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a6325084.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) June 16, 2010

Culp, Inc.

(Exact Name of Registrant as Specified in its Charter)

North Carolina		1-12597		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 compa ny’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 June 16, 2010, we issued a news release to announce our financial results for the fourth quarter and fiscal year ended May 2, 2010. The news release is attached hereto as Exhibit 99(a).

Also on June 16, 2010, we released a Financial Information Release containing additional financial information and disclosures about our fourth quarter and fiscal year ended May 2, 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, how ever, 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 p erformance 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 capit al. 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 June 16, 2010

99(b) Financial Information Release dated June 16, 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: June 16, 2010

EXHIBIT INDEX

	Exhibit Number	Exhibit

	99(a)	News Release dated June 16, 2010
	99(b)	Financial Information Release dated June 16, 2010

a6325084ex99a.htm

EXHIBIT 99(a)

Investor Contact:	Kenneth R. Bowling	Media Contact:	Teresa A. Huffman
	Chief Financial Officer		Vice President of Human Resources
	336-881-5630		336-889-5161

CULP ANNOUNCES RESULTS FOR FOURTH QUARTER AND FISCAL 2010

HIGH POINT, N.C. (June 16, 2010) ─ Culp, Inc. (NYSE: CFI) today reported financial and operating results for the fourth quarter and fiscal year ended May 2, 2010.

Fiscal 2010 fourth quarter highlights:

Net sales were $57.2 million, up 20 percent from the fourth quarter of last year, with mattress fabric segment sales up 26 percent and upholstery fabrics segment sales up 13 percent.

§ Pre-tax income was $5.0 million, compared with $2.2 million in the prior year period.

Net income was $5.4 million, or $0.41 per diluted share, compared with net income of $1.7 million, or $0.13 per diluted share, in the prior year. A tax benefit of $0.4 million was recorded in this quarter due to various factors.

The company increased its total cash position by $2.3 million, while incurring $3.2 million in capital expenditures and lowering its total debt from $16.4 million to $11.7 million, a reduction of $4.7 million, or 29 percent.

Fiscal 2010 full year highlights:

Net sales were $206.4 million, up 1.2 percent over the prior year. Mattress fabric segment sales were even with the prior year while upholstery fabric sales were up 3.4 percent. This marks the first annual sales gain for upholstery fabrics in ten years.

Pre-tax income was $14.3 million, compared with a pre-tax loss of $6.9 million in the prior year period. Restructuring and related (credits) charges were ($0.3) million in the current year and $13.1 million in the prior year

Net income was $13.2 million, or $1.01 per diluted share, compared with a net loss of $38.8 million, or $3.07 per diluted share, in the prior year period. Fiscal 2009 included a $27.2 million charge for the establishment of a valuation allowance against the company’s net deferred tax assets.

Cash flow from operations was $21.6 million, driven primarily by net income plus depreciation and amortization, totaling $17.7 million.

The company’s financial position strengthened considerably during the year with cash and cash equivalents and short-term investments totaling $21.3 million at year end, exceeding total debt of $11.7 million. The company increased its total cash position by $9.5 million during the year, while incurring $7.4 million in capital expenditures and reducing debt by $4.8 million.

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2010

Page 2

June 16, 2010

The projection for the first quarter of fiscal 2011 is for overall sales to increase 11 to 16 percent over the prior year period. Mattress fabric sales are expected to be up 15 to 20 percent and upholstery fabrics sales are expected to be up 5 to 10 percent compared with the prior year. Pre-tax income for the first quarter of fiscal 2011 is expected to be in the range of $3.6 to $4.0 million. Pre-tax income for the first quarter of fiscal 2009 was $1.8 million.

Overview

For the three months ended May 2, 2010, net sales were $57.2 million, a 20 percent increase compared with $47.8 million a year ago. The company reported net income of $5.4 million, or $0.41 per diluted share, for the fourth quarter of fiscal 2010, compared with net income of $1.7 million, or $0.13 per diluted share, for the fourth quarter of fiscal 2009. Net sales for fiscal 2010 were $206.4 million, compared with net sales of $203.9 million in fiscal 2009. Net income for fiscal 2010 was $13.2 million, or $1.01 per diluted share, compared with a net loss of $38.8 million, or $(3.07) per share, in fiscal 2009. The results for fiscal 2009 included a $27.2 million non-cash charge for the establishment of a val uation allowance against substantially all of the company’s net deferred tax assets.

Frank Saxon, chief executive officer of Culp, Inc., said, “We are pleased with our performance for the fourth quarter, capping off a year of significant growth and progress for Culp. We are encouraged by the recent improvement in consumer demand trends, as evidenced by an overall 20 percent sales gain compared with a year ago. In particular, our mattress fabrics business has benefited from a recent uptick in consumer demand in the bedding industry. We have also continued to see favorable growth trends in our upholstery fabrics business, although not to the same level as bedding. Overall, our improved performance for the quarter and year reflects the benefits of a lean and agile operating platform and a strong competitive position in both businesses. Culp represents a stable and trusted supplier for our customers with a proven ability to execute. Our strong financial position is a key advantage in these uncertain economic times and provides us with greater operating flexibility to pursue our growth initiatives.”

Mattress Fabrics Segment

Mattress fabric sales for the fourth quarter of fiscal 2010 were $33.4 million, a 26 percent increase compared with $26.6 million for the prior year period. For fiscal 2010, mattress fabric sales were $114.8 million, compared with $115.4 million in fiscal 2009.

“Our mattress fabrics business had a great fourth quarter, primarily driven by significant improvement in consumer demand in the bedding industry,” said Saxon. “Additionally, we are benefiting from the closure of a key competitor in late calendar 2009. These results also reflect the benefits of recent operating initiatives and the ongoing investments we have made to develop an efficient and scalable manufacturing platform. During the fourth quarter, we completed the installation of state-of-the-art finishing equipment for our growing knit business. We are also in the process of further expanding our 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. Our capital expenditures in mattress fabrics for fiscal 2010 totaled approximately $6.6 million, reflecting our continued commitment to the industry. While we are pleased with the trends in this business, we are also facing increased pricing pressures and higher material costs. As we move into fiscal 2011, we are continuing our high level of capital spending for modernizing and expanding our woven and knit capacities. Above all, we will focus on execution for our customers with outstanding service, reliable delivery performance and consistent quality and value.”

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2010

Page 3

June 16, 2010

Upholstery Fabrics Segment

Sales for this segment were $23.8 million for the fourth quarter of fiscal 2010, a 13 percent improvement compared with $21.2 million in the prior year. During this period, sales of China produced fabrics were $19.8 million, up 15 percent over the prior year period. Sales of U.S. produced fabrics were $4.0 million, up three percent from the fourth quarter of fiscal 2009. For fiscal 2010, upholstery fabrics sales were $91.6 million, up three percent compared with $88.5 million in fiscal 2009. Sales of China produced fabrics were $77.3 million for the year, up 14 percent, and sales of U.S. produced fabrics were $14.3 million, down 30 percent.

“Our upholstery fabrics business has made substantial progress this fiscal year and we are pleased with the improvement in sales and profitability,” Saxon noted. “Our sales results for the year mark the first annual sales gain for this business in ten years. At the same time, we have returned Culp’s upholstery fabrics business to solid profitability. After a multi-year restructuring process, we have established a leaner and more agile manufacturing platform, including a wholly-owned China operation that is scalable and vertical, but not capital intensive. We also have one remaining U.S. manufacturing facility that supports our customer needs. Our top priorities for upholster y fabrics in fiscal 2010 were to place a greater emphasis on product development, sales and marketing initiatives, and delivery performance. Customer response has been very favorable and we believe we have made excellent progress in each of these key areas. For fiscal 2011, we will continue to focus on these same key objectives.”

Balance Sheet

“Throughout fiscal 2010, we have strengthened our balance sheet and generated significant cash flow in this tough economic environment,” added Saxon. “Notably, at the end of the year, our balance sheet reflected $21.3 million in cash and cash equivalents and short-term investments, up from $11.8 million at the end of fiscal 2009. Over the same time, we have reduced our total debt, which includes current maturities of long-term debt plus long-term debt, to $11.7 million, compared with $16.4 million at the end of fiscal 2009, and incurred $7.4 million in capital expenditures. Our next major scheduled principal payment of $2.2 million is not due until August 2011. Our sound financial position provides us with sufficient capital t o support our growth strategy.”

Outlook

Commenting on the outlook for the first quarter of fiscal 2011, Saxon remarked, “We believe that macro-economic trends, including high unemployment, consumer credit concerns and a volatile housing market, will continue to influence consumer behavior, and the demand outlook for furniture and bedding remains difficult to predict. However, we are encouraged by trends in both of our businesses as compared with this time last year and currently expect that overall sales will be up 11 to 16 percent compared with the same quarter of fiscal 2010. We believe our profitability will be somewhat affected by higher raw material costs in both segments and increased pricing pressure in mattress fabrics.

“Sales in our mattress fabrics segment are expected to be up approximately 15 to 20 percent for the first quarter, with operating profit significantly higher compared with last year’s first quarter. In our upholstery fabrics segment, we expect sales to be approximately 5 to 10 percent higher for the first quarter than a year ago. Accordingly, we expect the upholstery fabrics segment to report a profit that is higher than the first quarter of last year.

“Considering these factors, we expect to report pre-tax income in the first quarter in the range of $3.6 to $4.0 million. Given the volatility in the income tax area during fiscal 2010 and continuing into fiscal 2011, the income tax expense and related tax rate for the first quarter of fiscal 2011 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.

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CFI Announces Results for Fourth Quarter and Fiscal 2010

Page 4

June 16, 2010

In closing, Saxon remarked, “We have demonstrated strong execution with favorable results in fiscal 2010, even in the face of ongoing challenges in the economy. We have worked hard to create a scalable and sustainable manufacturing platform in both businesses that allows us to serve our customers very well, achieve increasing profitability in a challenging business environment, and at the same time, position Culp for further profitable growth as the home furnishings industry recovers. As we begin fiscal 2011, we have a focused strategy and the financial strength to fund our growth initiatives. Our mattress fabrics business has shown consistent operational improvement and we believe Culp is well positioned to capitalize on additional growth opport unities with 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 have a balanced strategy that will support our continued growth and profitability. Above all, we are focused on outstanding execution for our customers as a financially stable and reliable source of innovative fabrics, delivery performance and quality.”

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 preferenc es 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 per iodic 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.

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CFI Announces Results for Fourth Quarter and Fiscal 2010

Page 5

June 16, 2010

CULP, INC.

Condensed Financial Highlights

(Unaudited)

		Three Months Ended				Fiscal Year Ended
		May 2, 2010		May 3, 2009		May 2, 2010		May 3, 2009

Net sales	$	57,243,000	$	47,762,000	$	206,416,000	$	203,938,000
Income (loss) before income taxes	$	4,996,000	$	2,212,000	$	14,316,000	$	(6,883,000	)
Net income (loss)	$	5,432,000	$	1,695,000	$	13,188,000	$	(38,842,000	)
Net income (loss) per share:
Basic	$	0.42	$	0.13	$	1.04	$	(3.07	)
Diluted	$	0.41	$	0.13	$	1.01	$	(3.07	)
Income before income taxes,
excluding restructuring and
related charges*	$	4,959,000	$	2,260,000	$	14,004,000	$	6,206,000
Average shares outstanding:
Basic		12,801,000		12,653,000		12,709,000		12,651,000
Diluted		13,200,000		12,694,000		13,057,000		12,651,000

* Excludes restructuring and related credits of $37,000 for the fourth quarter of fiscal 2010. Excludes restructuring and related credits of $312,000 for fiscal 2010.

*Excludes restructuring and related charges of $48,000 for the fourth quarter of fiscal 2009. Excludes restructuring and related charges of $13.1 million for fiscal 2009.

CULP, INC.

Reconciliation of Income (Loss) before Income Taxes

as Reported to Adjusted Income before Income Taxes

(Unaudited)

Three Months Ended

Twelve Months Ended

May 2,
2010

May 3,
2009

May 2,
2010

May 3,
2009

Income (loss) before income taxes,
as reported	$	4,996,000		$	2,212,000	$	14,316,000		$	(6,883,000	)
Restructuring and related
charges (credits)	$	(37,000	)	$	48,000	$	(312,000	)	$	13,089,000

Adjusted income before income taxes	$	4,959,000		$	2,260,000	$	14,004,000		$	6,206,000

-END-

a6325084ex99b.htm

Exhibit 99(b)

Page 1 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)

	THREE MONTHS ENDED

	Amounts										Percent of Sales
	May 2,			May 3,			% Over				May 2,				May 3,
	2010			2009			(Under)				2010				2009

Net sales	$	57,243		$	47,762			19.9		%		100.0		%		100.0		%
Cost of sales		45,843			39,408			16.3		%		80.1		%		82.5		%
Gross profit		11,400			8,354			36.5		%		19.9		%		17.5		%

Selling, general and
administrative expenses		6,090			5,252			16.0		%		10.6		%		11.0		%
Restructuring (credit) expense		(52	)		33		N.M.					(0.1	)	%		0.1		%
Income from operations		5,362			3,069			74.7		%		9.4		%		6.4		%

Interest expense		288			620			(53.5	)	%		0.5		%		1.3		%
Interest income		(36	)		(14	)		157.1		%		(0.1	)	%		(0.0	)	%
Other expense		114			251			(54.6	)	%		0.2		%		0.5		%
Income before income taxes		4,996			2,212			125.9		%		8.7		%		4.6		%

Income taxes*		(436	)		517		N.M.					(8.7	)	%		23.4		%
Net income	$	5,432		$	1,695			220.5		%		9.5		%		3.5		%

Net income per share-basic	$	0.42		$	0.13			223.1		%
Net income per share-diluted	$	0.41		$	0.13			215.4		%
Average shares outstanding-basic		12,801			12,653			1.2		%
Average shares outstanding-diluted		13,200			12,694			4.0		%



	TWELVE MONTHS ENDED

	Amounts										Percent of Sales
	May 2,			May 3,			% Over				May 2,				May 3,
	2010			2009 (1)			(Under)				2010				2009

Net sales	$	206,416		$	203,938			1.2		%		100.0		%		100.0		%
Cost of sales		167,639			179,286			(6.5	)	%		81.2		%		87.9		%
Gross profit		38,777			24,652			57.3		%		18.8		%		12.1		%

Selling, general and
administrative expenses		22,805			19,751			15.5		%		11.0		%		9.7		%
Restructuring (credit) expense		(370	)		9,471		N.M.					(0.2	)	%		4.6		%
Income (loss) from operations		16,342			(4,570	)	N.M.					7.9		%		(2.2	)	%

Interest expense		1,314			2,359			(44.3	)	%		0.6		%		1.2		%
Interest income		(116	)		(89	)		30.3		%		(0.1	)	%		(0.0	)	%
Other expense		828			43		N.M.					0.4		%		0.0		%
Income (loss) before income taxes		14,316			(6,883	)		(308.0	)	%		6.9		%		(3.4	)	%

Income taxes*		1,128			31,959		N.M.					7.9		%	N.M.
Net income (loss)	$	13,188		$	(38,842	)		(134.0	)	%		6.4		%		(19.0	)	%

Net income (loss) per share-basic	$	1.04		$	(3.07	)		(133.9	)	%
Net income (loss) per share-diluted	$	1.01		$	(3.07	)		(132.9	)	%
Average shares outstanding-basic		12,709			12,651			0.5		%
Average shares outstanding-diluted		13,057			12,651			3.2		%

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

(1) Derived from audited financial statements.

Page 2 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
MAY 2, 2010 AND MAY 3, 2009
Unaudited
(Amounts in Thousands)

	Amounts				Increase
	May 2,		* May 3,		(Decrease)
	2010		2009		Dollars			Percent

Current assets
Cash and cash equivalents	$	18,295	$	11,797		6,498			55.1		%
Short-term investments		3,023		-		3,023			100.0		%
Accounts receivable		19,822		18,116		1,706			9.4		%
Inventories		26,002		23,978		2,024			8.4		%
Deferred income taxes		150		54		96			177.8		%
Assets held for sale		123		1,209		(1,086	)		(89.8	)	%
Income taxes receivable		728		210		518			246.7		%
Other current assets		1,698		1,264		434			34.3		%
Total current assets		69,841		56,628		13,213			23.3		%

Property, plant and equipment, net		28,403		24,253		4,150			17.1		%
Goodwill		11,462		11,593		(131	)		(1.1	)	%
Deferred income taxes		324		-		324			100.0		%
Other assets		2,568		2,820		(252	)		(8.9	)	%

Total assets	$	112,598	$	95,294		17,304			18.2		%



Current liabilities
Current maturities of long-term debt	$	196	$	4,764		(4,568	)		(95.9	)	%
Current portion of an obligation under capital lease		-		626		(626	)		(100.0	)	%
Accounts payable - trade		22,278		17,030		5,248			30.8		%
Accounts payable - capital expenditures		567		923		(356	)		(38.6	)	%
Accrued expenses		9,613		6,504		3,109			47.8		%
Accrued restructuring		324		853		(529	)		(62.0	)	%
Income taxes payable - current		224		83		141			169.9		%
Total current liabilities		33,202		30,783		2,419			7.9		%

Accounts payable - capital expenditures		-		638		(638	)		(100.0	)	%
Income taxes payable - long-term		3,876		3,264		612			18.8		%
Deferred income taxes		982		974		8			0.8		%
Long-term debt , less current maturities		11,491		11,604		(113	)		(1.0	)	%

Total liabilities		49,551		47,263		2,288			4.8		%

Shareholders' equity		63,047		48,031		15,016			31.3		%

Total liabilities and
shareholders' equity	$	112,598	$	95,294		17,304			18.2		%

Shares outstanding		13,052		12,768		284			2.2		%

* Derived from audited financial statements

Page 3 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009
Unaudited
(Amounts in Thousands)


	TWELVE MONTHS ENDED

	Amounts
	May 2,			* May 3,
	2010			2009 (2)

Cash flows from operating activities:
Net income (loss)	$	13,188		$	(38,842	)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation		4,010			6,712
Amortization of other assets		548			488
Stock-based compensation		834			425
Excess tax benefit related to stock options exercised		(429	)		-
Deferred income taxes		(148	)		33,430
(Gain) loss on impairment of equipment		(65	)		(32	)
Restructuring expenses, net of gain on sale of related assets		(170	)		7,960
Foreign currency exchange losses (gains)		688			(88	)
Changes in assets and liabilities, net of effects of acquisition of assets:
Accounts receivable		(1,684	)		8,924
Inventories		(2,020	)		12,850
Other current assets		(418	)		28
Other assets		(67	)		10
Accounts payable-trade		5,157			(5,278	)
Accrued expenses		2,853			(1,667	)
Accrued restructuring		(529	)		(579	)
Income taxes		(171	)		(1,504	)
Net cash provided by operating activities		21,577			22,837

Cash flows from investing activities:
Capital expenditures		(7,431	)		(1,970	)
Purchase of short-term investments		(3,023	)		-
Net cash paid for acquisition of assets		-			(11,365	)
Proceeds from the sale of buildings and equipment		583			4,607
Net cash used in investing activities		(9,871	)		(8,728	)

Cash flows from financing activities:
Proceeds from the issuance of long-term debt		-			11,000
Payments on vendor-financed capital expenditures		(985	)		(1,236	)
Payments on a capital lease obligation		(626	)		(754	)
Payments on long-term debt		(4,789	)		(16,055	)
Debt issuance costs		(15	)		(133	)
Proceeds from common stock issued		673			21
Excess tax benefit related to stock options exercised		429			-
Net cash used in financing activities		(5,313	)		(7,157	)

Effect of exchange rate changes on cash and cash equivalents		105			(69	)

Increase in cash and cash equivalents		6,498			6,883

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

Cash and cash equivalents at end of year	$	18,295		$	11,797


Free Cash Flow (1)	$	13,652		$	23,415



(1) Free Cash Flow reconciliation is as follows:
	FY 2010			FY 2009
Net cash provided by operating activities	$	21,577		$	22,837
Minus: Capital Expenditures		(7,431	)		(1,970	)
Add: Proceeds from the sale of buildings and equipment		583			4,607
Minus: Payments on vendor-financed capital expenditures		(985	)		(1,236	)
Minus: Payments on a capital lease obligation		(626	)		(754	)
Add: Excess tax benefit related to stock options exercised		429			-
Effects of exchange rate changes on cash and cash equivalents		105			(69	)
	$	13,652		$	23,415

* Derived from audited financial statements.

(2)

Certain prior year amounts have been reclassified to conform to current year presentation to reflect the effects of foreign exchange losses and gains in operating cash flows and cash and cash equivalents held as of May 3, 2009. Reclassifications are not material to total net cash provided by operating activities, total net cash used in investing activities, and total net cash used in financing activities.

Page 4 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009

(Amounts in thousands)


	THREE MONTHS ENDED (UNAUDITED)

	Amounts												Percent of Total Sales
	May 2,				May 3,				% Over				May 2,				May 3,
Net Sales by Segment	2010				2009				(Under)				2010				2009

Mattress Fabrics	$	33,418				26,588				25.7		%		58.4		%		55.7		%
Upholstery Fabrics		23,825				21,174				12.5		%		41.6		%		44.3		%

Net Sales	$	57,243				47,762				19.9		%		100.0		%		100.0		%


Gross Profit by Segment													Gross Profit Margin

Mattress Fabrics	$	7,407				5,392				37.4		%		22.2		%		20.3		%
Upholstery Fabrics		4,008				2,977				34.6		%		16.8		%		14.1		%
Subtotal		11,415				8,369				36.4		%		19.9		%		17.5		%

Restructuring related charges		(15	)	(1)		(15	)	(1)		0.0		%		(0.0	)	%		(0.0	)	%

Gross Profit	$	11,400				8,354				36.5		%		19.9		%		17.5		%


Selling, General and Administrative expenses by Segment													Percent of Sales

Mattress Fabrics	$	2,482				1,848				34.3		%		7.4		%		7.0		%
Upholstery Fabrics		2,385				2,310				3.2		%		10.0		%		10.9		%
Unallocated Corporate		1,223				1,094				11.8		%		2.1		%		2.3		%
Selling, General and Administrative expenses		6,090				5,252				16.0		%		10.6		%		11.0		%


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

Mattress Fabrics	$	4,925				3,545				38.9		%		14.7		%		13.3		%
Upholstery Fabrics		1,623				666				143.7		%		6.8		%		3.1		%
Unallocated Corporate		(1,223	)			(1,094	)			11.8		%		(2.1	)	%		(2.3	)	%
Subtotal		5,325				3,117				70.8		%		9.3		%		6.5		%


Restructuring credit (expense) and restructuring related charges		37		(1)		(48	)	(1)	N.M.					0.1		%		(0.1	)	%

Operating income	$	5,362				3,069				74.7		%		9.4		%		6.4		%


Depreciation by Segment

Mattress Fabrics	$	838				925				(9.4	)	%
Upholstery Fabrics		130				32				306.3		%
Total Depreciation		968				957				1.1		%

Notes:

(1) See page 6 for detailed explanations of restructuring credit (expense) and restructuring related charges.

Page 5 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE TWELVE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009

(Amounts in thousands)


	TWELVE MONTHS ENDED (UNAUDITED)

	Amounts												Percent of Total Sales
	May 2,				May 3,				% Over				May 2,				May 3,
Net Sales by Segment	2010				2009				(Under)				2010				2009

Mattress Fabrics	$	114,848				115,396				(0.5	)	%		55.6		%		56.6		%
Upholstery Fabrics		91,568				88,542				3.4		%		44.4		%		43.4		%

Net Sales	$	206,416				203,938				1.2		%		100.0		%		100.0		%


Gross Profit by Segment													Gross Profit Margin

Mattress Fabrics	$	23,652				20,996				12.7		%		20.6		%		18.2		%
Upholstery Fabrics		15,183				7,253				109.3		%		16.6		%		8.2		%
Subtotal		38,835				28,249				37.5		%		18.8		%		13.9		%

Restructuring related charges		(58	)	(1)		(3,597	)	(1)	N.M.					(0.0	)	%		(1.8	)	%

Gross Profit	$	38,777				24,652				57.3		%		18.8		%		12.1		%


Selling, General and Administrative expenses by Segment													Percent of Sales

Mattress Fabrics	$	8,178				7,749				5.5		%		7.1		%		6.7		%
Upholstery Fabrics		9,227				8,756				5.4		%		10.1		%		9.9		%
Unallocated Corporate		5,400				3,225				67.4		%		2.6		%		1.6		%
Subtotal		22,805				19,730				15.6		%		11.0		%		9.7		%

Restructuring related charges		-		(1)		21		(1)	N.M.					0.0		%		0.0		%

Selling, General and Administrative expenses	$	22,805				19,751				15.5		%		11.0		%		9.7		%


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

Mattress Fabrics	$	15,474				13,247				16.8		%		13.5		%		11.5		%
Upholstery Fabrics		5,956				(1,503	)		N.M.					6.5		%		(1.7	)	%
Unallocated Corporate		(5,400	)			(3,225	)			67.4		%		(2.6	)	%		(1.6	)	%
Subtotal		16,030				8,519				88.2		%		7.8		%		4.2		%

Restructuring credit (expense) and restructuring related charges		312		(1)		(13,089	)	(1)	N.M.					0.2		%		(6.4	)	%

Operating income (loss)	$	16,342				(4,570	)		N.M.					7.9		%		(2.2	)	%


Depreciation by Segment

Mattress Fabrics	$	3,458				3,542				(2.4	)	%
Upholstery Fabrics		552				1,080				(48.9	)	%
Subtotal		4,010				4,622				(13.2	)	%
Accelerated Depreciation		-				2,090				(100.0	)	%
Total Depreciation		4,010				6,712				(40.3	)	%

Notes:

(1) 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 MAY 2, 2010 AND MAY 3, 2009
(Unaudited)
(Amounts in Thousands, Except for Per Share Data)

	THREE MONTHS ENDED

	As Reported													May 2, 2010						As Reported													May 3, 2009						Adjusted
	May 2,			% of						% of				Adjusted			% of			May 3,			% of						% of				Adjusted			% of			% Over
	2010			Sales			Adjustments			Sales				Results			Sales			2009			Sales			Adjustments			Sales				Results			Sales			(Under)

Net sales	$	57,243			100.0	%		-							57,243			100.0	%		47,762			100.0	%		-							47,762			100.0	%		19.9	%
Cost of sales		45,843			80.1	%		(15	)		0.0	%	(1)		45,828			80.1	%		39,408			82.5	%		(15	)		0.0	%	(2)		39,393			82.5	%		16.3	%
Gross Profit		11,400			19.9	%		(15	)		0.0	%			11,415			19.9	%		8,354			17.5	%		(15	)		0.0	%			8,369			17.5	%		36.4	%

Selling, general and administrative expenses		6,090			10.6	%		-			0.0	%			6,090			10.6	%		5,252			11.0	%		-			0.0	%			5,252			11.0	%		16.0	%
Restructuring (credit) expense		(52	)		-0.1	%		52			0.1	%	(1)		-			0.0	%		33			0.1	%		(33	)		-0.1	%	(2)		-			0.0	%		0.0	%
Income from operations		5,362			9.4	%		37			0.1	%			5,325			9.3	%		3,069			6.4	%		(48	)		-0.1	%			3,117			6.5	%		70.8	%

Interest expense		288			0.5	%		-			0.0	%			288			0.5	%		620			1.3	%		-			0.0	%			620			1.3	%		-53.5	%
Interest income		(36	)		-0.1	%		-			0.0	%			(36	)		-0.1	%		(14	)		0.0	%		-			0.0	%			(14	)		0.0	%		157.1	%
Other expense		114			0.2	%		-			0.0	%			114			0.2	%		251			0.5	%		-			0.0	%			251			0.5	%		-54.6	%
Income before income taxes		4,996			8.7	%		37			0.1	%	(3)		4,959			8.7	%		2,212			4.6	%		(48	)		-0.1	%	(4)		2,260			4.7	%		119.4	%

Notes:

(1)	The $15 restructuring related charge represents other operating costs associated with closed plant facilities. The $52 restructuring credit represents a credit of $43 for sales proceeds received on equipment with no carrying value, a credit of $16 for employee termination benefits, offset by a charge of $7 for lease termination and other exit costs.

(2)	The $15 restructuring related charge represents $57 for other operating costs associated with closed plant facilities and a credit of $42 for inventory markdowns. The $33 restructuring charge represents $43 for lease termination and other exit costs and a credit of $10 for employee termination benefits.

(3)	The $37 represents a cash credit.

(4)	Of this total charge, $90 and $42 represent a cash charge and a non-cash credit, respectively.

Page 7 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
ADJUSTED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009
(Unaudited)
(Amounts in Thousands, Except for Per Share Data)

	TWELVE MONTHS ENDED

	As Reported													May 2, 2010						As Reported													May 3, 2009						Adjusted
	May 2,			% of						% of				Adjusted			% of			May 3,			% of						% of				Adjusted			% of			% Over
	2010			Sales			Adjustments			Sales				Results			Sales			2009			Sales			Adjustments			Sales				Results			Sales			(Under)

Net sales	$	206,416			100.0	%		-							206,416			100.0	%		203,938			100.0	%		-							203,938			100.0	%		1.2	%
Cost of sales		167,639			81.2	%		(58	)		0.0	%	(1)		167,581			81.2	%		179,286			87.9	%		(3,597	)		-1.8	%	(2)		175,689			86.1	%		-4.6	%
Gross profit		38,777			18.8	%		(58	)		0.0	%			38,835			18.8	%		24,652			12.1	%		(3,597	)		-1.8	%			28,249			13.9	%		37.5	%

Selling, general and administrative expenses		22,805			11.0	%		-			0.0	%			22,805			11.0	%		19,751			9.7	%		(21	)		0.0	%	(2)		19,730			9.7	%		15.6	%
Restructuring (credit) expense		(370	)		-0.2	%		370			0.2	%	(1)		-			0.0	%		9,471			4.6	%		(9,471	)		-4.6	%	(3)		-			0.0	%		0.0	%
Income (loss) from operations		16,342			7.9	%		312			0.2	%			16,030			7.8	%		(4,570	)		-2.2	%		(13,089	)		-6.4	%			8,519			4.2	%		88.2	%

Interest expense		1,314			0.6	%		-			0.0	%			1,314			0.6	%		2,359			1.2	%		-			0.0	%			2,359			1.2	%		-44.3	%
Interest income		(116	)		-0.1	%		-			0.0	%			(116	)		-0.1	%		(89	)		0.0	%		-			0.0	%			(89	)		0.0	%		30.3	%
Other expense		828			0.4	%		-			0.0	%			828			0.4	%		43			0.0	%		-			0.0	%			43			0.0	%	N.M.
Income (loss) before income taxes		14,316			6.9	%		312			0.2	%	(4)		14,004			6.8	%		(6,883	)		-3.4	%		(13,089	)		-6.4	%	(5)		6,206			3.0	%		125.7	%

Notes:

(1)	The $58 restructuring related charge represents $108 for other operating costs asscoiated with closed plant facilities, offset by a credit of $50 for inventory markdowns. The $370 restructuring credit represents $186 for employee termination benefits, $170 for sales proceeds received on equipment with no carrying value, and $14 for lease termination and other exit costs.

(2)	The $3.6 million restructuring related charge represents $3.5 million for inventory markdowns and $119 for other operating costs associated with closed plant facilities. The $21 restructuring related charge represents other operating costs associated with closed plant facilities.

(3)	The $9.5 million restructuring charge represents $8.0 million for write-downs of equipment and buildings, $786 for employee termination benefits, and $728 for lease termination and other exit costs.

(4)	Of this total credit, $262 and $50 represent cash and non-cash credits, respectively.

(5)	Of this total charge, $1.6 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 TWELVE MONTHS ENDED MAY 2, 2010
(UNAUDITED)


	Operating
	Income
	Twelve Months Ended May 2, 2010			Average Capital Employed			Return on Avg. Capital Employed
	(1)			(3)			(2)

Mattress Fabrics	$	15,474		$	47,339			32.7	%
Upholstery Fabrics		5,956			10,587			56.3	%
(less: Unallocated Corporate)		(5,400	)		(5,606	)		N/A
Total	$	16,030		$	52,320			30.6	%

Average Capital Employed	As of May 2, 2010												As of January 31, 2010												As of November 1, 2009
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total

Total assets		61,922			25,420			25,256			112,598			58,609			25,928			21,971			106,508			56,686			19,598			22,496			98,780
Total liabilities		(14,720	)		(13,559	)		(21,272	)		(49,551	)		(10,066	)		(13,527	)		(25,991	)		(49,584	)		(10,625	)		(10,461	)		(24,416	)		(45,502	)

Subtotal	$	47,202		$	11,861		$	3,984		$	63,047		$	48,543		$	12,401		$	(4,020	)	$	56,924		$	46,061		$	9,137		$	(1,920	)	$	53,278
Less:
Cash and cash equivalents		-						(18,295	)	$	(18,295	)		-						(19,015	)	$	(19,015	)		-			-			(19,575	)		(19,575	)
Short-term investments		-		$	-			(3,023	)		(3,023	)
Current maturities of long-term debt		-						196			196			-						4,880			4,880			-			-			4,863			4,863
Long-term debt, less current maturities								11,491			11,491									11,529			11,529						-			11,568			11,568

Total Capital Employed	$	47,202		$	11,861		$	(5,647	)	$	53,416		$	48,543		$	12,401		$	(6,626	)	$	54,318		$	46,061		$	9,137		$	(5,064	)	$	50,134


	As of August 2, 2009												As of May 3, 2009
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total

Total assets		57,772			16,128			18,511			92,411			58,626			22,078			14,590			95,294
Total liabilities		(10,138	)		(7,670	)		(24,427	)		(42,235	)		(11,372	)		(10,999	)		(24,892	)		(47,263	)

Subtotal	$	47,634		$	8,458		$	(5,916	)	$	50,176		$	47,254		$	11,079		$	(10,302	)	$	48,031
Less:
Cash and cash equivalents		-						(15,481	)	$	(15,481	)		-						(11,797	)	$	(11,797	)
Current maturities of long-term debt		-						4,817			4,817			-						4,764			4,764
Long-term debt, less current maturities								11,618			11,618									11,604			11,604

Total Capital Employed	$	47,634		$	8,458		$	(4,962	)	$	51,130		$	47,254		$	11,079		$	(5,731	)	$	52,602


	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Average Capital Employed (3)	$	47,339		$	10,587		$	(5,606	)	$	52,320

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 year ended May 2, 2010 divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term debt, including current maturities and shareholders' equity.

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