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)    February 25, 2014

Culp, Inc.

(Exact Name of Registrant as Specified in its Charter)

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

1823 Eastchester Drive

High Point, North Carolina  27265

(Address of Principal Executive Offices)

(Zip Code)

(336) 889-5161

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

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

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

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

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

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

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

INDEX

	Page
Item 2.02 – Results of Operations and Financial Condition	3
Item 9.01(d) - Exhibits	5
Signature	6
Exhibits	7

2

This report and the exhibits attached 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, and we disclaim any duty to update such statements.  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 expectations for our future operations, production levels, sales, gross profit margins, operating income, SG&A or other expenses, earnings, cash flow, and other performance measures, as well as any statements regarding future economic or industry trends or future developments. 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 our 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 us adversely. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in the value of the U.S. dollar versus other currencies could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our 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 our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on July 12, 2013 for the fiscal year ended April 28, 2013.

Item 2.02 – Results of Operations and Financial Condition

On February 25, 2014, we issued a news release to announce our financial results for the third quarter and nine months ended January 26, 2014.  The news release is attached hereto as Exhibit 99(a).

Also on February 25, 2014, we released a Financial Information Release containing additional financial information and disclosures about our third quarter and nine months ended January 26, 2014.  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 we define as net cash provided by operating activities, less cash capital expenditures, plus any proceeds from sales of equipment, plus excess tax benefits related to stock-based compensation, and plus or minus 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, dividends, 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, and also for making decisions about dividend payments and share repurchases.

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 certain non-recurring 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

The news release and Financial Information Release contain disclosures about our consolidated adjusted effective income tax rate, which is a non-GAAP liquidity measure that represents our estimated cash expenditures for income taxes.  The consolidated adjusted effective income tax rate is calculated by eliminating the non-cash items that affect our GAAP income tax expense, including adjustments to valuation allowances for deferred tax assets, reductions in income taxes due to net operating loss (NOL) carryforwards, and non-cash foreign income tax expenses.  Currently we do not pay income taxes in the U.S. due to NOL carryforward amounts, and thus the consolidated adjusted effective income tax rate represents income tax expense for our subsidiaries located in China and Canada. A reconciliation of our consolidated adjusted effective income tax rate to our consolidated effective GAAP income tax rate is set forth in the Financial Information Release.  We believe this information is useful to investors because it demonstrates the amount of cash, as a percentage of income before income taxes, expected to be required to fund our income tax liabilities incurred for the periods reported.  Our consolidated income tax expense on a GAAP basis can vary widely over different reporting periods due to the effects of non-cash items, and we believe the calculation of our consolidated adjusted effective tax rate is helpful in comparing financial reporting periods and the amount of income tax liability that we are or will be required to pay to taxing authorities in cash. We also note that, because the consolidated adjusted effective income tax rate used to calculate adjusted net income is based on annualized amounts and estimates, adjusted net income for any quarter or year-to-date period does not necessarily indicate results that could be expected for the full fiscal year. In addition, non-cash reductions in our U.S. NOL carryforwards are based on pre-tax losses in prior periods and will not be available to reduce taxes on current earnings once the NOL carryforward amounts are utilized.  Management uses the consolidated adjusted effective income rate to analyze the effect that income tax expenditures are likely to have on cash balances and overall liquidity.

The news release and Financial Information Release contains disclosures about our adjusted net income, which is a non-GAAP performance measure that incorporates the consolidated adjusted effective income tax rate discussed in the preceding paragraph.  Adjusted net income is calculated by multiplying the consolidated adjusted effective income tax rate by the amount of income before income taxes shown on our income statement.  Because the consolidated adjusted effective income tax rate eliminates non-cash items that affect our GAAP income tax expense, adjusted net income is intended to demonstrate the amount of net income that would be generated by our operations if only the cash portions of our income tax expense are deducted from income before income taxes.  As noted above, our consolidated income tax expense on a GAAP basis can vary widely over different reporting periods due to the effect of non-cash items, and we believe the calculation of adjusted net income is useful to investors because it eliminates these items and aids in the analysis of comparable financial periods by reflecting the amount of earnings available after the deduction of tax liabilities that are paid in cash.  Adjusted net income should not be viewed in isolation by investors and should not be used as a substitute for net income calculated in accordance with GAAP.  We also note that, because the consolidated adjusted effective income tax rate used to calculate adjusted net income is based on annualized amounts and estimates, adjusted net income for any quarter or year-to-date period does not necessarily indicate results that could be expected for the full fiscal year.  In addition, the limitations on the usefulness of consolidated adjusted effective income tax rates described in the preceding paragraph also apply to the usefulness of adjusted net income, since consolidated adjusted effective income tax rates are used to calculate adjusted net income.  Management uses adjusted net income to help it analyze the company’s earnings and performance after taking certain tax matters into account when comparing comparable quarterly and year-to-date periods.

The news release and Financial Information Release contains disclosures about our Adjusted EBITDA, which is a non-GAAP performance measure that reflects net income excluding tax expenses and net interest expense, as well as depreciation and amortization expense and stock based compensation expense.  Details of these calculations and a reconciliation to information from our GAAP financial statements is set forth in the Financial Information Release.  We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry.  We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures.  For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other companies.  Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others.  Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend upon capital structure and debt level, tax provisions (which can be volatile for our company as described above), and non-cash items such as depreciation, amortization and stock based compensation expense that do not require immediate uses of cash.

4

Item 9.01 (d) -- Exhibits

99(a) News Release dated February 25, 2014

99(b) Financial Information Release dated February 25, 2014

5

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:  February 25, 2014

6

EXHIBIT INDEX

Exhibit Number	Exhibit
99(a)	News Release dated February 25, 2014
99(b)	Financial Information Release dated February 25, 2014

                                                                   7

EX-99.(A)

Exhibit 99(a)

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

CULP ANNOUNCES RESULTS FOR THIRD QUARTER FISCAL 2014

Company Declares Regular Quarterly Cash Dividend of $0.05 Per Share and

Board of Directors Authorizes Additional Share Repurchases

HIGH POINT, N.C. (February 25, 2014) ─ Culp, Inc. (NYSE: CFI) today reported financial and operating results for the third quarter and nine months ended January 26, 2014.

Fiscal 2014 Third Quarter Highlights:

§   Net sales were $72.4 million, up 13.6 percent, with mattress fabric sales up 8.5 percent and upholstery fabric sales up 20.1 percent, as compared with the same quarter last year.  This reflects the highest sales level for the third quarter in ten years.

§   Pre-tax income was $4.6 million, compared with $4.5 million in the third quarter of fiscal 2013. The $4.6 million reflects the highest pre-tax income level for the third quarter in over 15 years.

§   Adjusted net income (non-GAAP) was $3.9 million, or $0.31 per diluted share, for the current quarter, compared with $3.9 million, or $0.32 per diluted share, for the prior year period.  (Adjusted net income is calculated using estimated cash income tax expense.  See the reconciliation to net income on page 6).

§   Net income (GAAP) was $8.4 million, or $0.68 per diluted share, compared with net income of $2.8 million, or $0.23 per diluted share, in the prior year period.  Net income for the third quarter of fiscal 2014 included an income tax benefit $3.8 million, while net income for the third quarter of fiscal 2013 included an income tax expense of $1.7 million.

§   The company’s financial position remained strong with cash and cash equivalents and short term investments of $30.4 million and total debt of $5.0 million as of January 26, 2014.

§   The company paid a regular quarterly cash dividend of $0.05 per share, which compares with a $0.03 per share regular cash dividend in the prior year period.

Fiscal 2014 Year to Date Highlights

§   Year to date sales were $213.1 million, up 7.4 percent from the same period a year ago, with mattress fabrics segment sales up 3.4 percent and upholstery fabrics segment sales up 12.7 percent over the same period a year ago.

§   Pre-tax income was $14.9 million, up from $14.4 million for the same period last year.

§   Adjusted net income (non-GAAP) was $12.6 million, or $1.02 per diluted share, compared with $12.3 million, or $0.99 per diluted share, for the prior year period.

Net income (GAAP) was $14.7 million, or $1.19 per diluted share, compared with net income of $14.6 million, or $1.17 per diluted share, for the same period a year ago.  Year to date net income for both periods was affected by substantial income tax benefits booked in the third quarter of fiscal 2014 and the second quarter of fiscal 2013.

§   Consolidated return on capital was 27 percent, compared with 28 percent for the same period a year ago.

§   Free cash flow was $8.0 million, compared with $8.5 million for the same period a year ago.  The company expects free cash flow for fiscal 2014 to be comparable to the $13.1 million achieved in fiscal 2013.

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CFI Announces Results for Third Quarter Fiscal 2014

Page 2

February 25, 2014

§   The projection for fourth quarter fiscal 2014 is for overall sales to be 3 percent to 7 percent higher compared with the previous year’s fourth quarter.  Pre-tax income for the fourth quarter of fiscal 2014 is expected to be in the range of $5.0 million to $5.9 million.  Pre-tax income for the fourth quarter of fiscal 2013 was $5.9 million.

§   The projection for the full year is for overall sales to be up approximately 5 percent, which represents the fifth consecutive year for sales growth.

§   Pre-tax income for the full year is expected to be $19.9 million to $20.8 million, compared with $20.3 million in fiscal 2013.  The prior year pre-tax income of $20.3 million was the highest level in fifteen years.

Overview

For the third quarter ended January 26, 2014, net sales were $72.4 million, a 13.6 percent increase compared with $63.7 million a year ago.  The company reported net income of $8.4 million, or $0.68 per diluted share, for the third quarter of fiscal 2014, compared with net income of $2.8 million, or $0.23 per diluted share, for the third quarter of fiscal 2013.  Net income for the third quarter of fiscal 2014 included an income tax benefit of $3.8 million, which includes a $5.4 million income tax benefit to recognize U.S. foreign tax credits net of the income tax effects of the undistributed earnings associated with the company’s China operation, as determined on a U.S. income tax and financial reporting basis.  Net income for the third quarter of fiscal 2013 included an income tax expense of $1.7 million.

Given the volatility in the income tax area during fiscal 2014 and previous years, the company is reporting adjusted net income (non-GAAP), which is calculated using estimated cash income tax expense for its foreign subsidiaries.  (A presentation of adjusted net income and a reconciliation to net income is set forth on page 6).  The company currently does not incur cash income tax expense in the U.S., nor does it expect to for a number of years, due to approximately $50.7 million in U.S. net operating loss carryforwards as of the end of fiscal 2013.  For the third quarter of fiscal 2014, adjusted net income was $3.9 million, or $0.31 per diluted share, compared with $3.9 million, or $0.32 per diluted share, for the third quarter of fiscal 2013.  On a pre-tax basis, the company reported income of $4.6 million compared with pre-tax income of $4.5 million for the third quarter of fiscal 2013.

Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, “We continued to build upon our sales momentum thus far in fiscal 2014, with a 14 percent sales gain for the third quarter compared with a year ago.  These favorable results are primarily product related, as we continue to experience excellent customer response to our creative designs and innovative fabrics.  We have worked diligently – as our top strategic priority – to drive product innovation throughout our company.  It is very encouraging to see significant tangible progress resulting from these efforts with increased sales to existing key customers as well as new customers.  We compete in a product and fashion oriented business that is always changing.  Our ability to adapt quickly to such changes and to create innovative fabrics, season after season, is the key to our long-term success.

“We are on track to have another outstanding year of solid sales growth, consistent profitability and excellent free cash flow.  As a result, we have the financial strength to invest aggressively in capital expenditures and working capital to drive organic growth, as well as to provide added value to shareholders through dividends and share repurchases,” added Saxon.

Mattress Fabrics Segment

Mattress fabric sales for the third quarter were $38.5 million, up 8.5 percent compared with $35.5 million for the third quarter of fiscal 2013.

“Our mattress fabrics business had a solid sales performance in the third quarter of fiscal 2014,” said Iv Culp, president of Culp’s mattress fabrics division.  “These results reflect the growing consumer demand for ‘better’ designed bedding products and strong market penetration.  Culp is well positioned to meet this demand with our extensive design capabilities and technical expertise, supported by a scalable manufacturing platform and reactive capacity.  We now offer a complete array of innovative fabrics and mattress covers to all major players across all categories in the mattress industry.

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CFI Announces Results for Third Quarter Fiscal 2014

Page 3 

February 25, 2014

“Our operating results for the third quarter were affected by higher than expected transition costs in Culp-Lava, our new mattress cover operation, as well as additional sampling and development costs in support of new customer roll-outs for calendar 2014.  We experienced short-term challenges during the third quarter that lowered gross profit by approximately $600,000, as we absorbed the production of some mattress covers acquired from a previous supplier.  However, as these specific covers are phased out during the fourth quarter and new 2014 mattress covers are introduced, we expect significant improvement in our operating efficiencies and margins going forward.  Despite the operational challenges, we are pleased with the added sales contribution from Culp-Lava in the third quarter and are optimistic about continued growth in sales and improved productivity in the fourth quarter and beyond.

“The fundamentals of our mattress fabrics business are strong and Culp has a solid competitive position with a favorable product mix that reflects today’s style trends.  We are very encouraged by the response to our exciting designs and new product introductions.  Culp had an outstanding showing at the recent Las Vegas bedding market, with strong placements from key customers for both mattress fabrics and covers.  We are excited about the opportunities ahead to grow our business and to enhance Culp’s leadership position in the bedding industry.”

Upholstery Fabrics Segment

Sales for this segment were $33.8 million for the third quarter, a 20.1 percent improvement compared with sales of $28.2 million in the third quarter of fiscal 2013.

“Our upholstery fabrics business had an outstanding performance in the third quarter of fiscal 2014,” noted Saxon.  “The higher than expected sales primarily reflect continued positive customer response to our innovative designs and diverse product offering.    In addition, we experienced a greater than expected level of sales in the third quarter as customers anticipated longer lead times related to the Chinese New Year holiday, which occurred in late January of this year.  Notably, sales of China produced fabrics accounted for 92 percent of upholstery fabric sales in the third quarter.

“Our 100% owned China platform offers significant manufacturing flexibility to produce a variety of product categories, and we have continued to leverage this capability to meet changing customer demand in line with furniture style trends.  As a result, we have increased sales to our key customers with our outstanding designs and new product offerings.  We are also excited about our ability to reach new customers and expand our market presence.  Culp is well positioned for continued growth, especially as business conditions improve with a more stable housing market.”

Saxon continued, “With respect to Culp Europe, we have continued to make progress throughout fiscal 2014, and we remain optimistic about the long-term opportunities for Culp with a European market presence.”

Balance Sheet

“Our strong financial position continues to be an important advantage for Culp in fiscal 2014,” added Saxon.  “The company has generated $8.0 million in free cash flow through the first nine months of fiscal 2014, after investing $6.2 million in working capital and spending $2.7 million in capital expenditures.  As of January 26, 2014, we reported $30.4 million in cash and cash equivalents and short-term investments.  Total debt at the end of the third quarter was $5.0 million, which includes long-term debt plus current maturities of long-term debt and our line of credit.  Notably, our net cash position, or cash minus total debt, was $25.4 million at the end of the third quarter.  We expect our net cash position to build during the fourth quarter.”

Quarterly Dividend and Share Repurchase Program

The company paid a $0.05 per share dividend during the quarter.  The company also announced that its Board of Directors has approved the payment of a quarterly cash dividend of $0.05 per share, to be paid on or about April 15, 2014, to shareholders of record as of the close of business on April 1, 2014.  The quarterly dividend paid during the same period last year was $0.03 per share.  Future dividend payments are subject to Board approval and may be adjusted at the Board’s discretion as business needs or market conditions change.

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CFI Announces Results for Third Quarter Fiscal 2014

Page 4 

February 25, 2014

In addition, the company announced that its Board of Directors has approved an increase in the authorization for the company to acquire its common stock to $5.0 million, an increase from the current $2.0 million authorization.  Under the stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities and 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.

Commenting on this announcement, Saxon said, “The increase in the share repurchase program reflects our solid and consistent financial performance and strong balance sheet, along with the leadership position we have achieved in each of our businesses.  These actions reinforce our confidence in the company’s future and our commitment to generating value for our shareholders through the payment of dividends and share repurchases, as we have previously disclosed in our capital allocation strategy.”

Outlook

Commenting on the outlook for the fourth quarter of fiscal 2014, Saxon remarked, “Given the adverse weather conditions experienced in many parts of the country thus far in calendar 2014 and the related impact on furniture and mattress manufacturers and retailers, providing guidance for the company’s fiscal fourth quarter has become more difficult.

“At this time, we expect overall sales to be up 3 percent to 7 percent as compared with the fourth quarter of fiscal 2013.  For the year, we expect overall fiscal 2014 annual sales to exceed last year’s annual sales by approximately 5 percent.

“We expect fourth quarter sales in our mattress fabrics business to be up 3 percent to 7 percent as compared to the same period a year ago.  Operating income in this segment is expected to be flat to slightly higher, while margins are expected to be slightly lower as compared with the same period a year ago.  This performance reflects significant improvement over the results for the third quarter of fiscal 2014.

“For the full fiscal year, we expect mattress fabrics sales to be approximately 4 percent higher than fiscal 2013, and operating income and margins are expected to be somewhat lower than last fiscal year.

“In our upholstery fabrics business, we expect fourth quarter sales to be up 1 percent to 5 percent compared with the previous year’s fourth quarter results.  Because the Chinese New Year holiday falls entirely in the fourth quarter of fiscal 2014, our sales and production schedules will be affected by the extended break.  We believe the upholstery fabric segment’s operating income and margins will be flat to slightly lower when compared with the same quarter of last year.

“For the full fiscal year, we expect upholstery fabric sales to be approximately 10 percent higher than last fiscal year.  Operating income in this segment is expected to be significantly higher than last year, while operating margins are expected to be moderately higher as compared to last year.

“Considering these factors, the company expects to report pre-tax income for the fourth fiscal quarter of 2014 in the range of $5.0 million to $5.9 million.  Pre-tax income for last year’s fourth quarter was $5.9 million.  For fiscal 2014 as a whole, we expect pre-tax income in the range of $19.9 million to $20.8 million, compared with $20.3 million last fiscal year.”

In closing, Saxon remarked, “We are pleased with our performance to date in fiscal 2014 and our ability to continue to grow our business in a dynamic global marketplace.  Our creative designs and innovative fabric styles are resonating with our customers in both businesses with favorable results.  We are building a strong economic moat in both businesses with our flexible and scalable global manufacturing platform, supported by design expertise, product innovation and outstanding customer service.  We look forward to our future growth prospects and our ability to continue generating strong free cash flow.  Above all, we are committed to outstanding performance for our customers as a financially stable and trusted source for innovative fabrics.”

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CFI Announces Results for Third Quarter Fiscal 2014

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February 25, 2014

About the Company

Culp, Inc. is one of the world's largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture.  The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers.  Culp has operations located in the United States, Canada, China and Poland.

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, and we disclaim any duty to update such statements.  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 expectations for our future operations, production levels, sales, gross profit margins, operating income, SG&A or other expenses, earnings, cash flow, and other performance measures, as well as any statements regarding future economic or industry trends or future developments. 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 our 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 us adversely. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in the value of the U.S. dollar versus other currencies could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our 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 our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on July 12, 2013 for the fiscal year ended April 28, 2013.

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CFI Announces Results for Third Quarter Fiscal 2014

Page 6

February 25, 2014

CULP, INC.

Condensed Financial Highlights

(Unaudited)

	Three Months Ended				Nine Months Ended
	January 26,		January 27,		January 26,		January 27,
	2014		2013		2014		2013
Net sales	$	72,389,000	$	63,695,000	$	213,119,000	$	198,439,000
Income before income taxes	$	4,574,000	$	4,523,000	$	14,923,000	$	14,426,000
Net income	$	8,381,000	$	2,823,000	$	14,707,000	$	14,614,000
Net income per share:
Basic	$	0.69	$	0.23	$	1.21	$	1.19
Diluted	$	0.68	$	0.23	$	1.19	$	1.17
Adjusted net income	$	3,865,000	$	3,872,000	$	12,610,000	$	12,349,000
Adjusted net income per share
Basic	$	0.32	$	0.32	$	1.04	$	1.01
Diluted	$	0.31	$	0.32	$	1.02	$	0.99
Average shares outstanding:
Basic		12,188,000		12,095,000		12,173,000		12,279,000
Diluted		12,405,000		12,290,000		12,405,000		12,467,000

Presentation of Adjusted Net Income and Adjusted Income Taxes (1)

	Three Months Ended				Nine Months Ended
	January 26,		January 27,		January 26,		January 27,
	2014		2013		2014		2013
Income before income taxes	$	4,574,000	$	4,523,000	$	14,923,000	$	14,426,000
Adjusted income taxes (2)	$	709,000	$	651,000	$	2,313,000	$	2,077,000
Adjusted net income	$	3,865,000	$	3,872,000	$	12,610,000	$	12,349,000

(1)   Culp, Inc. currently does not incur cash income tax expense in the U.S. due to its $50.7 million in net operating loss carryforwards.  Adjusted net income is calculated using only estimated cash income tax expense for the company’s subsidiaries in Canada and China.

(2)   Represents estimated cash income tax expense for the company’s subsidiaries in Canada and China, calculated with a consolidated adjusted effective income tax rate of 15.5% for fiscal 2014 and 14.4% for fiscal 2013.

-MORE-

CFI Announces Results for Third Quarter Fiscal 2014

Page 7

February 25, 2014

Consolidated Adjusted Effective Income Tax Rate, Net Income and Earnings Per Share

For the Nine Months Ended January 26, 2014, and January 27, 2013

(Unaudited)

(Amounts in Thousands)

		NINE MONTHS ENDED
		Amounts
		January 26,			January 27,
		2014			2013
Consolidated Effective GAAP Income Tax Rate	(1)		1.4	%		(1.3	)%
Reduction of U.S. Valuation Allowance			-			83.7	%
Undistributed earnings from foreign subsidiaries			34.2	%		(46.3	)%
Non-Cash U.S. Income Tax Expense			(20.0	)%		(20.2	)%
Non-Cash Foreign Income Tax Expense			(0.1	)%		(1.5	)%
Consolidated Adjusted Effective Income Tax Rate	(2)		15.5	%		14.4	%
		THREE MONTHS ENDED
		As reported						January 26, 2014		As reported						January 27, 2013
		January 26,						Proforma Net		January 27,						Proforma Net
		2014			Adjustments			of Adjustments		2013			Adjustments			of Adjustments
Income before income taxes		$	4,574		$	-		$	4,574	$	4,523					$	4,523
Income taxes (3)			(3,807	)	$	4,516			709		1,700		$	(1,049	)		651
Net income		$	8,381		$	(4,516	)	$	3,865	$	2,823		$	1,049		$	3,872
Net income per share-basic		$	0.69		$	0.37		$	0.32	$	0.23		$	(0.09	)	$	0.32
Net income per share-diluted		$	0.68		$	0.36		$	0.31	$	0.23		$	(0.09	)	$	0.32
Average shares outstanding-basic			12,188			12,188			12,188		12,095			12,095			12,095
Average shares outstanding-diluted			12,405			12,405			12,405		12,290			12,290			12,290
		NINE MONTHS ENDED
		As reported						January 26, 2014		As reported						January 27, 2013
		January 26,						Proforma Net		January 27,						Proforma Net
		2014			Adjustments			of Adjustments		2013			Adjustments			of Adjustments
Income before income taxes		$	14,923		$	-		$	14,923	$	14,426		$	-		$	14,426
Income taxes (3)			216		$	2,097			2,313		(188	)	$	2,265			2,077
Net income		$	14,707		$	(2,097	)	$	12,610	$	14,614		$	(2,265	)	$	12,349
Net income per share-basic		$	1.21		$	0.17		$	1.04	$	1.19		$	0.18		$	1.01
Net income per share-diluted		$	1.19		$	0.17		$	1.02	$	1.17		$	0.18		$	0.99
Average shares outstanding-basic			12,173			12,173			12,173		12,279			12,279			12,279
Average shares outstanding-diluted			12,405			12,405			12,405		12,467			12,467			12,467
(1) Calculated by dividing consolidated income tax expense (benefit) by
consolidated income before income taxes.
(2) Represents estimated cash income tax expense for our subsidiaries located
in Canada and China divided by consolidated income before income taxes.
(3) Proforma income taxes calculated using the Consolidated Adjusted Effective Income Tax Rate as reflected above.

Reconciliation of Free Cash Flow

For the Nine Months Ended January 26, 2014, and January 27, 2013

(Unaudited)

(Amounts in thousands)

	FY 2014			FY 2013
Net cash provided by operating activities	$	10,994		$	10,817
Minus:  Capital Expenditures		(2,656	)		(2,763	)
Add: Proceeds from the sale of equipment		188			-
Add: Proceeds from life insurance policies		-			626
Minus: Payments on life insurance policies		(30	)		-
Add: Excess tax benefit related to stock-based compensation		143			77
Effect of exchange rate changes on cash and cash equivalents		(660	)		(284	)
Free Cash Flow	$	7,979		$	8,473

-MORE-

CFI Announces Results for Third Quarter Fiscal 2014

Page 8

February 25, 2014

Reconciliation of Return on Capital

For the Nine Months Ended January 26, 2014, and January 27, 2013

(Unaudited)

(Amounts in thousands)

	Nine Months Ended						Nine Months Ended
	January 26, 2014						January 27, 2013
Consolidated Income from Operations	$	15,805					$	15,010
Average Capital Employed (2)		77,100						71,355
Return on Average Capital Employed (1)		27.3	%					28.0	%
Average Capital Employed
	January 26, 2014			October 27, 2013			July 28, 2013			April 28, 2013
Total assets	$	156,678		$	156,242		$	151,101		$	144,706
Total liabilities		(47,235	)		(54,727	)		(52,516	)		(49,123	)
Subtotal	$	109,443		$	101,515		$	98,585		$	95,583
Less:
Cash and cash equivalents		(23,293	)		(24,267	)		(21,423	)		(23,530	)
Short-term investments		(7,077	)		(6,220	)		(6,174	)		(5,286	)
Income taxes receivable		-			-			(292	)		(318	)
Deferred income taxes - current		(7,503	)		(7,745	)		(7,747	)		(7,709	)
Deferred income taxes - non-current		(1,227	)		(661	)		(651	)		(753	)
Current maturities of long-term debt		2,200			2,200			2,200			2,200
Line of credit		573			585			560			561
Income taxes payable - current		130			304			320			285
Income taxes payable - long-term		3,953			4,141			4,176			4,191
Deferred income taxes - non-current		945			5,016			4,335			3,075
Long-term debt, less current maturities		2,200			2,200			4,400			4,400
Total Capital Employed	$	80,344		$	77,068		$	78,289		$	72,699
Average Capital Employed (2)	$	77,100
	January 27, 2013			October 28, 2012			July 29, 2012			April 29, 2012
Total assets	$	143,797		$	142,443		$	143,160		$	144,716
Total liabilities		(51,831	)		(47,055	)		(51,329	)		(55,716	)
Subtotal	$	91,966		$	95,388		$	91,831		$	89,000
Less:
Cash and cash equivalents		(19,489	)		(23,464	)		(21,889	)		(25,023	)
Short-term investments		(5,237	)		(5,241	)		(5,200	)		(5,941	)
Deferred income taxes - current		(4,098	)		(4,470	)		(2,337	)		(2,467	)
Deferred income taxes - non-current		(4,172	)		(4,738	)		(2,715	)		(3,205	)
Current maturities of long-term debt		2,366			2,401			2,400			2,404
Line of credit		576			875			834			889
Income taxes payable - current		395			385			751			642
Income taxes payable - long-term		4,195			4,188			4,131			4,164
Deferred income taxes - non-current		856			856			705			705
Long-term debt, less current maturities		4,400			4,416			6,666			6,719
Total Capital Employed	$	71,758		$	70,596		$	75,177		$	67,887
Average Capital Employed (2)	$	71,355

Notes:
(1)	Return on average capital employed represents operating income for the nine month period ending January 26, 2014, or January 27, 2013 divided by 3 quarters times 4 quarters
	to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents,
	short-term investments, long-term debt, including current maturities, line of credit, current and noncurrent deferred tax assets and liabilities, and
	income taxes receivable and payable.
(2)	Average capital employed used for the nine months ending January 26, 2014 was computed using the four quarterly periods ending January 26, 2014, October 27, 2013, July 28, 2013 and April 28, 2013.
	Average capital employed used for the nine months ending January 27,2013 was computed using the four quarterly periods ending January 27, 2013,October 28, 2012, July 29, 2012 and April 29, 2012.

-END-

EX-99.(B)

Exhibit 99(b)

Page 1 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED
	Amounts									Percent of Sales
	January 26,			January 27,			% Over			January 26,			January 27,
	2014			2013			(Under)			2014			2013
Net sales	$	72,389			63,695		13.6		%	100.0		%		100.0	%
Cost of sales		60,552			52,010		16.4		%	83.6		%		81.7	%
Gross profit		11,837			11,685		1.3		%	16.4		%		18.3	%
Selling, general and
administrative expenses		7,041			6,822		3.2		%	9.7		%		10.7	%
Income from operations		4,796			4,863		(1.4	)	%	6.6		%		7.6	%
Interest expense		91			145		(37.2	)	%	0.1		%		0.2	%
Interest income		(148	)		(105	)	41.0		%	(0.2	)	%		(0.2	) %
Other expense		279			300		(7.0	)	%	0.4		%		0.5	%
Income before income taxes		4,574			4,523		1.1		%	6.3		%		7.1	%
Income taxes*		(3,807	)		1,700		N.M.			(83.2	)	%		37.6	%
Net income	$	8,381			2,823		196.9		%	11.6		%		4.4	%
Net income per share-basic	$	0.69		$	0.23		200.0		%
Net income per share-diluted	$	0.68		$	0.23		195.7		%
Average shares outstanding-basic		12,188			12,095		0.8		%
Average shares outstanding-diluted		12,405			12,290		0.9		%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
	THREE MONTHS ENDED
	Amounts								Percent of Sales
	January 26,		January 27,		% Over				January 26,			January 27,
	2014		2013		(Under)				2014			2013
Income before income taxes (see above)	$	4,574		4,523		1.1		%		6.3	%		7.1	%
Adjusted Income taxes (2)*		709		651		8.9		%		15.5	%		14.4	%
Adjusted net income		3,865		3,872		(0.2	)	%		5.3	%		6.1	%
Adjusted net income per share-basic	$	0.32	$	0.32		0.0		%
Adjusted net income per share-diluted	$	0.31	$	0.32		(3.1	)	%
Average shares outstanding-basic		12,188		12,095		0.8		%
Average shares outstanding-diluted		12,405		12,290		0.9		%
(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $50.7 million in net operating loss carryforwards. Therefore,  adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Exhibit 99(b)

Page 2 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE NINE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	NINE MONTHS ENDED
	Amounts										Percent of Sales
	January 26,			January 27,			% Over				January 26,				January 27,
	2014			2013			(Under)				2014				2013
Net sales	$	213,119			198,439			7.4		%		100.0		%		100.0		%
Cost of sales		175,974			161,757			8.8		%		82.6		%		81.5		%
Gross profit		37,145			36,682			1.3		%		17.4		%		18.5		%
Selling, general and
administrative expenses		21,340			21,672			(1.5	)	%		10.0		%		10.9		%
Income from operations		15,805			15,010			5.3		%		7.4		%		7.6		%
Interest expense		330			491			(32.8	)	%		0.2		%		0.2		%
Interest income		(343	)		(328	)		4.6		%		(0.2	)	%		(0.2	)	%
Other expense		895			421			112.6		%		0.4		%		0.2		%
Income before income taxes		14,923			14,426			3.4		%		7.0		%		7.3		%
Income taxes*		216			(188	)	N.M.					1.4		%		(1.3	)	%
Net income	$	14,707			14,614			0.6		%		6.9		%		7.4		%
Net income per share-basic	$	1.21		$	1.19			1.7		%
Net income per share-diluted	$	1.19		$	1.17			1.7		%
Average shares outstanding-basic		12,173			12,279			(0.9	)	%
Average shares outstanding-diluted		12,405			12,467			(0.5	)	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
	NINE MONTHS ENDED
	Amounts								Percent of Sales
	January 26,		January 27,		% Over				January 26,			January 27,
	2014		2013		(Under)				2014			2013
Income before income taxes (see above)	$	14,923		14,426		3.4		%		7.0	%		7.3	%
Adjusted Income taxes (2)*		2,313		2,077		11.4		%		15.5	%		14.4	%
Adjusted net income		12,610		12,349		2.1		%		5.9	%		6.2	%
Adjusted net income per share-basic	$	1.04	$	1.01		3.0		%
Adjusted net income per share-diluted	$	1.02	$	0.99		3.0		%
Average shares outstanding-basic		12,173		12,279		(0.9	)	%
Average shares outstanding-diluted		12,405		12,467		(0.5	)	%
(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $50.7 million in net operating loss carryforwards. Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Exhibit 99(b)

Page 3 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
JANUARY 26, 2014, JANUARY 27, 2013 AND APRIL 28, 2013
Unaudited
(Amounts in Thousands)
	Amounts				Increase
	January 26,		January 27,		(Decrease)						* April 28,
	2014		2013		Dollars			Percent			2013
Current assets
Cash and cash equivalents	$	23,293		19,489		3,804			19.5	%		23,530
Short-term investments		7,077		5,237		1,840			35.1	%		5,286
Accounts receivable		26,392		24,257		2,135			8.8	%		23,392
Inventories		43,687		42,177		1,510			3.6	%		38,418
Deferred income taxes		7,503		4,098		3,405			83.1	%		7,709
Income taxes receivable		-		-		-			0.0	%		318
Other current assets		2,999		1,655		1,344			81.2	%		2,093
Total current assets		110,951		96,913		14,038			14.5	%		100,746
Property, plant & equipment, net		30,115		30,055		60			0.2	%		30,594
Goodwill		11,462		11,462		-			0.0	%		11,462
Deferred income taxes		1,227		4,172		(2,945	)		(70.6	) %		753
Other assets		2,923		1,195		1,728			144.6	%		1,151
Total assets	$	156,678		143,797		12,881			9.0	%		144,706
Current liabilities
Current maturities of long-term debt	$	2,200		2,366		(166	)		(7.0	) %		2,200
Line of credit		-		576		(576	)		(100.0	) %		561
Accounts payable - trade		25,187		26,220		(1,033	)		(3.9	) %		22,357
Accounts payable - capital expenditures		235		-		235			100.0	%		225
Accrued expenses		11,812		12,823		(1,011	)		(7.9	) %		11,829
Income taxes payable - current		130		395		(265	)		(67.1	) %		285
Total current liabilities		39,564		42,380		(2,816	)		(6.6	) %		37,457
Income taxes payable - long-term		3,953		4,195		(242	)		(5.8	) %		4,191
Deferred income taxes		945		856		89			10.4	%		3,075
Line of credit		573		-		573			100.0	%		-
Long-term debt , less current maturities		2,200		4,400		(2,200	)		(50.0	) %		4,400
Total liabilities		47,235		51,831		(4,596	)		(8.9	) %		49,123
Shareholders' equity		109,443		91,966		17,477			19.0	%		95,583
Total liabilities and
shareholders' equity	$	156,678		143,797		12,881			9.0	%		144,706
Shares outstanding		12,250		12,225		25			0.2	%		12,225
*  Derived from audited financial statements.

Exhibit 99(b)

Page 4 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
Unaudited
(Amounts in Thousands)
	NINE MONTHS ENDED
	Amounts
	January 26,			January 27,
	2014			2013
Cash flows from operating activities:
Net income	$	14,707		$	14,614
Adjustments to reconcile net income  to net cash
provided by operating activities:
Depreciation		3,964			3,818
Amortization of other assets		123			178
Stock-based compensation		551			308
Excess tax benefit related to stock-based compensation		(143	)		(77	)
Deferred income taxes		(2,255	)		(2,370	)
Gain on sale of equipment		(108	)		-
Foreign currency exchange losses		353			153
Changes in assets and liabilities, net of effects of acquisition of assets:
Accounts receivable		(2,844	)		776
Inventories		(5,081	)		(5,794	)
Other current assets		(882	)		353
Other assets		(53	)		(92	)
Accounts payable-trade		2,487			(4,395	)
Accrued expenses		13			3,526
Accrued restructuring		-			(40	)
Income taxes		162			(141	)
Net cash provided by operating activities		10,994			10,817
Cash flows from investing activities:
Capital expenditures		(2,656	)		(2,763	)
Net cash paid for acquisition of assets		(2,640	)		-
Proceeds from the sale of equipment		188			-
Proceeds from life insurance policies		-			626
Payments on life insurance policies		(30	)		-
Purchase of short-term investments		(1,916	)		(84	)
Proceeds from the sale of short-term investments		-			795
Net cash used in investing activities		(7,054	)		(1,426	)
Cash flows from financing activities:
Proceeds from lines of credit		-			1,000
Payments on lines of credit		-			(1,325	)
Payments on long-term debt		(2,200	)		(2,350	)
Proceeds from common stock issued		194			205
Common stock shares repurchased		-			(5,022	)
Dividends paid		(1,592	)		(7,226	)
Debt issance costs		(62	)		-
Excess tax benefit related to stock-based compensation		143			77
Net cash used in financing activities		(3,517	)		(14,641	)
Effect of exchange rate changes on cash and cash equivalents		(660	)		(284	)
Decrease in cash and cash equivalents		(237	)		(5,534	)
Cash and cash equivalents at beginning of period		23,530			25,023
Cash and cash equivalents at end of period	$	23,293		$	19,489
Free Cash Flow (1)	$	7,979		$	8,473

(1	)	Free Cash Flow reconciliation is as follows:
			FY 2014			FY 2013
A	)	Net cash provided by operating activities	$	10,994		$	10,817
B	)	Minus:  Capital Expenditures		(2,656	)		(2,763	)
C	)	Add: Proceeds from the sale of equipment		188			-
D	)	Add: Proceeds from life insurance policies		-			626
E	)	Minus: Payments on life insurance policies		(30	)		-
F	)	Add: Excess tax benefit related to stock-based compensation		143			77
G	)	Effect of exchange rate changes on cash and cash equivalents		(660	)		(284	)
			$	7,979		$	8,473

Exhibit 99(b)

Page 5 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
(Unaudited)
(Amounts in thousands)
	THREE MONTHS ENDED
	Amounts										Percent of Total Sales
	January 26,			January 27,			% Over				January 26,				January 27,
Net Sales by Segment	2014			2013			(Under)				2014				2013
Mattress Fabrics	$	38,541			35,513			8.5		%		53.2		%		55.8		%
Upholstery Fabrics		33,848			28,182			20.1		%		46.8		%		44.2		%
Net Sales	$	72,389			63,695			13.6		%		100.0		%		100.0		%
Gross Profit by Segment											Gross Profit Margin
Mattress Fabrics	$	5,599			6,548			(14.5	)	%		14.5		%		18.4		%
Upholstery Fabrics		6,238			5,137			21.4		%		18.4		%		18.2		%
Gross Profit	$	11,837			11,685			1.3		%		16.4		%		18.3		%
Selling, General and Administrative Expenses  by Segment											Percent of Sales
Mattress Fabrics	$	2,286			2,382			(4.0	)	%		5.9		%		6.7		%
Upholstery Fabrics		3,572			3,360			6.3		%		10.6		%		11.9		%
Unallocated Corporate expenses		1,183			1,080			9.5		%		1.6		%		1.7		%
Selling, General and Administrative Expenses	$	7,041			6,822			3.2		%		9.7		%		10.7		%
Operating Income (loss) by Segment											Operating Income (Loss) Margin
Mattress Fabrics	$	3,313			4,166			(20.5	)	%		8.6		%		11.7		%
Upholstery Fabrics		2,666			1,777			50.0		%		7.9		%		6.3		%
Unallocated corporate expenses		(1,183	)		(1,080	)		9.5		%		(1.6	)	%		(1.7	)	%
Operating income	$	4,796			4,863			(1.4	)	%		6.6		%		7.6		%
Depreciation by Segment
Mattress Fabrics	$	1,180			1,125			4.9		%
Upholstery Fabrics		149			154			(3.2	)	%
Depreciation	$	1,329			1,279			3.9		%

Exhibit 99(b)

Page 6 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE NINE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
(Unaudited)
(Amounts in thousands)
	NINE MONTHS ENDED
	Amounts										Percent of Total Sales
	January 26,			January 27,			% Over				January 26,				January 27,
Net Sales by Segment	2014			2013			(Under)				2014				2013
Mattress Fabrics	$	117,035			113,175			3.4		%		54.9		%		57.0		%
Upholstery Fabrics		96,084			85,264			12.7		%		45.1		%		43.0		%
Net Sales	$	213,119			198,439			7.4		%		100.0		%		100.0		%
Gross Profit by Segment											Gross Profit Margin
Mattress Fabrics	$	20,312			21,708			(6.4	)	%		17.4		%		19.2		%
Upholstery Fabrics		16,833			14,974			12.4		%		17.5		%		17.6		%
Gross Profit	$	37,145			36,682			1.3		%		17.4		%		18.5		%
Selling, General and Administrative Expenses  by Segment											Percent of Sales
Mattress Fabrics	$	7,280			7,197			1.2		%		6.2		%		6.4		%
Upholstery Fabrics		10,007			9,857			1.5		%		10.4		%		11.6		%
Unallocated Corporate expenses		4,053			4,618			(12.2	)	%		1.9		%		2.3		%
Selling, General, and Administrative Expenses	$	21,340			21,672			(1.5	)	%		10.0		%		10.9		%
Operating Income (loss)  by Segment											Operating Income (Loss) Margin
Mattress Fabrics	$	13,033			14,512			(10.2	)	%		11.1		%		12.8		%
Upholstery Fabrics		6,825			5,116			33.4		%		7.1		%		6.0		%
Unallocated corporate expenses		(4,053	)		(4,618	)		(12.2	)	%		(1.9	)	%		(2.3	)	%
Operating income	$	15,805			15,010			5.3		%		7.4		%		7.6		%
Return on Capital (1)
Mattress Fabrics		29.4	%		34.9	%
Upholstery Fabrics		44.7	%		39.7	%
Unallocated Corporate		N/A			N/A
Consolidated		27.3	%		28.0	%
Capital Employed (2)
Mattress Fabrics		59,699			55,970			6.7		%
Upholstery Fabrics		23,558			18,474			27.5		%
Unallocated Corporate		(2,913	)		(2,686	)		N/A
Consolidated		80,344			71,758			12.0		%
Depreciation by Segment
Mattress Fabrics	$	3,510			3,344			5.0		%
Upholstery Fabrics		454			474			(4.2	)	%
Depreciation	$	3,964			3,818			3.8		%
Notes:
(1) See pages 8 and 9 of this financial information release for calculations.
(2) The capital employed balances are as of January 26, 2014 and January 27, 2013.

Exhibit 99(b)

Page 7 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
	Quarter Ended
											Trailing 12
											Months
	4/28/2013		7/28/2013		10/27/2013			1/26/2014			1/26/2014
Net income	$	3,702	$	3,230	$	3,096		$	8,381		$	18,409
Income taxes		2,161		2,305		1,718			(3,807	)		2,377
Interest expense (income), net		50		48		(3	)		(57	)		38
Depreciation and amortization expense		1,354		1,344		1,373			1,370			5,441
Stock based compensation		254		152		224			175			805
Adjusted EBITDA	$	7,521	$	7,079	$	6,408		$	6,062		$	27,070
	Quarter Ended
											Trailing 12
											Months
	4/29/2012		7/29/2012		10/28/2012			1/27/2013			1/27/2013
Net income	$	3,423	$	3,524	$	8,268		$	2,823		$	18,038
Income taxes		2,071		1,848		(3,736	)		1,700			1,883
Interest expense, net		69		63		60			40			232
Depreciation and amortization expense		1,325		1,314		1,344			1,338			5,321
Stock based compensation		91		70		127			111			399
Adjusted EBITDA	$	6,979	$	6,819	$	6,063		$	6,012		$	25,873

Exhibit 99(b)

Page 8 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE NINE MONTHS ENDED JANUARY 26, 2014
(Amounts in Thousands)
(Unaudited)
	Operating Income
	Nine Months			Average			Return on
	Ended			Capital			Avg. Capital
	January 26, 2014 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	13,033		$	59,046			29.4	%
Upholstery Fabrics		6,825			20,345			44.7	%
(less: Unallocated Corporate)		(4,053	)		(2,291	)		N/A
Total	$	15,805		$	77,100			27.3	%

Average Capital Employed	As of the three Months Ended January 26, 2014												As of the three Months Ended October 27, 2013												As of the three Months Ended July 28, 2013
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		78,503			37,147			41,028			156,678			79,444			35,881			40,917			156,242			78,217			34,381			38,503			151,101
Total liabilities		(18,804	)		(13,589	)		(14,842	)		(47,235	)		(20,500	)		(15,581	)		(18,646	)		(54,727	)		(18,627	)		(14,172	)		(19,717	)		(52,516	)
Subtotal	$	59,699		$	23,558		$	26,186		$	109,443		$	58,944		$	20,300		$	22,271		$	101,515		$	59,590		$	20,209		$	18,786		$	98,585
Less:
Cash and cash equivalents		-			-			(23,293	)		(23,293	)		-			-			(24,267	)		(24,267	)		-			-			(21,423	)		(21,423	)
Short-term investments		-			-			(7,077	)		(7,077	)		-			-			(6,220	)		(6,220	)		-			-			(6,174	)		(6,174	)
Income taxes receivable		-			-			-			-			-			-			-			-			-			-			(292	)		(292	)
Deferred income taxes - current		-			-			(7,503	)		(7,503	)		-			-			(7,745	)		(7,745	)		-			-			(7,747	)		(7,747	)
Deferred income taxes - non-current		-			-			(1,227	)		(1,227	)		-			-			(661	)		(661	)		-			-			(651	)		(651	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200			-			-			2,200			2,200
Line of credit		-			-			573			573			-			-			585			585			-			-			560			560
Income taxes payable - current		-			-			130			130			-			-			304			304			-			-			320			320
Income taxes payable - long-term		-			-			3,953			3,953			-			-			4,141			4,141			-			-			4,176			4,176
Deferred income taxes - non-current		-			-			945			945			-			-			5,016			5,016			-			-			4,335			4,335
Long-term debt, less current maturities		-			-			2,200			2,200			-			-			2,200			2,200			-			-			4,400			4,400
Total Capital Employed	$	59,699		$	23,558		$	(2,913	)	$	80,344		$	58,944		$	20,300		$	(2,176	)	$	77,068		$	59,590		$	20,209		$	(1,510	)	$	78,289
	As of the three Months Ended April 28, 2013
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Total assets		73,954			30,995			39,757			144,706
Total liabilities		(16,004	)		(13,682	)		(19,437	)		(49,123	)
Subtotal	$	57,950		$	17,313		$	20,320		$	95,583
Less:
Cash and cash equivalents		-			-			(23,530	)		(23,530	)
Short-term investments		-			-			(5,286	)		(5,286	)
Income taxes receivable		-			-			(318	)		(318	)
Deferred income taxes - current		-			-			(7,709	)		(7,709	)
Deferred income taxes - non-current		-			-			(753	)		(753	)
Current maturities of long-term debt		-			-			2,200			2,200
Line of credit								561			561
Income taxes payable - current		-			-			285			285
Income taxes payable - long-term		-			-			4,191			4,191
Deferred income taxes - non-current		-			-			3,075			3,075
Long-term debt, less current maturities		-			-			4,400			4,400
Total Capital Employed	$	57,950		$	17,313		$	(2,564	)	$	72,699

	Mattress		Upholstery		Unallocated
	Fabrics		Fabrics		Corporate			Total
Average Capital Employed (3)	$	59,046	$	20,345	$	(2,291	)	$	77,100

Notes:

(1) See reconciliation per page 6 of this financial information release.

(2) Return on average capital employed represents operating income for the nine month period ending January 26, 2014 divided by 3 quarters times 4 quarters

       to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents,

       short-term investments, long-term debt, including current maturities, line of credit,  current and noncurrent deferred tax assets and liabilities, and

       income taxes payable and receivable.

(3) Average capital employed was computed using the four periods ending January 26, 2014, October 27, 2013, July 28, 2013 and April 28, 2013.

Exhibit 99(b)

Page 9 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE NINE MONTHS ENDED JANUARY 27,2013
(Amounts in Thousands)
(Unaudited)
	Operating Income
	Nine Months			Average			Return on
	Ended			Capital			Avg. Capital
	January 27, 2013 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	14,512		$	55,446			34.9	%
Upholstery Fabrics		5,116			17,172			39.7	%
(less: Unallocated Corporate)		(4,618	)		(1,264	)		N/A
Total	$	15,010		$	71,355			28.0	%

Average Capital Employed	As of the three Months Ended January 27, 2013												As of the three Months Ended October 28, 2012												As of the three Months Ended July 29, 2012
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		74,794			33,773			35,230			143,797			74,342			27,240			40,861			142,443			78,098			29,973			35,089			143,160
Total liabilities		(18,824	)		(15,299	)		(17,708	)		(51,831	)		(19,240	)		(10,512	)		(17,303	)		(47,055	)		(21,295	)		(11,006	)		(19,028	)		(51,329	)
Subtotal	$	55,970		$	18,474		$	17,522		$	91,966		$	55,102		$	16,728		$	23,558		$	95,388		$	56,803		$	18,967		$	16,061		$	91,831
Less:
Cash and cash equivalents		-			-			(19,489	)		(19,489	)		-			-			(23,464	)		(23,464	)		-			-			(21,889	)		(21,889	)
Short-term investments		-			-			(5,237	)		(5,237	)		-			-			(5,241	)		(5,241	)		-			-			(5,200	)		(5,200	)
Deferred income taxes - current		-			-			(4,098	)		(4,098	)		-			-			(4,470	)		(4,470	)		-			-			(2,337	)		(2,337	)
Deferred income taxes - non-current		-			-			(4,172	)		(4,172	)		-			-			(4,738	)		(4,738	)		-			-			(2,715	)		(2,715	)
Current maturities of long-term debt		-			-			2,366			2,366			-			-			2,401			2,401			-			-			2,400			2,400
Line of credit		-			-			576			576			-			-			875			875			-			-			834			834
Income taxes payable - current		-			-			395			395			-			-			385			385			-			-			751			751
Income taxes payable - long-term		-			-			4,195			4,195			-			-			4,188			4,188			-			-			4,131			4,131
Deferred income taxes - non-current		-			-			856			856			-			-			856			856			-			-			705			705
Long-term debt, less current maturities		-			-			4,400			4,400			-			-			4,416			4,416			-			-			6,666			6,666
Total Capital Employed	$	55,970		$	18,474		$	(2,686	)	$	71,758		$	55,102		$	16,728		$	(1,234	)	$	70,596		$	56,803		$	18,967		$	(593	)	$	75,177
	As of the three Months Ended April 29, 2012
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Total assets		71,563			33,641			39,512			144,716
Total liabilities		(17,653	)		(19,123	)		(18,940	)		(55,716	)
Subtotal	$	53,910		$	14,518		$	20,572		$	89,000
Less:
Cash and cash equivalents		-			-			(25,023	)		(25,023	)
Short-term investments		-			-			(5,941	)		(5,941	)
Deferred income taxes - current		-			-			(2,467	)		(2,467	)
Deferred income taxes - non-current		-			-			(3,205	)		(3,205	)
Current maturities of long-term debt		-			-			2,404			2,404
Line of credit		-			-			889			889
Income taxes payable - current		-			-			642			642
Income taxes payable - long-term		-			-			4,164			4,164
Deferred income taxes - non-current		-			-			705			705
Long-term debt, less current maturities		-			-			6,719			6,719
Total Capital Employed	$	53,910		$	14,518		$	(541	)	$	67,887

	Mattress		Upholstery		Unallocated
	Fabrics		Fabrics		Corporate			Total
Average Capital Employed (3)	$	55,446	$	17,172	$	(1,264	)	$	71,355

Notes:

(1) See reconciliation per page 6 of this financial information release.

(2) Return on average capital employed represents operating income for the nine month period ending January 27, 2013 divided by 3 quarters times 4 quarters

       to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents,

       short-term investments, long-term debt, including current maturities, line of credit, current and noncurrent deferred tax assets and liabilities,

       and income taxes payable.

(3) Average capital employed was computed using the four periods ending April 29, 2012, July 29, 2012, October 28, 2012, and January 27, 2013.

Exhibit 99(b)

Page 10 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED ADJUSTED EFFECTIVE INCOME TAX RATE, NET INCOME AND EARNINGS PER SHARE
FOR THE NINE MONTHS ENDED JANUARY 26, 2014 AND JANUARY 27, 2013
Unaudited
(Amounts in Thousands)
			NINE MONTHS ENDED
			Amounts
			January 26,				January 27.
			2014				2013
Consolidated Effective GAAP Income Tax Rate	(1	)		1.4		%		(1.3	)	%
Reduction of U.S. Valuation Allowance				-				83.7		%
Undistributed earnings from foreign subsidiaries				34.2		%		(46.3	)	%
Non-Cash U.S. Income Tax Expense				(20.0	)	%		(20.2	)	%
Non-Cash Foreign Income Tax Expense				(0.1	)	%		(1.5	)	%
Consolidated Adjusted Effective Income Tax Rate	(2	)		15.5		%		14.4		%

	THREE MONTHS ENDED
	As reported						January 26, 2014		As reported						January 27, 2013
	January 26,						Proforma Net		January 27,						Proforma Net
	2014			Adjustments			of Adjustments		2013			Adjustments			of Adjustments
Income before income taxes	$	4,574		$	-		$	4,574	$	4,523					$	4,523
Income taxes (3)		(3,807	)	$	4,516			709		1,700		$	(1,049	)		651
Net income	$	8,381		$	(4,516	)	$	3,865	$	2,823		$	1,049		$	3,872
Net income per share-basic	$	0.69		$	0.37		$	0.32	$	0.23		$	(0.09	)	$	0.32
Net income per share-diluted	$	0.68		$	0.36		$	0.31	$	0.23		$	(0.09	)	$	0.32
Average shares outstanding-basic		12,188			12,188			12,188		12,095			12,095			12,095
Average shares outstanding-diluted		12,405			12,405			12,405		12,290			12,290			12,290
	NINE MONTHS ENDED
	As reported						January 26, 2014		As reported						January 27, 2013
	January 26,						Proforma Net		January 27,						Proforma Net
		2014		Adjustments			of Adjustments			2013		Adjustments			of Adjustments
Income before income taxes	$	14,923		$	-		$	14,923	$	14,426		$	-		$	14,426
Income taxes (3)		216		$	2,097			2,313		(188	)	$	2,265			2,077
Net income	$	14,707		$	(2,097	)	$	12,610	$	14,614		$	(2,265	)	$	12,349
Net income per share-basic	$	1.21		$	0.17		$	1.04	$	1.19		$	0.18		$	1.01
Net income per share-diluted	$	1.19		$	0.17		$	1.02	$	1.17		$	0.18		$	0.99
Average shares outstanding-basic		12,173			12,173			12,173		12,279			12,279			12,279
Average shares outstanding-diluted		12,405			12,405			12,405		12,467			12,467			12,467

(1) Calculated by dividing consolidated income tax expense (benefit) by consolidated income before income taxes.

(2) Represents estimated cash income tax expense for our subsidiaries located in Canada and China divided by consolidated income before income taxes.

(3) Proforma income taxes calculated using the Consolidated Adjusted Effective Income Tax Rate as reflected above.