8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC  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)    November 29, 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):

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

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

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

⃞ 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 7.01 – Regulation FD Disclosure	4
Item 9.01(d) - Exhibits	4
Signature	5
Exhibits	6

2

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. Other factors that could affect the matters discussed in forward-looking statements are included in the company’s periodic reports filed with the Securities and Exchange Commission, including the “Risk Factors” section in the company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission on July 15, 2010 for the fiscal year ended May 2, 2010.

Item 2.02 – Results of Operations and Financial Condition

On November 29, 2010, we issued a news release to announce our financial results for the second quarter ended October 31, 2010.  The news release is attached hereto as Exhibit 99(a).

Also on November 29, 2010, we released a Financial Information Release containing additional financial information and disclosures about our second quarter ended October 31, 2010.  The Financial Information Release is attached hereto as Exhibit 99(b).       

The news release and Financial Information Release contain disclosures about free cash flow, a non-GAAP liquidity measure that the company defines as net cash provided by operating activities, less cash capital expenditures and capital lease expenditures, plus any proceeds from sales of fixed assets, and the effects of exchange rate changes on cash and cash equivalents.  Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases and additions to cash and cash equivalents.  We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use.  In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment.  

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

3

Item 7.01 – Regulation FD Disclsoure

The company has formed a subsidiary known as Culp Europe Sp. z.o.o., incorporated in Poland. The formation of this entity is part of our ongoing efforts to expand sales in international markets, particularly in Europe. Culp Europe intends to lease a building by January 2011 near Poznan, Poland, and plans to begin sales and distribution activities at that location in early 2011 for upholstery fabrics sourced primarily from our China platform, but also from the company's U.S. operations and possibly directly from outside suppliers. Our sales and marketing efforts in Europe also include a program for shipping containers of fabric and cut and sew kits directly from our operations in China to customers in Europe. We expect sales for Culp Europe to begin by the end of the fourth quarter of fiscal 2011.

Item 9.01 (d) -- Exhibits

99(a) News Release dated November 29, 2010

99(b) Financial Information Release dated November 29, 2010

4

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:  November 29, 2010

5

EXHIBIT INDEX

Exhibit Number	Exhibit
99(a)	News Release dated November 29, 2010
99(b)	Financial Information Release dated November 29, 2010

6

EX-99.(A)

Exhibit 99(a)

Culp Announces Results for Second Quarter Fiscal 2011

HIGH POINT, N.C.--(BUSINESS WIRE)--November 29, 2010--Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter of fiscal 2011 ended October 31, 2010.

Fiscal 2011 Second Quarter Highlights

• Net sales for the second quarter were $48.9 million, a two percent decline over the second quarter of fiscal 2010, with mattress fabrics segment sales even with the prior year period and upholstery fabric segment sales down five percent over the same period a year ago.
• Pre-tax income for the second quarter was $3.2 million, or 6.5 percent of sales, compared with $3.5 million, or 7.0 percent of sales in the prior year period, an 8.6 percent decline.
• Net income was $4.0 million, or $0.30 per diluted share, compared with net income of $2.9 million, or $0.22 per diluted share, for the second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 included an $801,000 income tax benefit, while net income for the previous year period included income tax expense of $625,000.

Fiscal 2011 Year to Date Highlights

• Year to date sales were $104.8 million, up 10 percent from the same period a year ago.
• Year to date pre-tax income was $7.5 million, or 7.1 percent of sales, compared with $5.5 million, or 5.8 percent of sales for the same period last year, an increase of 36 percent.
• Year to date net income was $7.7 million, or $0.59 per diluted share, compared with net income of $4.8 million, or $0.37 per diluted share, for the same period a year ago. Year to date net income included a $270,000 income tax benefit, while net income for the previous year period included income tax expense of $740,000.
• With year to date capital expenditures of $5.1 million, the company has completed a multi-year expansion in its mattress fabrics business, with capital expenditures totaling $25 million plus $20 million spent for two acquisitions.
• The company’s financial position remained strong, with cash and cash equivalents and short term investments of $19.3 million and total debt of $11.6 million as of October 31, 2010.
• The projection for third quarter fiscal 2011 is for overall sales to be down in the range of 5 to 10 percent. Mattress fabric sales are expected to be comparable to last year, and upholstery fabrics sales are expected to be down 10 to 20 percent compared with the third quarter of fiscal 2010. Pre-tax income for the third quarter of fiscal 2011 is expected to be in the range of $2.6 to $3.3 million. Pretax income for the third quarter of last year was $3.8 million.

Overview

For the quarter ended October 31, 2010, net sales were $48.9 million, a two percent decline compared with $49.7 million a year ago. The company reported net income of $4.0 million, or $0.30 per diluted share, for the second quarter of fiscal 2011, compared with net income of $2.9 million, or $0.22 per diluted share, for the second quarter of fiscal 2010. Net income for the second quarter of fiscal 2011 includes an $801,000 income tax benefit, while net income for the previous year included income tax expense of $625,000. The income tax benefit for the second quarter of fiscal 2011 is primarily due to the reversal of the non-cash valuation allowance against net deferred tax assets associated with the company’s China operations. On a pre-tax basis, the company reported income of $3.2 million compared with pre-tax income of $3.5 million for the second quarter of fiscal 2010.

Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, “While second quarter results reflect a much weaker U.S. retail environment, our year to date sales, profitability and return on capital are up from the prior year period. The uncertainties surrounding the economic outlook, a continued weak housing market, and high unemployment are all keeping U.S. consumers on the sidelines for now. However, we have continued to perform well during this period and we have strengthened our business models in both of our businesses. Additionally, we are pursuing international sales and marketing initiatives in our upholstery fabrics business, especially in Europe and China. We are excited about the global appeal of our products and the opportunity to reach new customers. Our strong financial resources are enabling us to pursue a more active growth strategy during these challenging times.”

Mattress Fabrics Segment

Mattress fabric sales for the second quarter were $28.3 million, relatively flat compared with $28.2 million for the second quarter of fiscal 2010.

“Our mattress fabrics business delivered a consistent performance, in spite of the weaker demand in the bedding industry,” said Saxon. “While sales were about the same level as the second quarter last year, these results reflect the planned discontinuation of a product line since a year ago. On a comparable basis, we are pleased with the favorable sales trends in our continuing product lines, which were up seven percent. We have benefited from our recent investments and initiatives to enhance our operations and develop an efficient and scalable manufacturing platform. However, our profitability for the second quarter was affected by increased competitive pricing pressures and higher raw material costs.

“We have recently completed a capital project to expand the internal production of our knitted fabrics product line, our fastest growing category. Including the second quarter capital expenditures, we have completed a multi-year expansion in our mattress fabrics business with a total investment of nearly $45 million, which included $25 million in capital expenditures and $20 million for two successful acquisitions. With these investments, Culp is well positioned with a large and modern, vertically integrated manufacturing platform in the two major product categories of the mattress fabrics industry. We have substantially improved upon our supply logistics from pattern inception to fabric delivery. With the completion of these expansions, our capital spending in mattress fabrics for the foreseeable future will be substantially lower. Above all, we remain focused on execution for our customers with outstanding service, reliable delivery performance and consistent quality and value,” added Saxon.

Upholstery Fabrics Segment

Sales for this segment were $20.5 million, a 4.5 percent decline compared with $21.5 million in the second quarter of fiscal 2010. Sales of China-produced fabrics were $17.2 million in the second quarter of fiscal 2011, a four percent decline over the prior year period, while sales of U.S. produced fabrics were $3.4 million, down 6.8 percent from the second quarter of fiscal 2010.

“As expected, our upholstery fabrics sales were influenced by weak U.S. consumer demand for furniture,” noted Saxon. “In addition to lower volumes, our profitability in this segment has also been affected by rising raw material costs. In order to offset some of these increases, we have implemented price increases on certain products.

“Our China operation has continued to be a steady performer for this business segment and China produced products accounted for 84 percent of sales in upholstery fabrics. While most of the China produced products have traditionally been sold to our U.S. customers, we have also expanded our sales to the local China market. While the level of these sales is still small, we have been pleased with the favorable customer response and are excited about the additional opportunities to leverage our substantial China platform. At the same time, we are expanding our global reach with greater emphasis on sales to customers in Europe and other international markets. We are encouraged by the interest from these new customer segments as a result of our product development, sales and marketing initiatives. We will continue to focus on these important areas during the balance of fiscal 2011.”

Balance Sheet

“In light of the ongoing economic uncertainties, we remain diligent in maintaining a strong financial position,” added Saxon. “As of October 31, 2010, our balance sheet reflected $19.3 million in cash and cash equivalents and short term investments. Total debt was $11.6 million, which includes current maturities of long term debt and long term debt. Our next major scheduled principal payment of $2.2 million is not due until August 2011. Our financial position is the strongest in our company’s history and provides us with a competitive advantage, giving us sufficient capital and flexibility to support our growth strategy.”

Outlook

Commenting on the outlook for the third quarter of fiscal 2011, Saxon remarked, “We expect that the economic uncertainties and ongoing issues surrounding the housing market and high unemployment will continue to affect U.S. consumer demand for furniture and bedding products. Additionally, our third quarter of last year was exceptionally strong, especially in upholstery fabrics. Overall, we expect our sales for the third quarter of fiscal 2011 to be 5 to 10 percent lower than the third quarter of last year.

“We expect sales in our mattress fabrics segment to be comparable with the same period a year ago. Operating income in this segment is expected to be somewhat lower than the same period a year ago, due primarily to higher raw materials costs and increased pricing pressure.

“In our upholstery fabrics segment, we are comparing to a strong third quarter of last year. We expect sales to be down 10 to 20 percent for the third quarter. We believe the upholstery fabric segment’s operating income will be significantly lower than the same time last year due to lower sales and rising raw material costs.

“Considering these factors, the company expects to report pre-tax income for the third fiscal quarter of 2011 in the range of $2.6 to $3.3 million. Given the volatility in the income tax area, the income tax expense or benefit and related tax rate for the third 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.

In closing, Saxon remarked, “We are making excellent progress in this uncertain and unpredictable business environment. It is in times like these that we can achieve the greatest gains for our long-term competitive position. Our financial strength enables us to be more aggressive while a number of competitors around the world are struggling with lower demand and a weaker financial position. We will continue to build upon our ‘economic moats’ in both businesses and pursue sales, marketing and product development initiatives, especially in Europe and China. Above all, we are focused on outstanding execution for our customers as a financially stable and trusted supplier 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 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. Other factors that could affect the matters discussed in forward-looking statements are included in the company’s periodic reports filed with the Securities and Exchange Commission, including the “Risk Factors” section in the company’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission on July 15, 2010, for fiscal year ended May 2, 2010.

CULP, INC. Condensed Financial Highlights (Unaudited)
	Three Months Ended				Six Months Ended
	October 31,		November 1,		October 31,		November 1,
	2010		2009		2010		2009
Net sales	$	48,879,000	$	49,716,000	$	104,791,000	$	95,193,000
Income before income taxes	$	3,201,000	$	3,504,000	$	7,479,000	$	5,495,000
Net income	$	4,002,000	$	2,879,000	$	7,749,000	$	4,755,000
Net income per share:
Basic	$	0.31	$	0.23	$	0.60	$	0.38
Diluted	$	0.30	$	0.22	$	0.59	$	0.37
Average shares outstanding:
Basic		12,932,000		12,671,000		12,901,000		12,662,000
Diluted		13,167,000		12,852,000		13,186,000		12,804,000

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

EX-99.(B)

Exhibit 99(b)
Page 1 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 2010 AND NOVEMBER 1, 2009
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED
	Amounts									Percent of Sales
	October 31,			November 1,			% Over			October 31,			November 1,
	2010			2009			(Under)			2010			2009
Net sales	$	48,879			49,716		(1.7	)	%	100.0		%	100.0		%
Cost of sales		41,270			40,582		1.7		%	84.4		%	81.6		%
Gross profit		7,609			9,134		(16.7	)	%	15.6		%	18.4		%
Selling, general and
administrative expenses		4,202			5,385		(22.0	)	%	8.6		%	10.8		%
Restructuring credit		-			(184	)	N.M.			0.0		%	(0.4	)	%
Income from operations		3,407			3,933		(13.4	)	%	7.0		%	7.9		%
Interest expense		225			342		(34.2	)	%	0.5		%	0.7		%
Interest income		(49	)		(16	)	206.3		%	(0.1	)	%	(0.0	)	%
Other expense		30			103		(70.9	)	%	0.1		%	0.2		%
Income before income taxes		3,201			3,504		(8.6	)	%	6.5		%	7.0		%
Income taxes*		(801	)		625		N.M.			(25.0	)	%	17.8		%
Net income	$	4,002			2,879		39.0		%	8.2		%	5.8		%
Net income per share-basic	$	0.31		$	0.23		34.8		%
Net income per share-diluted	$	0.30		$	0.22		36.4		%
Average shares outstanding-basic		12,932			12,671		2.1		%
Average shares outstanding-diluted		13,167			12,852		2.5		%
	SIX MONTHS ENDED
	Amounts									Percent of Sales
	October 31,			November 1,			% Over			October 31,			November 1,
	2010			2009			(Under)			2010			2009
Net sales	$	104,791			95,193		10.1		%	100.0		%	100.0		%
Cost of sales		87,473			78,473		11.5		%	83.5		%	82.4		%
Gross profit		17,318			16,720		3.6		%	16.5		%	17.6		%
Selling, general and
administrative expenses		9,416			10,280		(8.4	)	%	9.0		%	10.8		%
Restructuring credit		(8	)		(343	)	N.M.			(0.0	)	%	(0.4	)	%
Income from operations		7,910			6,783		16.6		%	7.5		%	7.1		%
Interest expense		435			699		(37.8	)	%	0.4		%	0.7		%
Interest income		(87	)		(28	)	210.7		%	(0.1	)	%	(0.0	)	%
Other expense		83			617		(86.5	)	%	0.1		%	0.6		%
Income before income taxes		7,479			5,495		36.1		%	7.1		%	5.8		%
Income taxes*		(270	)		740		N.M.			(3.6	)	%	13.5		%
Net income	$	7,749			4,755		63.0		%	7.4		%	5.0		%
Net income per share-basic	$	0.60		$	0.38		57.9		%
Net income per share-diluted	$	0.59		$	0.37		59.5		%
Average shares outstanding-basic		12,901			12,662		1.9		%
Average shares outstanding-diluted		13,186			12,804		3.0		%
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 2 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 2010, NOVEMBER 1, 2009 AND MAY 2, 2010
Unaudited
(Amounts in Thousands)
		Amounts		Increase
		October 31,	November 1,	(Decrease)					* May 2,
		2010	2009	Dollars		Percent			2010
Current assets
Cash and cash equivalents	$	15,262	19,575	(4,313	)	(22.0	)	%	18,295
Short-term investments		4,035	-	4,035		100.0		%	3,023
Accounts receivable		14,810	16,771	(1,961	)	(11.7	)	%	19,822
Inventories		29,435	21,834	7,601		34.8		%	26,002
Deferred income taxes		176	58	118		203.4		%	150
Assets held for sale		123	160	(37	)	(23.1	)	%	123
Income taxes receivable		477	384	93		24.2		%	728
Other current assets		1,234	972	262		27.0		%	1,698
Total current assets		65,552	59,754	5,798		9.7		%	69,841
Property, plant & equipment, net		31,225	24,795	6,430		25.9		%	28,403
Goodwill		11,462	11,462	-		0.0		%	11,462
Deferred income taxes		1,391	-	1,391		100.0		%	324
Other assets		2,278	2,769	(491	)	(17.7	)	%	2,568
Total assets	$	111,908	98,780	13,128		13.3		%	112,598
Current liabilities
Current maturities of long-term debt	$	2,396	4,863	(2,467	)	(50.7	)	%	196
Current portion of obligation under a capital lease		-	280	(280	)	(100.0	)	%	-
Accounts payable - trade		17,992	16,416	1,576		9.6		%	22,278
Accounts payable - capital expenditures		253	377	(124	)	(32.9	)	%	567
Accrued expenses		5,665	6,455	(790	)	(12.2	)	%	9,613
Accrued restructuring		287	345	(58	)	(16.8	)	%	324
Income taxes payable - current		90	329	(239	)	(72.6	)	%	224
Total current liabilities		26,683	29,065	(2,382	)	(8.2	)	%	33,202
Accounts payable - capital expenditures		-	188	(188	)	(100.0	)	%	-
Income taxes payable - long-term		3,890	3,603	287		8.0		%	3,876
Deferred income taxes		622	1,078	(456	)	(42.3	)	%	982
Long-term debt , less current maturities		9,209	11,568	(2,359	)	(20.4	)	%	11,491
Total liabilities		40,404	45,502	(5,098	)	(11.2	)	%	49,551
Shareholders' equity		71,504	53,278	18,226		34.2		%	63,047
Total liabilities and
shareholders' equity	$	111,908	98,780	13,128		13.3		%	112,598
Shares outstanding		13,199	12,888	311		2.4		%	13,052
* Derived from audited financial statements.

Page 3 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 2010 AND NOVEMBER 1, 2009
Unaudited
(Amounts in Thousands)
			SIX MONTHS ENDED
			Amounts
			October 31,		November 1,
			2010		2009
Cash flows from operating activities:
Net income		$	7,749		4,755
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation			2,097		2,052
Amortization of other assets			258		286
Stock-based compensation			204		440
Deferred income taxes			(1,183	)	8
Restructuring expenses, net of gain on sale of related assets			-		(113	)
Loss on impairment of equipment			4		60
Excess tax benefits related to stock-based compensation			(270	)	-
Foreign currency exchange losses			60		554
Changes in assets and liabilities
Accounts receivable			5,110		1,356
Inventories			(3,363	)	2,147
Other current assets			477		286
Other assets			(45	)	(31	)
Accounts payable			(4,493	)	(671	)
Accrued expenses			(4,112	)	(126	)
Accrued restructuring			(37	)	(508	)
Income taxes			121		181
Net cash provided by operating activities			2,577		10,676
Cash flows from investing activities:
Capital expenditures			(5,076	)	(1,976	)
Purchase of short-term investments			(1,012	)	-
Proceeds from the sale of equipment			27		285
Net cash used in investing activities			(6,061	)	(1,691	)
Cash flows from financing activities:
Payments on vendor-financed capital expenditures			(188	)	(797	)
Payments on capital lease obligation			-		(346	)
Payments on long-term debt			(80	)	-
Debt issuance costs			(27	)	(15	)
Excess tax benefits related to stock-based compensation			270		-
Proceeds from common stock issued			511		45
Net cash provided by (used in) financing activities			486		(1,113	)
Effect of exchange rate changes on cash and cash equivalents			(35	)	(94	)
(Decrease) increase in cash and cash equivalents			(3,033	)	7,778
Cash and cash equivalents at beginning of period			18,295		11,797
Cash and cash equivalents at end of period		$	15,262		19,575
Free Cash Flow (1)		$	(2,425	)	7,748
(1) Free Cash Flow reconciliation is as follows:			2nd Qtr		2nd Qtr
			FY 2011		FY 2010
A)	Net cash provided by operating activities	$	2,577		10,676
B)	Minus: Capital Expenditures		(5,076	)	(1,976	)
C)	Add: Proceeds from the sale of buildings and equipment		27		285
D)	Minus: Payments on vendor-financed capital expenditures		(188	)	(797	)
E)	Minus: Payments on capital lease obligation		-		(346	)
F)	Add: Excess tax benefits related to stock-based compensation		270		-
G)	Effects of exchange rate changes on cash and cash equivalents		(35	)	(94	)
		$	(2,425	)	7,748

Page 4 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED OCTOBER 31, 2010 AND NOVEMBER 1, 2009
(Unaudited)
(Amounts in thousands)
		THREE MONTHS ENDED
		Amounts									Percent of Total Sales
		October 31,		November 1,				% Over			October 31,			November 1,
Net Sales by Segment		2010		2009				(Under)			2010			2009
Mattress Fabrics	$	28,335		28,202				0.5		%	58.0		%	56.7		%
Upholstery Fabrics		20,544		21,514				(4.5	)	%	42.0		%	43.3		%
Net Sales	$	48,879		49,716				(1.7	)	%	100.0		%	100.0		%
Gross Profit by Segment											Gross Profit Margin
Mattress Fabrics	$	5,030		5,896				(14.7	)	%	17.8		%	20.9		%
Upholstery Fabrics		2,579		3,281				(21.4	)	%	12.6		%	15.3		%
Subtotal		7,609		9,177				(17.1	)	%	15.6		%	18.5		%
Restructuring related charges		-		(43	)	(1	)	(100.0	)	%	0.0		%	(0.1	)	%
Gross Profit	$	7,609		9,134				(16.7	)	%	15.6		%	18.4		%
Selling, General and Administrative expenses by Segment											Percent of Sales
Mattress Fabrics	$	1,704		1,856				(8.2	)	%	6.0		%	6.6		%
Upholstery Fabrics		1,777		2,183				(18.6	)	%	8.6		%	10.1		%
Unallocated Corporate expenses		721		1,346				(46.4	)	%	1.5		%	2.7		%
Selling, General and Administrative expenses		4,202		5,385				(22.0	)	%	8.6		%	10.8		%
Operating Income (loss) by Segment											Operating Income (Loss) Margin
Mattress Fabrics	$	3,326		4,041				(17.7	)	%	11.7		%	14.3		%
Upholstery Fabrics		802		1,097				(26.9	)	%	3.9		%	5.1		%
Unallocated corporate expenses		(721	)	(1,346	)			(46.4	)	%	(1.5	)	%	(2.7	)	%
Subtotal		3,407		3,792				(10.2	)	%	7.0		%	7.6		%
Restructuring and related credit		-		141		(2	)	(100.0	)	%	0.0		%	0.3		%
Operating income	$	3,407		3,933				(13.4	)	%	7.0		%	7.9		%
Depreciation by Segment
Mattress Fabrics	$	944		880				7.3		%
Upholstery Fabrics		139		240				(42.1	)	%
Subtotal		1,083		1,120				(3.3	)	%
Notes:
(1) The $43 restructuring related charge represents other operating costs associated with a closed plant facility.
(2) The $141 restructuring and related credit represents a credit of $200 for employee termination benefits, offset by a charge of $43 for other operating costs associated with a closed plant facility, and a charge of $16 for lease termination and other exit costs. Of this total credit, a credit of $184 was recorded in restructuring credit and a charge of $43 was recorded in cost of sales.

Page 5 of 7

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE SIX MONTHS ENDED OCTOBER 31, 2010 AND NOVEMBER 1, 2009
(Unaudited)
(Amounts in thousands)
		SIX MONTHS ENDED
		Amounts											Percent of Total Sales
		October 31,				November 1,				% Over			October 31,			November 1,
Net Sales by Segment		2010				2009				(Under)			2010			2009
Mattress Fabrics	$	59,253				54,476				8.8		%	56.5		%	57.2		%
Upholstery Fabrics		45,538				40,717				11.8		%	43.5		%	42.8		%
Net Sales	$	104,791				95,193				10.1		%	100.0		%	100.0		%
Gross Profit by Segment													Gross Profit Margin
Mattress Fabrics	$	11,020				10,658				3.4		%	18.6		%	19.6		%
Upholstery Fabrics		6,298				6,076				3.7		%	13.8		%	14.9		%
Subtotal		17,318				16,734				3.5		%	16.5		%	17.6		%
Restructuring related charges		-				(14	)	(2	)	(100.0	)	%	0.0		%	(0.0	)	%
Gross Profit	$	17,318				16,720				3.6		%	16.5		%	17.6		%
Selling, General and Administrative expenses by Segment													Percent of Sales
Mattress Fabrics	$	3,701				3,665				1.0		%	6.2		%	6.7		%
Upholstery Fabrics		3,878				4,216				(8.0	)	%	8.5		%	10.4		%
Unallocated Corporate expenses		1,837				2,399				(23.4	)	%	1.8		%	2.5		%
Subtotal		9,416				10,280				(8.4	)	%	9.0		%	10.8		%
Operating Income (loss) by Segment													Operating Income (Loss) Margin
Mattress Fabrics	$	7,319				6,993				4.7		%	12.4		%	12.8		%
Upholstery Fabrics		2,420				1,860				30.1		%	5.3		%	4.6		%
Unallocated corporate expenses		(1,837	)			(2,399	)			(23.4	)	%	(1.8	)	%	(2.5	)	%
Subtotal		7,902				6,454				22.4		%	7.5		%	6.8		%
Restructuring and related credit		8		(1	)	329		(3	)	97.6		%	0.0		%	0.3		%
Operating income	$	7,910				6,783				16.6		%	7.5		%	7.1		%
Return on Capital (4)
Mattress Fabrics		28.5	%			29.8	%
Upholstery Fabrics		39.1	%			38.9	%
Unallocated Corporate		N/A				N/A
Consolidated		25.2	%			23.2	%
Capital Employed (4)
Mattress Fabrics		51,357				46,983				9.3		%
Upholstery Fabrics		12,384				9,558				29.6		%
Unallocated Corporate		(1,021	)			(966	)			N/A
Consolidated		62,720				55,575				12.9		%
Depreciation by Segment
Mattress Fabrics	$	1,822				1,779				2.4		%
Upholstery Fabrics		275				273				0.7		%
Subtotal		2,097				2,052				2.2		%
Notes:
(1) The $8 restructuring credit primarily represents a credit of $15 for employee termination benefits and a charge of $7 for lease termination and other exit costs.
(2) The $14 restructuring related charge represents a charge of $64 for other operating costs associated with a closed plant facility offset by a credit of $50 for the sale of inventory previously reserved for.
(3) The $329 restructuring and related credit represents a credit of $169 for employee termination benefits, a credit of $113 for sales proceeds received on equipment with no carrying value, a credit of $61 for lease termination and other exit costs, a credit of $50 for the sale of inventory previously reserved for, offset by a charge of $64 for other operating costs associated with a closed plant facility.
(4) See pages 6 and 7 of this financial information release for calculations.

Page 6 of 7

	CULP, INC. FINANCIAL INFORMATION RELEASE
	RETURN ON CAPITAL EMPLOYED BY SEGMENT
	FOR THE SIX MONTHS ENDED OCTOBER 31, 2010
	(UNAUDITED)
	Operating Income
	Six Months			Average			Return on
	Ended			Capital			Avg. Capital
	October 31, 2010 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	7,319		$	51,357			28.5	%
Upholstery Fabrics		2,420			12,384			39.1	%
(less: Unallocated Corporate)		(1,837	)		(1,021	)		N/A
Total	$	7,902		$	62,720			25.2	%
Average Capital Employed	As of the three Months Ended October 31, 2010												As of the three Months Ended August 1, 2010												As of the three Months Ended May 2, 2010
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		65,485			22,277			24,146			111,908			66,919			24,415			21,763			113,097			61,922			25,420			25,256			112,598
Total liabilities		(10,634	)		(10,275	)		(19,495	)		(40,404	)		(14,902	)		(11,126	)		(19,943	)		(45,971	)		(14,720	)		(13,559	)		(21,272	)		(49,551	)
Subtotal	$	54,851		$	12,002		$	4,651		$	71,504		$	52,017		$	13,289		$	1,820		$	67,126		$	47,202		$	11,861		$	3,984		$	63,047
Less:
Cash and cash equivalents		-			-			(15,262	)		(15,262	)		-			-			(14,045	)		(14,045	)		-			-			(18,295	)		(18,295	)
Short-term investments		-			-			(4,035	)		(4,035	)		-			-			(4,009	)		(4,009	)								(3,023	)		(3,023	)
Deferred income taxes - current		-			-			(176	)		(176	)		-			-			(138	)		(138	)		-			-			(150	)		(150	)
Income taxes receivable		-			-			(477	)		(477	)		-			-			(568	)		(568	)		-			-			(728	)		(728	)
Deferred income taxes - non-current		-			-			(1,391	)		(1,391	)		-			-			(245	)		(245	)		-			-			(324	)		(324	)
Current maturities of long-term debt		-			-			2,396			2,396			-			-			194			194			-			-			196			196
Income taxes payable - current		-			-			90			90			-			-			182			182			-			-			224			224
Income taxes payable - long-term		-			-			3,890			3,890			-			-			3,877			3,877			-			-			3,876			3,876
Deferred income taxes - non-current		-			-			622			622			-			-			666			666			-			-			982			982
Long-term debt, less current maturities		-			-			9,209			9,209			-			-			11,453			11,453			-			-			11,491			11,491
Total Capital Employed	$	54,851		$	12,002		$	(483	)	$	66,370		$	52,017		$	13,289		$	(813	)	$	64,493		$	47,202		$	11,861		$	(1,767	)	$	57,296
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	51,357		$	12,384		$	(1,021	)	$	62,720
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 6 month period ending October 31, 2010 times 2 to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term debt, including current maturities, current and noncurrent deferred tax assets and liabilities, current and long-term income taxes payable, and income taxes receivable.
(3) Average capital employed computed using the three periods ending May 2,2010, August 1,2010, October 31, 2010.

Page 7 of 7

	CULP, INC. FINANCIAL INFORMATION RELEASE
	RETURN ON CAPITAL EMPLOYED BY SEGMENT
	FOR THE SIX MONTHS ENDED NOVEMBER 1, 2009
	(UNAUDITED)
	Operating Income
	Six Months			Average			Return on
	Ended			Capital			Avg. Capital
	November 1, 2009 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	6,993		$	46,983			29.8	%
Upholstery Fabrics		1,860			9,558			38.9	%
(less: Unallocated Corporate)		(2,399	)		(966	)		N/A
Total	$	6,454		$	55,575			23.2	%
Average Capital Employed	As of the three Months Ended November 1, 2009												As of the three Months Ended August 2, 2009												As of the three Months Ended May 3, 2009
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		56,686			19,598			22,496			98,780			57,772			16,128			18,511			92,411			58,626			22,078			14,590			95,294
Total liabilities		(10,625	)		(10,461	)		(24,416	)		(45,502	)		(10,138	)		(7,670	)		(24,427	)		(42,235	)		(11,372	)		(10,999	)		(24,892	)		(47,263	)
Subtotal	$	46,061		$	9,137		$	(1,920	)	$	53,278		$	47,634		$	8,458		$	(5,916	)	$	50,176		$	47,254		$	11,079		$	(10,302	)	$	48,031
Less:
Cash and cash equivalents		-			-			(19,575	)		(19,575	)		-			-			(15,481	)		(15,481	)		-			-			(11,797	)		(11,797	)
Deferred income taxes - current		-			-			(58	)		(58	)		-			-			(52	)		(52	)		-			-			(54	)		(54	)
Income taxes receivable		-			-			(384	)		(384	)		-			-			(396	)		(396	)		-			-			(210	)		(210	)
Current maturities of long-term debt		-			-			4,863			4,863			-			-			4,817			4,817			-			-			4,764			4,764
Income taxes payable - current		-			-			329			329			-			-			72			72			-			-			83			83
Income taxes payable - long-term		-			-			3,603			3,603			-			-			3,538			3,538			-			-			3,264			3,264
Deferred income taxes - non-current		-			-			1,078			1,078			-			-			1,072			1,072			-			-			974			974
Long-term debt, less current maturities		-			-			11,568			11,568			-			-			11,618			11,618			-			-			11,604			11,604
Total Capital Employed	$	46,061		$	9,137		$	(496	)	$	54,702		$	47,634		$	8,458		$	(728	)	$	55,364		$	47,254		$	11,079		$	(1,674	)	$	56,659
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	46,983		$	9,558		$	(966	)	$	55,575
Notes:
(1) Operating income excludes restructuring and related credits--see reconciliation per page 5 of this financial information release.
(2) Return on average capital employed represents operating income for the 6 month period ending November 1, 2009 times 2 to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, long-term debt, including current maturities, current and noncurrent deferred tax assets and liabilities, current and long-term income taxes payable, and income taxes receivable.
(3) Average capital employed computed using the three periods ending May 3,2009, August 2,2009, and November 1, 2009.