a50991326.htm

0001157523-14-004719.txt : 20141203 0001157523-14-004719.hdr.sgml : 20141203 20141203170818 ACCESSION NUMBER: 0001157523-14-004719 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20141203 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20141203 DATE AS OF CHANGE: 20141203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CULP INC CENTRAL INDEX KEY: 0000723603 STANDARD INDUSTRIAL CLASSIFICATION: BROADWOVEN FABRIC MILLS, COTTON [2211] IRS NUMBER: 561001967 STATE OF INCORPORATION: NC FISCAL YEAR END: 0429 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12597 FILM NUMBER: 141264083 BUSINESS ADDRESS: STREET 1: 1823 EASTCHESTER DRIVE CITY: HIGH POINT STATE: NC ZIP: 27265 BUSINESS PHONE: 3368895161 MAIL ADDRESS: STREET 1: P O BOX 2686 CITY: HIGH POINT STATE: NC ZIP: 27265 8-K 1 a50991326.htm CULP, INC. 8-K a50991326.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) December 3, 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

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, profit margins, profitability, operating income, SG&A or other expenses, pre-tax income, 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 11, 2014 for the fiscal year ended April 27, 2014.

Item 2.02 – Results of Operations and Financial Condition

On December 3, 2014, we issued a news release to announce our financial results for our second quarter and six months ended November 2, 2014. The news release is attached hereto as Exhibit 99(a).

Also on December 3, 2014, we released a Financial Information Release containing additional financial information and disclosures about our second quarter and six months ended November 2, 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 proceeds from life insurance policies, plus excess tax benefits related to stock-based compensation, minus the purchase of long-term investments, minus the payments on life insurance policies, 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.

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.

Item 9.01 (d) -- Exhibits

99(a) News Release dated December 3, 2014

99(b) Financial Information Release dated December 3, 2014

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: December 3, 2014

EXHIBIT INDEX

Exhibit Number	Exhibit

99(a)	News Release dated December 3, 2014
99(b)	Financial Information Release dated December 3, 2014

EX-99.(A) 2 a50991326ex99a.htm EXHIBIT 99(A) a50991326ex99a.htm

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 SECOND QUARTER FISCAL 2015

Board of Directors Authorizes a 20 Percent Increase

in the Quarterly Cash Dividend to $0.06 Per Share

HIGH POINT, N.C. (December 3, 2014) ─ Culp, Inc. (NYSE: CFI) today reported financial and operating results for the second quarter and six months ended November 2, 2014.

Fiscal 2015 Second Quarter Highlights:

§	Net sales were $74.0 million, up 4.8 percent, with mattress fabric sales up 6.7 percent and upholstery fabric sales up 2.3 percent, as compared with the same quarter last year. This reflects the highest sales level for the second quarter in ten years.

§	Pre-tax income was $4.9 million, up 1.6 percent compared with $4.8 million in the second quarter of fiscal 2014.

Adjusted net income (non-GAAP) was $4.1 million, or $0.33 per diluted share, for the current quarter, unchanged from 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 $3.0 million, or $0.24 per diluted share, compared with net income of $3.1 million, or $0.25 per diluted share, in the prior year period.

The company’s financial position remained strong with cash and cash equivalents and short term investments of $35.3 million, comparable to the $35.6 million total at the end of fiscal 2014, even after spending $14.7 million in total for dividends, capital expenditures, debt payments, and share repurchases during the first six months of this fiscal year.

§	The company announced a 20 percent increase in its quarterly cash dividend from $0.05 to $0.06 per share, commencing in the third quarter of fiscal 2015. The company has doubled its quarterly cash dividend since reinstating the dividend in June 2012.

Fiscal 2015 Year to Date Highlights

§	Sales were $150.1 million, up 6.6 percent from the same period a year ago, with mattress fabrics segment sales up 9.4 percent and upholstery fabrics segment sales up 3.1 percent over the same period a year ago.

§	Pre-tax income was $10.3 million, unchanged from the same period last year.

§	Adjusted net income (non-GAAP) was $8.7 million, or $0.70 per diluted share, unchanged from the prior year period. Net income (GAAP) was $6.3 million, or $0.51 per diluted share, unchanged from the same period a year ago.

§	Consolidated return on capital was 26 percent, compared with 29 percent for the same period a year ago.

§	Capital expenditures for the year to date period totaled $5.1 million, almost all of which related to the mattress fabrics segment, compared with $1.9 million a year ago.

§	Free cash flow was $9.2 million, up from $7.5 million for the same period a year ago, even after higher than normal capital expenditures. The company expects another year of strong free cash flow for fiscal 2015.

§	Since June 2011, the company has returned a total of $27 million to shareholders in the form of regular quarterly and special dividends and share repurchases.

The projection for third quarter fiscal 2015 is for overall sales to be two to five percent higher as compared to the previous year’s third quarter. Pre-tax income for the third quarter of fiscal 2015 is expected to be in the range of $5.0 to $5.8 million. Pre-tax income for the third quarter of fiscal 2014 was $4.6 million.

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CFI Announces Results for Second Quarter Fiscal 2015

Page 2

December 3, 2014

Overview

For the second quarter ended November 2, 2014, net sales were $74.0 million, a 4.8 percent increase compared with $70.6 million a year ago. The company reported net income of $3.0 million, or $0.24 per diluted share, for the second quarter of fiscal 2015, compared with net income of $3.1 million, or $0.25 per diluted share, for the second quarter of fiscal 2014.

Given the volatility in the income tax area during fiscal 2014 and previous years, the company is also 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 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 $45.7 million in U.S. net operating loss carryforwards as of the end of fiscal 2014. For the second quarter of fiscal 2015, adjusted net income was $4.1 million, or $0.33 per diluted share, unchanged from the second quarter of fiscal 2014. On a pre-tax basis, the company reported income of $4.9 million compared with pre-tax income of $4.8 million for the second quarter of fiscal 2014.

Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, “Overall, our second quarter results were in line with our expectations, and we are pleased with our consistent performance to date in fiscal 2015. Our higher sales in both businesses reflect favorable customer response to our creative designs and wide range of innovative products. In addition, our scalable and flexible manufacturing platform supports our ability to compete in a fashion-driven business that is always changing. Importantly, we have the financial strength to make the strategic investments to support our continued growth, as reflected in our increased capital expenditures for fiscal 2015.

“We are also pleased that our financial performance and strong balance sheet have enabled us to reward our shareholders with a 20 percent increase in our quarterly cash dividend, which has doubled since June 2012. Notably, our free cash flow for the year to date period has been excellent, even after higher than normal capital expenditures,” added Saxon.

Mattress Fabrics Segment

Mattress fabric sales for the second quarter were $43.0 million, up 6.7 percent compared with $40.3 million for the second quarter of fiscal 2014.

“We are pleased with our performance for the second quarter, highlighted by solid sales growth over the prior year period,” said Iv Culp, president of Culp’s mattress fabrics division. “These results reflect our proven ability to meet the growing demands of our customers with an innovative and diverse product offering across all price points. Our strategic focus on design creativity has been the critical driver of our success. As the mattress industry has embraced a more fashionable and decorative look, we have further enhanced our design capabilities to keep our mattress fabric designs current with the latest fashion trends and to meet changing customer style preferences. Along with our design excellence and innovation, we are well positioned to support our customers’ demand with our mirrored manufacturing platform, technical expertise and reactive capacity.

“We have also made steady progress in our operating performance since the end of fiscal 2014. We are well underway with the previously announced $9.5 million expansion plan to increase our production capacity, add finishing capabilities, and improve our overall efficiency and throughput. In spite of the ongoing expansion disruptions in our operations and the related short-term production challenges in the second quarter, we are pleased with our ability to meet the higher demand with outstanding delivery performance and speed to market. As we continue to expand our capacity, we expect to more fully benefit from these operational improvements in the second half of fiscal 2015. These investments further demonstrate Culp’s commitment to our customers, and we look forward to the additional opportunities to grow our mattress fabrics business.

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CFI Announces Results for Second Quarter Fiscal 2015

Page 3

December 3, 2014

“Culp-Lava, our mattress cover operation, had a much improved performance in the second quarter and we are pleased with the added contribution from our newest product category,” added Culp. “Our management team has done an outstanding job in developing a stable mattress cover operation with the ability to deliver the same style and value that is synonymous with the Culp brand. With the addition of mattress covers, we have further enhanced our competitive position as a fully integrated and leading supplier of all product categories in mattress fabrics.”

Upholstery Fabrics Segment

Sales for this segment were $31.0 million for the second quarter of fiscal 2015, a 2.3 percent improvement compared with sales of $30.3 million in the second quarter of fiscal 2014.

“We are pleased with our financial and operating performance for upholstery fabrics for the second quarter of fiscal 2015, which was in line with our expectations,” noted Boyd Chumbley, executive vice president of Culp’s upholstery fabrics division. “These results reflect consistent execution of our strategy with steady growth in sales since the beginning of the fiscal year. Our sales for the second quarter include significantly higher sales of cut and sewn kits compared with a year ago.

“Our creative designs and focused efforts on product innovation continue to be the key drivers of our sales performance. We are optimistic about the positive response from our key customers, with strong placements at the recent October furniture market. We are also diversifying our customer base, as a result of our marketing strategies to target additional end-user markets for upholstery fabrics, including the hospitality market and the “lifestyle” retail category. Our flexible global platform supports these marketing efforts and allows us to respond to changing market trends and consumer style preferences. China produced fabrics represent 92 percent of Culp’s upholstery fabrics sales. Importantly, our China operation allows us to produce a diverse product mix of fabric styles and price points with excellent service and quality.

“As previously announced, our sales from Culp Europe have not met our expectations, primarily as a result of the ongoing economic concerns in Europe. After considerable review, we have decided to phase out the finished goods warehouse and distribution facility located in Poznan, Poland. As a result, we incurred a modest charge of approximately $200,000 for closing related costs during the second quarter. We expect minimal operating expenses going forward as this closure is completed by the end of the third fiscal quarter. We intend to continue assessing the best strategy for selling upholstery fabric into the European market as conditions improve,” said Chumbley.

Balance Sheet

“We have continued to maintain a strong financial position, even as we made significant investments in our mattress fabrics business, returned cash to shareholders and reduced our debt during the first half of this fiscal year,” added Ken Bowling, chief financial officer of Culp, Inc. “Notably, the company has generated $9.2 million in free cash flow through the first six months of fiscal 2015, compared with $7.5 million for the same period last year. A key factor in our strong free cash flow this fiscal year has been the efficient use of working capital, especially inventory. Both business units have done a great job of managing working capital this fiscal year. With respect to our overall cash position, as of the end of the second quarter, we reported $35.3 million in cash and cash equivalents and short-term investments. This cash position reflects debt payments of $2.7 million made during the quarter. Total debt at the end of the second quarter was $2.2 million, which represents the final installment on our term loan due next August. Our net cash position, or cash minus total debt, was $33.1 million at the end of the second quarter, representing the highest net cash level in the company’s history.”

Dividend Increase and Share Repurchases

The company also announced that its Board of Directors has approved a 20 percent increase in its quarterly cash dividend from $0.05 to $0.06 per share, commencing in the third quarter of fiscal 2015. The company has doubled its quarterly cash dividend since reinstating the dividend in June 2012. This payment will be made on January 16, 2015, to shareholders of record as of January 2, 2015. 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 Second Quarter Fiscal 2015

Page 4

December 3, 2014

During the first six months of fiscal 2015, the company purchased 43,014 shares of Culp common stock for $745,000, pursuant to the $5.0 million share repurchase program authorized by the Board of Directors in February 2014. This leaves $4.3 million available for additional share repurchases.

Since June 2011, the company has returned a total of $27 million to shareholders in the form of regular quarterly and special dividends and share repurchases.

Outlook

Commenting on the outlook for the third quarter of fiscal 2015, Saxon remarked, “We expect overall sales to be two percent to five percent higher as compared with the third quarter of last year.

“We expect sales in our mattress fabrics segment to be three percent to six percent higher compared with the same period a year ago. Operating income and margins in this segment are expected to be substantially higher than the same period a year ago due primarily to significant operational improvement in the Culp-Lava mattress cover business as compared to last year. We also expect to realize some initial benefit from our capital investment program late in the third quarter.

“In our upholstery fabrics segment, we expect sales to be flat to slightly lower than the previous year’s third quarter results. We believe the upholstery fabric segment’s operating income and margins will be slightly lower than the same quarter of last year. These projections compare to an exceptionally strong third quarter for upholstery fabrics in fiscal 2014 as demand was affected by customers anticipating longer lead times due to the Chinese New Year holiday occurring in late January. In 2015, the Chinese New Year holiday falls in mid-February, therefore potentially causing some demand to be pushed into our fourth fiscal quarter. Additionally, we are also experiencing higher operating costs associated with our Culp China operation.

“Considering these factors, the company expects to report pre-tax income for the third fiscal quarter of 2015 in the range of $5.0 million to $5.8 million. Pre-tax income for last year’s third quarter was $4.6 million.

“For the full fiscal year, we expect sales and pre-tax income to be higher than fiscal 2014, with an improvement in profitability expected in the second half of this fiscal year as compared with the first half of the year. Capital expenditures for fiscal 2015 are expected to be approximately $10 million, primarily related to expansion projects for mattress fabrics. Additionally, the company expects a strong year of free cash flow, even with a higher than normal level of capital expenditures.”

In closing, Saxon remarked, “We are pleased with our results to date for fiscal 2015, which reflect consistent growth in sales compared with the same period last year. We have many reasons to be optimistic about our future direction and ability to meet our growth objectives. Our outstanding design capabilities and innovative product offerings are resonating with customers in both businesses. We have the ability to leverage our scalable and global manufacturing platforms to deliver these products and to meet changing customer style preferences. We believe Culp is favorably positioned for continued growth in this environment with the financial strength to execute our strategic initiatives and reward our shareholders. Above all, we are committed to outstanding performance for our customers as a financially stable and trusted source for innovative fabrics.”

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.

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CFI Announces Results for Second Quarter Fiscal 2015

Page 5

December 3, 2014

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, profit margins, profitability, operating income, SG&A or other expenses, pre-tax income, 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 11, 2014 for the fiscal year ended April 27, 2014. In addition, please note that the company is not responsible for changes made to this release by wire services, internet services, or other media.

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CFI Announces Results for Second Quarter Fiscal 2015

Page 6

December 3, 2014

CULP, INC.

Condensed Financial Highlights

(Unaudited)

	Three Months Ended				Six Months Ended
	November 2,		October 27,		November 2,		October 27,
	2014		2013		2014		2013

Net sales	$	73,991,000	$	70,589,000	$	150,051,000	$	140,730,000
Income before income taxes	$	4,890,000	$	4,814,000	$	10,349,000	$	10,349,000
Net income	$	3,001,000	$	3,096,000	$	6,346,000	$	6,326,000
Net income per share:
Basic	$	0.25	$	0.25	$	0.52	$	0.52
Diluted	$	0.24	$	0.25	$	0.51	$	0.51

Adjusted net income	$	4,103,000	$	4,063,000	$	8,683,000	$	8,735,000
Adjusted net income per share
Basic	$	0.34	$	0.33	$	0.71	$	0.72
Diluted	$	0.33	$	0.33	$	0.70	$	0.70

Average shares outstanding:
Basic		12,218,000		12,183,000		12,215,000		12,165,000
Diluted		12,401,000		12,389,000		12,403,000		12,391,000

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

	Three Months Ended				Six Months Ended
	November 2,		October 27,		November 2,		October 27,
	2014		2013		2014		2013

Income before income taxes	$	4,890,000	$	4,814,000	$	10,349,000	$	10,349,000
Adjusted income taxes (2)	$	787,000	$	751,000	$	1,666,000	$	1,614,000
Adjusted net income	$	4,103,000	$	4,063,000	$	8,683,000	$	8,735,000

(1)	Culp, Inc. currently does not incur cash income tax expense in the U.S. due to its $45.7 million in net operating loss carryforwards as of April 27, 2014. Therefore, adjusted net income is calculated using only 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 16.1% for fiscal 2015 and 15.6% for fiscal 2014.

-MORE-

CFI Announces Results for Second Quarter Fiscal 2015

Page 7

December 3, 2014

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

For the Six Months Ended November 2, 2014, and October 27, 2013

(Unaudited)

(Amounts in Thousands)

	SIX MONTHS ENDED

	Amounts
	November 2,			October 27,
	2014			2013


Consolidated Effective GAAP Income Tax Rate (1)		38.7	%		38.9	%

Non-Cash U.S. Income Tax Expense		(21.9	)%		(23.0	)%

Non-Cash Foreign Income Tax Expense		(0.7	)%		(0.3	)%

Consolidated Adjusted Effective Income Tax Rate (2)		16.1	%		15.6	%

	THREE MONTHS ENDED
	As reported					November 2, 2014		As reported					October 27, 2013
	November 2,					Proforma Net		October 27,					Proforma Net
	2014		Adjustments			of Adjustments		2013		Adjustments			of Adjustments

Income before income taxes	$	4,890	$	-		$	4,890	$	4,814				$	4,814

Income taxes (3)		1,889	$	(1,102	)		787		1,718	$	(967	)		751
Net income	$	3,001	$	1,102		$	4,103	$	3,096	$	967		$	4,063

Net income per share-basic	$	0.25	$	0.09		$	0.34	$	0.25	$	0.08		$	0.33
Net income per share-diluted	$	0.24	$	0.09		$	0.33	$	0.25	$	0.08		$	0.33
Average shares outstanding-basic		12,218		12,218			12,218		12,183		12,183			12,183
Average shares outstanding-diluted		12,401		12,401			12,401		12,389		12,389			12,389


	SIX MONTHS ENDED
	As reported					November 2, 2014		As reported					October 27, 2013
	November 2,					Proforma Net		October 27,					Proforma Net
	2014		Adjustments			of Adjustments		2013		Adjustments			of Adjustments

Income before income taxes	$	10,349	$	-		$	10,349	$	10,349	$	-		$	10,349

Income taxes (3)		4,003	$	(2,337	)		1,666		4,023	$	(2,409	)		1,614
Net income	$	6,346	$	2,337		$	8,683	$	6,326	$	2,409		$	8,735

Net income per share-basic	$	0.52	$	0.19		$	0.71	$	0.52	$	0.20		$	0.72
Net income per share-diluted	$	0.51	$	0.19		$	0.70	$	0.51	$	0.19		$	0.70
Average shares outstanding-basic		12,215		12,215			12,215		12,165		12,165			12,165
Average shares outstanding-diluted		12,403		12,403			12,403		12,391		12,391			12,391

(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.

-MORE-

CFI Announces Results for Second Quarter Fiscal 2015

Page 8

December 3, 2014

Reconciliation of Free Cash Flow

For the Six Months Ended November 2, 2014, and October 27, 2013

(Unaudited)

(Amounts in thousands)

	Six Months Ended			Six Months Ended
	November 2, 2014			October 27, 2013

Net cash provided by operating activities	$	14,538		$	9,443
Minus: Capital Expenditures		(5,087	)		(1,900	)
Add: Proceeds from the sale of equipment		391			113
Add: Proceeds from life insurance policies		320			-
Minus: Payments on life insurance policies		-			(30	)
Minus: Purchase of long-term investments		(1,146	)		-
Add: Excess tax benefits related to stock-based compensation		108			143
Effect of exchange rate changes on cash and cash equivalents		80			(298	)

Free Cash Flow	$	9,204		$	7,471

-MORE-

CFI Announces Results for Second Quarter Fiscal 2015

Page 9

December 3, 2014

Reconciliation of Return on Capital

For the Six Months Ended November 2, 2014, and October 27, 2013

(Unaudited)

(Amounts in thousands)

	Six Months Ended						Six Months Ended
	November 2, 2014						October 27, 2013

Consolidated Income from Operations	$	10,195					$	11,009
Average Capital Employed (2)		77,515						76,019

Return on Average Capital Employed (1)		26.3	%					29.0	%

Average Capital Employed

	November 2, 2014			August 3, 2014			April 27, 2014

Total assets	$	156,662		$	154,212		$	160,935
Total liabilities		(44,988	)		(45,065	)		(49,191	)

Subtotal	$	111,674		$	109,147		$	111,744
Less:
Cash and cash equivalents		(28,953	)		(24,665	)		(29,303	)
Short-term investments		(6,318	)		(6,311	)		(6,294	)
Long-term investments		(1,911	)		(1,749	)		(765	)
Income taxes receivable		-			(136	)		(121	)
Deferred income taxes - current		(6,191	)		(6,203	)		(6,230	)
Deferred income taxes - non-current		(508	)		(973	)		(2,040	)
Current maturities of long-term debt		2,200			2,200			2,200
Line of credit		-			569			586
Income taxes payable - current		268			387			442
Income taxes payable - long-term		3,980			4,037			3,962
Deferred income taxes - non-current		1,395			1,013			1,013
Long-term debt, less current maturities		-			2,200			2,200

Total Capital Employed	$	75,636		$	79,516		$	77,394


Average Capital Employed (2)	$	77,515


	October 27, 2013			July 28, 2013			April 28, 2013

Total assets	$	156,242		$	151,101		$	144,706
Total liabilities		(54,727	)		(52,516	)		(49,123	)

Subtotal	$	101,515		$	98,585		$	95,583
Less:
Cash and cash equivalents		(24,267	)		(21,423	)		(23,530	)
Short-term investments		(6,220	)		(6,174	)		(5,286	)
Income taxes receivable		-			(292	)		(318	)
Deferred income taxes - current		(7,745	)		(7,747	)		(7,709	)
Deferred income taxes - non-current		(661	)		(651	)		(753	)
Current maturities of long-term debt		2,200			2,200			2,200
Line of credit		585			560			561
Income taxes payable - current		304			320			285
Income taxes payable - long-term		4,141			4,176			4,191
Deferred income taxes - non-current		5,016			4,335			3,075
Long-term debt, less current maturities		2,200			4,400			4,400

Total Capital Employed	$	77,068		$	78,289		$	72,699


Average Capital Employed (2)	$	76,019

Notes:

(1)	Return on average capital employed represents operating income for the six month period ending November 2, 2014 or October 27, 2013 times two 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 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 six months ending November 2, 2014 was computed using the three quarterly periods ending November 2, 2014, August 3, 2014 and April 27, 2014.
	Average capital employed used for the six months ending October 27, 2013 was computed using the three quarterly periods ending October 27, 2013, July 28, 2013 and April 28, 2013.

-END-

EX-99.(B) 3 a50991326ex99b.htm EXHIBIT 99(B) a50991326ex99b.htm

Exhibit 99(b)

Page 1 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THREE MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)


	THREE MONTHS ENDED

	Amounts									Percent of Sales
	November 2,			October 27,			% Over			November 2,			October 27,
	2014			2013			(Under)			2014			2013

Net sales	$	73,991			70,589			4.8	%		100.0	%		100.0	%
Cost of sales		61,713			58,354			5.8	%		83.4	%		82.7	%
Gross profit		12,278			12,235			0.4	%		16.6	%		17.3	%

Selling, general and
administrative expenses		7,379			7,200			2.5	%		10.0	%		10.2	%
Income from operations		4,899			5,035			(2.7	)%		6.6	%		7.1	%

Interest expense		-			99			(100.0	)%		0.0	%		0.1	%
Interest income		(153	)		(102	)		50.0	%		(0.2	)%		(0.1	)%
Other expense		162			224			(27.7	)%		0.2	%		0.3	%
Income before income taxes		4,890			4,814			1.6	%		6.6	%		6.8	%

Income taxes*		1,889			1,718			10.0	%		38.6	%		35.7	%
Net income	$	3,001			3,096			(3.1	)%		4.1	%		4.4	%

Net income per share-basic	$	0.25		$	0.25			0.0	%
Net income per share-diluted	$	0.24		$	0.25			(4.0	)%
Average shares outstanding-basic		12,218			12,183			0.3	%
Average shares outstanding-diluted		12,401			12,389			0.1	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)


	THREE MONTHS ENDED

	Amounts							Percent of Sales
	November 2,		October 27,		% Over			November 2,			October 27,
	2014		2013		(Under)			2014			2013


Income before income taxes (see above)	$	4,890		4,814		1.6	%		6.6	%		6.8	%

Adjusted Income taxes (2)*		787		751		4.8	%		16.1	%		15.6	%
Adjusted net income		4,103		4,063		1.0	%		5.5	%		5.8	%

Adjusted net income per share-basic	$	0.34	$	0.33		3.0	%
Adjusted net income per share-diluted	$	0.33	$	0.33		0.0	%
Average shares outstanding-basic		12,218		12,183		0.3	%
Average shares outstanding-diluted		12,401		12,389		0.1	%

(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $45.7 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 SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)


	SIX MONTHS ENDED

	Amounts									Percent of Sales
	November 2,			October 27,			% Over			November 2,			October 27,
	2014			2013			(Under)			2014			2013

Net sales	$	150,051			140,730			6.6	%		100.0	%		100.0	%
Cost of sales		125,058			115,422			8.3	%		83.3	%		82.0	%
Gross profit		24,993			25,308			(1.2	)%		16.7	%		18.0	%

Selling, general and
administrative expenses		14,798			14,299			3.5	%		9.9	%		10.2	%
Income from operations		10,195			11,009			(7.4	)%		6.8	%		7.8	%

Interest expense		67			239			(72.0	)%		0.0	%		0.2	%
Interest income		(294	)		(195	)		50.8	%		(0.2	)%		(0.1	)%
Other expense		73			616			(88.1	)%		0.0	%		0.4	%
Income before income taxes		10,349			10,349			0.0	%		6.9	%		7.4	%

Income taxes*		4,003			4,023			(0.5	)%		38.7	%		38.9	%
Net income	$	6,346			6,326			0.3	%		4.2	%		4.5	%

Net income per share-basic	$	0.52		$	0.52			0.0	%
Net income per share-diluted	$	0.51		$	0.51			0.0	%
Average shares outstanding-basic		12,215			12,165			0.4	%
Average shares outstanding-diluted		12,403			12,391			0.1	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)


	SIX MONTHS ENDED

	Amounts							Percent of Sales
	November 2,		October 27,		% Over			November 2,			October 27,
	2014		2013		(Under)			2014			2013


Income before income taxes (see above)	$	10,349		10,349		0.0	%		6.9	%		7.4	%

Adjusted Income taxes (2)*		1,666		1,614		3.2	%		16.1	%		15.6	%
Adjusted net income		8,683		8,735		(0.6	)%		5.8	%		6.2	%

Adjusted net income per share-basic	$	0.71	$	0.72		(1.4	)%
Adjusted net income per share-diluted	$	0.70	$	0.70		0.0	%
Average shares outstanding-basic		12,215		12,165		0.4	%
Average shares outstanding-diluted		12,403		12,391		0.1	%

(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
NOVEMBER 2, 2014, OCTOBER 27, 2013, AND APRIL 27, 2014
(Unaudited)
(Amounts in Thousands)


	Amounts				Increase
	November 2,		October 27,		(Decrease)						* April 27,
	2014		2013		Dollars			Percent			2014

Current assets
Cash and cash equivalents	$	28,953		24,267		4,686			19.3	%		29,303
Short-term investments		6,318		6,220		98			1.6	%		6,294
Accounts receivable		25,045		24,937		108			0.4	%		27,409
Inventories		38,228		44,882		(6,654	)		(14.8	)%		40,674
Deferred income taxes		6,191		7,745		(1,554	)		(20.1	)%		6,230
Income taxes receivable		-		-		-			0.0	%		121
Other current assets		2,303		2,550		(247	)		(9.7	)%		2,344
Total current assets		107,038		110,601		(3,563	)		(3.2	)%		112,375

Property, plant & equipment, net		33,204		30,559		2,645			8.7	%		31,376
Goodwill		11,462		11,462		-			0.0	%		11,462
Deferred income taxes		508		661		(153	)		(23.1	)%		2,040
Long-term Investments		1,911		-		1,911			100.0	%		765
Other assets		2,539		2,959		(420	)		(14.2	)%		2,917

Total assets	$	156,662		156,242		420			0.3	%		160,935



Current liabilities
Current maturities of long-term debt	$	2,200		2,200		-			0.0	%		2,200
Accounts payable - trade		25,450		28,543		(3,093	)		(10.8	)%		26,686
Accounts payable - capital expenditures		178		66		112			169.7	%		277
Accrued expenses		7,723		11,672		(3,949	)		(33.8	)%		9,181
Income taxes payable - current		268		304		(36	)		(11.8	)%		442
Total current liabilities		35,819		42,785		(6,966	)		(16.3	)%		38,786

Income taxes payable - long-term		3,980		4,141		(161	)		(3.9	)%		3,962
Deferred income taxes		1,395		5,016		(3,621	)		(72.2	)%		1,013
Line of credit		-		585		(585	)		(100.0	)%		586
Deferred compensation		3,794		-		3,794			100.0	%		2,644
Long-term debt , less current maturities		-		2,200		(2,200	)		(100.0	)%		2,200

Total liabilities		44,988		54,727		(9,739	)		(17.8	)%		49,191

Shareholders' equity		111,674		101,515		10,159			10.0	%		111,744

Total liabilities and
shareholders' equity	$	156,662		156,242		420			0.3	%		160,935

Shares outstanding		12,219		12,250		(31	)		(0.3	)%		12,250



* Derived from audited financial statements.

Exhibit 99(b)

Page 4 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
Unaudited
(Amounts in Thousands)


	SIX MONTHS ENDED

	Amounts
	November 2,			October 27,
	2014			2013

Cash flows from operating activities:
Net income	$	6,346		$	6,326
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		2,812			2,636
Amortization of other assets		94			81
Stock-based compensation		291			376
Excess tax benefit related to stock-based compensation		(108	)		(143	)
Deferred income taxes		2,061			2,140
Gain on sale of equipment		(35	)		(74	)
Foreign currency exchange (gains) losses		(171	)		203
Changes in assets and liabilities, net of effects of acquisition of assets:
Accounts receivable		2,360			(1,419	)
Inventories		2,467			(6,331	)
Other current assets		34			(437	)
Other assets		(36	)		(47	)
Accounts payable-trade		(1,275	)		5,923
Accrued expenses and deferred compensation		(324	)		(158	)
Income taxes		22			367
Net cash provided by operating activities		14,538			9,443

Cash flows from investing activities:
Capital expenditures		(5,087	)		(1,900	)
Net cash paid for acquisition of assets		-			(2,640	)
Proceeds from the sale of equipment		391			113
Proceeds from life insurance policies		320			-
Payments on life insurance policies		-			(30	)
Proceeds from the sale of short-term investments		1,628			-
Purchase of short-term investments		(1,675	)		(1,047	)
Purchase of long-term investments		(1,146	)		-
Net cash used in investing activities		(5,569	)		(5,504	)

Cash flows from financing activities:
Payments on lines of credit		(538	)		-
Payments on long-term debt		(2,200	)		(2,200	)
Proceeds from common stock issued		89			194
Common stock shares repurchased		(745	)		-
Dividends paid		(6,113	)		(979	)
Debt issance costs		-			(62	)
Excess tax benefit related to stock-based compensation		108			143
Net cash used in financing activities		(9,399	)		(2,904	)

Effect of exchange rate changes on cash and cash equivalents		80			(298	)

(Decrease) increase in cash and cash equivalents		(350	)		737

Cash and cash equivalents at beginning of period		29,303			23,530

Cash and cash equivalents at end of period	$	28,953		$	24,267


Free Cash Flow (1)	$	9,204		$	7,471



(1) Free Cash Flow reconciliation is as follows:
	FY 2015			FY 2014
A) Net cash provided by operating activities	$	14,538		$	9,443
B) Minus: Capital Expenditures		(5,087	)		(1,900	)
C) Add: Proceeds from the sale of equipment		391			113
D) Add: Proceeds from life insurance policies		320			-
E) Minus: Payments on life insurance policies		-			(30	)
F) Minus: Purchase of long-term investments		(1,146	)		-
G) Add: Excess tax benefit related to stock-based compensation		108			143
H) Effect of exchange rate changes on cash and cash equivalents		80			(298	)
	$	9,204		$	7,471

Exhibit 99(b)

Page 5 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
(Unaudited)
(Amounts in thousands)


	THREE MONTHS ENDED

	Amounts									Percent of Total Sales
	November 2			October 27,			% Over			November 2			October 27,
Net Sales by Segment	2014			2013			(Under)			2014			2013

Mattress Fabrics	$	43,038			40,331			6.7	%		58.2	%		57.1	%
Upholstery Fabrics		30,953			30,258			2.3	%		41.8	%		42.9	%

Net Sales	$	73,991			70,589			4.8	%		100.0	%		100.0	%


Gross Profit by Segment										Gross Profit Margin

Mattress Fabrics	$	7,324			7,322			0.0	%		17.0	%		18.2	%
Upholstery Fabrics		4,954			4,913			0.8	%		16.0	%		16.2	%
Gross Profit	$	12,278			12,235			0.4	%		16.6	%		17.3	%



Selling, General and Administrative Expenses by Segment										Percent of Sales

Mattress Fabrics	$	2,592			2,620			(1.1	) %		6.0	%		6.5	%
Upholstery Fabrics		3,285			3,170			3.6	%		10.6	%		10.5	%
Unallocated Corporate expenses		1,502			1,410			6.5	%		2.0	%		2.0	%
Selling, General and Administrative Expenses	$	7,379			7,200			2.5	%		10.0	%		10.2	%


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

Mattress Fabrics	$	4,733			4,702			0.7	%		11.0	%		11.7	%
Upholstery Fabrics		1,668			1,743			(4.3	) %		5.4	%		5.8	%
Unallocated corporate expenses		(1,502	)		(1,410	)		6.5	%		(2.0	)%		(2.0	)%
Operating income	$	4,899			5,035			(2.7	) %		6.6	%		7.1	%


Depreciation by Segment

Mattress Fabrics	$	1,230			1,181			4.1	%
Upholstery Fabrics		184			150			22.7	%
Depreciation	$	1,414			1,331			6.2	%

Exhibit 99(b)

Page 6 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
(Unaudited)
(Amounts in thousands)


	SIX MONTHS ENDED

	Amounts									Percent of Total Sales
	November 2,			October 27,			% Over			November 2,			October 27,
Net Sales by Segment	2014			2013			(Under)			2014			2013

Mattress Fabrics	$	85,860			78,494			9.4	%		57.2	%		55.8	%
Upholstery Fabrics		64,191			62,236			3.1	%		42.8	%		44.2	%

Net Sales	$	150,051			140,730			6.6	%		100.0	%		100.0	%


Gross Profit by Segment										Gross Profit Margin

Mattress Fabrics	$	14,527			14,713			(1.3	)%		16.9	%		18.7	%
Upholstery Fabrics		10,466			10,595			(1.2	)%		16.3	%		17.0	%
Gross Profit	$	24,993			25,308			(1.2	)%		16.7	%		18.0	%


Selling, General and Administrative Expenses by Segment										Percent of Sales

Mattress Fabrics	$	5,166			4,994			3.4	%		6.0	%		6.4	%
Upholstery Fabrics		6,737			6,436			4.7	%		10.5	%		10.3	%
Unallocated Corporate expenses		2,895			2,869			0.9	%		1.9	%		2.0	%
Selling, General, and Administrative Expenses	$	14,798			14,299			3.5	%		9.9	%		10.2	%


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

Mattress Fabrics	$	9,361			9,719			(3.7	)%		10.9	%		12.4	%
Upholstery Fabrics		3,729			4,159			(10.3	)%		5.8	%		6.7	%
Unallocated corporate expenses		(2,895	)		(2,869	)		0.9	%		(1.9	)%		(2.0	)%
Operating income	$	10,195			11,009			(7.4	)%		6.8	%		7.8	%


Return on Capital (1)

Mattress Fabrics		29.8	%		33.0	%
Upholstery Fabrics		42.6	%		43.2	%
Unallocated Corporate		N/A			N/A
Consolidated		26.3	%		29.0	%

Capital Employed (2)

Mattress Fabrics		62,874			58,944			6.7	%
Upholstery Fabrics		16,069			20,300			(20.8	)%
Unallocated Corporate		(3,307	)		(2,176	)		N/A
Consolidated		75,636			77,068			(1.9	)%


Depreciation by Segment

Mattress Fabrics	$	2,448			2,331			5.0	%
Upholstery Fabrics		364			305			19.3	%
Depreciation	$	2,812			2,636			6.7	%

Notes:

(1) See pages 8 and 9 of this financial information release for calculations.

(2) The capital employed balances are as of November 2, 2014 and October 27, 2013.

Exhibit 99(b)

Page 7 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
(UNAUDITED)
(AMOUNTS IN THOUSANDS)



	Quarter Ended
													Trailing 12
													Months
	1/26/14			4/27/2014			8/3/2014			11/2/2014			11/2/2014

Net income	$	8,381		$	2,740		$	3,344		$	3,001		$	17,466
Income taxes		(3,807	)		1,380			2,115			1,889			1,577
Interest income, net		(57	)		(43	)		(74	)		(153	)		(327	)
Depreciation and amortization expense		1,370			1,394			1,446			1,460			5,670
Stock based compensation		175			159			46			245			625
Adjusted EBITDA	$	6,062		$	5,630		$	6,877		$	6,442		$	25,011



	Quarter Ended
													Trailing 12
													Months
	1/27/13			4/28/2013			7/28/2013			10/27/2013			10/27/2013

Net income	$	2,823		$	3,702		$	3,230		$	3,096		$	12,851
Income taxes		1,700			2,161			2,305			1,718			7,884
Interest expense (income), net		40			50			48			(3	)		135
Depreciation and amortization expense		1,338			1,354			1,344			1,373			5,409
Stock based compensation		111			254			152			224			741
Adjusted EBITDA	$	6,012		$	7,521		$	7,079		$	6,408		$	27,020

Exhibit 99(b)

Page 8 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE SIX MONTHS ENDED NOVEMBER 2, 2014
(Amounts in Thousands)
(Unaudited)


	Operating Income
	Six Months			Average			Return on
	Ended			Capital			Avg. Capital
	November 2, 2014 (1)			Employed (3)			Employed (2)

Mattress Fabrics	$	9,361		$	62,756			29.8	%
Upholstery Fabrics		3,729			17,513			42.6	%
(less: Unallocated Corporate)		(2,895	)		(2,754	)		N/A
Total	$	10,195		$	77,515			26.3	%




Average Capital Employed	As of the three Months Ended November 2, 2014												As of the three Months Ended August 3, 2014												As of the three Months Ended April 27, 2014
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total

Total assets		80,121			30,916			45,625			156,662			81,400			30,520			42,292			154,212			79,055			34,987			46,893			160,935
Total liabilities		(17,247	)		(14,847	)		(12,894	)		(44,988	)		(18,464	)		(11,468	)		(15,133	)		(45,065	)		(16,598	)		(17,568	)		(15,025	)		(49,191	)

Subtotal	$	62,874		$	16,069		$	32,731		$	111,674		$	62,936		$	19,052		$	27,159		$	109,147		$	62,457		$	17,419		$	31,868		$	111,744
Less:
Cash and cash equivalents		-			-			(28,953	)		(28,953	)		-			-			(24,665	)		(24,665	)		-			-			(29,303	)		(29,303	)
Short-term investments		-			-			(6,318	)		(6,318	)		-			-			(6,311	)		(6,311	)		-			-			(6,294	)		(6,294	)
Long-term investments		-			-			(1,911	)		(1,911	)		-			-			(1,749	)		(1,749	)		-			-			(765	)		(765	)
Income taxes receivable		-			-			-			-			-			-			(136	)		(136	)		-			-			(121	)		(121	)
Deferred income taxes - current		-			-			(6,191	)		(6,191	)		-			-			(6,203	)		(6,203	)		-			-			(6,230	)		(6,230	)
Deferred income taxes - non-current		-			-			(508	)		(508	)		-			-			(973	)		(973	)		-			-			(2,040	)		(2,040	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200			-			-			2,200			2,200
Line of credit		-			-			-			-			-			-			569			569			-			-			586			586
Income taxes payable - current		-			-			268			268			-			-			387			387			-			-			442			442
Income taxes payable - long-term		-			-			3,980			3,980			-			-			4,037			4,037			-			-			3,962			3,962
Deferred income taxes - non-current		-			-			1,395			1,395			-			-			1,013			1,013			-			-			1,013			1,013
Long-term debt, less current maturities		-			-			-			-			-			-			2,200			2,200			-			-			2,200			2,200

Total Capital Employed	$	62,874		$	16,069		$	(3,307	)	$	75,636		$	62,936		$	19,052		$	(2,472	)	$	79,516		$	62,457		$	17,419		$	(2,482	)	$	77,394



	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Average Capital Employed (3)	$	62,756		$	17,513		$	(2,754	)	$	77,515

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

(2) Return on average capital employed represents operating income for the six month period ending November 2, 2014 times two 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 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 three periods ending November 2, 2014, August 3, 2014 and April 27, 2014.

Exhibit 99(b)

Page 9 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE SIX MONTHS ENDED OCTOBER 27, 2013
(Amounts in Thousands)
(Unaudited)

	Operating Income
	Six Months			Average			Return on
	Ended			Capital			Avg. Capital
	October 27, 2013 (1)			Employed (3)			Employed (2)

Mattress Fabrics	$	9,719		$	58,828			33.0	%
Upholstery Fabrics		4,159			19,274			43.2	%
(less: Unallocated Corporate)		(2,869	)		(2,083	)		N/A
Total	$	11,009		$	76,019			29.0	%




Average Capital Employed	As of the three Months Ended October 27, 2013												As of the three Months Ended July 28, 2013												As of the three Months Ended April 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		79,444			35,881			40,917			156,242			78,217			34,381			38,503			151,101			73,954			30,995			39,757			144,706
Total liabilities		(20,500	)		(15,581	)		(18,646	)		(54,727	)		(18,627	)		(14,172	)		(19,717	)		(52,516	)		(16,004	)		(13,682	)		(19,437	)		(49,123	)

Subtotal	$	58,944		$	20,300		$	22,271		$	101,515		$	59,590		$	20,209		$	18,786		$	98,585		$	57,950		$	17,313		$	20,320		$	95,583
Less:
Cash and cash equivalents		-			-			(24,267	)		(24,267	)		-			-			(21,423	)		(21,423	)		-			-			(23,530	)		(23,530	)
Short-term investments		-			-			(6,220	)		(6,220	)		-			-			(6,174	)		(6,174	)		-			-			(5,286	)		(5,286	)
Income taxes receivable		-			-			-			-			-			-			(292	)		(292	)		-			-			(318	)		(318	)
Deferred income taxes - current		-			-			(7,745	)		(7,745	)		-			-			(7,747	)		(7,747	)		-			-			(7,709	)		(7,709	)
Deferred income taxes - non-current		-			-			(661	)		(661	)		-			-			(651	)		(651	)		-			-			(753	)		(753	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200			-			-			2,200			2,200
Line of credit		-			-			585			585			-			-			560			560			-			-			561			561
Income taxes payable - current		-			-			304			304			-			-			320			320			-			-			285			285
Income taxes payable - long-term		-			-			4,141			4,141			-			-			4,176			4,176			-			-			4,191			4,191
Deferred income taxes - non-current		-			-			5,016			5,016			-			-			4,335			4,335			-			-			3,075			3,075
Long-term debt, less current maturities		-			-			2,200			2,200			-			-			4,400			4,400			-			-			4,400			4,400

Total Capital Employed	$	58,944		$	20,300		$	(2,176	)	$	77,068		$	59,590		$	20,209		$	(1,510	)	$	78,289		$	57,950		$	17,313		$	(2,564	)	$	72,699



	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total

Average Capital Employed (3)	$	58,828		$	19,274		$	(2,083	)	$	76,019

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

(2) Return on average capital employed represents operating income for the six month period ending October 27, 2013 times two 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 three periods ending October 27, 2013, July 28, 2013 and April 28, 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 SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013

Unaudited

(Amounts in Thousands)




		SIX MONTHS ENDED

		Amounts
		November 2,			October 27,
		2014			2013


Consolidated Effective GAAP Income Tax Rate	(1)		38.7	%		38.9	%

Non-Cash U.S. Income Tax Expense			(21.9	)%		(23.0	)%

Non-Cash Foreign Income Tax Expense			(0.7	)%		(0.3	)%

Consolidated Adjusted Effective Income Tax Rate	(2)		16.1	%		15.6	%

	THREE MONTHS ENDED
	As reported					November 2, 2014		As reported					October 27, 2013
	November 2,					Proforma Net		October 27,					Proforma Net
	2014		Adjustments			of Adjustments		2013		Adjustments			of Adjustments

Income before income taxes	$	4,890	$	-		$	4,890	$	4,814				$	4,814

Income taxes (3)		1,889	$	(1,102	)		787		1,718	$	(967	)		751
Net income	$	3,001	$	1,102		$	4,103	$	3,096	$	967		$	4,063

Net income per share-basic	$	0.25	$	0.09		$	0.34	$	0.25	$	0.08		$	0.33
Net income per share-diluted	$	0.24	$	0.09		$	0.33	$	0.25	$	0.08		$	0.33
Average shares outstanding-basic		12,218		12,218			12,218		12,183		12,183			12,183
Average shares outstanding-diluted		12,401		12,401			12,401		12,389		12,389			12,389



	SIX MONTHS ENDED
	As reported					November 2, 2014		As reported					October 27, 2013
	November 2,					Proforma Net		October 27,					Proforma Net
	2014		Adjustments			of Adjustments		2013		Adjustments			of Adjustments

Income before income taxes	$	10,349	$	-		$	10,349	$	10,349	$	-		$	10,349

Income taxes (3)		4,003	$	(2,337	)		1,666		4,023	$	(2,409	)		1,614
Net income	$	6,346	$	2,337		$	8,683	$	6,326	$	2,409		$	8,735

Net income per share-basic	$	0.52	$	0.19		$	0.71	$	0.52	$	0.20		$	0.72
Net income per share-diluted	$	0.51	$	0.19		$	0.70	$	0.51	$	0.19		$	0.70
Average shares outstanding-basic		12,215		12,215			12,215		12,165		12,165			12,165
Average shares outstanding-diluted		12,403		12,403			12,403		12,391		12,391			12,391

(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.

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