SEC Filing | Culp Inc

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended July 30, 2000

                           Commission File No. 0-12781


                                   CULP, INC.

             (Exact name of registrant as specified in its charter)


         NORTH CAROLINA                                  56-1001967
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or other organization)


101 S. Main St., High Point, North Carolina                        27261-2686
(Address of principal executive offices)                           (zip code)

                                 (336) 889-5161
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Section 13 of the  Securities  Exchange  Act of 1934  during the
preceding 12 months and (2) has been subject to the filing  requirements  for at
least the past 90 days.

                                    YES X NO


             Common shares outstanding at July 30, 2000: 11,208,720
                                 Par Value: $.05





                               INDEX TO FORM 10-Q
                       For the period ended July 30, 2000

Part I -  Financial Statements.                                          Page
- ------------------------------------------                             -------

Item 1.    Unaudited Interim Consolidated Financial Statements:

Consolidated Statements of Income (Loss)-Three Months Ended
   July 30, 2000 and August 1, 1999                                      I-1

Consolidated Balance Sheets-July 30, 2000, August 1, 1999
   and April 30, 2000                                                    I-2

Consolidated Statements of Cash Flows---Three Months Ended
   July 30, 2000 and August 1, 1999                                      I-3

Consolidated Statements of Shareholders' Equity                          I-4

Notes to Consolidated Financial Statements                               I-5

Sales by Segment/Division                                                I-10

International Sales by Geographic Area                                   I-11

Item 2.   Management's Discussion and Analysis of Financial              I-12
Condition and Results of Operations

Item 3.   Quantitative and Qualitative Disclosures About                 I-16
Market Risk


Part II - Other Information
- -------------------------------------

Item 6.   Exhibits and Reports on Form 8-K                                II-1

Signature                                                                 II-8


                                   CULP, INC.
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
           FOR THE THREE MONTHS ENDED JULY 30, 2000 AND AUGUST 1, 1999

                (Amounts in Thousands, Except for Per Share Data)


                                                                       THREE MONTHS ENDED (UNAUDITED)
                                              ----------------------------------------------------------------------------------
                                                         Amounts                                          Percent of Sales
                                              ------------------------------                        ------------------------------
                                                July 30,        August 1,         % Over
                                                  2000            1999           (Under)               2001            2000
                                              --------------  --------------   -------------        --------------  --------------
                                                                                                           
Net sales                                 $         101,878         115,937        (12.1) %               100.0  %         100.0 %
Cost of sales                                        87,704          95,525         (8.2) %                86.1  %          82.4 %
                                              --------------  --------------   -------------        --------------  --------------
         Gross profit                                14,174          20,412        (30.6) %                13.9  %          17.6 %

Selling, general and
  administrative expenses                            13,778          15,038         (8.4) %                13.5  %          13.0 %
                                              --------------  --------------   -------------        --------------  --------------
         Income from operations                         396           5,374        (92.6) %                 0.4  %           4.6 %

Interest expense                                      2,323           2,416         (3.8) %                 2.3  %           2.1 %
Interest income                                          (7)            (17)       (58.8) %                (0.0) %          (0.0)%
Other expense (income), net                             741             555         33.5  %                 0.7  %           0.5 %
                                              --------------  --------------   -------------        --------------  --------------
         Income (loss) before income taxes           (2,661)          2,420       (210.0) %                (2.6) %           2.1 %

Income taxes  *                                        (905)            823       (210.0) %                34.0  %          34.0 %
                                              --------------  --------------   -------------        --------------  --------------

         Net income (loss)                $          (1,756)          1,597       (210.0) %                (1.7) %           1.4 %
                                              ==============  ==============   =============        ==============  ==============

Net income (loss) per share                          ($0.16)          $0.13       (223.1) %
Net income (loss) per share, assuming dilution       ($0.16)          $0.13       (223.1) %
Dividends per share                                  $0.035          $0.035          0.0  %
Average shares outstanding                           11,209          12,063         (7.1) %
Average shares outstanding, assuming dilution        11,292          12,219         (7.6) %


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


                                   CULP, INC.
                           CONSOLIDATED BALANCE SHEETS
                JULY 30, 2000, AUGUST 1, 1999 AND APRIL 30, 2000
                                    Unaudited
                             (Amounts in Thousands)
 

                                                            Amounts                  Increase
                                             ------------------------------         (Decrease)
                                               July 30,        August 1,   --------------------------     * April 30,
                                                 2000            1999        Dollars         Percent         2000
                                              ------------  ------------  ------------    -----------     ------------
                                                                                             
Current assets
       Cash and cash investments            $       1,654         1,097          557         50.8  %            1,007
       Accounts receivable                         58,851        61,984       (3,133)        (5.1) %           75,223
       Inventories                                 74,600        75,337         (737)        (1.0) %           74,471
       Other current assets                        11,565        10,860          705          6.5  %           10,349
                                              ------------  ------------  ------------    -----------     ------------
                  Total current assets            146,670       149,278       (2,608)        (1.7) %          161,050

Restricted investments                                  0         1,684       (1,684)      (100.0) %                0
Property, plant & equipment, net                  123,636       120,971        2,665          2.2  %          126,407
Goodwill                                           49,525        50,920       (1,395)        (2.7) %           49,873
Other assets                                        5,550         4,969          581         11.7  %            5,548
                                              ------------  ------------  ------------    -----------     ------------

                  Total assets              $     325,381       327,822       (2,441)        (0.7) %          342,878
                                              ============  ============  ============    ===========     ============


Current liabilities
       Current maturities of long-term debt $       1,678         1,678            0          0.0  %            1,678
       Accounts payable                            24,942        26,099       (1,157)        (4.4) %           37,287
       Accrued expenses                            19,762        20,309         (547)        (2.7) %           22,108
       Income taxes payable                             0           798         (798)      (100.0) %                0
                                              ------------  ------------  ------------    -----------     ------------
                  Total current liabilities        46,382        48,884       (2,502)        (5.1) %           61,073


Long-term debt                                    135,150       136,228       (1,078)        (0.8) %          135,808
Deferred income taxes                              17,459        14,583        2,876         19.7  %           17,459
                                              ------------  ------------  ------------    -----------     ------------
                  Total liabilities               198,991       199,695         (704)        (0.4) %          214,340

Shareholders' equity                              126,390       128,127       (1,737)        (1.4) %          128,538
                                              ------------  ------------  ------------    -----------     ------------

                  Total liabilities and
                  shareholders' equity      $     325,381       327,822       (2,441)        (0.7) %          342,878
                                              ============  ============  ============    ===========     ============

Shares outstanding                                 11,209        12,040         (831)        (6.9) %           11,209
                                              ============  ============  ============    ===========     ============



*  Derived from audited financial statements.


                                   CULP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE THREE MONTHS ENDED JULY 30, 2000 AND AUGUST 1, 1999
                                    Unaudited
                             (Amounts in Thousands)


                                                                                THREE MONTHS ENDED
                                                                         ----------------------------------
                                                                                     Amounts
                                                                         --------------------------------
                                                                            July 30,        August 1,
                                                                              2000             1999
                                                                         ---------------  ---------------
                                                                                         
Cash flows from operating activities:
     Net income (loss)                                                 $         (1,756)           1,597
     Adjustments to reconcile net income (loss) to net
        cash provided by operating activities:
            Depreciation                                                          5,060            4,759
            Amortization of intangible assets                                       399              399
            Changes in assets and liabilities:
                Accounts receivable                                              16,372            8,519
                Inventories                                                        (129)          (8,267)
                Other current assets                                             (1,216)          (1,227)
                Other assets                                                        147              (41)
                Accounts payable                                                 (6,886)             270
                Accrued expenses                                                 (2,346)            (717)
                Income taxes payable                                                  0              798
                                                                         ---------------  ---------------
                    Net cash provided by operating activities                     9,645            6,090
                                                                         ---------------  ---------------
Cash flows from investing activities:
     Capital expenditures                                                        (2,289)          (2,420)
     Purchases of restricted investments                                              0              (15)
     Purchase of investments to fund deferred compensation liability               (200)               0
     Sale of restricted investments                                                   0            1,671
                                                                         ---------------  ---------------
                    Net cash used in investing activities                        (2,489)            (764)
                                                                         ---------------  ---------------
Cash flows from financing activities:
     Proceeds from issuance of long-term debt                                         0            3,333
     Principal payments on long-term debt                                          (658)          (7,417)
     Change in accounts payable-capital expenditures                             (5,459)             142
     Dividends paid                                                                (392)            (423)
     Payments to acquire common stock                                                 0             (393)
     Proceeds from common stock issued                                                0               20
                                                                         ---------------  ---------------
                    Net cash used in financing activities                        (6,509)          (4,738)
                                                                         ---------------  ---------------

Increase in cash and cash investments                                               647              588

Cash and cash investments at beginning of period                                  1,007              509
                                                                         ---------------  ---------------

Cash and cash investments at end of period                             $          1,654            1,097
                                                                         ===============  ===============




                                   CULP, INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (Unaudited)

                 (Dollars in thousands, except per share data)



                                                                  Capital
                                           Common Stock         Contributed                     Total
                                     -------------------------   in Excess       Retained    Shareholders'
                                        Shares        Amount    of Par Value     Earnings       Equity
- ----------------------------------------------------------------------------------------------------------
                                                                              
Balance, May 2, 1999                  12,079,171    $   604    $   37,966      $  88,756     $  127,326
    Cash dividends ($0.14 per share)                                              (1,611)        (1,611)
    Net income                                                                     9,380          9,380
    Common stock issued in connection
       with stock option plans            13,813          1            78                            79
    Common stock purchased              (884,264)       (45)       (2,778)        (3,813)        (6,636)
- ----------------------------------------------------------------------------------------------------------
Balance, April 30, 2000               11,208,720        560        35,266         92,712        128,538
    Cash dividends ($0.035 per share)                                               (392)          (392)
    Net loss                                                                      (1,756)        (1,756)
- ----------------------------------------------------------------------------------------------------------
Balance,  July 30, 2000               11,208,720     $  560    $   35,266      $  90,564     $  126,390
==========================================================================================================


                                    Culp, Inc.
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1. Basis of Presentation

     The accompanying  unaudited consolidated financial statements of Culp, Inc.
and subsidiary  include all  adjustments,  consisting only of normal,  recurring
adjustments and accruals, which are, in the opinion of management, necessary for
fair presentation of the results of operations and financial  position.  Results
of operations for interim periods may not be indicative of future  results.  The
unaudited  consolidated  financial statements should be read in conjunction with
the  audited  consolidated  financial  statements,  which  are  included  in the
company's  annual  report on Form 10-K filed with the  Securities  and  Exchange
Commission  on  July  28,  2000  for the  fiscal  year  ended  April  30,  2000.
================================================================================

================================================================================

2.  Accounts Receivable

      A summary of accounts receivable follows (dollars in thousands):

- --------------------------------------------------------------------------------

                                                July 30, 2000     April 30  2000
- --------------------------------------------------------------------------------

Customers                                       $   61,219        $   77,981
Allowance for doubtful accounts                     (1,428)           (1,477)
Reserve for returns and allowances                    (940)           (1,281)
- --------------------------------------------------------------------------------
                                                $   58,851        $   75,223
================================================================================

3.  Inventories

     Inventories are carried at the lower of cost or market.  Cost is determined
for substantially all inventories using the LIFO (last-in, first-out) method.

   A summary of inventories follows (dollars in thousands):

- --------------------------------------------------------------------------------

                                               July 30, 2000      April 30, 2000
- --------------------------------------------------------------------------------

Raw materials                                   $   46,190        $   46,946
Work-in-process                                      6,090             6,379
Finished goods                                      28,709            26,998
- --------------------------------------------------------------------------------

Total inventories valued at FIFO cost               80,989            80,323
Adjustments of certain inventories
   to the LIFO cost method                            (893)             (893)
Adjustments of certain inventories to market        (5,496)           (4,959)
- --------------------------------------------------------------------------------
                                                $   74,600        $   74,471
================================================================================



4.  Restricted Investments

     Restricted investments were purchased with proceeds from industrial revenue
bond issues and are invested  pending  application  of such  proceeds to project
costs or  repayment  of the  bonds.  The  investments  are  stated at cost which
approximates market value.

5.     Accounts Payable

   A summary of accounts payable follows (dollars in thousands):
- --------------------------------------------------------------------------------

                                               July 30, 2000      April 30, 2000
- --------------------------------------------------------------------------------

Accounts payable-trade                         $    19,593        $   26,479
Accounts payable-capital expenditures                5,349            10,808
- --------------------------------------------------------------------------------
                                               $    24,942        $   37,287
================================================================================

6.  Accrued Expenses

   A summary of accrued expenses follows (dollars in thousands):
- --------------------------------------------------------------------------------

                                               July 30, 2000      April 30, 2000
- --------------------------------------------------------------------------------
Compensation and benefits                      $    11,587        $   14,748
Other                                                8,175             7,360
- --------------------------------------------------------------------------------
                                                $   19,762        $   22,108
================================================================================

7.  Long-Term Debt

   A summary of long-term debt follows (dollars in thousands):
- --------------------------------------------------------------------------------

                                                July 30, 2000     April 30, 2000
- --------------------------------------------------------------------------------

Senior unsecured notes                          $   75,000        $  75,000
Industrial revenue bonds and other obligations      32,452           32,452
Revolving credit facility                           25,000           25,000
Obligations to sellers                               4,376            5,034
- --------------------------------------------------------------------------------
                                                   136,828          137,486
Less current maturities                             (1,678)          (1,678)
- --------------------------------------------------------------------------------
                                               $   135,150        $ 135,808
================================================================================




7.  Long-Term Debt (continued)


     The senior unsecured notes have a fixed coupon rate of 6.76% and an average
remaining term of 8 years. The principal  payments become due from March 2006 to
March 2010 with interest payable semi-annually.

     The company's revolving credit agreement (the "Credit Agreement")  provides
an unsecured  multi-currency  revolving credit facility,  which expires in April
2002,  with a  syndicate  of banks in the United  States.  The Credit  Agreement
provides for a revolving loan commitment of $88,000,000.  The agreement requires
payment of a  quarterly  facility  fee in  advance.  In July 2000,  the  company
amended the Credit  Agreement  to amend  certain  covenants.  Additionally,  the
amendment  increased  the interest  rate from LIBOR plus 0.80% to 0.90% to LIBOR
plus 1.10% to 1.60%.  The  specified  pricing  matrix  will be in effect for the
remainder of fiscal 2001 and is based on the company's debt to EBITDA ratio,  as
defined by the  agreement.  On  borrowings  outstanding  at July 30,  2000,  the
interest rate was 7.52% (LIBOR plus 0.90%).

     The company's  $6,000,000  revolving  line of credit  expires on August 31,
2001.  However,  the  line of  credit  will  automatically  be  extended  for an
additional  three-month  period on each  November  30,  February  28, May 31 and
August 31 unless the bank  notifies the company that the line of credit will not
be  extended.  At July 30,  2000,  no  borrowings  were  outstanding  under  the
revolving line of credit.

     The industrial revenue bonds (IRBs) are generally due in balloon maturities
which occur at various dates from 2006 to 2013. The IRBs are  collateralized  by
letters of credit for the outstanding  balance of the IRBs and certain  interest
payments due thereunder.

     The company's loan agreements require, among other things, that the company
maintain compliance with certain financial ratios. At July 30, 2000, the company
was in compliance with these financial covenants.

     At July 30, 2000, the company had two interest rate swap  agreements with a
bank in order to reduce its exposure to floating  interest rates on a portion of
its variable  rate  borrowings.  The  following  table  summarizes  certain data
regarding the interest rate swaps:

            notional amount        interest rate         expiration date
            $  5,000,000                6.9%                June 2002
            $  5,000,000                6.6%                July 2002

     The  company  could  terminate  these  agreements  as of July 30,  2000 and
receive  approximately  $113,000.  Net amounts received/paid under interest rate
swap agreements decreased interest expense by approximately $3,000 for the three
months of fiscal 2001 and increased  interest expense by  approximately  $92,000
for the three months of fiscal 2000.  Management  believes the risk of incurring
losses  resulting from the inability of the bank to fulfill its obligation under
the  interest  rate swap  agreements  to be remote and that any losses  incurred
would be immaterial.

8. Cash Flow Information

     Payments for  interest and income taxes during the period were  (dollars in
thousands):

- --------------------------------------------------------------------------------

                                                            2001        2000
- --------------------------------------------------------------------------------
 .
Interest                                                $  1,053      $ 1,340
Income taxes                                                   0        1,186
================================================================================


9. Foreign Exchange Forward Contracts

     The company  generally  enters  into  foreign  exchange  forward and option
contracts  as a hedge  against its  exposure to  currency  fluctuations  on firm
commitments to purchase certain  machinery and equipment and raw materials.  The
company had approximately  $1,978,000  of  outstanding  foreign exchange forward
contracts as of July 30, 2000.


10. Net Income (Loss) Per Share

     The following  table  reconciles  the numerators  and  denominators  of net
income (loss) per share and net income (loss) per share,  assuming  dilution for
the three months ended July 30, 2000 and August 1, 1999:



                                                      THREE MONTHS ENDED
                           ----------------------------------------------------------------------
                                     July 30, 2000                         August 1, 1999
                           ---------------------------------   ----------------------------------
(Amounts in thousands,   (Loss)        Shares     Per  Share      Income        Shares     Per Share
except per share data) (Numerator)  (Denominator)   Amount      (Numerator)  (Denominator)   Amount
                       -----------   -----------  ----------    -----------   ------------  --------
                                                                          
Net income (loss) per
    share               ($1,756)       11,209      ($0.16)        $1,597        12,063        $0.13
                                                  ==========                                ========
Effect of dilutive
    securities:
       Options              -              83                         -            156
                       -----------  -----------                 -----------   -----------
Net income(loss) per
     share,assuming
     dilution           ($1,756)       11,292      ($0.16)        $1,597        12,219        $0.13
                       ===========  ===========   ==========    ===========   ===========   ========



11. Segment Information

     The  company's  operations  are  classified  into  two  business  segments:
upholstery  fabrics  and  mattress  ticking.   The  upholstery  fabrics  segment
principally  manufactures  and  sells  woven  jacquards  and  dobbies,  wet  and
heat-transfer  prints, and woven and tufted velvets primarily to residential and
commercial  (contract)  furniture  manufacturers.  The mattress  ticking segment
principally  manufactures  and sells woven jacquards,  heat-transfer  prints and
pigment prints to bedding manufacturers.

     The  company   internally   manages  and  reports   selling,   general  and
administrative  expenses,  interest expense,  interest income, other expense and
income  taxes  on a total  company  basis.  Thus,  profit  by  business  segment
represents gross profit. In addition, the company internally manages and reports
cash and cash investments, accounts receivable, other current assets, restricted
investments, property, plant and equipment, goodwill and other assets on a total
company  basis.  Thus,   identifiable   assets  by  business  segment  represent
inventories.

     Sales,  gross profit and inventories for the company's  operating  segments
are as follows:

(dollars in thousands):
- --------------------------------------------------------------------------------

                                                        2001            2000
- --------------------------------------------------------------------------------
Net sales
     Upholstery Fabrics                            $   74,926      $   90,854
     Mattress Ticking                                  26,952          25,083
- --------------------------------------------------------------------------------
                                                   $  101,878      $  115,937
================================================================================

Gross Profit
     Upholstery Fabrics                            $    7,913      $   14,442
     Mattress Ticking                                   6,261           5,970
- --------------------------------------------------------------------------------
                                                   $   14,174      $   20,412
================================================================================

Inventories
     Upholstery Fabrics                            $   61,213      $   63,304
     Mattress Ticking                                  13,387          12,033
- --------------------------------------------------------------------------------
                                                   $   74,600      $   75,337
================================================================================




                                   CULP, INC.
                            SALES BY SEGMENT/DIVISION
           FOR THE THREE MONTHS ENDED JULY 30, 2000 AND AUGUST 1, 1999

                             (Amounts in thousands)



                                                            THREE MONTHS ENDED (UNAUDITED)
                                       --------------------------------------------------------------------------
                                                Amounts                                Percent of Total Sales
                                       --------------------------                    ----------------------------
                                        July 30,      August 1,         % Over
Segment/Division                          2000          1999           (Under)           2001            2000
- ------------------------------------   ------------  ------------   ---------------  -------------   ------------
                                                                                        
Upholstery Fabrics
    Culp Decorative Fabrics         $       41,533        50,516       (17.8) %          40.8 %          43.6 %
    Culp Velvets/Prints                     30,074        36,209       (16.9) %          29.5 %          31.2 %
    Culp Yarn                                3,319         4,129       (19.6) %           3.3 %           3.6 %
                                       ------------  ------------   ---------------  -------------   ------------
                                            74,926        90,854       (17.5) %          73.5 %          78.4 %

Mattress Ticking
    Culp Home Fashions                      26,952        25,083         7.5  %          26.5 %          21.6 %
                                       ------------  ------------   ---------------  -------------   ------------

                                  * $      101,878       115,937       (12.1) %         100.0 %         100.0 %
                                       ============  ============   ===============  =============   ============


* U.S.  sales were $82,290 and $92,124 for the first  quarter of fiscal 2001 and
fiscal 2000,  respectively.  The percentage decrease in U.S. sales was 10.7% for
the first quarter.




                                   CULP, INC.
                     INTERNATIONAL SALES BY GEOGRAPHIC AREA
           FOR THE THREE MONTHS ENDED JULY 30, 2000 AND AUGUST 1, 1999

                             (Amounts in thousands)


                                                               THREE MONTHS ENDED (UNAUDITED)
                                       --------------------------------------------------------------------------------
                                                  Amounts                                   Percent of Total Sales
                                       -------------------------------                   ------------------------------
                                          July 30,        August 1,        % Over
         Geographic Area                    2000            1999           (Under)           2001             2000
- ----------------------------------     ---------------  --------------  --------------   -------------     ------------
                                                                                            
North America (Excluding USA)     $             8,395           7,676        9.4  %          42.9 %           32.2 %
Europe                                          1,452           2,929      (50.4) %           7.4 %           12.3 %
Middle East                                     5,043           6,992      (27.9) %          25.7 %           29.4 %
Far East & Asia                                 3,236           4,309      (24.9) %          16.5 %           18.1 %
South America                                     306             620      (50.6) %           1.6 %            2.6 %
All other areas                                 1,156           1,287      (10.2) %           5.9 %            5.4 %
                                       ---------------  --------------  --------------   -------------     ------------

                                  $            19,588          23,813      (17.7) %         100.0 %          100.0 %
                                       ===============  ==============  ==============   =============     ============


International  sales,  and the  percentage of total sales,  for each of the last
five fiscal years  follows:  fiscal  1996-$77,397  (22%);  fiscal  1997-$101,571
(25%);  fiscal  1998-$137,223  (29%);  fiscal  1999-$113,354  (23%);  and fiscal
2000-$111,104 (23%). International sales for the first quarter represented 19.2%
and 20.5% for 2001 and 2000, respectively.



Item 2.

                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations

The  following  analysis of the  financial  condition  and results of operations
should be read in conjunction with the Financial  Statements and Notes and other
exhibits included elsewhere in this report.

Overview

     Culp is one of the largest integrated marketers in the world for upholstery
fabrics for  furniture  and is one of the leading  global  producers of mattress
fabrics (or ticking). The company's fabrics are used primarily in the production
of  residential  and  commercial  upholstered  furniture  and bedding  products,
including sofas, recliners,  chairs, love seats, sectionals,  sofa-beds,  office
seating and mattress sets.  Although Culp markets  fabrics at most price levels,
the company  emphasizes  fabrics that have broad appeal in the  promotional  and
popular-priced categories of furniture and bedding.

     Culp's  worldwide  leadership  as a  marketer  of  upholstery  fabrics  and
mattress  ticking  has  been  achieved   through  internal   expansion  and  the
integration of strategic acquisitions.

     The  company's  operating  segments  are  upholstery  fabrics and  mattress
ticking,  with related divisions organized within those segments.  In upholstery
fabrics,  Culp Decorative  Fabrics markets  jacquard and dobby woven fabrics for
residential and commercial furniture.  Culp Velvets/Prints markets a broad range
of printed and velvet  fabrics  used  primarily  for  residential  and  juvenile
furniture.  Culp Yarn  manufactures  specialty filling yarn that is used by Culp
and also marketed to outside customers.  In mattress ticking, Culp Home Fashions
markets a broad array of fabrics used by bedding manufacturers.

Three Months ended July 30, 2000 compared with Three Months ended August 1, 1999

     Net Sales.  Net sales for the first  quarter of fiscal  2001  decreased  by
12.1% to $101.9 million.  Sales of upholstery  fabrics  decreased 17.5% to $74.9
million,  and  sales  of  mattress  ticking  increased  7.5% to  $27.0  million.
International sales were down 17.7% for the quarter. The first fiscal quarter is
historically  not the  strongest  period  of the year  for  Culp due to  planned
vacations and seasonal industry-wide plant closings. The company had anticipated
that the first quarter would be a difficult year-to-year  comparison,  but sales
proved to be considerably  less than expected.  Key factors which influenced the
company's  shipments were a slowdown in consumer  spending on home  furnishings,
especially in the promotional  price category,  and the relative strength of the
dollar which is affecting  Culp's sales to customers  outside the United States.
The decline in sales of upholstery fabrics was offset in part by increased sales
by Culp Home Fashions  (primarily  mattress ticking).  Culp's growth in mattress
ticking  continues  to be driven by the  introduction  of new designs and fabric
constructions as well as the advantages of the company's  vertical  integration.
In particular,  the ability to manufacture  the jacquard  greige (or unfinished)
goods  that are then  printed  to  produce  mattress  ticking  has aided Culp in
meeting  faster  delivery  schedules and  providing  improved  overall  customer
service.

Based on current  trends,  the company expects to report a profit for the second
fiscal  quarter,  but believes that earnings will be down from the  year-earlier
level.  The trend in results over the  remainder of this year will be determined
by a number of factors  including the overall trend in consumer spending on home
furnishings and the fluctuation of the dollar relative to other currencies.

Gross  Profit  and Cost of  Sales.  Gross  profit  declined  30.6% for the first
quarter  versus a year ago and decreased as a percentage of net sales from 17.6%
to 13.9%.  The decline was due  principally to lower sales volume for the period
which led to underabsorption of fixed costs in the company's  upholstery fabrics
operation.  The  company  also  experienced  some  higher  costs  related to the
consolidation of the Phillips weaving plant in Monroe, NC into the Pageland,  SC
facility.  This move has been  completed,  and the company expects to benefit in
subsequent periods from reduced operating expenses.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative expenses for the first quarter increased as a percentage of sales
from 13.0% to 13.5%.  The dollar amount of these  expenses  declined 8.4% from a
year ago,  aided by the fact that a portion of these  expenses is variable based
on the level of sales.

Interest  Expense.  Interest  expense of $2.3 million for the first  quarter was
down slightly from $2.4 million in the prior year due to slightly  lower average
borrowings.

Other Expense.  Other expense for the first quarter  totaled  $741,000  compared
with  $555,000  in the prior year.  The  increase  is  principally  due to lower
investment  income on assets related to the nonqualified  deferred  compensation
plan.

Income Taxes. The effective tax rate for the first quarter was 34.0%,  unchanged
from the prior year.

Net Income (Loss) Per Share.  Net loss per share for the first quarter of fiscal
2001 totaled  ($0.16) per share  diluted  (based on  11,292,000  average  shares
outstanding  during  the  period)  compared  with net  income of $0.13 per share
diluted  (based on 12,219,000  average shares  outstanding  during the period) a
year ago.

Liquidity and Capital Resources

Liquidity.  Cash and cash  investments  were $1.7  million as of July 30,  2000,
compared  with $1.1  million at August 1, 1999,  and $1.0  million at the end of
fiscal 2000.  Funded debt (long-term debt,  including current  maturities,  less
restricted  investments)  was $136.8  million at July 30,  2000,  compared  with
$136.2  million at August 1, 1999 and $137.5  million  at April 30,  2000.  As a
percentage of total capital (funded debt plus total stockholders'  equity),  the
company's  borrowings amounted to 52.0% at July 30, 2000, compared with 51.5% at
August 1, 1999, and 51.7% at April 30, 2000. The company's working capital as of
July 30, 2000 was $100.3  million,  compared with $100.4 million as of August 1,
1999, and $100.0 million at the close of fiscal 2000.

The  company's  cash flow from  operations  was $9.6 million for the first three
months of fiscal 2001,  consisting  of $3.7 million from earnings (net loss plus
depreciation  and  amortization)  plus $5.9 million from the decrease in working
capital.  The decrease in working  capital was  primarily due to a $16.4 million
decrease in accounts  receivable  offset by a $6.9 million  decrease in accounts
payable, a $2.3 million decrease in accrued expenses and a $1.2 million increase
in other current assets.

In separate authorizations in June 1998, March 1999, September 1999 and December
1999,  the board of  directors of the company  authorized  the use of a total of
$20.0 million to repurchase the company's common stock. Over the past two fiscal
years,  the company has  invested  $12.2  million to  repurchase  a total of 1.8
million  shares.  No purchases were made during the first quarter of fiscal 2001
under these authorizations.

Financing  Arrangements.  Culp has outstanding  $75 million of senior  unsecured
notes with a fixed coupon rate of 6.76% and an average  remaining  term of eight
years.

Culp has an $88 million syndicated,  unsecured,  multi-currency revolving credit
facility. The facility, which expires in April 2002, requires quarterly payments
of interest on all outstanding  borrowings and a quarterly  facility fee paid in
advance.  In July 2000, the company amended the credit facility to amend certain
covenants.  The amendment also increased the interest rate from LIBOR plus 0.80%
to 0.90% to LIBOR plus 1.10% to 1.60%.  The specified  pricing matrix will be in
effect for the  remainder of fiscal 2001 and is based on the  company's  debt to
EBITDA ratio,  as defined by the facility.  As of July 30, 2000, the company had
outstanding balances of $25 million under the credit facility.

The  company  also  has a  total  of  $32.5  million  in  currently  outstanding
industrial  revenue  bonds  ("IRBs")  which  have been used to  finance  capital
expenditures.  The  IRBs  are  collateralized  by  letters  of  credit  for  the
outstanding balance of the IRBs and certain interest payments due thereunder.

The company's  loan  agreements  require,  among other things,  that the company
maintain  compliance  with certain  financial  ratios.  As of July 30, 2000, the
company was in compliance with these financial covenants.

As of July 30, 2000, the company had two interest rate swap agreements to reduce
its exposure to floating  interest rates on a $10 million notional  amount.  The
effect of these  contracts is to "fix" the interest  rate payable on $10 million
of the company's  variable rate  borrowings at a weighted  average rate of 6.8%.
The company also enters into foreign  exchange  forward and option  contracts to
hedge against currency fluctuations with respect to firm commitments to purchase
certain  machinery,  equipment and raw materials.  The company had approximately
$2.0 million of outstanding  foreign exchange  forward  contracts as of July 30,
2000.

Capital  Expenditures.  The  company  maintains  an  ongoing  program of capital
expenditures  designed to increase  capacity  as needed,  enhance  manufacturing
efficiencies   through   modernization  and  increase  the  company's   vertical
integration.  Capital  expenditures for the first quarter of fiscal 2001 totaled
$2.3 million compared with $2.4 million in the year-earlier  period. The company
plans for  total  capital  spending  for  fiscal  2001 to be  approximately  $16
million.

The company  believes that cash flows from  operations and funds available under
existing credit  facilities will be sufficient to fund capital  expenditures and
working capital requirements for the foreseeable future.

Inflation

The cost of the company's raw materials is remaining  generally stable although,
the  company is  experiencing  some price  increases  in  petroleum  related raw
materials.  Factors that reasonably can be expected to influence  margins in the
future include changes in raw material  prices,  trends in other operating costs
and overall competitive conditions.


Seasonality

The company's  business is slightly  seasonal,  with  relatively  stronger sales
during the second and fourth  fiscal  quarters.  This  seasonality  results from
one-week closings of the company's manufacturing facilities,  and the facilities
of most of its  customers  in the  United  States,  during  the  first and third
quarters for the holiday weeks including July 4th and Christmas.

Forward-Looking Information

The  company's  quarterly  report on Form 10-Q 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.  Such
statements are inherently  subject to risks and  uncertainties.  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  characterized  by  qualifying  words such as
"expect,"  "believe,"  "estimate,"  "plan," and "project" and their derivatives.
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.  Because of the  significant  percentage  of the
company's sales derived from international shipments,  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.
Additionally,  economic and political  instability in international  areas could
affect the demand for the company's products.

New Accounting Pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities." As amended,  this new standard is effective
for fiscal years beginning after June 15, 2000,  which will be effective for the
company's fiscal year 2002. This statement establishes  accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other  contracts,  and for hedging  activities.  The company has not
determined the financial  impact of adopting this SFAS and has not determined if
it will adopt its provisions prior to its effective date.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The company is exposed to market risk from changes in interest rates on debt and
foreign currency exchange rates. The company's market risk sensitive instruments
are not entered into for trading  purposes.  The company has not experienced any
significant changes in market risk since July 30, 2000.

The  company's  exposure to interest  rate risk  consists of floating  rate debt
based on the London Interbank  Offered Rate plus an adjustable  margin under the
company's  revolving  credit agreement and variable rate debt in connection with
the industrial  revenue bonds. To lower or limit overall  borrowing  costs,  the
company  enters  into  interest  rate swap  agreements  to modify  the  interest
characteristics  of portions of its outstanding debt. The agreements entitle the
company to receive or pay to the  counterparty  (a major  bank),  on a quarterly
basis, the amounts,  if any, by which the company's interest payments covered by
swap  agreements  differ  from  those of the  counterparty.  These  amounts  are
recorded  as  adjustments  to  interest  expense.  The  fair  value  of the swap
agreements and changes in fair value  resulting from changes in market  interest
rates are not recognized in the consolidated  financial  statements.  The annual
impact on the company's results of operations of a 100 basis point interest rate
change on the July 30, 2000 outstanding  balance of the variable rate debt would
be approximately $560,000 irrespective of any swaps associated with this debt.

The company's exposure to fluctuations in foreign currency exchange rates is due
primarily to a foreign  subsidiary  domiciled in Canada and purchases of certain
machinery,  equipment  and raw  materials in foreign  currencies.  The company's
Canadian  subsidiary  uses the United States dollar as its functional  currency.
The company  generally  does not use financial  derivative  instruments to hedge
foreign currency  exchange rate risks  associated with the Canadian  subsidiary.
However,  the company  generally enters into foreign exchange forward and option
contracts  as a hedge  against its  exposure to  currency  fluctuations  on firm
commitments to purchase  certain  machinery,  equipment and raw  materials.  The
Canadian  subsidiary  is not material to the company's  consolidated  results of
operations;  therefore,  the impact of a 10% change in the exchange rate at July
30,  2000  would not have a  significant  impact  on the  company's  results  of
operations or financial  position.  In addition,  the company had  approximately
$2.0 million of outstanding  foreign exchange  forward  contracts as of July 30,
2000.  As a result,  any change in exchange  rates would not have a  significant
impact on the  company's  results of  operations  or  financial  position as the
foreign exchange  forward  contracts have "fixed" the exchange rate with respect
to these purchase commitments.


Part II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

      The following  exhibits are filed as part of this report or  incorporated
by reference.  Management  contracts,  compensatory plans, and arrangements are
marked with an asterisk (*).


     3(i)     Articles of  Incorporation  of the Company,  as amended,
              were filed as Exhibit  3(i) to the  Company's  Form 10-Q for
              the quarter  ended  January 29, 1995,  filed March 15, 1995,
              and are incorporated herein by reference.

     3(ii)    Restated and Amended Bylaws of the Company,  as amended,
              were filed as Exhibit  3(b) to the  Company's  Form 10-K for
              the year ended April 28, 1991,  filed July 25, 1991, and are
              incorporated herein by reference.

     3(iii)   Articles of Amendment of Culp,  Inc.  dated  October 5, 1999
              for the purpose of amending its Restated  Charter to fix the
              designation,  preferences,  limitations  and relative rights
              of  a  series  of  its  Preferred  Stock.  The  Articles  of
              Amendment of Culp,  Inc. were filed as Exhibit 3(iii) to the
              Company's  Form 10-Q for the quarter ended October 31, 1999,
              filed  December 15,  1999,  and are  incorporated  herein by
              reference.

     10(a)    Loan  Agreement  dated  December  1, 1988 with  Chesterfield
              County,  South Carolina  relating to Series 1988  Industrial
              Revenue  Bonds in the  principal  amount of  $3,377,000  was
              filed as Exhibit  10(n) to the  Company's  Form 10-K for the
              year ended April 29,  1989,  and is  incorporated  herein by
              reference.

     10(b)    Loan  Agreement  dated  November  1, 1988 with the  Alamance
              County   Industrial   Facilities   and   Pollution   Control
              Financing  Authority  relating to Series A and B  Industrial
              Revenue   Refunding   Bonds  in  the  principal   amount  of
              $7,900,000,  was  filed as  exhibit  10(o) to the  Company's
              Form  10-K  for  the  year  ended  April  29,  1990,  and is
              incorporated herein by reference.

     10(c)    Loan  Agreement  dated  January  5, 1990  with the  Guilford
              County   Industrial   Facilities   and   Pollution   Control
              Financing  Authority,  North  Carolina,  relating  to Series
              1989  Industrial  Revenue Bonds in the  principal  amount of
              $4,500,000,  was  filed as  Exhibit  10(d) to the  Company's
              Form 10-K for the year ended April 29,  1990,  filed on July
              25, 1990, and is incorporated herein by reference.

     10(d)    Loan  Agreement   dated  as  of  December  1,  1993  between
              Anderson County,  South Carolina and the Company relating to
              $6,580,000   Anderson  County,   South  Carolina  Industrial
              Revenue Bonds (Culp,  Inc.  Project)  Series 1993, was filed
              as Exhibit 10(o) to the Company's  Form 10-Q for the quarter
              ended  January  30,  1994,  filed  March  16,  1994,  and is
              incorporated herein by reference.

     10(e)    Form of Severance Protection Agreement,  dated September 21,
              1989,  was filed as Exhibit 10(f) to the Company's Form 10-K
              for the year ended April 29,  1990,  filed on July 25, 1990,
              and is incorporated herein by reference. (*)

     10(f)    Lease  Agreement,  dated  January 19,  1990,  with  Phillips
              Interests,  Inc. was filed as Exhibit 10(g) to the Company's
              Form 10-K for the year ended April 29,  1990,  filed on July
              25, 1990, and is incorporated herein by reference.

     10(g)    Management Incentive Plan of the Company,  dated August 1986
              and  amended  July  1989,  filed  as  Exhibit  10(o)  to the
              Company's  Form 10-K for the year ended May 3,  1992,  filed
              on  August  4,   1992,   and  is   incorporated   herein  by
              reference.  (*)

     10(h)    Lease  Agreement,  dated September 6, 1988, with Partnership
              74 was filed as  Exhibit  10(h) to the  Company's  Form 10-K
              for the year ended April 28,  1991,  filed on July 25, 1990,
              and is incorporated herein by reference.

     10(i)    Amendment  and  Restatement  of  the  Employee's  Retirement
              Builder  Plan  of  the  Company   dated  May  1,  1981  with
              amendments  dated  January 1, 1990 and  January 8, 1990 were
              filed as Exhibit  10(p) to the  Company's  Form 10-K for the
              year  ended May 3,  1992,  filed on August 4,  1992,  and is
              incorporated herein by reference. (*)

     10(j)    First  Amendment of Lease Agreement dated July 27, 1992 with
              Partnership  74 Associates was filed as Exhibit 10(n) to the
              Company's  Form 10-K for the year ended May 2,  1993,  filed
              on July 29, 1993, and is incorporated herein by reference.

     10(k)    Second  Amendment of Lease  Agreement  dated April 16, 1993,
              with  Partnership  52 Associates  was filed as Exhibit 10(l)
              to the  Company's  Form 10-K for the year ended May 2, 1993,
              filed  on July  29,  1993,  and is  incorporated  herein  by
              reference.

     10(l)    1993 Stock  Option  Plan was filed as  Exhibit  10(o) to the
              Company's  Form 10-K for the year ended May 2,  1993,  filed
              on July 29, 1993, and is  incorporated  herein by reference.
              (*)

     10(m)    First  Amendment to Loan  Agreement  dated as of December 1,
              1993  by  and  between  The   Guilford   County   Industrial
              Facilities  and Pollution  Control  Financing  Authority and
              the  Company  was filed as  Exhibit  10(p) to the  Company's
              Form  10-Q,  filed on March 15,  1994,  and is  incorporated
              herein by reference.

     10(n)    First  Amendment to Loan Agreement  dated as of December 16,
              1993  by  and  between  The   Alamance   County   Industrial
              Facilities  and Pollution  Control  Financing  Authority and
              the  Company  was filed as  Exhibit  10(q) to the  Company's
              Form  10-Q,  filed on March 15,  1994,  and is  incorporated
              herein by reference.

     10(o)    First  Amendment to Loan Agreement  dated as of December 16,
              1993 by and between  Chesterfield County, South Carolina and
              the  Company  was filed as  Exhibit  10(r) to the  Company's
              Form  10-Q,  filed on March 15,  1994,  and is  incorporated
              herein by reference.

     10(p)    Amendment  to Lease  dated as of  November  4, 1994,  by and
              between  the  Company  and RDC,  Inc.  was filed as  Exhibit
              10(w) to the  Company's  Form 10-Q,  for the  quarter  ended
              January  29,  1995,   filed  on  March  15,  1995,   and  is
              incorporated herein by reference.

     10(q)    Amendment to Lease  Agreement dated as of December 14, 1994,
              by and between the Company and Rossville  Investments,  Inc.
              (formerly  known  as A & E  Leasing,  Inc.),  was  filed  as
              Exhibit  10(y) to the Company's  Form 10-Q,  for the quarter
              ended  January 29,  1995,  filed on March 15,  1995,  and is
              incorporated herein by reference.

     10(r)    Interest  Rate  Swap  Agreement  between  Company  and First
              Union  National Bank of North Carolina dated April 17, 1995,
              was filed as Exhibit  10(aa) to the Company's  Form 10-K for
              the year ended April 30, 1995,  filed on July 26, 1995,  and
              is incorporated herein by reference.

     10(s)    Performance-Based  Stock Option  Plan,  dated June 21, 1994,
              was filed as Exhibit  10(bb) to the Company's  Form 10-K for
              the year ended April 30, 1995,  filed on July 26, 1995,  and
              is incorporated herein by reference. (*)

     10(t)    Interest  Rate  Swap  Agreement  between  Company  and First
              Union  National Bank of North  Carolina,  dated May 31, 1995
              was filed as exhibit  10(w) to the  Company's  Form 10-Q for
              the quarter  ended July 30,  1995,  filed on  September  12,
              1995, and is incorporated herein by reference.

     10(u)    Interest  Rate  Swap  Agreement  between  Company  and First
              Union  National Bank of North  Carolina,  dated July 7, 1995
              was filed as exhibit  10(x) to the  Company's  Form 10-Q for
              the quarter  ended July 30,  1995,  filed on  September  12,
              1995, and is incorporated herein by reference.

      10(v)   Second  Amendment  of Lease  Agreement  dated June 15,  1994
              with  Partnership  74 Associates  was filed as Exhibit 10(v)
              to the  Company's  Form 10-Q for the quarter  ended  October
              29, 1995,  filed on December 12, 1995,  and is  incorporated
              herein by reference.

     10(w)    Lease  Agreement  dated  November 1, 1993 by and between the
              Company and  Chromatex,  Inc. was filed as Exhibit  10(w) to
              the  Company's  Form 10-Q for the quarter  ended October 29,
              1995,  filed  on  December  12,  1995,  and is  incorporated
              herein by reference.

     10(x)    Lease  Agreement  dated  November 1, 1993 by and between the
              Company and Chromatex Properties,  Inc. was filed as Exhibit
              10(x)  to the  Company's  Form  10-Q for the  quarter  ended
              October  29,  1995,  filed  on  December  12,  1995,  and is
              incorporated herein by reference.

     10(y)    Amendment  to  Lease  Agreement  dated  May 1,  1994  by and
              between the  Company  and  Chromatex  Properties,  Inc.  was
              filed as Exhibit  10(y) to the  Company's  Form 10-Q for the
              quarter ended October 29, 1995,  filed on December 12, 1995,
              and is incorporated herein by reference.

     10(z)    Canada-Quebec   Subsidiary   Agreement   on   Industrial
              Development  (1991),  dated  January 4,  1995,  was filed as
              Exhibit  10(z) to the  Company's  Form 10-Q for the  quarter
              ended October 29, 1995,  filed on December 12, 1995,  and is
              incorporated herein by reference.

    10(aa)    Loan Agreement between  Chesterfield  County, South Carolina
              and the  Company  dated as of April 1, 1996  relating to Tax
              Exempt  Adjustable Mode Industrial  Development Bonds (Culp,
              Inc.  Project)  Series  1996  in  the  aggregate   principal
              amount  of  $6,000,000  was filed as  Exhibit  10(aa) to the
              Company's  Form 10-K for the year ended April 28, 1996,  and
              is incorporated herein by reference.

    10(bb)    Loan  Agreement   between  the  Alamance  County  Industrial
              Facilities and Pollution Control Financing Authority,  North
              Carolina and the Company,  dated December 1, 1996,  relating
              to  Tax  Exempt   Adjustable  Mode  Industrial   Development
              Revenue  Bonds,  (Culp,  Inc.  Project  Series  1996) in the
              aggregate  amount of $6,000,000  was filed as Exhibit 10(cc)
              to the  Company's  Form 10-Q for the quarter  ended  January
              26, 1997, and is incorporated herein by reference.

    10(cc)    Loan Agreement between Luzerne County,  Pennsylvania and the
              Company,   dated  as  of  December  1,  1996,   relating  to
              Tax-Exempt  Adjustable Mode Industrial  Development  Revenue
              Bonds  (Culp,  Inc.  Project)  Series 1996 in the  aggregate
              principal  amount of $3,500,000  was filed as Exhibit 10(dd)
              to the  Company's  Form 10-Q for the quarter  ended  January
              26, 1997, and is incorporated herein by reference.

    10(dd)    Second  Amendment  to  Lease  Agreement   between  Chromatex
              Properties,  Inc. and the Company,  dated April 17, 1997 was
              filed as Exhibit  10(dd) to the Company's  Form 10-K for the
              year ended April 27,  1997,  and is  incorporated  herein by
              reference.

    10(ee)    Lease  Agreement  between Joseph E. Proctor (doing  business
              as JEPCO) and the  Company,  dated  April 21, 1997 was filed
              as Exhibit  10(ee) to the  Company's  Form 10-K for the year
              ended  April  27,  1997,  and  is  incorporated   herein  by
              reference.

    10(ff)    $125,000,000  Revolving  Loan Facility  dated April 23, 1997
              by and among  the  Company  and  Wachovia  Bank of  Georgia,
              N.A.,  as agent,  and  First  Union  National  Bank of North
              Carolina,  as  documentation  agent  was  filed  as  Exhibit
              10(ff) to the  Company's  Form 10-K for the year ended April
              27, 1997, and is incorporated herein by reference.

    10(gg)   Revolving  Line of  Credit  for  $4,000,000  dated  April 23,
             1997 by and between the  Company and  Wachovia  Bank of North
             Carolina,  N.A. was filed as Exhibit  10(gg) to the Company's
             Form  10-K  for  the  year  ended  April  27,  1997,  and  is
             incorporated herein by reference.

    10(hh)   Reimbursement  and Security  Agreement between Culp, Inc. and
             Wachovia  Bank of  North  Carolina,  N.A.,  dated as of April
             1,   1997,   relating   to   $3,337,000   Principal   Amount,
             Chesterfield   County,   South  Carolina  Industrial  Revenue
             Bonds (Culp,  Inc.  Project) Series 1988 was filed as Exhibit
             10(hh) to the  Company's  Form 10-K for the year ended  April
             27, 1997, and is incorporated herein by reference.

             Additionally,    there   are   Reimbursement   and   Security
             Agreements  between  Culp,  Inc. and  Wachovia  Bank of North
             Carolina,  N.A.,  dated as of April 1, 1997 in the  following
             amounts and with the following facilities:

             $7,900,000  Principal  Amount,   Alamance  County  Industrial
             Facilities   and  Pollution   Control   Financing   Authority
             Industrial  Revenue  Refunding  Bonds  (Culp,  Inc.  Project)
             Series A and B.

             $4,500,000  Principal  Amount,   Guilford  County  Industrial
             Facilities   and  Pollution   Control   Financing   Authority
             Industrial  Development  Revenue Bonds (Culp,  Inc.  Project)
             Series 1989.

             $6,580,000  Principal Amount,  Anderson County South Carolina
             Industrial Revenue Bonds (Culp, Inc. Project)  Series 1993.

             $6,000,000  Principal  Amount,   Chesterfield  County,  South
             Carolina  Tax-Exempt  Adjustable Mode Industrial  Development
             Revenue Bonds (Culp, Inc. Project) Series 1996.

             $6,000,000  Principal Amount,  The Alamance County Industrial
             Facilities   and  Pollution   Control   Financing   Authority
             Tax-exempt  Adjustable  Mode Industrial  Development  Revenue
             Bonds (Culp, Inc. Project) Series 1996.

             $3,500,000   Principal  Amount,   Luzerne  County  Industrial
             Development  Authority Tax-Exempt  Adjustable Mode Industrial
             Development Revenue Bonds (Culp, Inc. Project) Series 1996.

    10(ii)   Loan  Agreement  and  Reimbursement  and  Security  Agreement
             dated July 1, 1997 with the   Robeson    County    Industrial
             Facilities and Pollution Control Financing Authority relating
             to the issuance of Tax-Exempt  Adjustable   Mode   Industrial
             Development  Revenue Bonds (Culp, Inc. Project),  Series 1997
             in the aggregate  principal  amount of  $8,500,000  was filed
             as  Exhibit  10(ii)  to  the  Company's  Form  10-Q  for  the
             quarter ended August 3, 1997, and is  incorporated  herein by
             reference.

    10(jj)   Asset  Purchase  Agreement  dated as of August 4, 1997 by and
             between Culp, Inc.,  Phillips Weaving Mills,  Inc.,  Phillips
             Printing Mills, Inc.,  Phillips Velvet Mills, Inc.,  Phillips
             Mills,  Inc.,   Phillips  Property  Company,   LLC,  Phillips
             Industries,  Inc. and S. Davis  Phillips was filed as Exhibit
             (10jj)  to the  Company's  Form  10-Q for the  quarter  ended
             November 2, 1997, and is incorporated herein by reference.

    10(kk)   Asset Purchase  Agreement  dated as of October 14, 1997 among
             Culp,  Inc.,  Artee  Industries,   Incorporated,   Robert  T.
             Davis,  Robert L. Davis,  Trustee u/a dated  8/25/94,  Robert
             L.  Davis,  Louis W. Davis,  Kelly D.  England,  J.  Marshall
             Bradley,  Frankie S.  Bradley and Mickey R. Bradley was filed
             as  Exhibit  10(kk)  to  the  Company's  Form  10-Q  for  the
             quarter ended  November 2, 1997, and is  incorporated  herein
             by reference.

    10(ll)    Form of Note Purchase Agreement  (providing for the issuance
              by  Culp,  Inc.  of its $20  million  6.76%  Series A Senior
              Notes due 3/15/08 and its $55 million  6.76% Series B Senior
              Notes due 3/15/10),  each dated March 4, 1998, between Culp,
              Inc. and each of the following:
              1. Connecticut General Life Insurance Company;
              2. The Mutual Life Insurance Company of New York;
              3. United of Omaha Life Insurance Company;
              4. Mutual of Omaha Insurance Company;
              5. The Prudential Insurance Company of  America;
              6. Allstate Life Insurance Company;
              7. Life Insurance Company of North America;  and
              8. CIGNA Property and Casualty Insurance Company
              This  agreement was filed as Exhibit 10(ll) to the Company's
              Form  10-K  for  the  year  ended  May  3,   1998,   and  is
              incorporated herein by reference.

    10(mm)    First  Amendment  to Credit  Agreement  dated July 22,  1998
              among Culp,  Inc.,  Wachovia  Bank,  N.A.,  as agent,  First
              Union National Bank, as  documentation  agent,  and Wachovia
              Bank,  N.A.,  First  Union  National  Bank,  SunTrust  Bank,
              Atlanta,          and         Cooperatieve          Centrale
              Raiffeisen-Boerenleeenbank  B.A.,  Rabobank  Nederland,  New
              York  Branch,  as  lenders.  This  amendment  was  filed  as
              Exhibit  10(mm) to the  Company's  Form 10-Q for the quarter
              ended  August  2,  1998,  and  is  incorporated   herein  by
              reference.

    10(nn)    Second  Amendment  to Credit  Agreement  dated  October  26,
              1998,  among Culp,  Inc.,  Wachovia  Bank,  N.A.,  as agent,
              First Union  National  Bank,  as  documentation  agent,  and
              Wachovia  Bank,   N.A.,   First  Union  National  Bank,  and
              SunTrust  Bank,  Atlanta,  as lenders.  This  amendment  was
              filed as Exhibit  10(nn) to the Company's  Form 10-Q for the
              quarter ended November 1, 1998, and is  incorporated  herein
              by reference.

    10(oo)    Rights  Agreement,  dated as of  October  8,  1999,  between
              Culp,  Inc. and  EquiServe  Trust  Company,  N.A., as Rights
              Agent,  including  the form of  Articles of  Amendment  with
              respect  to  the  Series  A  Participating  Preferred  Stock
              included as Exhibit A to the Rights Agreement,  the forms of
              Rights  Certificate  included  as  Exhibit  B to the  Rights
              Agreement,  and the form of  Summary of Rights  included  as
              Exhibit C to the  Rights  Agreement.  The  Rights  Agreement
              was filed as Exhibit  99.1 to the  Company's  Form 8-K dated
              October 12, 1999, and is incorporated herein by reference.

    10(pp)    Third  Amendment to Credit  Agreement  dated April 28, 2000,
              among Culp,  Inc.,  Wachovia  Bank,  N.A.,  as agent,  First
              Union National Bank, as  documentation  agent,  and Wachovia
              Bank,  N.A.,  First Union  National Bank, and Suntrust Bank,
              as lenders.  This  amendment was filed as Exhibit  10(pp) to
              the  Company's  Form 10-K for the year ended April 30, 2000,
              and is incorporated herein by reference.


    10(qq)    Fourth  Amendment to Credit  Agreement  dated July 30, 2000,
              among Culp,  Inc.,  Wachovia  Bank,  N.A.,  as agent,  First
              Union National Bank, as  documentation  agent,  and Wachovia
              Bank,  N.A.,  First Union  National Bank, and Suntrust Bank,
              as lenders.

     27      Financial Data Schedule

(b)  Reports on Form 8-K:

The following reports on Form 8-K were filed during the period covered by
this report:

   (1)      Form 8-K  dated  May 31, 2000,  included  under Item 5, Other
      Events, the Company's press release for quarterly earnings and  the
      Financial  Information   Release   relating  to  certain  financial
      information for the quarter and year ended April 30, 2000.





                                   SIGNATURE

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 thereunto duly authorized.


                               CULP, INC.
                               (Registrant)


Date:   September 13, 2000 By:  s/s Phillip W. Wilson
                                    Phillip W. Wilson
                                    Vice President and Chief Financial
                                    and Accounting Officer

                                    (Authorized to sign on behalf
                                    of the registrant and also sign-
                                    ing as principal financial officer)

FOURTH AMENDMENT TO CREDIT AGREEMENT THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Fourth Amendment") is dated as of the 30th day of July, 2000 among CULP, INC. (the "Borrower"), WACHOVIA BANK, N.A. (successor by merger to Wachovia Bank of Georgia, N.A.), as Agent (the "Agent"), FIRST UNION NATIONAL BANK (successor by merger to First Union National Bank of North Carolina), as Documentation Agent (the "Documentation Agent"), and WACHOVIA BANK, N.A. (successor by merger to Wachovia Bank of North Carolina, N.A.), FIRST UNION NATIONAL BANK, and SUNTRUST BANK (formerly known as SunTrust Bank, Atlanta)(collectively, the "Banks"); W I T N E S S E T H : WHEREAS, the Borrower, the Agent, the Documentation Agent and the Banks executed and delivered that certain Credit Agreement, dated as of April 23, 1997, as amended by First Amendment to Credit Agreement dated as of July 22, 1998, Second Amendment to Credit Agreement dated as of October 26, 1998, and Third Amendment to Credit Agreement dated as of April 28, 2000 (as so amended, the "Credit Agreement"); and WHEREAS, the Borrower has requested, and the Agent, the Documentation Agent and the Banks have agreed to certain amendments to the Credit Agreement, subject to the terms and conditions hereof; NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged by the parties hereto, the Borrower, the Agent, the Documentation Agent and the Banks hereby covenant and agree as follows: 1. Definitions. Unless otherwise specifically defined herein, each term used herein which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Credit Agreement shall from and after the date hereof refer to the Credit Agreement as amended hereby. 2. Amendment to Section 1.01. Section 1.01 of the Credit Agreement hereby is amended by adding the following definition in the proper alphabetical order: "Fourth Amendment Effective Date" means July 30, 2000. 3. Amendment to Section-2.06(a). Section-2.06(a) of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor: (a) "Applicable Margin" means: (i) for the period commencing on the Fourth Amendment Effective Date to the first Performance Pricing Determination Date after the Fourth Amendment Effective Date, (x) for any Base Rate Loan, 0.00%, and (y) for any Euro-Dollar Loan or Foreign Currency Loan, 0.275%; and (ii) from and after the first Performance Pricing Determination Date after the Fourth Amendment Effective Date, (x) for any Base Rate Loan, 0.00% and (y) for each Euro-Dollar Loan or Foreign Currency Loan, the percentage determined on each Performance Pricing Determination Date by reference to the table set forth below as to such type of Loan and the Debt/EBITDA Ratio for the quarterly or annual period ending immediately prior to such Performance Pricing Determination Date. Debt/EBITDA Ratio Applicable Margin <= 3.0 to 1.0 1.10% > 3.0 to 1.0 but <= 3.25 to 1.0 1.30% > 3.25 to 1.0 but <= 3.50 to 1.0 1.50% > 3.50 to 1.0 1.60% In determining interest for purposes of this Section 2.06 and fees for purposes of Section 2.07, the Borrower and the Banks shall refer to the Borrower's most recent consolidated quarterly and annual (as the case may be) financial statements delivered pursuant to Section 5.01(a) or (b), as the case may be. If such financial statements require a change in interest pursuant to this Section 2.06 or fees pursuant to Section 2.07, the Borrower shall deliver to the Agent, along with such financial statements, a notice to that effect, which notice shall set forth in reasonable detail the calculations supporting the required change. The "Performance Pricing Determination Date" is the date which is the last date on which such financial statements are permitted to be delivered pursuant to Section 5.01(a) or (b), as applicable. Any such required change in interest and fees shall become effective on such Performance Pricing Determination Date, and shall be in effect until the next Performance Pricing Determination Date, provided that: (x) for Fixed Rate Loans, changes in interest shall only be effective for Interest Periods commencing on or after the Performance Pricing Determination Date; and (y) no fees or interest shall be decreased pursuant to this Section 2.06 or Section 2.07 if a Default is in existence on the Performance Pricing Determination Date. 4. Amendment to Section 2.07(a). Section 2.07(a) of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor: (a) The Borrower shall pay to the Agent, for the ratable account of each Bank, a facility fee, on the aggregate amount of such Bank's Commitment (without taking into account the amount of the outstanding Loans made by such Bank), at a rate per annum equal to 0.30%. Such facility fees shall accrue from and including the Closing Date to (but excluding the Termination Date) and shall be payable on each March 31, June 30, September 30 and December 31 and on the Termination Date. 5. Amendment to Section 5.19. Section 5.19 of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor: SECTION 5.19. Interest and Leases Coverage. At the end of each Fiscal Quarter, the Interest and Leases Coverage Ratio shall not have been less than: (i) for the period from and including the first Fiscal Quarter of Fiscal Year 2001 through and including the fourth Fiscal Quarter of Fiscal Year 2001, 2.25 to 1.0; and (ii) at all times thereafter, 3.0 to 1.0. 6. Amendment to Section 5.21. Section 5.21 of the Credit Agreement hereby is amended by deleting it in its entirety and substituting the following therefor: SECTION 5.21. Debt/EBITDA Ratio. At the end of each Fiscal Month, the Debt/EBITDA Ratio will be (i) for each Fiscal Month of Fiscal Year 2001, less than 3.75 to 1.0, and (ii) for each Fiscal Month thereafter, less than 3.50 to 1.0. 7. Amendment to Exhibit F. Exhibit F hereby is amended by deleting paragraphs 5 and 7 thereof and substituting therefor paragraphs 5 and 7 set forth in Exhibit F attached hereto. 8. Restatement of Representations and Warranties. The Borrower hereby restates and renews each and every representation and warranty heretofore made by it in the Credit Agreement and the other Loan Documents as fully as if made on the date hereof, except to the extent that any representation or warranty related to an earlier specified date, and with specific reference to this Fourth Amendment and all other loan documents executed and/or delivered in connection herewith. 9. Effect of Amendment. Except as set forth expressly hereinabove, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding and enforceable obligations of the Borrower. The amendments contained herein shall be deemed to have prospective application only, unless otherwise specifically stated herein. 10. Ratification. The Borrower hereby restates, ratifies and reaffirms each and every term, covenant and condition set forth in the Credit Agreement and the other Loan Documents effective as of the date hereof. 11. Counterparts. This Fourth Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. 12. Section References. Section titles and references used in this Fourth Amendment shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby. 13. No Default. To induce the Agent, the Documentation Agent and the Banks to enter into this Fourth Amendment and to continue to make advances pursuant to the Credit Agreement, the Borrower hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i)-no Default or Event of Default and (ii)-no right of offset, defense, counterclaim, claim or objection in favor of the Borrower arising out of or with respect to any of the Loans or other obligations of the Borrower owed to the Banks under the Credit Agreement. 14. Further Assurances. The Borrower agrees to take such further actions as the Agent shall reasonably request in connection herewith to evidence the amendments herein contained to the Borrower. 15. Governing Law. This Fourth Amendment shall be governed by and construed and interpreted in accordance with, the laws of the State of Georgia. 16. Conditions Precedent. This Fourth Amendment shall become effective only upon (i) execution and delivery of this Fourth Amendment by each of the parties hereto, and (ii) payment to the Agent, for the ratable account of each Bank, of a fully-earned and non-refundable fee in an amount equal to 0.05% of each Bank's Commitment. IN WITNESS WHEREOF, the Borrower, the Agent, the Documentation Agent and each of the Banks has caused this Fourth Amendment to be duly executed, under seal, by its duly authorized officer as of the day and year first above written. CULP, INC., (SEAL) as Borrower By: __________________________________ Title: WACHOVIA BANK, N.A. (successor by merger to Wachovia Bank of Georgia, N.A. and Wachovia Bank of North Carolina, N.A.), as Agent and as a Bank (SEAL) By: __________________________________ Title: FIRST UNION NATIONAL BANK (successor by merger to First Union National Bank of North Carolina), as Documentation Agent and as a Bank (SEAL) By: __________________________________ Title: SUNTRUST BANK (formerly known as SunTrust Bank, Atlanta), as a Bank (SEAL) By: __________________________________ Title:

EXHIBIT F 5. Interest and Leases Coverage (Section 5.19) At the end of each Fiscal Quarter, the Interest and Leases Coverage Ratio shall not have been less than: (i) for the period from and including the fourth Fiscal Quarter of Fiscal Year 2000 through and including the fourth Fiscal Quarter of Fiscal Year 2001, 2.25 to 1.0; and (ii) at all times thereafter, 3.0 to 1.0. (a) EBILTDA - Schedule 1 $______________ (b) Consolidated Net Interest Expense - Schedule 1 $______________ (c) Consolidated Lease Expense - Schedule 1 $______________ (d) Sum of (b) and (c) $______________ (e) Actual ratio of (a) to (d) _____ to 1.0 Minimum Ratio [2.25 to 1.0] [3.0 to 1.0] 6. Debt/EBITDA Ratio (Section 5.21) At the end of each Fiscal Month, the Debt/EBITDA Ratio will be (i) for each Fiscal Month of Fiscal Year 2001, less than 3.75 to 1.0, and (ii) for each Fiscal Month thereafter, less than 3.50 to 1.0. (a) Total Debt $ _____________ (b) EBITDA - Schedule 1 $ _____________ (c) Actual ratio of (a) to (b) _____ to 1.0 Maximum ratio [3.75 to 1.0] [3.50 to 1.0]

  


                                      5
                                          0000723603
                                         Culp, Inc.
                                   1000


                                           
                                  3-MOS
                              APR-29-2001
                                 MAY-01-2000
                                   JUL-30-2000
                                           1,654
                                         0
                                   61,219
                                    (2,368)
                                     74,600
                               146,670
                                         253,043
                                (129,407)
                                 325,381
                           46,382
                                              0
                                0
                                          0
                                           560
                                     125,830
                   325,381
                                        101,878
                               101,878
                                           87,704
                                   87,704
                                13,778
                                     0
                               2,323
                                 (2,661)
                                      (905)
                             (1,756)
                                       0
                                      0
                                            0
                                    (1,756)
                                    (0.16)
                                    (0.16)