. Capital expenditures for fiscal 2010 in mattress fabrics are expected to total $6.6 million, reflecting our continued commitment to the industry. These initiatives, complemented by our unrelenting focus on execution for our customers, are further enhancing our strong capability to provide outstanding service, reliable delivery performance and consistent quality and value.”

Upholstery Fabrics Segment

Sales for this segment were $27.0 million, a 39 percent improvement compared with $19.4 million in the third quarter of fiscal 2009. During this period, sales of non-U.S. produced fabrics were $23.5 million in the third quarter, up 53 percent over the prior year period. Sales of U.S. produced fabrics were $3.5 million, down 12 percent from the third quarter of fiscal 2009.

“We are very pleased with the substantial improvement in sales and profitability in our upholstery fabrics business for the third quarter of fiscal 2010,” Saxon noted. “This period marks the first year-over-year sales increase for this business segment in three years, and the highest quarterly profit in over five years. We are especially encouraged by the extent of our sales gains throughout our customer base. We are realizing the benefits of our long-term strategy to build a wholly-owned China manufacturing platform that is scalable and vertical, but not capital intensive. Additionally, we are beginning to benefit from a complimentary strategy to grow our business in our one remaining U.S. manufacturing facility. Also, with the multi-year restructuring activities behind us, we have been able to shift our focus this fiscal year to product development, sales and marketing initiatives, and delivery performance. We are making excellent progress in each of these areas. Further, we are aggressively defending our design copyrights. Most importantly, our goal remains to provide our customers with innovative products from China, or the U.S., along with reliable delivery and quality performance at excellent values.

Balance Sheet

“We have been diligent in our efforts to maintain a strong balance sheet and generate cash flow throughout this tough economic environment,” added Saxon. “Notably, at the end of the third fiscal quarter, our balance sheet reflected $19.0 million in cash, compared with $11.8 million at the end of fiscal 2009. Total debt of $16.4 million, which includes current maturities of long-term debt plus long-term debt, remained unchanged from the previous fiscal year end. We have a scheduled principal payment of $4.8 million due in mid-March 2010, which will reduce our total debt to $11.6 million. Our next scheduled principal payment of $2.2 million is not due until August 2011, eighteen months away. Our sound financial position provides us with an important competitive advantage with the resources to invest significantly in our businesses during this economic downturn in terms of capital projects and working capital growth.

“Our capital expenditures for fiscal 2010 are expected to total $7.0 million, most of which are for our mattress fabrics segment. Additionally, for the current fiscal year, we expect to make payments on vendor-financed capital expenditures and capital lease obligations from earlier fiscal years of $1.6 million,” said Saxon.

Outlook

Commenting on the outlook for the fourth quarter of fiscal 2010, Saxon remarked, “We expect the prevailing economic uncertainties and unemployment issues will continue to influence consumer demand for furniture and bedding through the end of our fiscal year. However, we are encouraged by the improving trends in both of our businesses and expect that overall sales will be up 12 to 16 percent compared with the same quarter of fiscal 2009.

“We expect sales in our mattress fabrics segment to be up approximately 10 to 14 percent for the fourth quarter, with improved operating profit compared with last year’s fourth quarter. In our upholstery fabrics segment, we expect sales to be approximately 13 to 17 percent higher for the fourth quarter than a year ago. It is important to note that the fourth quarter will be affected by at least a week of plant closures for the Chinese New Year holiday. Accordingly, we expect the upholstery fabrics segment to report a profit that is substantially higher than the fourth quarter of last year, but lower than the operating profit achieved in the third quarter of this year.

“Considering these factors, we expect to report pre-tax income in the fourth quarter in the range of $3.5 to $4.2 million. Given the volatility in the income tax area during fiscal 2009 and continuing into fiscal 2010, the income tax expense and related tax rate for the fourth quarter of fiscal 2010 are too uncertain to project. This is management’s best estimate at present, recognizing that future financial results are difficult to predict because of overall economic uncertainties,” said Saxon.

In closing, Saxon remarked, “Our results to date for fiscal 2010 demonstrate that we have positioned Culp to operate effectively and profitably through this challenging period. We have created lean and agile business models in both of our segments that are scalable and position us very well to handle significant growth as the home furnishings industry recovers. We believe we are a market leader in both of our businesses, and we have the financial strength necessary to build upon our position. Our mattress fabrics business has shown consistent improvement this fiscal year, even in a challenging environment. We are excited about the additional growth opportunities related to our enhanced manufacturing capabilities. In the upholstery fabrics business, our sales and marketing initiatives are producing favorable results. With our China and U.S. manufacturing platforms, we believe we are well positioned for continued profitability and sales growth. Above all, we are focused on outstanding execution for our customers as a financially strong and trusted supplier of innovative products with excellent quality and delivery performance.”

About the Company

Culp, Inc. is one of the world’s largest marketers of mattress fabrics for bedding and upholstery fabrics for furniture. The company’s fabrics are used principally in the production of bedding products and residential and commercial upholstered furniture.

This release contains statements that may be deemed “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 27A of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties. Further, forward-looking statements are intended to speak only as of the date on which they are made. 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,” “estimate,” “plan” and “project” and their derivatives, and include but are not limited to statements about the company’s future operations, production levels, sales, SG&A or other expenses, margins, gross profit, operating income, earnings or other performance measures. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on the company’s business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect the company adversely. Changes in consumer tastes or preferences toward products not produced by the company could erode demand for the company’s products. Strengthening of the U.S. dollar against other currencies could make the company’s products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on the company’s sales in the U.S. of products produced in those countries. Also, economic and political instability in international areas could affect the company’s operations or sources of goods in those areas, as well as demand for the company’s products in international markets. Finally, unanticipated delays or costs in executing restructuring actions could cause the cumulative effect of restructuring actions to fail to meet the objectives set forth by management. Other factors that could affect the matters discussed in forward-looking statements are included in the company’s periodic reports filed with the Securities and Exchange Commission, including the “Risk Factors” section in the company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission on July 16, 2009, for the fiscal year ended May 3, 2009.

CULP, INC.

Condensed Financial Highlights

(Unaudited)

	Three Months Ended
	January 31,		February 1,
	2010		2009

Net sales	$	53,980,000	$	44,592,000
Income before income taxes	$	3,825,000	$	17,000
Net income (loss)	$	3,000,000	$	(450,000	)
Net income (loss) per share:
Basic	$	0.24	$	(0.04	)
Diluted	$	0.23	$	(0.04	)
Income before income taxes,
excluding restructuring and related charges*	$	3,879,000	$	794,000
Average shares outstanding:
Basic		12,713,000		12,653,000
Diluted		13,074,000		12,653,000

*Excludes restructuring and related charges of $54,000 for the third quarter of fiscal 2010.

Excludes restructuring and related charges of $777,000 for the third quarter of fiscal 2009.

CULP, INC.

Reconciliation of Income before Income Taxes

as Reported to Adjusted Income before Income Taxes

(Unaudited)

	Three Months Ended
	January 31,		February 1,
	2010		2009

Income before income taxes, as reported	$	3,825,000	$	17,000
Restructuring and related charges	$	54,000	$	777,000

Adjusted income before income taxes	$	3,879,000	$	794,000

Investor Contact:	Kenneth R. Bowling	Media Contact:	Teresa A. Huffman

	Chief Financial Officer		Vice President of Human Resources

	336-881-5630		336-889-5161

a6193942ex99b.htm

Exhibit 99(b)

Page 1 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 31, 2010 AND FEBRUARY 1, 2009
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)

	THREE MONTHS ENDED

	Amounts										Percent of Sales
	January 31,			February 1,			% Over				January 31,				February 1,
	2010			2009			(Under)				2010				2009

Net sales	$	53,980			44,592			21.1		%		100.0		%		100.0		%
Cost of sales		43,323			38,843			11.5		%		80.3		%		87.1		%
Gross Profit		10,657			5,749			85.4		%		19.7		%		12.9		%

Selling, general and
administrative expenses		6,435			4,676			37.6		%		11.9		%		10.5		%
Restructuring expense		26			402			(93.5	)	%		0.0		%		0.9		%
Income from operations		4,196			671		N.M.					7.8		%		1.5		%

Interest expense		327			646			(49.4	)	%		0.6		%		1.4		%
Interest income		(52	)		(20	)		160.0		%		(0.1	)	%		(0.0	)	%
Other expense		96			28			242.9		%		0.2		%		0.1		%
Income before income taxes		3,825			17		N.M.					7.1		%		0.0		%

Income taxes*		825			467			76.7		%		21.6		%	N.M.
Net income (loss)	$	3,000			(450	)	N.M.					5.6		%		(1.0	)	%

Net income (loss) per share-basic	$	0.24		$	(0.04	)	N.M.
Net income (loss) per share-diluted	$	0.23		$	(0.04	)	N.M.
Average shares outstanding-basic		12,713			12,653			0.5		%
Average shares outstanding-diluted		13,074			12,653			3.3		%



	NINE MONTHS ENDED

	Amounts										Percent of Sales
	January 31,			February 1,			% Over				January 31,				February 1,
	2010			2009			(Under)				2010				2009

Net sales	$	149,173			156,176			(4.5	)	%		100.0		%		100.0		%
Cost of sales		121,795			139,879			(12.9	)	%		81.6		%		89.6		%
Gross Profit		27,378			16,297			68.0		%		18.4		%		10.4		%

Selling, general and
administrative expenses		16,716			14,498			15.3		%		11.2		%		9.3		%
Restructuring (credit) expense		(317	)		9,438		N.M.					(0.2	)	%		6.0		%
Income (loss) from operations		10,979			(7,639	)	N.M.					7.4		%		(4.9	)	%

Interest expense		1,026			1,739			(41.0	)	%		0.7		%		1.1		%
Interest income		(81	)		(75	)		8.0		%		(0.1	)	%		(0.0	)	%
Other expense (income)		714			(207	)	N.M.					0.5		%		(0.1	)	%
Income (loss) before income taxes		9,320			(9,096	)	N.M.					6.2		%		(5.8	)	%

Income taxes*		1,565			31,442		N.M.					16.8		%	N.M.
Net income (loss)	$	7,755			(40,538	)	N.M.					5.2		%		(26.0	)	%

Net income (loss) per share-basic	$	0.61		$	(3.20	)	N.M.
Net income (loss) per share-diluted	$	0.60		$	(3.20	)	N.M.
Average shares outstanding-basic		12,679			12,650			0.2		%
Average shares outstanding-diluted		12,960			12,650			2.5		%

* Percent of sales column for income taxes is calculated as a % of income (loss) before income taxes.

Page 2 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED BALANCE SHEETS

JANUARY 31, 2010, FEBRUARY 1, 2009 AND MAY 3, 2009

Unaudited

(Amounts in Thousands)

	Amounts				Increase
	January 31,		February 1,		(Decrease)						* May 3,
	2010		2009		Dollars			Percent			2009

Current assets
Cash and cash equivalents	$	19,015		15,809		3,206			20.3	%		11,797
Accounts receivable		20,871		14,219		6,652			46.8	%		18,116
Inventories		24,366		25,376		(1,010	)		(4.0	) %		23,978
Deferred income taxes		57		-		57			100.0	%		54
Assets held for sale		98		1,681		(1,583	)		(94.2	) %		1,209
Income taxes receivable		331		-		331			100.0	%		210
Other current assets		1,217		1,493		(276	)		(18.5	) %		1,264
Total current assets		65,955		58,578		7,377			12.6	%		56,628

Property, plant & equipment, net		26,431		24,763		1,668			6.7	%		24,253
Goodwill		11,462		11,593		(131	)		(1.1	) %		11,593
Other assets		2,660		2,922		(262	)		(9.0	) %		2,820

Total assets	$	106,508		97,856		8,652			8.8	%		95,294



Current liabilities
Current maturities of long-term debt	$	4,880		7,180		(2,300	)		(32.0	) %		4,764
Current portion of obligation under a capital lease		107		692		(585	)		(84.5	) %		626
Accounts payable - trade		18,649		10,947		7,702			70.4	%		17,030
Accounts payable - capital expenditures		790		725		65			9.0	%		923
Accrued expenses		8,144		5,592		2,552			45.6	%		6,504
Accrued restructuring		362		1,215		(853	)		(70.2	) %		853
Income taxes payable - current		153		1,469		(1,316	)		(89.6	) %		83
Total current liabilities		33,085		27,820		5,265			18.9	%		30,783

Accounts payable - capital expenditures		188		912		(724	)		(79.4	) %		638
Income taxes payable - long-term		3,690		747		2,943			394.0	%		3,264
Deferred income taxes		1,092		1,213		(121	)		(10.0	) %		974
Obligation under capital lease		-		107		(107	)		(100.0	) %		-
Long-term debt , less current maturities		11,529		20,933		(9,404	)		(44.9	) %		11,604

Total liabilities		49,584		51,732		(2,148	)		(4.2	) %		47,263

Shareholders' equity		56,924		46,124		10,800			23.4	%		48,031

Total liabilities and
shareholders' equity	$	106,508		97,856		8,652			8.8	%		95,294

Shares outstanding		12,935		12,768		167			1.3	%		12,768



* Derived from audited financial statements.

Page 3 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 31, 2010 AND FEBRUARY 1, 2009

Unaudited

(Amounts in Thousands)

		NINE MONTHS ENDED

		Amounts
		January 31,			February 1,
		2010			2009 (2)

Cash flows from operating activities:
Net income (loss)		$	7,755			(40,538	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation			3,042			5,756
Amortization of other assets			416			350
Stock-based compensation			695			306
Excess tax benefits related to stock-based compensation			(182	)		-
Deferred income taxes			190			33,816
Gain on sale of equipment			(72	)		(51	)
Restructuring expenses, net of gain on sale of related assets			(127	)		7,960
Foreign currency exchange losses (gains)			613			(313	)
Changes in assets and liabilities, net of effects of acquisition of business:
Accounts receivable			(2,742	)		12,820
Inventories			(385	)		11,452
Other current assets			46			(200	)
Other assets			(48	)		26
Accounts payable			1,558			(11,347	)
Accrued expenses			1,555			(2,668	)
Accrued restructuring			(491	)		(217	)
Income taxes			109			(2,289	)
Net cash provided by operating activities			11,932			14,863

Cash flows from investing activities:
Capital expenditures			(4,209	)		(1,719	)
Net cash paid for acquisition of business			-			(11,365	)
Proceeds from the sale of buildings and equipment			513			4,148
Net cash used in investing activities			(3,696	)		(8,936	)

Cash flows from financing activities:
Proceeds from the issuance of long-term debt			-			11,000
Payments on vendor-financed capital expenditures			(797	)		(962	)
Payments on capital lease obligation			(519	)		(586	)
Payments on long-term debt			(32	)		(4,310	)
Debt issuance costs			(15	)		(133	)
Proceeds from common stock issued			250			21
Excess tax benefits related to stock-based compensation			182			-
Net cash (used in) provided by financing activities			(931	)		5,030

Effect of exchange rate changes on cash and cash equivalents			(87	)		(62	)

Increase in cash and cash equivalents			7,218			10,895

Cash and cash equivalents at beginning of period			11,797			4,914

Cash and cash equivalents at end of period		$	19,015			15,809


Free Cash Flow (1)		$	7,015			15,682



(1) Free Cash Flow reconciliation is as follows:		3rd Qtr			3rd Qtr
		FY 2010			FY 2009
A)	Net cash provided by operating activities	$	11,932			14,863
B)	Minus: Capital Expenditures		(4,209	)		(1,719	)
C)	Add: Proceeds from the sale of buildings and equipment		513			4,148
D)	Minus: Payments on vendor-financed capital expenditures		(797	)		(962	)
E)	Minus: Payments on capital lease obligation		(519	)		(586	)
F)	Add: Excess tax benefits related to stock-based compensation		182			-
G)	Effects of exchange rate changes on cash and cash equivalents		(87	)		(62	)
		$	7,015			15,682


(2)	Certain prior year amounts have been reclassified to conform to current year presentation to reflect the effects of foreign exchange losses and gains on operating cash flows and cash and cash equivalents held as of February 1, 2009. Reclassifications are not material to total net cash provided by operating activities, total net cash used in investing activities, and total net cash provided by financing activities.

Page 4 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED JANUARY 31, 2010 AND FEBRUARY 1, 2009

(Amounts in thousands)

	THREE MONTHS ENDED (UNAUDITED)

	Amounts										Percent of Total Sales
	January 31,			February 1,			% Over				January 31,				February 1,
Net Sales by Segment	2010			2009			(Under)				2010				2009

Mattress Fabrics	$	26,953			25,198			7.0		%		49.9		%		56.5		%
Upholstery Fabrics		27,027			19,394			39.4		%		50.1		%		43.5		%

Net Sales	$	53,980			44,592			21.1		%		100.0		%		100.0		%


Gross Profit by Segment											Gross Profit Margin

Mattress Fabrics	$	5,587			4,176			33.8		%		20.7		%		16.6		%
Upholstery Fabrics		5,098			1,931			164.0		%		18.9		%		10.0		%
Subtotal		10,685			6,107			75.0		%		19.8		%		13.7		%

Restructuring related charges		(28	)		(358	)		(92.2	)	%		(0.1	)	%		(0.8	)	%

Gross Profit	$	10,657			5,749			85.4		%		19.7		%		12.9		%


Selling, General and Administrative expenses by Segment											Percent of Sales

Mattress Fabrics	$	2,031			1,941			4.6		%		7.5		%		7.7		%
Upholstery Fabrics		2,627			1,880			39.7		%		9.7		%		9.7		%
Unallocated Corporate		1,777			838			112.1		%		3.3		%		1.9		%
		6,435			4,659			38.1		%		11.9		%		10.4		%

Restructuring related charges		-			17			(100.0	)	%		0.0		%		0.0		%

Selling, General and Administrative expenses	$	6,435			4,676			37.6		%		11.9		%		10.5		%


Operating Income (loss) by Segment											Operating Income (Loss) Margin

Mattress Fabrics	$	3,556			2,235			59.1		%		13.2		%		8.9		%
Upholstery Fabrics		2,471			51		N.M.					9.1		%		0.3		%
Unallocated Corporate		(1,777	)		(838	)		112.1		%		(3.3	)	%		(1.9	)	%
Subtotal		4,250			1,448			193.5		%		7.9		%		3.2		%


Restructuring expense and restructuring related charges		(54	)		(777	)		(93.1	)	%		(0.1	)	%		(1.7	)	%

Income from operations	$	4,196			671		N.M.					7.8		%		1.5		%


Depreciation by Segment

Mattress Fabrics	$	842			941			(10.5	)	%
Upholstery Fabrics		149			92			62.0		%
Total Depreciation		991			1,033			(4.1	)	%


Notes:

See page 6 for detailed explanations of restructuring expense and restructuring related charges.

Page 5 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE NINE MONTHS ENDED JANUARY 31, 2010 AND FEBRUARY 1, 2009

(Amounts in thousands)

	NINE MONTHS ENDED (UNAUDITED)

	Amounts										Percent of Total Sales
	January 31,			February 1,			% Over				January 31,				February 1,
Net Sales by Segment	2010			2009			(Under)				2010				2009

Mattress Fabrics	$	81,429			88,808			(8.3	)	%		54.6		%		56.9		%
Upholstery Fabrics		67,744			67,368			0.6		%		45.4		%		43.1		%

Net Sales	$	149,173			156,176			(4.5	)	%		100.0		%		100.0		%


Gross Profit by Segment											Gross Profit Margin

Mattress Fabrics	$	16,245			15,603			4.1		%		19.9		%		17.6		%
Upholstery Fabrics		11,175			4,277			161.3		%		16.5		%		6.3		%
Subtotal		27,420			19,880			37.9		%		18.4		%		12.7		%

Restructuring related charges		(42	)		(3,583	)		(98.8	)	%		(0.0	)	%		(2.3	)	%

Gross Profit	$	27,378			16,297			68.0		%		18.4		%		10.4		%


Selling, General and Administrative expenses by Segment												Percent of Sales

Mattress Fabrics	$	5,696			5,902			(3.5	)	%		7.0		%		6.6		%
Upholstery Fabrics		6,843			6,444			6.2		%		10.1		%		9.6		%
Unallocated Corporate		4,177			2,131			96.0		%		2.8		%		1.4		%
Subtotal		16,716			14,477			15.5		%		11.2		%		9.3		%

Restructuring related charges		-			21			(100.0	)	%		0.0		%		0.0		%

Selling, General and Administrative expenses	$	16,716			14,498			15.3		%		11.2		%		9.3		%


Operating Income (loss) by Segment											Operating Income (Loss) Margin

Mattress Fabrics	$	10,549			9,702			8.7		%		13.0		%		10.9		%
Upholstery Fabrics		4,332			(2,168	)	N.M.					6.4		%		(3.2	)	%
Unallocated Corporate		(4,177	)		(2,131	)		96.0		%		(2.8	)	%		(1.4	)	%
Subtotal		10,704			5,403			98.1		%		7.2		%		3.5		%

Restructuring (credit) expense and restructuring related charges		275			(13,042	)	N.M.					0.2		%		(8.4	)	%

Income (loss) from operations	$	10,979			(7,639	)	N.M.					7.4		%		(4.9	)	%


Depreciation by Segment

Mattress Fabrics	$	2,620			2,617			0.1		%
Upholstery Fabrics		422			1,049			(59.8	)	%
Subtotal		3,042			3,666			(17.0	)	%
Accelerated Depreciation		-			2,090			100.0		%
Total Depreciation		3,042			5,756			(47.2	)	%


Notes:

See page 7 for detailed explanations of restructuring (credit) expense and restructuring related charges.

Page 6 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

ADJUSTED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JANUARY 31, 2010 AND FEBRUARY 1, 2009

(Unaudited)

(Amounts in Thousands, Except for Per Share Data)

	THREE MONTHS ENDED

	As Reported													January 31, 2010						As Reported													February 1, 2009						Adjusted
	January 31,			% of						% of				Adjusted			% of			February 1,			% of						% of				Adjusted			% of			% Over
	2010			Sales			Adjustments			Sales				Results			Sales			2009			Sales			Adjustments			Sales				Results			Sales			(Under)

Net sales	$	53,980			100.0	%		-							53,980			100.0	%		44,592			100.0	%		-							44,592			100.0	%		21.1	%
Cost of sales		43,323			80.3	%		(28	)		-0.1	%	(1)		43,295			80.2	%		38,843			87.1	%		(358	)		-0.8	%	(3)		38,485			86.3	%		12.5	%
Gross Profit		10,657			19.7	%		(28	)		-0.1	%			10,685			19.8	%		5,749			12.9	%		(358	)		-0.8	%			6,107			13.7	%		75.0	%

Selling, general and
administrative expenses		6,435			11.9	%		-			0.0	%			6,435			11.9	%		4,676			10.5	%		(17	)		0.0	%	(3)		4,659			10.4	%		38.1	%
Restructuring expense		26			0.0	%		(26	)		0.0	%	(2)		-			0.0	%		402			0.9	%		(402	)		-0.9	%	(4)		-			0.0	%		0.0	%
Income from operations		4,196			7.8	%		(54	)		-0.1	%			4,250			7.9	%		671			1.5	%		(777	)		-1.7	%			1,448			3.2	%		193.5	%

Interest expense		327			0.6	%		-			0.0	%			327			0.6	%		646			1.4	%		-			0.0	%			646			1.4	%		-49.4	%
Interest income		(52	)		-0.1	%		-			0.0	%			(52	)		-0.1	%		(20	)		0.0	%		-			0.0	%			(20	)		0.0	%		160.0	%
Other expense		96			0.2	%		-			0.0	%			96			0.2	%		28			0.1	%		-			0.0	%			28			0.1	%		242.9	%
Income before income taxes	$	3,825			7.1	%		(54	)		-0.1	%	(5)		3,879			7.2	%		17			0.0	%		(777	)		-1.7	%	(6)		794			1.8	%		388.5	%

Notes:

(1) The $28 restructuring related charge represents other operating costs associated with closed plant facilities.

(2) The $26 restructuring charge represents $40 for lease termination and other exit costs offset by a credit of $14 for sales proceeds received on equipment with no carrying value.

(3) The $358 restructuring related charge represents $322 for inventory markdowns and $36 for other operating costs associated with closed plant facilities. The $17 restructuring related charge represents other operating costs associated with closed plant facilities.

(4) The $402 restructuring charge represents $234 for lease termination and other exit costs, $148 for write-downs of equipment, and $20 for employee termination benefits. The lease termination and other exit costs of $234 primarily relate to the sale of the company's corporate headquarters.

(5) The $54 represents a cash charge.

(6) Of this total charge, $273 and $504 represent cash and non-cash charges, respectively.

Page 7 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

ADJUSTED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED JANUARY 31, 2010 AND FEBRUARY 1, 2009

(Unaudited)

(Amounts in Thousands, Except for Per Share Data)

	NINE MONTHS ENDED

	As Reported													January 31, 2010						As Reported													February 1, 2009						Adjusted
	January 31,			% of						% of				Adjusted			% of			February 1,			% of						% of				Adjusted			% of			% Over
	2010			Sales			Adjustments			Sales				Results			Sales			2009			Sales			Adjustments			Sales				Results			Sales			(Under)

Net sales	$	149,173			100.0	%		-							149,173			100.0	%		156,176			100.0	%		-							156,176			100.0	%		-4.5	%
Cost of sales		121,795			81.6	%		(42	)		0.0	%	(1)		121,753			81.6	%		139,879			89.6	%		(3,583	)		-2.3	%	(3)		136,296			87.3	%		-10.7	%
Gross Profit		27,378			18.4	%		(42	)		0.0	%			27,420			18.4	%		16,297			10.4	%		(3,583	)		-2.3	%			19,880			12.7	%		37.9	%

Selling, general and
administrative expenses		16,716			11.2	%		-			0.0	%			16,716			11.2	%		14,498			9.3	%		(21	)		0.0	%	(3)		14,477			9.3	%		15.5	%
Restructuring (credit) expense		(317	)		-0.2	%		317			0.2	%	(2)		-			0.0	%		9,438			6.0	%		(9,438	)		-6.0	%	(4)		-			0.0	%		0.0	%
Income (loss) from operations		10,979			7.4	%		275			0.2	%			10,704			7.2	%		(7,639	)		-4.9	%		(13,042	)		-8.4	%			5,403			3.5	%		98.1	%

Interest expense		1,026			0.7	%		-			0.0	%			1,026			0.7	%		1,739			1.1	%		-			0.0	%			1,739			1.1	%		-41.0	%
Interest income		(81	)		-0.1	%		-			0.0	%			(81	)		-0.1	%		(75	)		0.0	%		-			0.0	%			(75	)		0.0	%		8.0	%
Other expense (income)		714			0.5	%		-			0.0	%			714			0.5	%		(207	)		-0.1	%		-			0.0	%			(207	)		-0.1	%	-	444.9	%
Income (loss) before income taxes	$	9,320			6.2	%		275			0.2	%	(5)		9,045			6.1	%		(9,096	)		-5.8	%		(13,042	)		-8.4	%	(6)		3,946			2.5	%		129.2	%

Notes:

(1) The $42 restructuring related charge represents $92 for other operating costs associated with closed plant facilities offset by a credit of $50 for inventory markdowns.

(2) The $317 restructuring credit represents a credit of $169 for employee termination benefits, a credit of $127 for sales proceeds recevied on equipment with no carrying value, and a credit of $21 for lease termination and other exit costs.

(3) The $3.6 million restructuring related charge represents $2.1 million for accelerated depreciation, $1.4 million for inventory markdowns, and $63 for other operating costs associated with closed plant facilities. The $21 restructuring related charge represents other operating costs associated with closed plant facilities.

(4) The $9.4 million restructuring charge represents $8.0 million for write-downs of equipment and buildings, $797 for employee termination benefits, and $681 for lease termination and other exit costs.

(5) Of this total credit, $225 and $50 represent cash and non-cash credits, respectively.

(6) Of this total charge, $1.5 million and $11.5 million represent cash and non-cash charges, respectively.

Page 8 of 8

	CULP, INC. FINANCIAL INFORMATION RELEASE
	RETURN ON CAPITAL EMPLOYED BY SEGMENT
	FOR THE NINE MONTHS ENDED JANUARY 31, 2010
	(UNAUDITED)

	Operating
	Income						Return on
	Nine Months			Average			Avg.
	Ended			Capital			Capital
	January 31,			Employed			Employed
	2010 (1)			(3)			(2)
Mattress Fabrics	$	10,549		$	47,373			29.7	%
Upholstery Fabrics		4,332			10,269			56.2	%
(less: Unallocated Corporate)		(4,177	)		(5,596	)		N/A
Total	$	10,704		$	52,046			27.4	%

Average Capital Employed	As of the three Months Ended January 31, 2010												As of the three Months Ended November 1, 2009												As of the three Months Ended August 2, 2009
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total

Total assets		58,609			25,928			21,971			106,508			56,686			19,598			22,496			98,780			57,772			16,128			18,511			92,411
Total liabilities		(10,066	)		(13,527	)		(25,991	)		(49,584	)		(10,625	)		(10,461	)		(24,416	)		(45,502	)		(10,138	)		(7,670	)		(24,427	)		(42,235	)

Subtotal	$	48,543		$	12,401		$	(4,020	)	$	56,924		$	46,061		$	9,137		$	(1,920	)	$	53,278		$	47,634		$	8,458		$	(5,916	)	$	50,176
Less:
Cash and cash equivalents		-						(19,015	)	$	(19,015	)		-			-			(19,575	)		(19,575	)		-						(15,481	)	$	(15,481	)
Current maturities of long-term debt		-						4,880			4,880			-			-			4,863			4,863			-						4,817			4,817
Long-term debt, less current maturities								11,529			11,529						-			11,568			11,568									11,618			11,618

Total Capital Employed	$	48,543		$	12,401		$	(6,626	)	$	54,318		$	46,061		$	9,137		$	(5,064	)	$	50,134		$	47,634		$	8,458		$	(4,962	)	$	51,130


	As of the three Months Ended May 3, 2009
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Total assets		58,626			22,078			14,590			95,294
Total liabilities		(11,372	)		(10,999	)		(24,892	)		(47,263	)

Subtotal	$	47,254		$	11,079		$	(10,302	)	$	48,031
Less:
Cash and cash equivalents		-						(11,797	)	$	(11,797	)
Current maturities of long-term debt		-						4,764			4,764
Long-term debt, less current maturities								11,604			11,604

Total Capital Employed	$	47,254		$	11,079		$	(5,731	)	$	52,602


	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Average Capital Employed (3)	$	47,373		$	10,269		$	(5,596	)	$	52,046

Notes:

(1) Operating income excludes restructuring and related charges--see reconciliation per page 5 of this financial information release.

(2) Return on average capital employed represents operating income for the 9 month period ending January 31, 2010 divided by 3 quarters times 4 quarters to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, long-term debt, including current maturities and shareholders' equity.

(3) Average capital employed computed using the four periods ending May 3,2009, August 2,2009, November 1, 2009, and January 31, 2010.