8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)     August 29, 2011

Culp, Inc.

(Exact Name of Registrant as Specified in its Charter)

North Carolina	1-12597	56-1001967
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1823 Eastchester Drive

High Point, North Carolina  27265

(Address of Principal Executive Offices)

(Zip Code)

(336) 889-5161

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former name or address, if changed from last report)

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

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

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

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

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

INDEX

	Page
Item 1.01 – Entry into a Material Definitive Agreement		3
Item 2.02 - Results of Operations and Financial Condition		3
Item 9.01(d) - Exhibits		4
Signature		5
Exhibits		6

2

Forward Looking Information.  This report and the exhibits hereto contain “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, 2011 for the fiscal year ended May 1, 2011.

Item 1.01 – Entry into a Material Definitive Agreement.

We have entered into a Seventeenth Amendment to Amended and Restated Credit Agreement (the “Amendment”) with Wells Fargo Bank, N.A. (“Wells Fargo”), as Agent and as Bank, dated August 25, 2011, amending our current credit agreement with Wells Fargo (the “Credit Agreement”).  The Amendment increases the size of the credit limit under the Credit Agreement and extends the term of the Credit Agreement through August 25, 2013.  The Amendment provides for a line of credit of up to $10.0 million and provides a pricing matrix for determining the interest rate payable on loans made under the line of credit.  The Amendment also changes the capital expenditure covenant, decreasing permitted annual capital expenditures to $6 million during any fiscal year.

Item 2.02 – Results of Operations and Financial Condition

On August 29, 2011, we issued a news release to announce our financial results for the first quarter ended July 31, 2011.  The news release is attached hereto as Exhibit 99(a).

Also on August 29, 2011, we released a Financial Information Release containing additional financial information and disclosures about our first quarter ended July 31, 2011.  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.  Details of these calculations and a reconciliation to information from our GAAP financial statements is set forth in the Financial Information Release.  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 and expenses are allocated to our operating segments, and there are assets and expenses at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the assets and expenses used to calculate that segment’s return on capital.  Thus, the average return on capital for the company’s segments will generally be different from 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 9.01 (d) -- Exhibits

99(a) News Release dated August 29, 2011

99(b) Financial Information Release dated August 29, 2011

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:  August 29, 2011

5

EXHIBIT INDEX

Exhibit Number	Exhibit
99(a)	News Release dated August 29, 2011
99(b)	Financial Information Release dated August 29, 2011

6

EX-99.A

Exhibit 99(a)

NEWS RELEASE

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

CULP ANNOUNCES RESULTS FOR FIRST QUARTER FISCAL 2012

Board of Directors Approves Expanded Stock Repurchase

HIGH POINT, N.C. (August 29, 2011) ─ Culp, Inc. (NYSE: CFI) today reported financial and operating results for the first quarter of fiscal 2012 ended July 31, 2011.

Highlights for the first quarter of fiscal 2012 include the following:

§   Net sales were $60.3 million, a 7.8 percent increase compared with the first quarter of fiscal 2011, with mattress fabrics segment sales up four percent and upholstery fabric segment sales up 12.4 percent over the same period a year ago.

§   Pre-tax income was $3.0 million, or 4.9 percent of sales, compared with $4.3 million, or 7.7 percent of sales in the prior year period.

§   Net income was $1.8 million, or $0.14 per diluted share, compared with net income of $3.7 million, or $0.28 per diluted share, for the first quarter of fiscal 2011.  Net income for the current quarter reflected a significantly higher tax rate primarily due to non-cash U.S.-related tax expense.

§   As of July 31, 2011, the company’s financial position reflected cash and cash equivalents and short term investments of $25.0 million and total debt of $11.5 million.

§   The company announced today the addition of $2.0 million to the previously announced $5.0 million share repurchase program announced in June.  As of August 26, 2011, the company has repurchased 364,000 shares, or 2.7 percent of shares outstanding at the beginning of the program, for approximately $3.2 million.

§   The second quarter projection for fiscal 2012 is for overall sales to increase by approximately four to eight percent.  Pre-tax income for the second quarter of fiscal 2012 is expected to be in the range of $2.6 million to $3.5 million.

Expanded Stock Repurchase Program

The company also announced that its Board of Directors has authorized the expenditure of an additional $2.0 million, for a total authorization of $7.0 million, as part of the share repurchase program originally announced June 16, 2011.  Since announcing the repurchase, the Company has used approximately $3.2 million to purchase 364,000 shares through August 26, 2011.  Based on the current market value of the common stock, and together with the shares already repurchased, the expanded authorization from the Board of Directors will allow the company to repurchase up to approximately 6.5 percent of the 13.3 million shares outstanding at the beginning of the program.  Under the stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under Securities Exchange Act Rule 10b5-1, or otherwise.  The amount of shares purchased and the timing of the purchases will be based on working capital requirements, market and general business conditions and other factors, including alternative investment opportunities.

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CFI Announces Results for First Quarter Fiscal 2012

Page 2

August 29, 2011

Frank Saxon, president and chief executive officer of Culp, Inc., stated, “The expansion of the share repurchase program reflects our confidence in Culp’s long-term prospects.  Our strong financial position provides us the opportunity to continue to execute our global growth strategy, while also creating value for our shareholders through share repurchases.”

Overview

For the quarter ended July 31, 2011, net sales were $60.3 million, a 7.8 percent increase compared with $55.9 million a year ago.  The company reported net income of $1.8 million, or $0.14 per diluted share, for the first quarter of fiscal 2012, compared with net income of $3.7 million, or $0.28 per diluted share, for the first quarter of fiscal 2011.  The current year income tax rate was significantly higher primarily due to non-cash U.S. tax expense that was not in the prior year quarter.  On a pre-tax basis, the company reported income of $3.0 million compared with pre-tax income of $4.3 million for the first quarter of fiscal 2011.

Commenting on the results, Saxon said, “We are pleased with our year over year sales improvement for the first quarter of fiscal 2012, especially in the face of an uncertain economy.  As a result of our sales and marketing initiatives, we expect this sales momentum to continue into the second quarter and full year compared with the same periods of fiscal 2011.  Both of our businesses continued to deliver solid results, even though profitability is down somewhat from the same quarter of last year primarily due to higher raw material costs in mattress fabrics and lower than expected results in our U.S. upholstery fabrics operation.  We announced price increases in both segments that are expected to absorb some of these additional costs going forward.  Our financial position remains strong and supports our ability to invest in growing our businesses in fiscal 2012.  Overall, we have a solid competitive position in both mattress fabrics and upholstery fabrics, and, as always, our primary focus is on outstanding service for our customers as a financially stable and trusted supplier.”

Mattress Fabrics Segment

Mattress fabric sales for the first quarter were $32.2 million, a four percent increase compared with $30.9 million for the first quarter of fiscal 2011.

“Our mattress fabrics business delivered a solid performance in the first quarter, largely driven by sales of knitted fabrics, our fastest growing product line,” said Iv Culp, president of Culp’s Mattress Fabrics Division.  “We are especially pleased with the increased sales to many key customers who are leaders in the bedding industry.  We continue to benefit from our recent investments to expand and modernize the internal production capacity of both our knitted and damask woven product lines. This enhanced manufacturing platform has allowed us to better serve our customers in the major product categories.  We have also had favorable customer response to our innovative designs in all product lines, creating additional sales opportunities for fiscal 2012.  While we are pleased with our sales results for the first quarter, our profitability was affected by significantly higher raw material costs.  To help address the higher costs, we previously announced price increases that will be in effect for our second quarter.  We have also continued to reengineer raw materials and yarns wherever possible without affecting quality or production efficiencies.  We are also encouraged that raw material prices are at least stabilizing following recent periods of upward volatility, but year over year comparisons are quite unfavorable.

“We have a strong competitive position with the ability to further leverage our efficient and scalable operating platform and outstanding design capabilities, especially as demand improves,” added Culp.  “Above all, we will continue to provide our customers with the same outstanding service, reliable delivery performance and consistent quality and value that are associated with the Culp name.”

Upholstery Fabrics Segment

Sales for this segment were $28.1 million, a 12.4 percent increase compared with $25.0 million in the first quarter of fiscal 2011.  Sales of China produced fabrics were $24.8 million in the first quarter of fiscal 2012, up 12.2 percent over the prior year period, while sales of U.S. produced fabrics were $3.3 million, up 14.1 percent from the first quarter of fiscal 2011.

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CFI Announces Results for First Quarter Fiscal 2012

Page 3

August 29, 2011

“We are encouraged by the sales growth for the upholstery fabrics business,” noted Saxon.  “These results reflect a combination of new product introductions, outstanding design capabilities, sales and marketing initiatives and the launch of our new Culp Europe platform.  Our higher sales were primarily driven by the growth of China produced fabrics with increased sales to key U.S customers, the local China market and a growing list of international customers. The response to the innovative design of our China produced products from both our existing and new customers has been very favorable.  We are excited about the continued success of our sales and marketing initiatives.  We will continue to focus on leveraging our China platform to drive our growth in fiscal 2012.

“While we are pleased with the first quarter sales results and profitability of our China produced fabrics, we experienced significantly lower profitability in our velvet fabrics product line, which is manufactured in our U.S. operation.  Higher raw material costs and lower demand for the velvet product category are pressuring our results.  To help address this issue, we announced a significant price increase during July, which will be realized midway through the second quarter.  In addition, we are also taking further steps to align our velvet capacity with expected demand during the second quarter.  Further, we are encouraged about the opportunity to increase our sales of woven texture products, which we began manufacturing at this U.S. facility just over two years ago.  Notably, our costs to produce this particular category of fabrics in the U.S. are now comparable to our production costs in China.

Saxon continued, “The first quarter represented the first full quarter of sales from Culp Europe, located in Poland.  This operation, established in the fourth quarter of fiscal 2011, is in the early stages and is experiencing the usual start-up activities and costs associated with a new location.  We expect sales to develop gradually over the next year; however, we are encouraged by the level of interest from many customers.  The Poland location offers a number of advantages for Culp, including the highest concentration of furniture and bedding suppliers to the European market, low operating costs and close proximity for shipping to customers in most European countries.  Europe as a whole represents the second largest furniture market in the world behind North America.  We are making excellent progress building a solid foundation and look forward to the additional growth opportunities with Culp Europe.

“As we move forward in fiscal 2012, our key goals are to improve the results of our U.S. operation , make meaningful progress in Culp Europe, and continue the excellent performance of our China produced fabrics business,” added Saxon.

Balance Sheet

“A key area of focus for Culp in fiscal 2012 will be to maintain our strong financial position, especially in light of the ongoing economic uncertainties,” added Saxon.  “As of July 31, 2011, our balance sheet reflected $25.0 million in cash and cash equivalents and short term investments.  As previously announced on June 16, 2011, our Board of Directors authorized the expenditure of up to $5.0 million for the repurchase of shares of the company's common stock.  As announced today, the Board has authorized an additional $2.0 million to this program.  As of July 31, 2011, we spent approximately $1.1 million for 119,000 shares of Culp common stock, and as of August 26, 2011, approximately $3.2 million was spent for 364,000 shares.

“Our balance sheet also reflects somewhat higher than normal working capital level in the first quarter of fiscal 2012 related to higher sales volumes.  An important priority for fiscal 2012 will be to bring working capital back to historical levels.

“Total debt at the end of the first quarter of fiscal 2012 was $11.5 million, which includes current maturities of long term debt and long term debt.  Our strong financial position provides us with a competitive advantage, giving us sufficient capital and flexibility to support our growth strategy and reward our shareholders through share repurchases,” added Saxon.

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CFI Announces Results for First Quarter Fiscal 2012

Page 4

August 29, 2011

Outlook

Commenting on the outlook for the second quarter of fiscal 2012, Saxon remarked, “We expect our sales for the second quarter of fiscal 2012 to be up approximately four to eight percent from the second quarter of last year, even though we expect the overall economic uncertainties and issues surrounding the housing market and high unemployment will continue to influence consumer demand for furniture and bedding.

“We expect sales in our mattress fabrics segment to be approximately four to eight percent higher compared with the same period a year ago.  Operating income in this segment is expected to be flat to slightly higher than operating income for the same period a year ago.

“In our upholstery fabrics segment, we expect sales for the second quarter to increase about five to nine percent compared with the same period last year.  We believe the upholstery fabric segment’s operating income will be flat to slightly down over the same period a year ago, primarily due to the pressures in the velvet product category in our U.S. operation.

“Considering these factors, the company expects to report pre-tax income for the second fiscal quarter of 2012 in the range of $2.6 million to $3.5 million.  This is management’s best estimate at present, recognizing that future financial results are difficult to predict because of overall economic uncertainties.

“Also, given the volatility in the income tax area during fiscal 2011 and the first quarter of fiscal 2012, the income tax expense or benefit and related tax rate for the second quarter of fiscal 2012 remain too uncertain to project,“ said Saxon.

In closing, Saxon remarked, “We are excited about the many positive initiatives we have underway and the progress we are making with a number of key customers around the world.  We have made great strides in enhancing the design and creative side of both of our businesses.  Although strong headwinds remain throughout the economy and in our industry, we will continue to execute against our global strategic initiatives in fiscal 2012.  We believe Culp has demonstrated resilience in a challenging marketplace with the ability to leverage a lean and agile manufacturing platform, outstanding design capabilities and a leading competitive position in both businesses.  We are well positioned to expand our market reach in both segments in fiscal 2012 and grow our business profitably as the environment improves."

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.

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CFI Announces Results for First Quarter Fiscal 2012

Page 5

August 29, 2011

This release contains “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, 2011, for fiscal year ended May 1, 2011.

CULP, INC.

Condensed Financial Highlights

(Unaudited)

	Three Months Ended
	July 31,		August 1,
	2011		2010
Net sales	$	60,270,000	$	55,912,000
Income before income taxes	$	2,965,000	$	4,278,000
Net income	$	1,820,000	$	3,747,000
Net income per share:
Basic	$	0.14	$	0.29
Diluted	$	0.14	$	0.28
Average shares outstanding:
Basic		13,061,000		12,870,000
Diluted		13,205,000		13,199,000

-END-

EX-99.B

Exhibit 99(b)

Page 1 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED STATEMENTS OF NET INCOME

FOR THE THREE MONTHS ENDED JULY 31, 2011 AND AUGUST 1, 2010

(Amounts in Thousands, Except for Per Share Data)

	THREE MONTHS ENDED (UNAUDITED)
	Amounts									Percent of Sales
	July 31,			August 1,			% Over			July 31,			August 1,
	2011			2010			(Under)			2011			2010
Net sales	$	60,270			55,912			7.8	%		100.0	%		100.0	%
Cost of sales		51,392			46,203			11.2	%		85.3	%		82.6	%
Gross profit		8,878			9,709			(8.6	) %		14.7	%		17.4	%
Selling, general and
administrative expenses		5,757			5,212			10.5	%		9.6	%		9.3	%
Restructuring credit		-			(6	)		(100.0	) %		0.0	%		(0.0	) %
Income from operations		3,121			4,503			(30.7	) %		5.2	%		8.1	%
Interest expense		220			210			4.8	%		0.4	%		0.4	%
Interest income		(129	)		(38	)		239.5	%		(0.2	) %		(0.1	) %
Other expense		65			53			22.6	%		0.1	%		0.1	%
Income before income taxes		2,965			4,278			(30.7	) %		4.9	%		7.7	%
Income taxes*		1,145			531			115.6	%		38.6	%		12.4	%
Net income	$	1,820			3,747			(51.4	) %		3.0	%		6.7	%
Net income per share-basic	$	0.14			0.29			(51.7	) %
Net income per share-diluted	$	0.14			0.28			(50.0	) %
Average shares outstanding-basic		13,061			12,870			1.5	%
Average shares outstanding-diluted		13,205			13,199			0.0	%

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

Page 2 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED BALANCE SHEETS

JULY 31, 2011, AUGUST 1, 2010 AND MAY 1, 2011

Unaudited

(Amounts in Thousands)

	Amounts				Increase
	July 31,		August 1,		(Decrease)						* May 1,
	2011		2010		Dollars			Percent			2011
Current assets
Cash and cash equivalents	$	14,570		14,045		525			3.7	%		23,181
Short-term investments		10,443		4,009		6,434			160.5	%		7,699
Accounts receivable		18,905		18,342		563			3.1	%		20,209
Inventories		34,858		29,687		5,171			17.4	%		28,723
Deferred income taxes		1,237		138		1,099			796.4	%		293
Assets held for sale		75		123		(48	)		(39.0	) %		75
Income taxes receivable		79		568		(489	)		(86.1	) %		79
Other current assets		2,862		1,646		1,216			73.9	%		2,376
Total current assets		83,029		68,558		14,471			21.1	%		82,635
Property, plant & equipment, net		30,615		30,471		144			0.5	%		30,296
Goodwill		11,462		11,462		-			0.0	%		11,462
Deferred income taxes		2,191		245		1,946			794.3	%		3,606
Other assets		2,010		2,361		(351	)		(14.9	) %		2,052
Total assets	$	129,307		113,097		16,210			14.3	%		130,051
Current liabilities
Current maturities of long-term debt	$	2,409		194		2,215			1,141.8	%		2,412
Accounts payable - trade		25,022		22,821		2,201			9.6	%		24,871
Accounts payable - capital expenditures		342		498		(156	)		(31.3	) %		140
Accrued expenses		5,862		5,964		(102	)		(1.7	) %		7,617
Accrued restructuring		41		316		(275	)		(87.0	) %		44
Deferred income taxes		82		-		82			100.0	%		82
Income taxes payable - current		345		182		163			89.6	%		646
Total current liabilities		34,103		29,975		4,128			13.8	%		35,812
Income taxes payable - long-term		4,178		3,877		301			7.8	%		4,167
Deferred income taxes		596		666		(70	)		(10.5	) %		596
Long-term debt , less current maturities		9,079		11,453		(2,374	)		(20.7	) %		9,135
Total liabilities		47,956		45,971		1,985			4.3	%		49,710
Shareholders' equity		81,351		67,126		14,225			21.2	%		80,341
Total liabilities and
shareholders' equity	$	129,307		113,097		16,210			14.3	%		130,051
Shares outstanding		13,181		13,084		97			0.7	%		13,264

*  Derived from audited financial statements.

Page 3 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED JULY 31, 2011 AND AUGUST 1, 2010

Unaudited

(Amounts in Thousands)

		THREE MONTHS ENDED
		Amounts
		July 31,			August 1,
		2011			2010
Cash flows from operating activities:
	Net income	$	1,820		$	3,747
	Adjustments to reconcile net income  to net cash
	used in operating activities:
	Depreciation		1,187			1,014
	Amortization of other assets		56			130
	Stock-based compensation		77			96
	Excess tax benefit related to stock-based compensation		(31	)		(169	)
	Deferred income taxes		502			(55	)
	Foreign currency exchange (gains) losses		(39	)		87
	Changes in assets and liabilities:
	Accounts receivable		1,322			1,475
	Inventories		(6,080	)		(3,686	)
	Other current assets		(486	)		41
	Other assets		(14	)		(27	)
	Accounts payable-trade		54			541
	Accrued expenses		(1,750	)		(3,626	)
	Accrued restructuring		(3	)		(8	)
	Income taxes		(257	)		149
	Net cash used in operating activities		(3,642	)		(291	)
Cash flows from investing activities:
	Capital expenditures		(1,304	)		(3,151	)
	Purchase of short-term investments		(4,761	)		(986	)
	Proceeds from the sale of short-term investments		2,032			-
	Net cash used in investing activities		(4,033	)		(4,137	)
Cash flows from financing activities:
	Payments on long-term debt		(53	)		(32	)
	Proceeds from common stock issued		169			170
	Common stock shares repurchased		(1,102	)		-
	Excess tax benefit related to stock-based compensation		31			169
	Net cash (used in) provided by financing activities		(955	)		307
Effect of exchange rate changes on cash and cash equivalents			19			(129	)
Decrease in cash and cash equivalents			(8,611	)		(4,250	)
Cash and cash equivalents at beginning of period			23,181			18,295
Cash and cash equivalents at end of period		$	14,570		$	14,045
Free Cash Flow (1)		$	(4,896	)	$	(3,402	)

(1)  Free Cash Flow reconciliation is as follows:
		FY 2012			FY 2011
A)	Net cash used in operating activities	$	(3,642	)	$	(291	)
B)	Minus:  Capital Expenditures		(1,304	)		(3,151	)
C)	Add: Excess tax benefit related to stock-based compensation		31			169
D)	Effects of exchange rate changes on cash and cash equivalents		19			(129	)
		$	(4,896	)	$	(3,402	)

Page 4 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED JULY 31, 2011 AND AUGUST 1, 2010

(Amounts in thousands)

	THREE MONTHS ENDED (UNAUDITED)
	Amounts										Percent of Sales
	July 31,			August 1,				% Over			July 31,			August 1,
Net Sales by Segment	2011			2010				(Under)			2011			2010
Mattress Fabrics	$	32,170			30,918				4.0	%		53.4	%		55.3	%
Upholstery Fabrics		28,100			24,994				12.4	%		46.6	%		44.7	%
Net Sales	$	60,270			55,912				7.8	%		100.0	%		100.0	%
Gross Profit by Segment											Gross Profit Margin
Mattress Fabrics	$	5,137			5,990				(14.2	) %		16.0	%		19.4	%
Upholstery Fabrics		3,741			3,719				0.6	%		13.3	%		14.9	%
Gross Profit	$	8,878			9,709				(8.6	) %		14.7	%		17.4	%
Sales, General and Administrative expenses by Segment											Percent of Sales
Mattress Fabrics	$	1,992			1,996				(0.2	) %		6.2	%		6.5	%
Upholstery Fabrics		2,766			2,101				31.7	%		9.8	%		8.4	%
Unallocated Corporate expenses		999			1,115				(10.4	) %		1.7	%		2.0	%
Selling, General and Administrative expenses		5,757			5,212				10.5	%		9.6	%		9.3	%
Operating income (loss) by Segment											Operating Income (Loss) Margin
Mattress Fabrics	$	3,146			3,994				(21.2	) %		9.8	%		12.9	%
Upholstery Fabrics		974			1,618				(39.8	) %		3.5	%		6.5	%
Unallocated corporate expenses		(999	)		(1,115	)			(10.4	) %		(1.7	) %		(2.0	) %
Subtotal		3,121			4,497				(30.6	) %		5.2	%		8.0	%
Restructuring and related credit		-			6		(1)		(100.0	) %		0.0	%		0.0	%
Operating income	$	3,121			4,503				(30.7	) %		5.2	%		8.1	%
Return on Capital (2)
Mattress Fabrics		23.2	%		32.2	%
Upholstery Fabrics		33.2	%		51.5	%
Unallocated Corporate		N/A			N/A
Consolidated		18.9	%		29.5	%
Capital Employed  (2) (3)
Mattress Fabrics		55,994			52,017				7.6	%
Upholstery Fabrics		13,176			13,289				(0.9	) %
Unallocated Corporate		350			(813	)			N/A
Consolidated		69,520			64,493				7.8	%
Depreciation Expense by Segment
Mattress Fabrics	$	1,029			877				17.3	%
Upholstery Fabrics		158			137				15.3	%
Total depreciation expense		1,187			1,014				17.1	%

Notes:

(1) The $6 restructuring credit primarily represents a credit for employee termination benefits.

(2)  See pages 5 and 6 of this financial information release for calculations.

(3) The capital employed balances are as of July 31, 2011 and August 1, 2010.

Page 5 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE THREE MONTHS ENDED JULY 31, 2011

(Amounts in Thousands)

(Unaudited)

	Operating
	Income
	Three
	Months
	Ended			Average			Return on
	July 31, 2011 (1)			Capital Employed (3)			Avg. Capital Employed (2)
Mattress Fabrics	$	3,146		$	54,313			23.2	%
Upholstery Fabrics		974			11,747			33.2	%
(less: Unallocated Corporate)		(999	)		(39	)		N/A
Total	$	3,121		$	66,021			18.9	%
Average Capital Employed	As of the three Months Ended July 31, 2011												As of the three Months Ended May 1, 2011
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		71,325			26,683			31,299			129,307			66,637			25,929			37,485			130,051
Total liabilities		(15,331	)		(13,507	)		(19,118	)		(47,956	)		(14,005	)		(15,612	)		(20,093	)		(49,710	)
Subtotal	$	55,994		$	13,176		$	12,181		$	81,351		$	52,632		$	10,317		$	17,392		$	80,341
Less:
Cash and cash equivalents		-			-			(14,570	)		(14,570	)		-			-			(23,181	)		(23,181	)
Short-term investments		-			-			(10,443	)		(10,443	)		-			-			(7,699	)		(7,699	)
Deferred income taxes - current		-			-			(1,237	)		(1,237	)		-			-			(1,381	)		(1,381	)
Income taxes receivable		-			-			(79	)		(79	)		-			-			(79	)		(79	)
Deferred income taxes - non-current		-			-			(2,191	)		(2,191	)		-			-			(2,518	)		(2,518	)
Current maturities of long-term debt		-			-			2,409			2,409			-			-			2,412			2,412
Deferred income taxes - current								82			82									82			82
Income taxes payable - current		-			-			345			345			-			-			646			646
Income taxes payable - long-term		-			-			4,178			4,178			-			-			4,167			4,167
Deferred income taxes - non-current		-			-			596			596			-			-			596			596
Long-term debt, less current maturities		-			-			9,079			9,079			-			-			9,135			9,135
Total Capital Employed	$	55,994		$	13,176		$	350		$	69,520		$	52,632		$	10,317		$	(428	)	$	62,521
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	54,313		$	11,747		$	(39	)	$	66,021

Notes:

(1) Operating income excludes restructuring and related charges--see reconciliation per page 4 of this financial information release.

(2) Return on average capital employed represents operating income for the three month period ending July 31, 2011 times four quarters 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, income taxes payable, and income taxes receivable.

(3) Average capital employed was computed using the two periods ending July 31, 2011 and May 1, 2011.

Page 6 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 1, 2010
	(UNAUDITED)

	Operating Income Three
	Months
	Ended			Average			Return on
	August 1, 2010 (1)			Capital Employed (3)			Avg. Capital Employed (2)
Mattress Fabrics	$	3,994		$	49,610			32.2	%
Upholstery Fabrics		1,618			12,575			51.5	%
(less: Unallocated Corporate)		(1,115	)		(1,290	)		N/A
Total	$	4,497		$	60,895			29.5	%
Average Capital Employed	As of the three Months Ended August 1, 2010												As of the three Months Ended May 2, 2010
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		66,919			24,415			21,763			113,097			61,922			25,420			25,256			112,598
Total liabilities		(14,902	)		(11,126	)		(19,943	)		(45,971	)		(14,720	)		(13,559	)		(21,272	)		(49,551	)
Subtotal	$	52,017		$	13,289		$	1,820		$	67,126		$	47,202		$	11,861		$	3,984		$	63,047
Less:
Cash and cash equivalents		-			-			(14,045	)		(14,045	)		-			-			(18,295	)		(18,295	)
Short-term investments		-			-			(4,009	)		(4,009	)								(3,023	)		(3,023	)
Deferred income taxes - current		-			-			(138	)		(138	)		-			-			(150	)		(150	)
Income taxes receivable		-			-			(568	)		(568	)		-			-			(728	)		(728	)
Deferred income taxes - non-current		-			-			(245	)		(245	)		-			-			(324	)		(324	)
Current maturities of long-term debt		-			-			194			194			-			-			196			196
Income taxes payable - current		-			-			182			182			-			-			224			224
Income taxes payable - long-term		-			-			3,877			3,877			-			-			3,876			3,876
Deferred income taxes - non-current		-			-			666			666			-			-			982			982
Long-term debt, less current maturities		-			-			11,453			11,453			-			-			11,491			11,491
Total Capital Employed	$	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)	$	49,610		$	12,575		$	(1,290	)	$	60,895

Notes:

(1) Operating income excludes restructuring and related charges--see reconciliation per page 4 of this financial information release.

(2) Return on average capital employed represents operating income for the three month period ending August 1, 2010 times four quarters 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 two periods ending August 1, 2010 and May 2, 2010.