10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2014

Commission File No. 1-12597

CULP, INC.

(Exact name of registrant as specified in its charter)

NORTH CAROLINA	56-1001967
(State or other jurisdiction of incorporation or other organization)	(I.R.S. Employer Identification No.)
1823 Eastchester Drive High Point, North Carolina	27265-1402
(Address of principal executive offices)	(zip code)

(336) 889-5161

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to the filing requirements for at least the past 90 days.          x YES      NO  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period after the registrant was required to submit and post such files).     x  YES      NO  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer, large accelerated filer, and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one);

Large accelerated filer  o	Accelerated filer  x	Non-accelerated filer  o
	Smaller Reporting Company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).          o  YES      NO  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common shares outstanding at November 2, 2014:  12,218,521

Par Value: $0.05 per share

INDEX TO FORM 10-Q

For the period ended November 2, 2014

		Page
	Part I - Financial Statements
Item 1.         Financial Statements: (Unaudited)
	Consolidated Statements of Net Income -- Three and Six Months Ended November 2, 2014 and October 27, 2013	I-1
	Consolidated Statements of Comprehensive Income - Three and Six Months Ended November 2, 2014 and October 27, 2013	I-2
	Consolidated Balance Sheets -- November 2, 2014, October 27, 2013, and April 27, 2014	I-3
	Consolidated Statements of Cash Flows -- Six Months Ended November 2, 2014 and October 27, 2013	I-4
	Consolidated Statements of Shareholders' Equity	I-5
	Notes to Consolidated Financial Statements	I-6
	Cautionary Statement Concerning Forward-Looking Information	I-27
Item 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations		I-28
Item 3.          Quantitative and Qualitative Disclosures About Market Risk		I-46
Item 4.           Controls and Procedures		I-47
	Part II - Other Information
Item 1. Legal Proceedings		II-1
Item 1A. Risk Factors		II-1
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		II-1
Item 6. Exhibits		II-2
Signatures		II-3

Item 1:  Financial Statements

CULP, INC.
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
UNAUDITED
(Amounts in Thousands, Except for Per Share Data)
		THREE MONTHS ENDED
		November 2,			October 27,
		2014			2013
Net sales		$	73,991			70,589
Cost of sales			61,713			58,354
	Gross profit		12,278			12,235
Selling, general and
administrative expenses			7,379			7,200
	Income from operations		4,899			5,035
Interest expense			-			99
Interest income			(153	)		(102	)
Other expense			162			224
	Income before income taxes		4,890			4,814
Income taxes			1,889			1,718
	Net income	$	3,001			3,096
Net income per share, basic		$	0.25			0.25
Net income per share, diluted			0.24			0.25
Average shares outstanding, basic			12,218			12,183
Average shares outstanding, diluted			12,401			12,389
		SIX MONTHS ENDED
		November 2,			October 27,
		2014			2013
Net sales		$	150,051			140,730
Cost of sales			125,058			115,422
	Gross profit		24,993			25,308
Selling, general and
administrative expenses			14,798			14,299
	Income from operations		10,195			11,009
Interest expense			67			239
Interest income			(294	)		(195	)
Other expense			73			616
	Income before income taxes		10,349			10,349
Income taxes			4,003			4,023
	Net income	$	6,346			6,326
Net income per share, basic		$	0.52			0.52
Net income per share, diluted			0.51			0.51
Average shares outstanding, basic			12,215			12,165
Average shares outstanding, diluted			12,403			12,391
See accompanying notes to consolidated financial statements.

I-1

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
(UNAUDITED)
	THREE MONTHS ENDED
	November 2,			October 27,
	2014			2013
Net income	$	3,001		$	3,096
Other comprehensive (loss) gain
Unrealized (losses) gains on investments		(18	)		22
Total other comprehensive (loss) gain		(18	)		22
Comprehensive income	$	2,983		$	3,118
	SIX MONTHS ENDED
	November 2,			October 27,
	2014			2013
Net income	$	6,346		$	6,326
Other comprehensive loss
Unrealized losses on investments		(28	)		(113	)
Total other comprehensive loss		(28	)		(113	)
Comprehensive income	$	6,318		$	6,213
See accompanying notes to consolidated financial statements.

I-2

CULP, INC.
CONSOLIDATED BALANCE SHEETS
NOVEMBER 2, 2014, OCTOBER 27, 2013 AND APRIL 27, 2014
UNAUDITED
(Amounts in Thousands)
	November 2,			October 27,			* April 27,
	2014			2013			2014
Current assets:
Cash and cash equivalents	$	28,953			24,267			29,303
Short-term investments		6,318			6,220			6,294
Accounts receivable, net		25,045			24,937			27,409
Inventories		38,228			44,882			40,674
Deferred income taxes		6,191			7,745			6,230
Income taxes receivable		-			-			121
Other current assets		2,303			2,550			2,344
Total current assets		107,038			110,601			112,375
Property, plant and equipment, net		33,204			30,559			31,376
Goodwill		11,462			11,462			11,462
Deferred income taxes		508			661			2,040
Long-term investments		1,911			-			765
Other assets		2,539			2,959			2,917
Total assets	$	156,662			156,242			160,935
Current liabilities:
Current maturities of long-term debt	$	2,200			2,200			2,200
Accounts payable-trade		25,450			28,543			26,686
Accounts payable - capital expenditures		178			66			277
Accrued expenses		7,723			11,672			9,181
Income taxes payable - current		268			304			442
Total current liabilities		35,819			42,785			38,786
Income taxes payable - long-term		3,980			4,141			3,962
Deferred income taxes		1,395			5,016			1,013
Line of credit		-			585			586
Deferred compensation		3,794			-			2,644
Long-term debt, less current maturities		-			2,200			2,200
Total liabilities		44,988			54,727			49,191
Commitments and Contingencies (Note 16)
Shareholders' equity
Preferred stock, $0.05 par value, authorized
10,000,000		-			-			-
Common stock, $0.05 par value, authorized
40,000,000 shares, issued and outstanding
12,218,521 at November 2, 2014; 12,250,030
at October 27, 2013; and 12,250,030 at
April 27, 2014		611			612			612
Capital contributed in excess of par value		42,658			42,598			42,932
Accumulated earnings		68,493			58,364			68,260
Accumulated other comprehensive loss		(88	)		(59	)		(60	)
Total shareholders' equity		111,674			101,515			111,744
Total liabilities and shareholders' equity	$	156,662			156,242			160,935
* Derived from audited financial statements.
See accompanying notes to consolidated financial statements.

I-3

CULP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 2, 2014 AND OCTOBER 27, 2013
UNAUDITED
(Amounts in Thousands)
	SIX MONTHS ENDED
	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 acquistion 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 issuance 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
See accompanying notes to consolidated financial statements.

I-4

CULP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
UNAUDITED
(Dollars in thousands, except share data)
							Capital						Accumulated
							Contributed						Other			Total
	Common Stock						in Excess			Accumulated			Comprehensive			Shareholders’
	Shares			Amount			of Par Value			Earnings			Income (Loss)			Equity
Balance,  April 28, 2013		12,224,894		$	611			41,901			53,017			54		$	95,583
Net income		-			-			-			17,447			-			17,447
Stock-based compensation		-			-			710			-			-			710
Unrealized loss on investments		-			-			-			-			(114	)		(114	)
Excess tax benefit related to stock
based compensation		-			-			143			-			-			143
Fully vested common stock award		3,000			-			-			-			-			-
Common stock issued in connection														.
with exercise of stock options		23,125			1			193			-			-			194
Common stock surrendered for
withholding taxes payable		(989	)		-			(15	)		-			-			(15	)
Dividends paid		-			-			-			(2,204	)		-			(2,204	)
Balance,  April 27, 2014  *		12,250,030			612			42,932			68,260			(60	)		111,744
Net income		-			-			-			6,346			-			6,346
Stock-based compensation		-			-			291			-			-			291
Unrealized loss on investments		-			-			-			-			(28	)		(28	)
Excess tax benefit related to stock
based compensation		-			-			108			-			-			108
Common stock repurchased		(43,014	)		(2	)		(743	)								(745	)
Fully vested common stock award		3,000			-			-			-			-			-
Common stock issued in connection
with exercise of stock options		9,500			1			88									89
Common stock surrendered for
withholding taxes payable		(995	)		-			(18	)		-			-			(18	)
Dividends paid		-						-			(6,113	)		-			(6,113	)
Balance,  November 2, 2014		12,218,521		$	611			42,658			68,493			(88	)	$	111,674
* Derived from audited financial statements.
See accompanying notes to consolidated financial statements.

I-5

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.  Basis of Presentation

The accompanying unaudited consolidated financial statements of Culp, Inc. and subsidiaries (the “company”) include all adjustments, which are, in the opinion of management, necessary for fair presentation of the results of operations and financial position.  All of these adjustments are of a normal recurring nature. Results of operations for interim periods may not be indicative of future results.  The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, which are included in the company’s annual report on Form 10-K filed with the Securities and Exchange Commission on July 11, 2014 for the fiscal year ended April 27, 2014.

The company’s six months ended November 2, 2014 and October 27, 2013, represent 27 and 26 week periods, respectively.

2. Significant Accounting Policies

As of November 2, 2014, there were no changes in the nature of our significant accounting policies or the application of those policies from those reported in our annual report on Form 10-K for the year then ended April 27, 2014.

Recently Adopted Accounting Pronouncements

None

Recently Issued Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) amended its authoritative guidance on accounting for certain share-based payment awards. The amended guidance requires that share-based compensation awards with terms of a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The guidance will be effective in our fiscal 2017 first quarter. The guidance will permit an entity to apply the amendments in the update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the consolidated financial statements and to all new or modified awards thereafter. Currently, we do not have any share-based payment awards with terms of a performance target that affects vesting and could be achieved after the requisite service period. We will apply this new guidance when it becomes effective, and we will evaluate the impact of adoption on our consolidated financial statements.

In May 2014, the FASB issued accounting guidance on revenue recognition. The amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Improved disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. This guidance will be effective in our fiscal 2018 first quarter and will be required to be applied retrospectively. We are currently assessing the impact that this guidance will have on our consolidated financial statements at this time.

I-6

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

3.   Business Combinations – Mattress Fabric Segment

On May 8, 2013, we entered into an asset purchase and consulting agreement with Bodet & Horst GMBH & Co. KG and certain affiliates (“Bodet & Horst”) that provided for, among other things, the purchase of equipment and certain other assets from Bodet & Horst and the restructuring of prior consulting and non-compete agreements pursuant to an earlier asset purchase and consulting agreement with Bodet & Horst dated August 11, 2008. This agreement was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. We agreed with Bodet & Horst to replace the prior non-compete agreement that prevented us from selling certain mattress fabrics and products to a leading manufacturer, which now allows us to make such sales. In addition, the prior consulting and non-compete agreement, under which Bodet & Horst agreed not to sell most  mattress fabrics in North America, was replaced, expanded, and extended pursuant to the new asset purchase and consulting agreement.

The purchase price for the equipment and the other certain assets noted below was $2.6 million in cash.

Direct acquisition costs related to this business combination totaled $83,000.

The following table presents the allocation of the acquisition cost to the assets acquired based on their fair values:

(dollars in thousands)	Fair Value
Equipment (Note 10)	$	890
Non-compete agreement (Notes 7 and 10)		882
Customer relationships (Notes 7 and 10)		868
	$	2,640

The company recorded its non-compete at its fair value based on a discounted cash flow valuation model. The company recorded its customer relationships at its fair value based on a multi-period excess earnings valuation model. This non-compete agreement will be amortized on a straight line basis over the fifteen year life of the agreement. The customer relationships will be amortized on a straight line basis over their useful life of seventeen years. The equipment will be amortized on a straight line basis over its useful life of seven years.

4.  Stock-Based Compensation

Incentive Stock Option Awards

We did not grant any incentive stock option awards through the second quarter of fiscal 2015.

At November 2, 2014, options to purchase 140,700 shares of common stock were outstanding and exercisable, had a weighted average exercise price of $6.50 per share, and a weighted average contractual term of 3.2 years. At November 2, 2014, the aggregate intrinsic value for options outstanding and exercisble was $1.8 million.

I-7

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The aggregate intrinsic value for options exercised for the six months ending November 2, 2014 and October 27, 2013, was $80,000 and $224,000, respectively.

At November 2, 2014, there were no unvested incentive stock option awards. Therefore, there was no unrecognized compensation cost related to incentive stock option awards at November 2, 2014.

No compensation expense was recorded on incentive stock options for the six months ended November 2, 2014. We recorded $8,000 of compensation expense on incentive stock option grants within selling, general, and administrative expense for the six months ended October 27, 2013.

Common Stock Awards

On October 1, 2014, we granted a total of 3,000 shares of common stock to our outside directors. These shares of common stock vested immediately and were measured at $17.95 per share, which represents the closing price of the company’s common stock at the date of grant.

On October 1, 2013, we granted a total of 3,000 shares of common stock to our outside directors. These shares of common stock vested immediately and were measured at $18.84 per share, which represents the closing price of the company’s common stock at the date of grant.

We recorded $54,000 and $57,000 of compensation expense within selling, general, and administrative expense for these common stock awards for the six month periods ending November 2, 2014, and October 27, 2013, respectively.

Time Vested Restricted Stock Awards

We did not grant any time vested restricted stock awards through the second quarter of fiscal 2015.

We recorded $4,000 and $38,000 of compensation expense within selling, general, and administrative expense for time vested restricted stock awards for the six month periods ending November 2, 2014, and October 27, 2013, respectively.

At November 2, 2014, there were no outstanding and unvested shares of time vested restricted stock. Therefore, there was no unrecognized compensation cost related to time vested restricted stock awards at November 2, 2014.

During the six month period ended November 2, 2014, 61,667 shares of time vested restricted stock vested and had a weighted average fair value of $257,000 or $4.17 per share. During the six month period ended October 27, 2013, 61,667 shares of time vested restricted stock vested and had a weighted average fair value of $249,000 or $4.04 per share.

Performance Based Restricted Stock Units

Fiscal 2015 Grant

On June 24, 2014, certain key members of management were granted performance based restricted common stock units which could earn up to 102,845 shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. These awards were valued based on the fair market value on the date of grant. The fair value of these awards was $17.70 per share, which represents the closing price of our common stock on the date of grant. The vesting of these awards is over the requisite service period of three years.

I-8

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Fiscal 2014 Grant

On June 25, 2013, certain key members of management were granted performance based restricted common stock units which could earn up to 72,380 shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. These awards were valued based on the fair market value on the date of grant. The fair value of these awards was $17.12 per share, which represents the closing price of our common stock on the date of grant. The vesting of these awards is over the requisite service period of three years.

Fiscal 2013 Grant

On July 11, 2012, certain key members of management were granted performance based restricted common stock units which could earn up to 120,000 shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. These awards were valued based on the fair market value on the date of grant. The fair value of these awards was $10.21 per share, which represents the closing price of our common stock on the date of grant. The vesting of these awards is over the requisite service period of three years.

Overall

The company recorded compensation expense of $233,000 and $273,000 within selling, general, and administrative expense for performance based restricted stock units for the six month periods ending November 2, 2014 and October 27, 2013, respectively. Compensation cost is recorded based on an assessment each reporting period of the probability if certain performance goals will be met during the vesting period. If performance goals are not probable of occurrence, no compensation cost will be recognized and any recognized compensation cost would be reversed.

As of November 2, 2014, the remaining unrecognized compensation cost related to the performance based restricted stock units was $1.1 million, which is expected to be recognized over a weighted average vesting period of 2.0 years.

5.  Accounts Receivable

A summary of accounts receivable follows:

(dollars in thousands)	November 2, 2014			October 27, 2013			April 27, 2014
Customers	$	26,082		$	26,022		$	28,461
Allowance for doubtful accounts		(442	)		(513	)		(573	)
Reserve for returns and allowances and discounts		(595	)		(572	)		(479	)
	$	25,045		$	24,937		$	27,409

I-9

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A summary of the activity in the allowance for doubtful accounts follows:

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Beginning balance	$	(573	)	$	(780	)
Provision for bad debts		57			211
Net write-offs, net of recoveries		74			56
Ending balance	$	(442	)	$	(513	)

A summary of the activity in the allowance for returns and allowances and discounts accounts follows:

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Beginning balance	$	(479	)	$	(543	)
Provision for returns, allowances and discounts		(1,334	)		(1,129	)
Credits issued		1,218			1,100
Ending balance	$	(595	)	$	(572	)

6.  Inventories

Inventories are carried at the lower of cost or market.  Cost is determined using the FIFO (first-in, first-out) method.

A summary of inventories follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Raw materials	$	5,657	$	5,592	$	6,707
Work-in-process		2,190		2,383		2,263
Finished goods		30,381		36,907		31,704
	$	38,228	$	44,882	$	40,674

7.  Other Assets

A summary of other assets follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Cash surrender value - life insurance	$	320	$	649	$	644
Non-compete agreement		1,017		1,054		1,041
Customer relationships		791		842		817
Other		411		414		415
	$	2,539	$	2,959	$	2,917

I-10

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Non-Compete Agreement

In connection with the asset purchase and consulting agreement with Bodet & Horst on May 8, 2013 (see Note 3), we restructured our prior non-compete agreement pursuant to our asset purchase and consulting agreement dated August 11, 2008. We have agreed with Bodet & Horst to replace the prior non-compete agreement that prevented us from selling certain mattress fabrics and products to a leading manufacturer, that will now allow us to make such sales. In addition, the prior consulting and non-compete agreement, under which Bodet & Horst agreed not to sell mattress fabrics in North America, was replaced, expanded, and extended pursuant to the new asset purchase consulting agreement. We recorded this non-compete agreement at its fair value based on a discounted cash flow valuation model. This non-compete agreement is amortized on a straight-line basis over the fifteen year life of the agreement.

The gross carrying amount of this non-compete agreement was $2.0 million at November 2, 2014, October 27, 2013 and April 27, 2014, respectively. At November 2, 2014, October 27, 2013, and April 27, 2014, accumulated amortization for the non-compete agreement was $1.0 million.

Of the $1.0 million non-compete agreement carrying amount at November 2, 2014, $223,000 pertains to the non-compete agreement that was in place as part of the asset purchase agreement dated August 11, 2008, and $794,000 pertains to the non-compete agreement pursuant to the asset purchase agreement dated May 8, 2013 that was restructured to expand the non-compete agreement in place effective August 11, 2008.

Amortization expense for the non-compete agreement was $38,000 for the six month periods ended November 2, 2014 and October 27, 2013. The remaining amortization expense for the next five fiscal years and thereafter follows: FY 2015 - $38,000; FY 2016 - $75,000; FY 2017 - $75,000; FY 2018- $75,000; FY 2019 - $75,000; and Thereafter - $679,000.

The weighted average amortization period for the non-compete agreement is 13.5 years as of November 2, 2014.

Customer Relationships

In connection with the asset purchase and consulting agreement with Bodet & Horst noted above, we purchased certain customer relationships. We recorded the customer relationships at its fair value based on a multi-period excess earnings valuation model. The gross carrying amount of these customer relationships was $868,000 at November 2, 2014, October 27, 2013, and April 27, 2014, respectively. Accumulated amortization for these customer relationships was $77,000, $26,000, and $51,000 at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

The customer relationships are amortized on a straight-line basis over its seventeen year useful life. Amortization expense for the customer relationships was $26,000 for the six months ending November 2, 2014 and October 27, 2013. The remaining amortization expense for the next five fiscal years and thereafter follows: FY 2015 - $25,000; FY 2016 - $51,000; FY 2017 - $51,000; FY 2018 - $51,000; FY 2019 - $51,000; and Thereafter - $562,000.

The weighted average amortization period for the non-compete agreement is 15.5 years as of November 2, 2014.

Cash Surrender Value – Life Insurance

On May 16, 2014, we entered into an agreement with a former employee and his irrevocable trust (the “Trust”) dated September 7, 1995. As a result of this agreement, a previous split dollar life insurance agreement in which we purchased a policy on the life of this former employee and his spouse, in which we retained ownership of the policy, paid premiums to support the policy, had the right to receive cash surrender value of the policy upon the second to die of the former employee and his spouse, with the Trust receiving the remainder of the policy’s death benefit ($2.5 million), was terminated. In connection with the termination of the previous split dollar life insurance agreement, we transferred the life insurance policy to the Trust and received cash proceeds in the amount of the cash surrender value policy totaling $320,000 during the second quarter of fiscal 2015.

I-11

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At November 2, 2014, we had one life insurance contract with a death benefit of $1.4 million. At October 27, 2013 and April 27, 2014, we had two life insurance contracts with death benefits to the respective insured totaling $3.9 million. Our cash surrender value – life insurance balances totaling $320,000, $649,000 and $644,000 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, are collectible upon death of the respective insured.

8.  Accrued Expenses

A summary of accrued expenses follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Compensation, commissions and related benefits	$	4,969	$	8,567	$	7,388
Interest		38		74		71
Other accrued expenses		2,716		3,031		1,722
	$	7,723	$	11,672	$	9,181

9.  Long-Term Debt and Lines of Credit

A summary of long-term debt follows:

(dollars in thousands)	November 2, 2014			October 27, 2013			April 27, 2014
Unsecured senior term notes	$	2,200		$	4,400		$	4,400
Current maturities of long-term debt		(2,200	)		(2,200	)		(2,200	)
Long-term debt, less current maturities of long-term debt	$	-		$	2,200		$	2,200

Unsecured Term Notes

We entered into a note agreement dated August 11, 2008 that provided for the issuance of $11.0 million of unsecured term notes with a fixed interest rate of 8.01% and a term of seven years. Principal payments of $2.2 million per year are due on the notes beginning August 11, 2011. The remaining principal payments are payable over an average term of 0.8 years through August 11, 2015. Any principal pre-payments would be assessed a penalty as defined in the agreement. The agreement contains customary financial and other covenants as defined in the agreement.

As of November 2, 2014, we have one remaining annual payment of $2.2 million due on August 11, 2015.

Revolving Credit Agreement – United States

We have an unsecured credit agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) that provides for an unsecured revolving loan commitment of $10.0 million to be used to finance working capital and general corporate purposes. The amount of borrowings that are outstanding under the credit agreement with Culp Europe noted below decrease the $10.0 million available. Interest is charged at a rate (applicable interest rate of 1.76%, 1.77%, and 1.75% at November 2, 2014, October 27, 2013, and April 27, 2014, respectively) equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement. The credit agreement contains customary financial and other covenants as defined in the agreement and expires on August 31, 2015.

I-12

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At November 2, 2014, October 27, 2013, and April 27, 2014, there was a $195,000 outstanding letter of credit (all of which related to workers compensation). At November 2, 2014, October 27, 2013, and April 27, 2014, there were no borrowings outstanding under the agreement.

Revolving Credit Agreement – China

We have an unsecured credit agreement associated with our operations in China that provides for a line of credit of up to 40 million RMB (approximately $6.5 million USD at November 2, 2014), expiring on May 9, 2015. This agreement has an interest rate determined by the Chinese government. There were no borrowings outstanding under the agreement as of November 2, 2014, October 27, 2013 and April 27, 2014.

Revolving Credit Agreement – Europe

As of April 27, 2014, we had an unsecured credit agreement with Wells Fargo that incurred interest at WIBOR (Warsaw Interbank Offered Rate) plus 2% (applicable interest rate of 4.38% at April 27, 2014). There was $586,000 (1.8 million Polish Zloty) in borrowings outstanding under the agreement at April 27, 2014.

Effective May 2, 2014, we converted our 1.8 million Polish Zloty denominated borrowings under the credit agreement to EURO denominated borrowings totaling €424,000 ($569,000 USD). In addition, the applicable interest rate was converted to EURO LIBOR plus 2% (applicable interest rate of 2.2% at November 2, 2014).

At November 2, 2014, no borrowings were outstanding under this agreement, as the outstanding balance was paid in full during the second quarter of fiscal 2015.

Overall

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. At November 2, 2014, the company was in compliance with these financial covenants.

The fair value of the company’s long-term debt is estimated by discounting the future cash flows at rates currently offered to the company for similar debt instruments of comparable maturities. At November 2, 2014, the carrying value of our long-term debt was $2.2 million and the fair value was $2.3 million. At October 27, 2013, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.6 million. At April 27, 2014, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.6 million.

I-13

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

10. Fair Value of Financial Instruments

ASC Topic 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either level 1 or level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy. The hierarchy consists of three broad levels as follows:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than level 1 inputs that are either directly or indirectly observable, and

Level 3 – Unobservable inputs developed using the company’s estimates and assumptions, which reflect those that market participants would use.

Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a recurring basis:

	Fair value measurements at November 2, 2014 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,576		N/A		N/A	$	2,576
Low Duration Bond Fund		2,081		N/A		N/A		2,081
Premier Money Market Fund		1,818		N/A		N/A		1,818
Intermediate Term Bond Fund		1,661		N/A		N/A		1,661
Other		93		N/A		N/A		93

	Fair value measurements at October 27, 2013 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,561		N/A		N/A	$	2,561
Low Duration Bond Fund		2,060		N/A		N/A		2,060
Intermediate Term Bond Fund		1,599		N/A		N/A		1,599

I-14

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Fair value measurements at April 27, 2014 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,576		N/A		N/A	$	2,576
Low Duration Bond Fund		2,077		N/A		N/A		2,077
Intermediate Term Bond Fund		1,641		N/A		N/A		1,641
Premier Money Market Fund		755		N/A		N/A		755
Other		10		N/A		N/A		10

The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.

Our short-term investments include short-term bond funds, are classified as available-for-sale, and their unrealized gains or losses are included in other comprehensive income (loss). Our short-term bond funds were recorded at their fair value of $6.3 million, $6.2 million and $6.3 million at November 2, 2014, October 27, 2013, and April 27, 2014, respectively. Our short-term bond funds had an accumulated unrealized loss totaling $88,000, $59,000, and $60,000 at November 2, 2014, October 27, 2013, and April 27, 2014, respectively. At November 2, 2014, October 27, 2013, and April 27, 2014, the fair value of our short-term bond funds approximated its cost basis.

Effective, January 1, 2014, we established a Rabbi Trust to set aside funds for participants of our deferred compensation plan (the “Plan”) and enable the participants to credit their contributions to various investment options of the Plan. The investments associated with the Rabbi Trust consist of investments in a money market fund and various mutual funds that are classified as available for sale. Our long-term investments are recorded at its fair value of $1.9 million and $765,000 at November 2, 2014 and April 27, 2014, respectively. The fair value of our long-term investments approximates its cost basis.

The carrying amount of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses, and line of credit approximates fair value because of the short maturity of these financial instruments.

Nonrecurring Basis

During the six months ended November 2, 2014, we did not have any financial assets that were required to be measured at fair value on a nonrecurring basis.

During fiscal 2014, we did not have any financial assets that were required to be measured at fair value on a nonrecurring basis other than the assets acquired from Bodet & Horst (see note 3) that were acquired at fair value.

I-15

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Fair value measurements at April 27, 2014 and October 27, 2013 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Equipment	$	-	$	890	$	-	$	890
Non-compete Agreement		-		-		882		882
Customer Relationships		-		-		868		868

The equipment was classified as level 2 as the fair value was determined using quoted market prices from a third party. The non-compete was recorded at its fair value using a discounted cash flow valuation model that used significant unobservable inputs and was classified as level 3. The customer relationships were recorded at a fair value using a multi-period excess earnings valuation model that used significant unobservable inputs and was classified as level 3.

11.  Cash Flow Information

Payments for interest and income taxes follows:

	Six months ended
(dollars in thousands)	November 2, 2014		October 27, 2013
Interest	$	180	$	276
Net income tax payments		1,943		1,515

Interest costs of $82,000 for the construction of qualifying fixed assets were capitalized and are being amortized over the related assets’ useful lives for the six months ended November 2, 2014. No interest costs were capitalized for the six months ended October 27, 2013.

During the six months ended November 2, 2014, 995 shares of common stock were surrendered to satisfy withholding tax liabilities totaling $18,000 in connection with the vesting of 3,334 shares of time vested restricted common stock. During the six months ended October 27, 2013, 989 shares of common stock were surrendered to satisfy withholding tax liabilities totaling $15,000 in connection with the vesting of 3,333 shares of time vested restricted common stock.

12.  Net Income Per Share

Basic net income per share is computed using the weighted-average number of shares outstanding during the period.  Diluted net income per share uses the weighted-average number of shares outstanding during the period plus the dilutive effect of stock-based compensation calculated using the treasury stock method.  Weighted average shares used in the computation of basic and diluted net income per share follows:

I-16

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Three months ended
(amounts in thousands)	November 2, 2014		October 27, 2013
Weighted average common shares outstanding, basic		12,218		12,183
Dilutive effect of stock-based compensation		183		206
Weighted average common shares outstanding, diluted		12,401		12,389

All options to purchase shares of common stock were included in the computation of diluted net income for the three months ended November 2, 2014 and October 27, 2013, as the exercise price of the options was less than the average market price of the common shares.

The computation of basic net income per share did not include 61,667 shares of time vested restricted common stock as these shares were unvested for the three months ending October 27, 2013. At November 2, 2014, there were no outstanding and unvested shares of time vested restricted common stock and therefore, the computation of basic net income per share was not affected.

	Six months ended
(amounts in thousands)	November 2, 2014		October 27, 2013
Weighted average common shares outstanding, basic		12,215		12,165
Dilutive effect of stock-based compensation		188		226
Weighted average common shares outstanding, diluted		12,403		12,391

All options to purchase shares of common stock were included in the computation of diluted net income for the six months ended November 2, 2014 and October 27, 2013, as the exercise price of the options was less than the average market price of the common shares.

The computation of basic net income per share did not include 61,667 shares of time vested restricted common stock as these shares were unvested for the six months ending October 27, 2013. At November 2, 2014, there were no outstanding and unvested shares of time vested restricted common stock and therefore, the computation of basic net income per share was not affected.

13.  Segment Information

Our operations are classified into two business segments: mattress fabrics and upholstery fabrics.  The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers to bedding manufacturers.  The upholstery fabrics segment manufactures, sources, and sells fabrics primarily to residential furniture manufacturers.

We evaluate the operating performance of our segments based upon income from operations before certain unallocated corporate expenses and other non-recurring items. Cost of sales in both segments include costs to manufacture or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead and incoming freight charges.  Unallocated corporate expenses primarily represent compensation and benefits for certain executive officers and all costs related to being a public company.  Segment assets include assets used in the operations of each segment and primarily consist of accounts receivable, inventories, and property, plant and equipment.  The mattress fabrics segment also includes in segment assets, goodwill, a non-compete agreement, and customer relationships associated with an acquisition.

I-17

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Financial information for the company’s operating segments follows:

	Three months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Net sales:
Mattress Fabrics	$	43,038		$	40,331
Upholstery Fabrics		30,953			30,258
	$	73,991		$	70,589
Gross profit:
Mattress Fabrics	$	7,324		$	7,322
Upholstery Fabrics		4,954			4,913
	$	12,278		$	12,235
Selling, general, and administrative expenses:
Mattress Fabrics	$	2,592		$	2,620
Upholstery Fabrics		3,285			3,170
Total segment selling, general, and
administrative expenses		5,877			5,790
Unallocated corporate expenses		1,502			1,410
	$	7,379		$	7,200
Income from operations:
Mattress Fabrics	$	4,733		$	4,702
Upholstery Fabrics		1,668			1,743
Total segment income from operations		6,401			6,445
Unallocated corporate expenses		(1,502	)		(1,410	)
Total income from operations		4,899			5,035
Interest expense		-			(99	)
Interest income		153			102
Other expense		(162	)		(224	)
Income before income taxes	$	4,890		$	4,814

I-18

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Net sales:
Mattress Fabrics	$	85,860		$	78,494
Upholstery Fabrics		64,191			62,236
	$	150,051		$	140,730
Gross profit:
Mattress Fabrics	$	14,527		$	14,713
Upholstery Fabrics		10,466			10,595
	$	24,993		$	25,308
Selling, general, and administrative expenses:
Mattress Fabrics	$	5,166		$	4,994
Upholstery Fabrics		6,737			6,436
Total segment selling, general, and
administrative expenses		11,903			11,430
Unallocated corporate expenses		2,895			2,869
	$	14,798		$	14,299
Income from operations:
Mattress Fabrics	$	9,361		$	9,719
Upholstery Fabrics		3,729			4,159
Total segment income from operations		13,090			13,878
Unallocated corporate expenses		(2,895	)		(2,869	)
Total income from operations		10,195			11,009
Interest expense		(67	)		(239	)
Interest income		294			195
Other expense		(73	)		(616	)
Income before income taxes	$	10,349		$	10,349

I-19

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Balance sheet information for the company’s operating segments follow:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Segment assets:
Mattress Fabrics
Current assets (1)	$	35,406	$	37,373	$	36,229
Non-compete agreement		1,017		1,054		1,041
Customer relationships		791		842		817
Goodwill		11,462		11,462		11,462
Property, plant and equipment (2)		30,938		28,307		29,040
Total mattress fabrics assets		79,614		79,038		78,589
Upholstery Fabrics
Current assets (1)		27,867		32,447		31,854
Property, plant and equipment (3)		1,578		1,612		1,573
Total upholstery fabrics assets		29,445		34,059		33,427
Total segment assets		109,059		113,097		112,016
Non-segment assets:
Cash and cash equivalents		28,953		24,267		29,303
Short-term investments		6,318		6,220		6,294
Deferred income taxes		6,699		8,406		8,270
Income taxes receivable		-		-		121
Other current assets		2,303		2,550		2,344
Property, plant and equipment (4)		688		640		763
Long-term investments		1,911		-		765
Other assets		731		1,062		1,059
Total assets	$	156,662	$	156,242	$	160,935
			Six months ended
(dollars in thousands)			November 2, 2014		October 27, 2013
Capital expenditures (5):
Mattress Fabrics			$	4,692	$	1,199
Upholstery Fabrics				258		521
Unallocated Corporate				38		20
Total capital expenditures			$	4,988	$	1,740
Depreciation expense:
Mattress Fabrics			$	2,448	$	2,331
Upholstery Fabrics				364		305
Total depreciation expense			$	2,812	$	2,636

(1)   Current assets represent accounts receivable and inventory for the respective segment.

(2)   The $30.9 million at November 2, 2014, represents property, plant, and equipment of $22.2 million and $8.7 million located in the U.S. and Canada, respectively. The $28.3 million at October 27, 2013, represents property, plant, and equipment of $20.5 million and $7.8 million located in the U.S. and Canada, respectively. The $29.0 million at April 27, 2014, represents property, plant, and equipment of $20.6 million and $8.4 million located in the U.S. and Canada, respectively.

I-20

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(3)   The $1.6 million at November 2, 2014, represents property, plant, and equipment of $977 and $601 located in the U.S. and China, respectively. The $1.6 million at October 27, 2013, represents property, plant, and equipment located in the U.S. of $1.1 million, located in China of $464, and located in Poland of $49. The $1.6 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $957, located in China of $572, and located in Poland of $44.

(4)   The $688, $640, and $763 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate are located in the U.S.

(5)   Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.

14.  Income Taxes

Effective Income Tax Rate

We recorded income tax expense of $4.0 million, or 38.7% of income before income tax expense, for the six month period ended November 2, 2014, compared to income tax expense of $4.0 million, or 38.9% of income before income tax expense, for the six month period ended October 27, 2013. Our effective income tax rates for the six month periods ended November 2, 2014 and October 27, 2013 were based upon the estimated effective income tax rate applicable for the full year after giving effect to any significant items related specifically to interim periods. The effective income tax rate can be affected over the fiscal year by the mix and timing of actual earnings from our U.S. operations and foreign sources versus annual projections and changes in foreign currencies in relation to the U.S. dollar.

The income tax expense for the six month period ended November 2, 2014 is different from the amount obtained by applying our statutory rate of 34% to income before income taxes for the following reasons:

·   The income tax rate decreased by 6% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States.

·   The income tax rate increased by 4% for an increase in unrecognized tax benefits.

·   The income tax rate increased by 6.7% for stock-based compensation and other miscellaneous items.

The income tax expense for six month period ended October 27, 2013 is different from the amount obtained by applying our statutory rate of 34% to income before income taxes for the following reasons:

·   The income tax rate increased 3% for adjustments primarily made to our state of North Carolina loss carryforwards for the decrease in future North Carolina corporate income tax rates commencing in fiscal 2015 and beyond. These adjustments totaled $273,000 and represented a discrete event in which the full tax effects were recorded in the six month period ending October 27, 2013.

I-21

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

·   The income tax rate decreased by 6% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States.

·   The income tax rate increased 4% for an increase in unrecognized tax benefits.

·   The income tax rate was increased by 3.9% for stock-based compensation and other miscellaneous items.

Deferred Income Taxes

Valuation Allowance

In accordance with ASC Topic 740, we evaluate our deferred income taxes to determine if a valuation allowance is required. ASC Topic 740 requires that companies assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law. Based on our assessment at November 2, 2014, we recorded a partial valuation allowance of $1.1 million, of which $666,000 pertained to certain U.S. state net operating loss carryforwards and credits and $456,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.  Based on our assessment at October 27, 2013, we recorded a partial valuation allowance of $1.0 million, of which $722,000 pertained to certain U.S. state net operating loss carryforwards and credits and $315,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.  Based on our assessment at April 27, 2014, we recorded a partial valuation allowance of $977,000, of which $666,000 pertained to certain U.S. state net operating loss carryforwards and credits and $311,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.

No valuation allowance was recorded against our net deferred tax assets associated with our operations located in China and Canada at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

The recorded valuation allowance of $1.1 million at November 2, 2014, has no effect on our operations, loan covenant compliance, or the possible realization of certain U.S. state net operating loss carryforwards and credits and our loss carryforwards associated with our Culp Europe operation located in Poland. If it is determined that it is more-likely-than-not that we will realize any of these deferred tax assets, an income tax benefit will be recognized at that time.

Undistributed Earnings

In accordance with ASC Topic 740, we assess whether the undistributed earnings from our foreign subsidiaries will be reinvested indefinitely or eventually distributed to our U.S. parent company. ASC Topic 740 requires that a deferred tax liability should be recorded for undistributed earnings from foreign subsidiaries that will not be reinvested indefinitely. Based on our assessment as of November 2, 2014, it is our intention not to permanently invest our undistributed earnings from our foreign subsidiaries. Also, we assess the recognition of U.S. foreign income tax credits associated with foreign withholding and income tax payments and whether it is more-likely-than-not that our foreign income tax credits will not be realized. If it is determined that any foreign income tax credits need to be recognized or it is more-likely-than-not our foreign income tax credits will not be realized, an adjustment to our provision for income taxes will be recognized at that time.

I-22

Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At November 2, 2014, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $2.2 million, which included U.S. income and foreign withholding taxes totaling $30.6 million, offset by U.S. foreign income tax credits of $28.4 million. At October 27, 2013, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $7.1 million, which included U.S. income and foreign withholding taxes totaling $22.4 million, offset by U.S. foreign income tax credits of $15.3 million. At April 27, 2014, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $2.0 million, which included U.S. income and foreign withholding taxes totaling $28.1 million, offset by U.S. foreign income tax credits of $26.1 million.

We had accumulated earnings from our foreign subsidiaries totaling $78.9 million, $57.7 million, and $72.8 million at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

Overall

At November 2, 2014, the current deferred tax asset of $6.2 million represents $5.8 million and $428,000 from our operations located in the U.S. and China, respectively. At November 2, 2014, the non-current deferred tax asset of $508,000 pertains to our operations located in China. At November 2, 2014, the non-current deferred tax liability of $1.4 represents $886,000 and $509,000 from our operations located in Canada and the U.S., respectively.

At October 27, 2013, the current deferred tax asset of $7.8 million represents $7.4 million and $386,000 from our operations located in the U.S. and China, respectively. At October 27, 2013, the non-current deferred tax asset of $661,000 pertains to our operations located in China. At October 27, 2013, the non-current deferred tax liability of $5.0 million represents $4.1 million and $945,000 from operations located in the U.S. and Canada, respectively.

At April 27, 2014, the current deferred tax asset of $6.2 million represents $5.8 million and $372,000 from our operations located in the U.S. and China, respectively. At April 27, 2014, the non-current deferred tax asset of $2.0 million represents $1.4 million and $572,000 from our operations located in the U.S. and China, respectively. At April 27, 2014, the non-current deferred tax liability of $1.0 million pertained to our operations located in Canada.

Uncertainty In Income Taxes

At November 2, 2014, we had a $14.1 million total gross unrecognized tax benefit, of which $4.0 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods. At October 27, 2013, we had a $13.5 million total gross unrecognized tax benefit, of which $4.1 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods. At April 27, 2014, we had a $13.7 million total gross unrecognized tax benefit, of which $4.0 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods.

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Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At November 2, 2014, we had a $14.1 million total gross unrecognized tax benefit, of which $10.1 million and $4.0 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets. At October 27, 2013, we had a $13.5 million total gross unrecognized tax benefit, of which $9.4 million and $4.1 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets. At April 27, 2014, we had $13.7 million of total gross unrecognized tax benefit, of which $9.7 million and $4.0 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets.

We estimate that the amount of gross unrecognized tax benefits will increase by approximately $905,000 for fiscal 2015. This increase primarily relates to double taxation under applicable tax treaties with foreign tax jurisdictions.

15.  Statutory Reserves

Our subsidiaries located in China are required to transfer 10% of their net income, as determined in accordance with the People’s Republic of China (PRC) accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the company’s registered capital.

The transfer to this reserve must be made before distributions of any dividend to shareholders. As of November 2, 2014, the company’s statutory surplus reserve was $5.1 million, representing 10% of accumulated earnings and profits determined in accordance with PRC accounting rules and regulations. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

Our subsidiaries located in China can transfer funds to the parent company with the exception of the statutory surplus reserve of $5.1 million to assist with debt repayment, capital expenditures, and other expenses of the company’s business.

16.   Commitments and Contingencies

Chromatex Environmental Claim

A lawsuit was filed against us and other defendants (Chromatex, Inc., Rossville Industries, Inc., Rossville Companies, Inc. and Rossville Investments, Inc.) on February 5, 2008 in the United States District Court for the Middle District of Pennsylvania.  The plaintiffs are Alan Shulman, Stanley Siegel, Ruth Cherenson as Personal Representative of Estate of Alan Cherenson, and Adrienne Rolla and M.F. Rolla as Executors of the Estate of Joseph Byrnes.  The plaintiffs were partners in a general partnership that formerly owned a manufacturing plant in West Hazleton, Pennsylvania (the “Site”).  Approximately two years after this general partnership sold the Site to defendants Chromatex, Inc. and Rossville Industries, Inc., we leased and operated the Site as part of our Rossville/Chromatex division.  The lawsuit involved court judgments that were entered against the plaintiffs and against defendant Chromatex, Inc. requiring them to pay costs incurred by the United States Environmental Protection Agency (“USEPA”) responding to environmental contamination at the Site, in amounts approximating $14 million, plus unspecified future environmental costs. Neither USEPA nor any other governmental authority asserted any claim against us on account of these matters.  The plaintiffs sought contribution from us and other defendants declaring that the company and the other defendants were responsible for environmental response costs under environmental laws and certain agreements.  The plaintiffs also asserted that we tortiously interfered with contracts between them and other defendants in the case and diverted assets to prevent the plaintiffs from being paid monies owed to them.  We defended ourselves vigorously with regards to the matters described in this litigation.

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Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the first quarter of fiscal 2014, the parties to this lawsuit reached a settlement of all matters, which required us to contribute cash to a global settlement fund. Consequently, we recorded a charge of $206,000 to other expense in the fiscal 2014 Consolidated Statement of Net Income. In the fourth quarter of fiscal 2014, we paid the $206,000 settlement amount. Subsequently, the settlement was reviewed by the government and during the first quarter of fiscal 2015 the court approved the final agreement by the parties involved. The lawsuit was dismissed on June 5, 2014.

Other Litigation

The company is involved in legal proceedings and claims which have arisen in the ordinary course of business. Management has determined that it is not reasonably possible that these actions, when ultimately concluded and settled, will have a material adverse effect upon the financial position, results of operations, or cash flows of the company.

Purchase Commitments

At November 2, 2014, October 27, 2013, and April 27, 2014, we had open purchase commitments to acquire equipment for our mattress fabrics segment totaling $3.0 million, $1.6 million, and $3.4 million, respectively.

17.  Common Stock Repurchase Program

On February 25, 2014, we announced that our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock. Under the common stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The amount of shares purchased and the timing of such purchases will be based on working capital requirements, market and general business conditions, and other factors including alternative investment opportunities.

During the first half of fiscal 2015, we repurchased 43,014 shares of our common stock at a cost of $745,000. During the first half of fiscal 2014, we did not repurchase any shares of common stock.

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Culp, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

18.  Dividend Program

During the first half of fiscal 2015, dividend payments totaled $6.1 million, of which $4.9 million represented a special cash dividend payment in the first quarter of $0.40 per share, and $1.2 million represented first and second quarter dividend payments of $0.05 per share.

During the first half of fiscal 2014, we paid first and second quarter dividend payments of $0.04 per share totaling $979,000.

On December 3, 2014, we announced that our board of directors approved a 20 percent increase in our quarterly cash dividend rate from $0.05 to $0.06 per share, commencing in the third quarter of fiscal 2015. 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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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

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 21E 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 or liquidity 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 can 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” section in our Form 10-K filed with the Securities and Exchange Commission on July 11, 2014, for the fiscal year ended April 27, 2014.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

General

Our fiscal year is the 52 or 53 week period ending on the Sunday closest to April 30. The six months ended November 2, 2014, and October 27, 2013, represent 27 and 26 week periods, respectively. Our operations are classified into two business segments: mattress fabrics and upholstery fabrics. The mattress fabrics segment manufactures, sources and sells fabrics and mattress covers to bedding manufacturers. The upholstery fabrics segment manufactures, sources, and sells fabrics primarily to residential furniture manufacturers.

We evaluate the operating performance of our segments based upon income from operations before certain unallocated corporate expenses and other non-recurring items. Cost of sales in both segments include costs to manufacture or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead and incoming freight charges. Unallocated corporate expenses represent primarily compensation and benefits for certain executive officers and all costs related to being a public company.

Executive Summary

Results of Operations

	Three Months Ended
(dollars in thousands)	November 2, 2014			October 27, 2013			% Change
Net sales	$	73,991		$	70,589			4.8	%
Gross profit		12,278			12,235			0.4	%
Gross profit margin		16.6	%		17.3	%		(4.0	)%
SG&A expenses		7,379			7,200			2.5	%
Income from operations		4,899			5,035			(2.7	)%
Operating margin		6.6	%		7.1	%		(7.0	)%
Income before income taxes		4,890			4,814			1.6	%
Income taxes		1,889			1,718			10.0	%
Net income		3,001			3,096			(3.1	)%

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	Six Months Ended
(dollars in thousands)	November 2, 2014			October 27, 2013			% Change
Net sales	$	150,051		$	140,730			6.6	%
Gross profit		24,993			25,308			(1.2	)%
Gross profit margin		16.7	%		18.0	%		(7.2	)%
SG&A expenses		14,798			14,299			3.5	%
Income from operations		10,195			11,009			(7.4	)%
Operating margin		6.8	%		7.8	%		(12.8	)%
Income before income taxes		10,349			10,349			-
Income taxes		4,003			4,023			(0.5	)%
Net income		6,346			6,326			0.3	%

Net Sales

Our net sales for the second quarter and first six months of fiscal 2015 increased as compared with the same periods a year ago. Our net sales were in line with our expectations, as we continued to experience favorable customer response to our designs and wide range of products in both our business segments. Our focused efforts on product innovation and creativity have been a strategic priority that has led to our net sales growth. In addition, our scalable and flexible manufacturing platform supports our ability to compete in a fashion-driven business that is always changing.

Another factor contributing to the increase in net sales for the first half of fiscal 2015, is the fact that the first six months of fiscal 2015 include 27 weeks compared to 26 weeks for the first six months of fiscal 2014.

Income Before Income Taxes

Although our net sales increased over last fiscal year as noted above, our income before income taxes was flat for the second quarter and the first six months of fiscal 2015 compared with the same periods a year ago. During the second quarter and first six months of fiscal 2015, our income from operations, gross profit margins and operating margins declined. These declines in profitability were due in part to short-term production challenges associated with our mattress fabrics segment caused by increased demand for premium mattress fabrics. Additionally, the profitability of our upholstery fabrics segment was affected by lower business volume and  profitability associated with our Culp Europe operation located in Poland, higher operational costs associated with our operations located in China, and product mix.

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The decline in income from operations was partially offset by the decrease in other expense in the second quarter and first six months of fiscal 2015. This decrease in other expense is primarily due to more favorable foreign currency exchange rates associated with our operations located in China in the second quarter and first six months of fiscal 2015 compared with the same periods of fiscal 2014.

In addition, a non-recurring charge of $206,000 was recorded in the first quarter of fiscal 2014 for the settlement of litigation relating to environmental claims associated with a closed facility, and there was no comparable charge in the first half of fiscal 2015.

See the Segment Analysis section located in the Results of Operations for further details.

Liquidity

At November 2, 2014, our cash and cash equivalents and short-term investments totaled $35.3 million and exceeded our total debt (all of which  is classified in current maturities of long-term debt) of $2.2 million. We currently have one remaining annual $2.2 million principal payment due on our long-term debt in August 2015.
 

As of the end of the second quarter, our cash and cash equivalents and short-term investments remained flat compared to $35.6 million at April 27, 2014, despite spending during the first half of the year of $6.9 million on dividend payments and common stock repurchases, $5.1 million on capital expenditures, $2.7 million on payments on our long-term debt and lines of credit, and $1.1 million on long-term investment purchases associated with our Rabbi Trust that is partially funding our deferred compensation plan.

Our net cash provided by operating activities of $14.5 million, increased 54% compared with $9.4 million for the first six months of fiscal 2014. This increase is primarily due to improved inventory management in both our business segments.

Dividend Program

On December 3, 2014, we announced that our board of directors approved a 20 percent increase in our a quarterly cash dividend rate 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.

During the first half of fiscal 2015, dividend payments totaled $6.1 million, of which $4.9 million represented a special cash dividend payment in the first quarter of $0.40 per share, and $1.2 million represented first and second quarter dividend payments of $0.05 per share.

During the first half of fiscal 2014, we paid first and second quarter dividend payments of $0.04 per share totaling $979,000.

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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Common Stock Repurchase Program

On February 25, 2014, we announced that our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock. Under the common stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The amount of shares purchased and the timing of such purchases will be based on working capital requirements, market and general business conditions, and other factors including alternative investment opportunities.

During the first half of fiscal 2015, we repurchased 43,014 shares of our common stock at a cost of $745,000. During the first half of fiscal 2014, we did not repurchase any shares of common stock.

Since June 2011, we have returned a total of $27 million to shareholders in the form of regular quarterly and special dividend payments and common stock share repurchases.

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Segment Analysis

Mattress Fabrics Segment

	Three Months Ended
(dollars in thousands)	November 2, 2014			October 27, 2013			% Change
Net sales	$	43,038		$	40,331			6.7	%
Gross profit		7,324			7,322			-
Gross profit margin		17.0	%		18.2	%		(6.6	)%
SG&A expenses		2,592			2,620			(1.1	)%
Income from operations		4,733			4,702			0.7	%
Operating margin		11.0	%		11.7	%		(6.0	)%

	Six Months Ended
(dollars in thousands)	November 2, 2014			October 27, 2013			% Change
Net sales	$	85,860		$	78,494			9.4	%
Gross profit		14,527			14,713			(1.3	)%
Gross profit margin		16.9	%		18.7	%		(9.6	)%
SG&A expenses		5,166			4,994			3.4	%
Income from operations		9,361			9,719			(3.7	)%
Operating margin		10.9	%		12.4	%		(12.1	)%

Net Sales

Our mattress fabrics net sales for the second quarter and first six months of fiscal 2015 increased as compared with the same periods a year ago. These results reflect our ability to meet the growing demands of our customers with a diverse product offering across most price points. Our strategic focus on design creativity has been a critical factor driving our net sales growth. As the mattress industry has shifted to more fashionable and decorative designs we have further enhanced our design capabilities. We believe we are well positioned to capitalize on the growing demands of our customers and any changes in design trends. Our scalable manufacturing platform and reactive capacity supports our ability to deliver a diverse product mix in line with changing consummer demand.

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Another factor contributing to the increase in net sales for the first half of fiscal 2015 is the fact that the first six months of fiscal 2015 include 27 weeks compared to 26 weeks for the first six months of fiscal 2014.

Gross Profit and Operating Income

Although our net sales increased over last fiscal year as noted above, our income from operations has remained  flat for the second quarter and declined for the first six months of fiscal 2015. Also, our gross profit margins and operating margins declined. With the beginning of the third quarter of fiscal 2014, we have experienced increased demand for premium decorative mattress fabrics, which have amplified our production complexity. As expected, we have had short-term production challenges related to this growth. In order to meet our customer delivery commitments, we have incurred additional overtime expenses that have affected our profitability. We have also utilized contract suppliers at a higher cost to ensure we could meet this higher demand.

Although we have experienced declines in our operating margins in the second quarter and first six months of fiscal 2015 as compared to the same periods a year ago, our operating margins have sequentially improved each quarter since the third quarter of fiscal 2014. Our operating margins were 11.0%, 10.8%, 10.3%, and 8.6% for the second quarter of fiscal 2015, first quarter of fiscal 2015, fourth quarter of fiscal 2014, and third quarter of fiscal 2014, respectively.

We are well underway with our previously announced $9.5 million expansion plan to increase our production capacity, add finishing capabilities, and improve our overall efficiency and throughput. As we have continued to work through this construction phase, we have experienced some typical disruptions and space constraints as we move equipment and people to accommodate this build-out. This ongoing activity has required additional overtime hours to meet our production schedules. Currently, we expect to complete our expansion plan in the second half of fiscal 2015. Upon completion of our expansion plan, we believe our gross profit and operation margins will improve during the second half of fiscal 2015.

During fiscal 2015, we continued to make progress with the efficiency of our mattress cover operation.  With this addition, we are a fully integrated supplier of all product categories in mattress fabrics. We believe this operation will continue to show steady growth and make a positive contribution to our business.

Segment assets

Segment assets consist of accounts receivable, inventory, property, plant and equipment, goodwill, a non-compete agreement and customer relationships associated with an acquisition.

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(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Accounts receivable   and inventory	$	35,406	$	37,372	$	36,229
Property, plant & equipment		30,938		28,307		29,040
Goodwill		11,462		11,462		11,462
Non-compete agreement		1,017		1,055		1,041
Customer Relationships		791		842		817

Accounts Receivable & Inventory

As of November 2, 2014, accounts receivable and inventory for this segment decreased $2.0 million, or 5%, compared with October 27, 2013. This decrease is primarily due to a decrease of $3.0 million, or 12%, in this segment’s inventory due to improved inventory management. The decrease in inventory was partially offset by an increase of $1.0 million, or 9%, in this segment’s accounts receivable balance. The increase in the accounts receivable balance reflects a 7% increase in net sales in the second quarter of fiscal 2015 compared to the second quarter of fiscal 2014.

As of November 2, 2014, accounts receivable and inventory for this segment decreased 2% compared with April 27, 2014. This decrease reflects a 1.4% decrease in net sales in the second quarter of fiscal 2015 compared to the fourth quarter of fiscal 2014.

Property, Plant & Equipment
 

The $30.9 million at November 2, 2014, represents property, plant and equipment of $22.2 million and $8.7 million located in the U.S. and Canada, respectively. The $28.3 million at October 27, 2013, represents property, plant, and equipment of $20.5 million and $7.8 million located in the U.S. and Canada, respectively. The $29.0 million at April 27, 2014, represents property, plant, and equipment of $20.6 million and $8.4 million located in the U.S. and Canada, respectively.

The increase in property, plant, and equipment for this segment is primarily due to the $9.5 million expansion plan noted above, offset by depreciation expense.

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Upholstery Fabrics Segment

Net Sales

	Three Months Ended
(dollars in thousands)	November 2, 2014				October 27, 2013				% Change
Non U.S. Produced	$	28,563	92	%	$	27,540	91	%		3.7	%
U.S. Produced		2,390	8	%		2,718	9	%		(12.1	)%
Total	$	30,953	100	%	$	30,258	100	%		2.3	%

	Six Months Ended
(dollars in thousands)	November 2, 2014				October 27, 2013				% Change
Non U.S. Produced	$	59,019	92	%	$	57,526	92	%		2.6	%
U.S. Produced		5,172	8	%		4,710	8	%		9.8	%
Total	$	64,191	100	%	$	62,236	100	%		3.1	%

Our net sales for the second quarter and first six months of fiscal 2015 increased as compared with the same periods a year ago. Our designs and focused efforts on product innovation have been a key factor to our net sales growth. Notably, we increased our sales of cut and sewn kits in the second quarter and first six months of fiscal 2015, reflecting increased demand for this product category.

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 100% owned China platform supports our marketing efforts and allows us to quickly adapt to changing market trends and consumer style preferences at different price points. Our China produced fabrics accounted for 92% of our upholstery fabric net sales during the second quarter and first six months of fiscal 2015.

Another factor contributing to the increase in  net sales for the first six months of fiscal 2015 is the fact that the first six months of fiscal 2015 include 27 weeks compared to 26 weeks for the first six months of fiscal 2014.

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Gross Profit, Selling, General & Administrative Expenses, and Operating Income

	Three Months Ended
(dollars in thousands)	November 2, 2014			October 27, 2013			% Change
Gross profit	$	4,954		$	4,913			0.8	%
Gross profit margin		16.0	%		16.2	%		(1.2	)%
SG&A expenses		3,285			3,170			3.6	%
Income from operations		1,668			1,743			(4.3	)%
Operating margin		5.4	%		5.8	%		(6.9	)%

	Six Months Ended
(dollars in thousands)	November 2, 2014			October 27, 2013			% Change
Gross profit	$	10,466		$	10,595			(1.2	)%
Gross profit margin		16.3	%		17.0	%		(4.1	)%
SG&A expenses		6,737			6,436			4.7	%
Income from operations		3,729			4,159			(10.3	)%
Operating margin		5.8	%		6.7	%		(13.4	)%

Although our net sales increased over last fiscal year as noted above, our income from operations and gross profit margins and operating margins declined. Our profitability was affected by lower business volume and  profitability associated with our Culp Europe operation located in Poland, higher operational costs associated with our operations located in China, and product mix.

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 charge of approximately $200,000 for closing related costs during the second quarter. We expect minimal operating expenses going forward, as this closure is expected to be completed by the end of the third quarter of fiscal 2015. We intend to continue to sell upholstery fabric into the European market and we are assessing the best strategy for taking advantage of this market’s opportunities as economic conditions improve.

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Our income from operations and operating margins are expected to be affected in the third quarter of fiscal 2015 compared to the third quarter of fiscal 2014, as we experienced exceptionally strong customer demand from customers who anticipated longer lead times due to the Chinese New Year holiday that occurred late in the third quarter of fiscal 2014. In fiscal 2015, the Chinese New Year holiday is during mid-February, therefore potentially causing some customer demand to be shifted from the third quarter to the fourth quarter of fiscal 2015. Additionally, as we previously discussed, we are experiencing higher operating costs associated with our China operations.

Segment Assets

Segment assets consist of accounts receivable, inventory, and property, plant, and equipment.

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Accounts receivable  and inventory	$	27,867	$	32,447	$	31,854
Property, plant & equipment		1,578		1,612		1,573

Accounts Receivable & Inventory

As of November 2, 2014, accounts receivable and inventory for this segment decreased $4.6 million, or 14%, compared with October 27, 2013. This decrease is primarily due to a decrease of $3.6 million, or 18%, in this segment’s inventory due to improved inventory management and the reduction of inventory associated with our Culp Europe operation located in Poland. Also, this segment’s accounts receivable balance decreased $1.0 million, or 8%. The decrease in the accounts receivable balance reflects increased net sales with certain customers with discounted payment terms.

As of November 2, 2014, accounts receivable and inventory for this segment decreased $4.0 million, or 13% compared with April 27, 2014. This decrease is primarily due to a decrease of $2.9 million, or 15%, in this segment’s inventory due to improved inventory management and the reduction of inventory associated with our Culp Europe operation located in Poland. Also, this segment’s accounts receivable balance decreased $1.1 million, or 9%. The decrease in the accounts receivable balance reflects increased net sales with certain customers with discounted payment terms.

Property, Plant & Equipment

The $1.6 million at November 2, 2014, represents property, plant, and equipment of $977 and $601 located in the U.S. and China, respectively. The $1.6 million at October 27, 2013, represents property, plant, and equipment located in the U.S. of $1.1 million, located in China of $464, and located in Poland of $49. The $1.6 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $957, located in China of $572, and located in Poland of $44.

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Other Income Statement Categories

Selling, General and Administrative Expenses

SG&A expenses for the company as a whole were $7.4 million in the second quarter of fiscal 2015 compared to $7.2 million in the second quarter of fiscal 2014. As a percent of net sales, SG&A expenses were 10.0% in the second quarter of fiscal 2015 compared with 10.2% in the second quarter of fiscal 2014.

SG&A expenses for the company as a whole were $14.8 million for the first six months of fiscal 2015 compared to $14.3 million for the first six months of fiscal 2014. This increase is primarily due to the fact that the first six months of fiscal 2015 includes 27 weeks compared with 26 weeks for the first six months of fiscal 2014. As a percent of net sales, SG&A expenses were 9.9% for the first six months of fiscal 2015 compared with 10.2% for the first six months of fiscal 2014.

Interest Expense

There was no interest expense for the second quarter of fiscal 2015 compared to $99,000 for the second quarter of fiscal 2014. Interest expense was $67,000 for the first six months of fiscal 2015 compared with $239,000 for the first six months of fiscal 2014.

These trends primarily reflect lower outstanding balances of long-term debt. Also, interest expense was reduced by interest costs of $52,000 and $82,000 for the mattress fabric expansion plan that were capitalized during the second quarter and the first six months of fiscal 2015, respectively. These interest costs will be depreciated over the related assets’ useful lives. No interest costs were capitalized during fiscal 2014.

Interest Income

Interest income was $153,000 for the second quarter of fiscal 2015 compared to $102,000 for the second quarter of fiscal 2014. Interest income was $294,000 for the first six months of fiscal 2015 compared to $195,000 for the first six months of fiscal 2014.

These increases reflect higher cash and cash equivalent and short-term investment balances held with our foreign subsidiaries during the second quarter and first six months of fiscal 2015 compared to the prior year. Cash and cash equivalents and short-term investment balances held by our foreign subsidiaries earn higher interest rates as compared to our cash and cash equivalents and short-term investment balances held in the United States.

Other Expense

Other expense for the second quarter of fiscal 2015 was $162,000 compared to $224,000 during the second quarter of fiscal 2014. Other expense for the first six months of fiscal 2015 was $73,000 compared with the $616,000 for the first six months of fiscal 2014.

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This improvement is primarily due to more favorable foreign currency exchange rates associated with our operations located in China in the second quarter and first six months of fiscal 2015 compared with the second quarter and first six months of fiscal 2014.

We have been able to mitigate the effects of foreign exchange rate fluctuations associated with our subsidiaries domiciled in Canada and Poland through maintenance of a natural hedge by keeping a balance of assets and liabilities denominated in foreign currencies other than the U.S. dollar. Although we will continue to try and maintain this natural hedge, there is no assurance that we will be able to continue to do so in the future reporting periods.

In addition, a non-recurring charge of $206,000 was recorded in the first quarter of fiscal 2014 for the settlement of litigation relating to environmental claims associated with a closed facility, and there was no comparable charge in the first half of fiscal 2015.

Income Taxes

Effective Income Tax Rate

We recorded income tax expense of $4.0 million, or 38.7% of income before income tax expense, for the six month period ended November 2, 2014, compared to income tax expense of $4.0 million, or 38.9% of income before income tax expense, for the six month period ended October 27, 2013. Our effective income tax rates for the six month periods ended November 2, 2014 and October 27, 2013 were based upon the estimated effective income tax rate applicable for the full year after giving effect to any significant items related specifically to interim periods. The effective income tax rate can be affected over the fiscal year by the mix and timing of actual earnings from our U.S. operations and foreign sources versus annual projections and changes in foreign currencies in relation to the U.S. dollar.

The income tax expense for the six month period ended November 2, 2014 is different from the amount obtained by applying our statutory rate of 34% to income before income taxes for the following reasons:

·   The income tax rate decreased by 6% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States.

·   The income tax rate increased by 4% for an increase in unrecognized tax benefits.

·   The income tax rate increased by 6.7% for stock-based compensation and other miscellaneous items.

The income tax expense for six month period ended October 27, 2013 is different from the amount obtained by applying our statutory rate of 34% to income before income taxes for the following reasons:

·   The income tax rate increased 3% for adjustments primarily made to our state of North Carolina loss carryforwards for the decrease in future North Carolina corporate income tax rates commencing in fiscal 2015 and beyond. These adjustments totaled $273,000 and represented a discrete event in which the full tax effects were recorded in the six month period ending October 27, 2013.

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·   The income tax rate decreased by 6% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States.

·   The income tax rate increased 4% for an increase in unrecognized tax benefits.

·   The income tax rate was increased by 3.9% for stock-based compensation and other miscellaneous items.

Deferred Income Taxes

Valuation Allowance

In accordance with ASC Topic 740, we evaluate our deferred income taxes to determine if a valuation allowance is required. ASC Topic 740 requires that companies assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law. Based on our assessment at November 2, 2014, we recorded a partial valuation allowance of $1.1 million, of which $666,000 pertained to certain U.S. state net operating loss carryforwards and credits and $456,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.  Based on our assessment at October 27, 2013, we recorded a partial valuation allowance of $1.0 million, of which $722,000 pertained to certain U.S. state net operating loss carryforwards and credits and $315,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.  Based on our assessment at April 27, 2014, we recorded a partial valuation allowance of $977,000, of which $666,000 pertained to certain U.S. state net operating loss carryforwards and credits and $311,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.

No valuation allowance was recorded against our net deferred tax assets associated with our operations located in China and Canada at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

The recorded valuation allowance of $1.1 million at November 2, 2014, has no effect on our operations, loan covenant compliance, or the possible realization of certain U.S. state net operating loss carryforwards and credits and our loss carryforwards associated with our Culp Europe operation located in Poland. If it is determined that it is more-likely-than-not that we will realize any of these deferred tax assets, an income tax benefit will be recognized at that time.

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Undistributed Earnings

In accordance with ASC Topic 740, we assess whether the undistributed earnings from our foreign subsidiaries will be reinvested indefinitely or eventually distributed to our U.S. parent company. ASC Topic 740 requires that a deferred tax liability should be recorded for undistributed earnings from foreign subsidiaries that will not be reinvested indefinitely. Based on our assessment as of November 2, 2014, it is our intention not to permanently invest our undistributed earnings from our foreign subsidiaries. Also, we assess the recognition of U.S. foreign income tax credits associated with foreign withholding and income tax payments and whether it is more-likely-than-not that our foreign income tax credits will not be realized. If it is determined that any foreign income tax credits need to be recognized or it is more-likely-than-not our foreign income tax credits will not be realized, an adjustment to our provision for income taxes will be recognized at that time.

At November 2, 2014, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $2.2 million, which included U.S. income and foreign withholding taxes totaling $30.6 million, offset by U.S. foreign income tax credits of $28.4 million. At October 27, 2013, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $7.1 million, which included U.S. income and foreign withholding taxes totaling $22.4 million, offset by U.S. foreign income tax credits of $15.3 million. At April 27, 2014, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $2.0 million, which included U.S. income and foreign withholding taxes totaling $28.1 million, offset by U.S. foreign income tax credits of $26.1 million.

We had accumulated earnings from our foreign subsidiaries totaling $78.9 million, $57.7 million, and $72.8 million at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

Uncertainty In Income Taxes

At November 2, 2014, we had a $14.1 million total gross unrecognized tax benefit, of which $4.0 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods. At October 27, 2013, we had a $13.5 million total gross unrecognized tax benefit, of which $4.1 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods. At April 27, 2014, we had a $13.7 million total gross unrecognized tax benefit, of which $4.0 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods.

At November 2, 2014, we had a $14.1 million total gross unrecognized tax benefit, of which $10.1 million and $4.0 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets. At October 27, 2013, we had a $13.5 million total gross unrecognized tax benefit, of which $9.4 million and $4.1 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets. At April 27, 2014, we had $13.7 million of total gross unrecognized tax benefit, of which $9.7 million and $4.0 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets.

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We estimate that the amount of gross unrecognized tax benefits will increase by approximately $905,000 for fiscal 2015. This increase primarily relates to double taxation under applicable tax treaties with foreign tax jurisdictions.

Income Taxes Paid

We reported income tax expense of $4.0 million in both the first half of fiscal 2015 and the first half of fiscal 2014. Currently, we are not paying income taxes in the United States due to our loss carryforwards that totaled $45.7 million at April 27, 2014. However, we did have income tax payments of $1.9 million and $1.5 million in the first half of fiscal 2015 and first half of fiscal 2014, respectively. Our income tax payments are associated with our subsidiaries located in China and Canada.

Liquidity and Capital Resources

Liquidity

At the end of the second quarter, our sources of liquidity include cash and cash equivalents, short-term investments, cash flow from operations, and amounts available under our unsecured revolving credit lines. These sources have been adequate for day-to-day operations, capital expenditures, debt payments, common stock repurchases, and dividend payments. We believe our present cash and cash equivalents and short-term investment balance of $35.3 million at November 2, 2014, cash flow from operations, and the current availability under our unsecured revolving credit lines will be sufficient to fund our foreseeable business needs and contractual obligations.

At November 2, 2014, our cash and cash equivalents and short-term investments totaling  $35.3 million represented $17.4 million associated with our operations located in China, $12.2 million associated with our operations located in Canada, $5.7 million associated with our operations located in the United States, and $40,000 associated without operations located in Poland.

At November 2, 2014, our cash and cash equivalents and short-term investments totaled $35.3 million and exceeded our total debt (all of which is classified in current maturities of long-term debt) of $2.2 million. We currently have one remaining annual $2.2 million principal payment on our long-term debt due in August 2015.

Our cash and cash equivalents and short-term investments remained flat compared to $35.6 million at April 27, 2014, despite spending during the first half of the year of $6.9 million on dividend payments and common stock repurchases, $5.1 million on capital expenditures, $2.7 million on payments on our long-term debt and lines of credit, and $1.1 million on long-term investment purchases associated with our Rabbi Trust that is partially funding our deferred compensation plan.

Our net cash provided by operating activities of $14.5 million, increased 54% compared with $9.4 million for the first six months of fiscal 2014. This increase is primarily due to improved inventory management in both our business segments.

Our cash and cash equivalents and short-term investment balance may be adversely affected by factors beyond our control, such as weakening industry demand and delays in receipt of payment on accounts receivable.

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Dividend Program

On December 3, 2014, we announced that our board of directors approved a 20 percent increase in our quarterly cash dividend rate 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.

During the first half of fiscal 2015, dividend payments totaled $6.1 million, of which $4.9 million represented a special cash dividend payment in the first quarter of $0.40 per share, and $1.2 million represented first and second quarter dividend payments of $0.05 per share.

During the first half of fiscal 2014, we paid first and second quarter dividend payments of $0.04 per share totaling $979,000.

Future dividend payments are subject to board approval and may be adjusted at the board’s discretion as business needs or market conditions change.

Common Stock Repurchase Program

On February 25, 2014, we announced that our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock. Under the common stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The amount of shares purchased and the timing of such purchases will be based on working capital requirements, market and general business conditions, and other factors including alternative investment opportunities.

During the first half of fiscal 2015, we repurchased 43,014 shares of our common stock at a cost of $745,000. During the first half of fiscal 2014, we did not repurchase any shares of common stock.

Since June 2011, we have returned a total of $27 million to shareholders in the form of regular quarterly and special dividend payments and common stock share repurchases.

Working Capital

Accounts receivable at November 2, 2014, were $25.0 million and remained flat as compared with $24.9 million at October 27, 2013. Accounts receivable remained flat despite an increase in net sales of 4.8% in the second quarter of fiscal 2015 compared with the second quarter of fiscal 2014, as days’ sales outstanding improved to 31 days from 32 days for the same year over year period.

Inventories as of November 2, 2014, were $38.2 million, a decrease of $6.7 million, or 15%, compared with $44.9 million at October 27, 2013. This decrease reflects improved inventory management by both of our business segments and the reduction of inventory associated with our Culp Europe operation located in Poland. Inventory turns improved to 6.4 for the second quarter of fiscal 2015 from 5.4 for the second quarter of fiscal 2014.

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Accounts payable-trade as of November 2, 2014, were $25.4 million, a decrease of $3.1 million, or 11%, compared with $28.5 million at October 27, 2013. This decrease primarily reflects the decrease in inventory noted above.

Operating working capital (comprised of accounts receivable and inventories, less accounts payable-trade and accounts payable-capital expenditures) was $37.6 million at November 2, 2014 compared with $41.2 million at October 27, 2013. Operating working capital turnover was 7.2 during the second quarter of fiscal 2015 compared with 7.1 during the second quarter of fiscal 2014.

Financing Arrangements

Unsecured Term Notes

We entered into a note agreement dated August 11, 2008 that provided for the issuance of $11.0 million of unsecured term notes with a fixed interest rate of 8.01% and a term of seven years. Principal payments of $2.2 million per year are due on the notes beginning August 11, 2011. The remaining principal payments are payable over an average term of 0.8 years through August 11, 2015. Any principal pre-payments would be assessed a penalty as defined in the agreement. The agreement contains customary financial and other covenants as defined in the agreement. As of November 2, 2014, we have one remaining annual payment of $2.2 million due on August 11, 2015.

Revolving Credit Agreement – United States

We have an unsecured credit agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) that provides for an unsecured revolving loan commitment of $10.0 million to be used to finance working capital and general corporate purposes. The amount of borrowings that are outstanding under the credit agreement with Culp Europe noted below decrease the $10.0 million available. Interest is charged at a rate (applicable interest rate of 1.76%, 1.77%, and 1.75% at November 2, 2014, October 27, 2013, and April 27, 2014, respectively) equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement. The credit agreement contains customary financial and other covenants as defined in the agreement and expires on August 31, 2015.

At November 2, 2014, October 27, 2013, and April 27, 2014, there was a $195,000 outstanding letter of credit (all of which related to workers compensation). At November 2, 2014, October 27, 2013, and April 27, 2014, there were no borrowings outstanding under the agreement.

Revolving Credit Agreement – China

We have an unsecured credit agreement associated with our operations in China that provides for a line of credit of up to 40 million RMB (approximately $6.5 million USD at November 2, 2014), expiring on May 9, 2015. This agreement has an interest rate determined by the Chinese government. There were no borrowings outstanding under the agreement as of November 2, 2014, October 27, 2013 and April 27, 2014.

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Revolving Credit Agreement – Europe

As of April 27, 2014, we had an unsecured credit agreement with Wells Fargo that incurred interest at WIBOR (Warsaw Interbank Offered Rate) plus 2% (applicable interest rate of 4.38% at April 27, 2014). There were $586,000 (1.8 million Polish Zloty) in borrowings outstanding under the agreement at April 27, 2014.

Effective May 2, 2014, we converted our 1.8 million Polish Zloty denominated borrowings under the credit agreement to EURO denominated borrowings totaling €424,000 ($569,000 USD). In addition, the applicable interest rate was converted to EURO LIBOR plus 2% (applicable interest rate of 2.2% at November 2, 2014).

At November 2, 2014, no borrowings were outstanding under this agreement, as the outstanding balance was paid in full during the second quarter of fiscal 2015.

Overall

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. At November 2, 2014, the company was in compliance with these financial covenants.

Capital Expenditures and Depreciation

Capital expenditures on a cash basis were $5.1 million for the first six months of fiscal 2015 compared with $1.9 million for the first six months of fiscal 2014. Capital expenditures for the first six months of fiscal 2015 and 2014 were primarily related to our mattress fabrics segment.

We acquired equipment for our mattress fabrics segment totaling $890,000 in connection with the May 2013 Bodet & Horst asset purchase agreement during the first quarter of fiscal 2014.

Depreciation expense was $2.8 million and $2.6 million for the first six months of fiscal 2015 and 2014, respectively. Depreciation expense for the first six months of fiscal 2015 and 2014, primarily related to the mattress fabrics segment.

For fiscal 2015, we currently expect capital expenditures to be approximately $10.0 million compared with $5.3 million in fiscal 2014 and $4.5 million in fiscal 2013. Planned capital expenditures for fiscal 2015 primarily relate to our previously announced mattress fabrics segment expansion plan. For fiscal 2015, depreciation expense is projected to be $6.0 million, which primarily relates to the mattress fabrics segment.

These are management’s current expectations only, and changes in our business needs could cause changes in plans for capital expenditures and expectations for related depreciation expense.

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Critical Accounting Policies and Recent Accounting Developments

As November 2, 2014, there were no changes in the nature of our significant accounting policies or the application of those policies from those reported in our annual report on Form 10-K for the year ended April 27, 2014.

Refer to Note 2 located in the notes to the consolidated financial statements for recently adopted and issued accounting pronouncements since the filing of our Form 10-K for the year ended April 27, 2014.

Contractual Obligations

As of November 2, 2014, there were no significant or new contractual obligations from those reported in our annual report on Form 10-K for the year ended April 27, 2014.

Inflation

Any significant increase in our raw material costs, utility/energy costs and general economic inflation could have a material adverse impact on the company, because competitive conditions have limited our ability to pass significant operating increases on to customers. As discussed in our Form 10-K for the year ended April 27, 2014 (see “Segment Analysis”), significant increases in raw material costs led to lower profit margins for both of our business segments during fiscal 2012.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from changes in interest rates on our revolving credit lines.

At November 2, 2014, our U.S. revolving credit agreement had an interest rate equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement. Our revolving credit line associated with our China subsidiaries bears interest at a rate determined by the Chinese government. Our revolving credit line associated with our operation located in Poland bears interest at the EURO LIBOR plus 2%. At November 2, 2014, there were no borrowings outstanding under any of our revolving credit lines.

We are not exposed to market risk from changes in interest rates on our long-term debt. Our unsecured term notes have a fixed interest rate of 8.01%.

We are exposed to market risk from changes in the value of foreign currencies for our subsidiaries domiciled in China, Canada, and Poland. We try to maintain a natural hedge by keeping a balance of our assets and liabilities denominated in the local currency of our subsidiaries domiciled in Canada and Poland, although there is no assurance that we will be able to continually maintain this natural hedge. Our foreign subsidiaries use the United States dollar as their functional currency. A substantial portion of the company’s imports purchased outside the United States are denominated in U.S. dollars. A 10% change in the above exchange rates at November 2, 2014, would not have had a significant impact on our results of operations or financial position.

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ITEM 4.  CONTROLS AND PROCEDURES

We have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of November 2, 2014, the end of the period covered by this report. This evaluation was conducted under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, we have concluded that these disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports filed by us and submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported as and when required. Further, we concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in reports filed by us under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, in a manner to allow timely decisions regarding the required disclosures.

There has been no change in our internal control over financial reporting that occurred during the quarter ended November 2, 2014, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II – Other Information

Item 1. Legal Proceedings

There have not been any material changes to our legal proceedings during the three months ended November 2, 2014. Our legal proceedings are disclosed in the company’s annual report on Form 10-K filed with the Securities and Exchange Commission on July 11, 2014 for the fiscal year ended April 27, 2014.

Item 1A.  Risk Factors

There have not been any material changes to our risk factors during the three months ended November 2, 2014. Our risk factors are disclosed in the company’s annual report on Form 10-K filed with the Securities and Exchange Commission on July 11, 2014 for the fiscal year ended April 27, 2014.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

Period	(a) Total Number of Shares Purchased		(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
August 4, 2014 to September 7, 2014		801		$17.21		801		$4,430,205
September 8, 2014 to October 5, 2014		6,889		17.50		6,889		$4,309,677
October 6, 2014 to November 2, 2014		3,055		17.49		3,055		$4,256,235
Total		10,745		$17.47		10,745		$4,256,235

(1)   On February 25, 2014, we announced that our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock.

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Item 6.  Exhibits

The following exhibits are submitted as part of this report.
3(i)	Articles of Incorporation of the company, as amended, were filed as Exhibit 3(i) to the company's Form 10-Q for the quarter ended July 28, 2002, filed September 11, 2002 (Commission File No. 001-12597), and are incorporated herein by reference.
3 (ii)	Restated and Amended Bylaws of the company, as amended November 12, 2007, were filed as Exhibit 3.1 to the company's Form 8-K dated November 12, 2007, and incorporated herein by reference.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

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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 thereunto duly authorized.

		CULP, INC.
		(Registrant)
Date: December 12, 2014	By:	/s/ Kenneth R. Bowling
		Kenneth R. Bowling
		Vice President and Chief Financial Officer
		(Authorized to sign on behalf of the registrant and also signing as principal financial officer)
	By:	/s/ Thomas B. Gallagher, Jr.
		Thomas B. Gallagher, Jr.
		Corporate Controller
		(Authorized to sign on behalf of the registrant and also signing as principal accounting officer)

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EXHIBIT INDEX

Exhibit Number	Exhibit
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Franklin N. Saxon, certify that:

1.   I have reviewed this Form 10-Q of Culp, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Franklin N. Saxon

Franklin N. Saxon

President and Chief Executive Officer

(Principal Executive Officer)

Date:  December 12, 2014

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Kenneth R. Bowling, certify that:

1.   I have reviewed this Form 10-Q of Culp, Inc.;

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Kenneth R. Bowling

Kenneth R. Bowling

Vice President and Chief Financial Officer

(Principal Financial Officer)

Date:  December 12, 2014

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Culp, Inc. (the “Company”) on Form 10-Q for the period ended November 2, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Franklin N. Saxon, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Franklin N. Saxon                                                           

Franklin N. Saxon

President and Chief Executive Officer

December 12, 2014

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to Culp, Inc. and will be retained by Culp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Culp, Inc. (the “Company”) on Form 10-Q for the period ended November 2, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth R. Bowling, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Kenneth R. Bowling                                                           

Kenneth R. Bowling

Vice President and Chief Financial Officer

December 12, 2014

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to Culp, Inc. and will be retained by Culp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Stock-Based Compensation (Detail) (USD $)	0 Months Ended			6 Months Ended	0 Months Ended			6 Months Ended										0 Months Ended		6 Months Ended
	Jun. 24, 2014 Performance Based Restricted Stock Units [Member]	Jun. 25, 2013 Performance Based Restricted Stock Units [Member]	Jul. 11, 2012 Performance Based Restricted Stock Units [Member]	Nov. 02, 2014 Performance Based Restricted Stock Units [Member]	Jun. 24, 2014 Performance Based Restricted Stock Units [Member] Maximum [Member]	Jun. 25, 2013 Performance Based Restricted Stock Units [Member] Maximum [Member]	Jul. 11, 2012 Performance Based Restricted Stock Units [Member] Maximum [Member]	Nov. 02, 2014 Performance Based Restricted Stock Units [Member] Selling, general and administrative expense [Member]	Oct. 27, 2013 Performance Based Restricted Stock Units [Member] Selling, general and administrative expense [Member]	Nov. 02, 2014 Stock Options [Member]	Oct. 27, 2013 Stock Options [Member]	Nov. 02, 2014 Stock Options [Member] Selling, general and administrative expense [Member]	Oct. 27, 2013 Stock Options [Member] Selling, general and administrative expense [Member]	Nov. 02, 2014 Time Vested Restricted Stock Awards [Member]	Oct. 27, 2013 Time Vested Restricted Stock Awards [Member]	Nov. 02, 2014 Time Vested Restricted Stock Awards [Member] Selling, general and administrative expense [Member]	Oct. 27, 2013 Time Vested Restricted Stock Awards [Member] Selling, general and administrative expense [Member]	Oct. 01, 2014 Common Stock Awards [Member] Outside Director [Member]	Oct. 01, 2013 Common Stock Awards [Member] Outside Director [Member]	Nov. 02, 2014 Common Stock Awards [Member] Selling, general and administrative expense [Member]	Oct. 27, 2013 Common Stock Awards [Member] Selling, general and administrative expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options granted										0
Number of options to purchase common stock outstanding										140,700
Number of options exercisable										140,700
Weighted average exercise price for options outstanding										$ 6.50
Weighted average exercise price for options exercisable										$ 6.50
Weighted average contractual term for options outstanding										3 years 2 months 12 days
Weighted average contractual term for options exercisable										3 years 2 months 12 days
Aggregate intrinsic value for options outstanding										$ 1,800,000
Aggregate intrinsic value for options exercisable										1,800,000
Aggregate intrinsic value for options exercised										80,000	224,000
Number of unvested stock option										0
Unrecognized stock based compensation cost										0
Share-based compensation expense								233,000	273,000			0	8,000			4,000	38,000			54,000	57,000
Number of shares granted					102,845	72,380	120,000							0				3,000	3,000
Vesting period	3 years	3 years	3 years															0 days	0 days
Closing price of common stock at the date of grant	$ 17.70	$ 17.12	$ 10.21															$ 17.95	$ 18.84
Number of shares outstanding and unvested														0
Remaining unrecognized compensation cost				1,100,000										0
Number of shares vested														61,667	61,667
Weighted average fair value of vested shares														$ 257,000	$ 249,000
Weighted average fair value of vested shares, per share														$ 4.17	$ 4.04
Weighted average period over which unrecognized compensation cost is expected to be recognized				2 years

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Cash Flow Information - Narrative (Detail) (USD $)	6 Months Ended		12 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Apr. 27, 2014
Cash Flow Supplemental Disclosures [Line Items]
Interest cost capitalized	$ 82,000	$ 0
Common stock surrendered for withholding taxes liabilities	18,000		15,000
Time Vested Restricted Stock Awards [Member]
Cash Flow Supplemental Disclosures [Line Items]
Common stock surrendered for withholding taxes liabilities, shares	995	989
Common stock surrendered for withholding taxes liabilities	$ 18,000	$ 15,000
Number of shares vesting	3,334	3,333

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Long-Term Debt and Lines of Credit - Long-Term Debt - Narrative (Detail) (USD $)	6 Months Ended
	Nov. 02, 2014 Payment	Apr. 27, 2014	Oct. 27, 2013	Aug. 11, 2008
Debt Instrument [Line Items]
Long-term debt	$ 2,200,000	$ 4,400,000	$ 4,400,000
Unsecured senior term notes [Member]
Debt Instrument [Line Items]
Issuance of unsecured term notes				11,000,000
Fixed interest rate				8.01%
Term of the note agreement	7 years
Required amount of principal payment installments	2,200,000
Date of first required principal payment	Aug. 11, 2011
Required debt payment frequency	Annual
Average term period for remaining principal payments, in years	9 months 18 days
Maturity date	Aug. 11, 2015
Remaining annual payment	2,200,000
Number of annual payment remaining	1
Long-term debt, fair value	$ 2,300,000	$ 4,600,000	$ 4,600,000

XML

Dividend Program (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended		3 Months Ended	6 Months Ended		0 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Aug. 03, 2014 Special Dividend [Member]	Nov. 02, 2014 Quarterly Dividend [Member]	Oct. 27, 2013 Quarterly Dividend [Member]	Dec. 03, 2014 Quarterly Dividend [Member] Subsequent Event [Member]	Dec. 03, 2014 Quarterly Dividend [Member] Subsequent Event [Member]
Dividends [Line Items]
Cash dividend payment, per share			$ 0.40	$ 0.05	$ 0.04
Cash dividends paid	$ 6,113	$ 979	$ 4,900	$ 1,200	$ 979
Percentage increase in quarterly cash dividend							20.00%
Cash dividend declared, per share						$ 0.06
Date of payment to shareholders entitled to dividends						Jan. 16, 2015
Date of record of shareholders entitled to dividends						Jan. 02, 2015

XML

Net Income Per Share - Weighted Average Shares (Detail) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Nov. 02, 2014	Oct. 27, 2013
Earnings Per Share [Abstract]
Weighted average common shares outstanding, basic	12,218	12,183	12,215	12,165
Dilutive effect of stock-based compensation	183	206	188	226
Weighted average common shares outstanding, diluted	12,401	12,389	12,403	12,391

XML

Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Payables and Accruals [Abstract]
Compensation, commissions and related benefits	$ 4,969	$ 7,388		$ 8,567
Interest	38	71		74
Other accrued expenses	2,716	1,722		3,031
Accrued expenses	$ 7,723	$ 9,181	[1]	$ 11,672

[1] Derived from audited financial statements.

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Nov. 02, 2014

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a recurring basis:

	Fair value measurements at November 2, 2014 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,576		N/A		N/A	$	2,576
Low Duration Bond Fund		2,081		N/A		N/A		2,081
Premier Money Market Fund		1,818		N/A		N/A		1,818
Intermediate Term Bond Fund		1,661		N/A		N/A		1,661
Other		93		N/A		N/A		93

	Fair value measurements at October 27, 2013 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,561		N/A		N/A	$	2,561
Low Duration Bond Fund		2,060		N/A		N/A		2,060
Intermediate Term Bond Fund		1,599		N/A		N/A		1,599

	Fair value measurements at April 27, 2014 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,576		N/A		N/A	$	2,576
Low Duration Bond Fund		2,077		N/A		N/A		2,077
Intermediate Term Bond Fund		1,641		N/A		N/A		1,641
Premier Money Market Fund		755		N/A		N/A		755
Other		10		N/A		N/A		10

Schedule of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

	Fair value measurements at April 27, 2014 and October 27, 2013 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Equipment	$	-	$	890	$	-	$	890
Non-compete Agreement		-		-		882		882
Customer Relationships		-		-		868		868

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Segment Information - Narrative (Detail)	6 Months Ended
	Nov. 02, 2014 Segment
Segment Reporting [Abstract]
Number of business segments	2

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Dividend Program

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Dividend Program

18.  Dividend Program

During the first half of fiscal 2015, dividend payments totaled $6.1 million, of which $4.9 million represented a special cash dividend payment in the first quarter of $0.40 per share, and $1.2 million represented first and second quarter dividend payments of $0.05 per share.

During the first half of fiscal 2014, we paid first and second quarter dividend payments of $0.04 per share totaling $979,000.

On December 3, 2014, we announced that our board of directors approved a 20 percent increase in our quarterly cash dividend rate from $0.05 to $0.06 per share, commencing in the third quarter of fiscal 2015. 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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Fair Value of Financial Instruments - Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014	Oct. 27, 2013
Limited Term Bond Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	$ 2,576	$ 2,576	$ 2,561
Low Duration Bond Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	2,081	2,077	2,060
Intermediate Term Bond Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	1,661	1,641	1,599
Premier Money Market Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	1,818	755
Other [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	93	10
Quoted prices in active markets for identical assets - Level 1 [Member] | Limited Term Bond Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	2,576	2,576	2,561
Quoted prices in active markets for identical assets - Level 1 [Member] | Low Duration Bond Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	2,081	2,077	2,060
Quoted prices in active markets for identical assets - Level 1 [Member] | Intermediate Term Bond Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	1,661	1,641	1,599
Quoted prices in active markets for identical assets - Level 1 [Member] | Premier Money Market Fund [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	1,818	755
Quoted prices in active markets for identical assets - Level 1 [Member] | Other [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a recurring basis	$ 93	$ 10

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Accounts Receivable - Allowance for Returns and Allowances and Discounts (Detail) (Reserve for returns and allowances and discounts [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013
Reserve for returns and allowances and discounts [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning balance	$ (479)	$ (543)
Provision for returns, allowances and discounts	(1,334)	(1,129)
Credits issued	1,218	1,100
Ending balance	$ (595)	$ (572)

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Business Combinations - Mattress Fabric Segment - Narrative (Detail) (Bodet And Horst [Member], USD $)	12 Months Ended	6 Months Ended
	Apr. 27, 2014	Nov. 02, 2014 Equipment [Member]	Nov. 02, 2014 Non-compete Agreement [Member]	Nov. 02, 2014 Customer Relationships [Member]
Business Acquisition [Line Items]
Direct acquisition costs related to business combination	$ 83,000
Intangible asset, useful life			15 years	17 years
Tangible asset, useful life		7 years

XML

Fair Value of Financial Instruments - Nonrecurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Apr. 27, 2014	Oct. 27, 2013
Equipment [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a nonrecurring basis	$ 890	$ 890
Non-compete Agreement [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a nonrecurring basis	882	882
Customer Relationships [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a nonrecurring basis	868	868
Significant other observable inputs - Level 2 [Member] | Equipment [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a nonrecurring basis	890	890
Significant unobservable inputs - Level 3 [Member] | Non-compete Agreement [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a nonrecurring basis	882	882
Significant unobservable inputs - Level 3 [Member] | Customer Relationships [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets measured at fair value on a nonrecurring basis	$ 868	$ 868

XML

Statutory Reserves (Detail) (Subsidiaries [Member], China [Member], USD $) In Millions, unless otherwise specified	6 Months Ended
	Nov. 02, 2014
Subsidiaries [Member] | China [Member]
Statutory Reserve [Line Items]
Percentage of net income required to be transferred to a statutory surplus reserve fund	10.00%
Maximum required percentage of statutory surplus reserve fund to registered capital	50.00%
Statutory surplus reserve fund balance	$ 5.1
Percentage of accumulated earnings and profits determined in accordance with PRC accounting rules and regulations	10.00%
Minimum threshold percentage for statutory surplus reserve fund as percentage of registered capital, below which certain capital transactions are prohibited	25.00%

XML

Segment Information - Balance Sheet Information by Operating Segments (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014		Apr. 27, 2014		Oct. 27, 2013
Segment Reporting Information [Line Items]
Property, plant and equipment	$ 33,204		$ 31,376	[1]	$ 30,559
United States [Member] | Mattress Fabrics [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	22,200		20,600		20,500
United States [Member] | Upholstery Fabrics [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	977		957		1,100
Canada [Member] | Mattress Fabrics [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	8,700		8,400		7,800
China [Member] | Upholstery Fabrics [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	601		572		464
Poland [Member] | Upholstery Fabrics [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment			44		49
Unallocated corporate [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	688	[2]	763	[2]	640	[2]
Unallocated corporate [Member] | United States [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	$ 688		$ 763		$ 640

[1] Derived from audited financial statements.

[2] The $688, $640, and $763 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate are located in the U.S.

XML

Long-Term Debt and Lines of Credit (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Debt Disclosure [Abstract]
Unsecured senior term notes	$ 2,200	$ 4,400		$ 4,400
Current maturities of long-term debt	(2,200)	(2,200)	[1]	(2,200)
Long-term debt, less current maturities of long-term debt		$ 2,200	[1]	$ 2,200

[1] Derived from audited financial statements.

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Significant Accounting Policies

6 Months Ended

Nov. 02, 2014

Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

As of November 2, 2014, there were no changes in the nature of our significant accounting policies or the application of those policies from those reported in our annual report on Form 10-K for the year then ended April 27, 2014.

Recently Adopted Accounting Pronouncements

None

Recently Issued Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) amended its authoritative guidance on accounting for certain share-based payment awards. The amended guidance requires that share-based compensation awards with terms of a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The guidance will be effective in our fiscal 2017 first quarter. The guidance will permit an entity to apply the amendments in the update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the consolidated financial statements and to all new or modified awards thereafter. Currently, we do not have any share-based payment awards with terms of a performance target that affects vesting and could be achieved after the requisite service period. We will apply this new guidance when it becomes effective, and we will evaluate the impact of adoption on our consolidated financial statements.

In May 2014, the FASB issued accounting guidance on revenue recognition. The amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Improved disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. This guidance will be effective in our fiscal 2018 first quarter and will be required to be applied retrospectively. We are currently assessing the impact that this guidance will have on our consolidated financial statements at this time.

XML

Income Taxes - Effective Income Tax Rate - Narrative (Detail) (USD $)	3 Months Ended		6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Nov. 02, 2014	Oct. 27, 2013
Income Taxes [Line Items]
Income taxes	$ 1,889,000	$ 1,718,000	$ 4,003,000	$ 4,023,000
Income tax rate			38.70%	38.90%
Statutory rate			34.00%	34.00%
Decrease in income tax rate from the lower statutory income tax rates in foreign jurisdictions compared with the U.S statutory income tax rate			(6.00%)	(6.00%)
Increase in income tax rate from an increase in unrecognized tax benefits			4.00%	4.00%
Increase in income tax rate for stock-based compensation and other miscellaneous items			6.70%	3.90%
Increase in income tax rate from adjustments to the state of North Carolina loss carryforwards for the decrease in future North Carolina corporate income tax rates				3.00%
Income tax expense related to the adjustments of the state of North Carolina loss carryforwards from the decrease in future North Carolina corporate income tax rates				273,000
Canada and China [Member]
Income Taxes [Line Items]
Decrease in income tax rate from the lower statutory income tax rates in foreign jurisdictions compared with the U.S statutory income tax rate			(6.00%)	(6.00%)
North Carolina [Member]
Income Taxes [Line Items]
Increase in income tax rate from adjustments to the state of North Carolina loss carryforwards for the decrease in future North Carolina corporate income tax rates				3.00%
Income tax expense related to the adjustments of the state of North Carolina loss carryforwards from the decrease in future North Carolina corporate income tax rates				$ 273,000

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Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Inventory Disclosure [Abstract]
Raw materials	$ 5,657	$ 6,707		$ 5,592
Work-in-process	2,190	2,263		2,383
Finished goods	30,381	31,704		36,907
Inventories	$ 38,228	$ 40,674	[1]	$ 44,882

[1] Derived from audited financial statements.

XML

Inventories (Tables)

6 Months Ended

Nov. 02, 2014

Inventory Disclosure [Abstract]

Summary of Inventories

A summary of inventories follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Raw materials	$	5,657	$	5,592	$	6,707
Work-in-process		2,190		2,383		2,263
Finished goods		30,381		36,907		31,704
	$	38,228	$	44,882	$	40,674

XML

Accounts Receivable (Tables)

6 Months Ended

Nov. 02, 2014

Receivables [Abstract]

Summary of Accounts Receivable

A summary of accounts receivable follows:

(dollars in thousands)	November 2, 2014			October 27, 2013			April 27, 2014
Customers	$	26,082		$	26,022		$	28,461
Allowance for doubtful accounts		(442	)		(513	)		(573	)
Reserve for returns and allowances and discounts		(595	)		(572	)		(479	)
	$	25,045		$	24,937		$	27,409

Summary of the Activity in the Allowance for Doubtful Accounts

A summary of the activity in the allowance for doubtful accounts follows:

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Beginning balance	$	(573	)	$	(780	)
Provision for bad debts		57			211
Net write-offs, net of recoveries		74			56
Ending balance	$	(442	)	$	(513	)

Summary of the Activity in the Allowance for Returns and Allowances and Discounts Accounts

A summary of the activity in the allowance for returns and allowances and discounts accounts follows:

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Beginning balance	$	(479	)	$	(543	)
Provision for returns, allowances and discounts		(1,334	)		(1,129	)
Credits issued		1,218			1,100
Ending balance	$	(595	)	$	(572	)

XML

Net Income Per Share - Narrative (Detail)	3 Months Ended	6 Months Ended
	Oct. 27, 2013	Oct. 27, 2013	Nov. 02, 2014 Time Vested Restricted Stock Awards [Member]
Earnings Per Share Disclosure [Line Items]
Number of shares of common stock excluded from the computation of basic net income	61,667	61,667
Number of shares outstanding and unvested of common stock not affecting computation of basic net income per share			0

XML

Other Assets (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Other Assets, Noncurrent [Abstract]
Cash surrender value - life insurance	$ 320	$ 644		$ 649
Non-compete agreement	1,017	1,041		1,054
Customer relationships	791	817		842
Other	411	415		414
Other assets	$ 2,539	$ 2,917	[1]	$ 2,959

[1] Derived from audited financial statements.

XML

Other Assets (Tables)

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Summary of Other Assets

A summary of other assets follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Cash surrender value - life insurance	$	320	$	649	$	644
Non-compete agreement		1,017		1,054		1,041
Customer relationships		791		842		817
Other		411		414		415
	$	2,539	$	2,959	$	2,917

XML

Accrued Expenses (Tables)

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Summary of Accrued Expenses

A summary of accrued expenses follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Compensation, commissions and related benefits	$	4,969	$	8,567	$	7,388
Interest		38		74		71
Other accrued expenses		2,716		3,031		1,722
	$	7,723	$	11,672	$	9,181

XML

Basis of Presentation

6 Months Ended

Nov. 02, 2014

Accounting Policies [Abstract]

Basis of Presentation

1.  Basis of Presentation

The accompanying unaudited consolidated financial statements of Culp, Inc. and subsidiaries (the “company”) include all adjustments, which are, in the opinion of management, necessary for fair presentation of the results of operations and financial position.  All of these adjustments are of a normal recurring nature. Results of operations for interim periods may not be indicative of future results.  The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, which are included in the company’s annual report on Form 10-K filed with the Securities and Exchange Commission on July 11, 2014 for the fiscal year ended April 27, 2014.

The company’s six months ended November 2, 2014 and October 27, 2013, represent 27 and 26 week periods, respectively.

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Long-Term Debt and Lines of Credit (Tables)

6 Months Ended

Nov. 02, 2014

Debt Disclosure [Abstract]

Summary of Long-Term Debt

A summary of long-term debt follows:

(dollars in thousands)	November 2, 2014			October 27, 2013			April 27, 2014
Unsecured senior term notes	$	2,200		$	4,400		$	4,400
Current maturities of long-term debt		(2,200	)		(2,200	)		(2,200	)
Long-term debt, less current maturities of long-term debt	$	-		$	2,200		$	2,200

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Accounts Receivable (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013	Apr. 28, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Customers	$ 26,082	$ 28,461		$ 26,022
Accounts receivable, net	25,045	27,409	[1]	24,937
Allowance for doubtful accounts [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Valuation allowance, balance	(442)	(573)		(513)	(780)
Reserve for returns and allowances and discounts [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Valuation allowance, balance	$ (595)	$ (479)		$ (572)	$ (543)

[1] Derived from audited financial statements.

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Cash Flow Information (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013
Supplemental Cash Flow Elements [Abstract]
Interest	$ 180	$ 276
Net income tax payments	$ 1,943	$ 1,515

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CONSOLIDATED STATEMENTS OF NET INCOME (UNAUDITED) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Nov. 02, 2014	Oct. 27, 2013
Income Statement [Abstract]
Net sales	$ 73,991	$ 70,589	$ 150,051	$ 140,730
Cost of sales	61,713	58,354	125,058	115,422
Gross profit	12,278	12,235	24,993	25,308
Selling, general and administrative expenses	7,379	7,200	14,798	14,299
Income from operations	4,899	5,035	10,195	11,009
Interest expense		99	67	239
Interest income	(153)	(102)	(294)	(195)
Other expense	162	224	73	616
Income before income taxes	4,890	4,814	10,349	10,349
Income taxes	1,889	1,718	4,003	4,023
Net income	$ 3,001	$ 3,096	$ 6,346	$ 6,326
Net income per share, basic	$ 0.25	$ 0.25	$ 0.52	$ 0.52
Net income per share, diluted	$ 0.24	$ 0.25	$ 0.51	$ 0.51
Average shares outstanding, basic	12,218	12,183	12,215	12,165
Average shares outstanding, diluted	12,401	12,389	12,403	12,391

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Other Assets - Narrative (Detail) (USD $)	3 Months Ended	6 Months Ended									6 Months Ended			6 Months Ended
	Nov. 02, 2014 Contract	Nov. 02, 2014 Contract	May 16, 2014	Apr. 27, 2014 Contract	Oct. 27, 2013 Contract	Nov. 02, 2014 Other assets [Member]	Apr. 27, 2014 Other assets [Member]	Oct. 27, 2013 Other assets [Member]	Nov. 02, 2014 Other assets [Member] Asset Purchase Agreement Dated August 11, 2008 [Member]	Nov. 02, 2014 Other assets [Member] Asset Purchase Agreement Dated May 8, 2013 [Member]	Nov. 02, 2014 Other assets [Member] Customer Relationships [Member]	Oct. 27, 2013 Other assets [Member] Customer Relationships [Member]	Apr. 27, 2014 Other assets [Member] Customer Relationships [Member]	Nov. 02, 2014 Other assets [Member] Non-compete Agreement [Member]	Oct. 27, 2013 Other assets [Member] Non-compete Agreement [Member]	Apr. 27, 2014 Other assets [Member] Non-compete Agreement [Member]
Other Assets [Line Items]
Useful life											17 years			15 years
Gross carrying amount of non-compete agreement						$ 2,000,000	$ 2,000,000	$ 2,000,000
Accumulated amortization											77,000	26,000	51,000	1,000,000	1,000,000	1,000,000
Non-compete agreement carrying amount	1,017,000	1,017,000		1,041,000	1,054,000				223,000	794,000
Amortization expense											26,000	26,000		38,000	38,000
Remaining amortization expense for the fiscal year											25,000			38,000
Remaining amortization expense for the second fiscal year											51,000			75,000
Remaining amortization expense for the third fiscal year											51,000			75,000
Remaining amortization expense for the fourth fiscal year											51,000			75,000
Remaining amortization expense for the fifth fiscal year											51,000			75,000
Remaining amortization expense for the fiscal year thereafter											562,000			679,000
Weighted average remaining amortization period											15 years 6 months			13 years 6 months
Gross carrying amount of customer relationships						868,000	868,000	868,000
Death benefits to beneficiary of insured on terminated life insurance agreement			2,500,000
Collection of cash surrender value from termination of split dollar life insurance agreement	320,000	320,000
Number of life insurance contracts owned	1	1		2	2
Life insurance contracts, death benefits to insured	1,400,000	1,400,000		3,900,000	3,900,000
Life insurance contracts, cash surrender value	$ 320,000	$ 320,000		$ 644,000	$ 649,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 02, 2014		Oct. 27, 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 issuance 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	[1]	23,530
Cash and cash equivalents at end of period	$ 28,953		$ 24,267

[1] Derived from audited financial statements.

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Segment Information - Balance Sheet Information by Operating Segments (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014		Apr. 27, 2014		Oct. 27, 2013		Apr. 28, 2013
Segment Reporting Information [Line Items]
Non-compete agreement	$ 1,017		$ 1,041		$ 1,054
Customer relationships	791		817		842
Goodwill	11,462		11,462	[1]	11,462
Property, plant and equipment	33,204		31,376	[1]	30,559
Total assets	156,662		160,935	[1]	156,242
Cash and cash equivalents	28,953		29,303	[1]	24,267		23,530
Short-term investments	6,318		6,294	[1]	6,220
Income taxes receivable			121	[1]
Other current assets	2,303		2,344	[1]	2,550
Long-term investments	1,911		765	[1]
Other assets	2,539		2,917	[1]	2,959
Operating Segments [Member]
Segment Reporting Information [Line Items]
Total assets	109,059		112,016		113,097
Operating Segments [Member] | Mattress Fabrics [Member]
Segment Reporting Information [Line Items]
Current assets	35,406	[2]	36,229	[2]	37,373	[2]
Non-compete agreement	1,017		1,041		1,054
Customer relationships	791		817		842
Goodwill	11,462		11,462		11,462
Property, plant and equipment	30,938	[3]	29,040	[3]	28,307	[3]
Total assets	79,614		78,589		79,038
Operating Segments [Member] | Upholstery Fabrics [Member]
Segment Reporting Information [Line Items]
Current assets	27,867	[2]	31,854	[2]	32,447	[2]
Property, plant and equipment	1,578	[4]	1,573	[4]	1,612	[4]
Total assets	29,445		33,427		34,059
Unallocated corporate [Member]
Segment Reporting Information [Line Items]
Property, plant and equipment	688	[5]	763	[5]	640	[5]
Cash and cash equivalents	28,953		29,303		24,267
Short-term investments	6,318		6,294		6,220
Deferred income taxes	6,699		8,270		8,406
Income taxes receivable			121
Other current assets	2,303		2,344		2,550
Long-term investments	1,911		765
Other assets	$ 731		$ 1,059		$ 1,062

[1] Derived from audited financial statements.

[2] Current assets represent accounts receivable and inventory for the respective segment.

[3] The $30.9 million at November 2, 2014, represents property, plant, and equipment of $22.2 million and $8.7 million located in the U.S. and Canada, respectively. The $28.3 million at October 27, 2013, represents property, plant, and equipment of $20.5 million and $7.8 million located in the U.S. and Canada, respectively. The $29.0 million at April 27, 2014, represents property, plant, and equipment of $20.6 million and $8.4 million located in the U.S. and Canada, respectively.

[4] The $1.6 million at November 2, 2014, represents property, plant, and equipment of $977 and $601 located in the U.S. and China, respectively. The $1.6 million at October 27, 2013, represents property, plant, and equipment located in the U.S. of $1.1 million, located in China of $464, and located in Poland of $49. The $1.6 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $957, located in China of $572, and located in Poland of $44.

[5] The $688, $640, and $763 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate are located in the U.S.

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Net Income Per Share (Tables)

6 Months Ended

Nov. 02, 2014

Earnings Per Share [Abstract]

Schedule of Weighted Average Shares Used in the Computation of Basic and Diluted Net Income Per Share

Weighted average shares used in the computation of basic and diluted net income per share follows:

	Three months ended
(amounts in thousands)	November 2, 2014		October 27, 2013
Weighted average common shares outstanding, basic		12,218		12,183
Dilutive effect of stock-based compensation		183		206
Weighted average common shares outstanding, diluted		12,401		12,389

	Six months ended
(amounts in thousands)	November 2, 2014		October 27, 2013
Weighted average common shares outstanding, basic		12,215		12,165
Dilutive effect of stock-based compensation		188		226
Weighted average common shares outstanding, diluted		12,403		12,391

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Income Taxes - Deferred Income Taxes - Narrative (Detail) (USD $)	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Income Taxes [Line Items]
Current deferred tax asset	$ 6,191,000	$ 6,230,000	[1]	$ 7,745,000
Non-current deferred tax asset	508,000	2,040,000	[1]	661,000
Non-current deferred tax liability	1,395,000	1,013,000	[1]	5,016,000
U.S. Tax Authorities [Member]
Income Taxes [Line Items]
Current deferred tax asset	5,800,000	5,800,000		7,400,000
Non-current deferred tax asset		1,400,000
Non-current deferred tax liability	509,000			4,100,000
China [Member]
Income Taxes [Line Items]
Current deferred tax asset	428,000	372,000		386,000
Non-current deferred tax asset	508,000	572,000		661,000
Canada [Member]
Income Taxes [Line Items]
Non-current deferred tax liability	$ 886,000	$ 1,000,000		$ 945,000

[1] Derived from audited financial statements.

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Statutory Reserves

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Statutory Reserves

15.  Statutory Reserves

Our subsidiaries located in China are required to transfer 10% of their net income, as determined in accordance with the People’s Republic of China (PRC) accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the company’s registered capital.

The transfer to this reserve must be made before distributions of any dividend to shareholders. As of November 2, 2014, the company’s statutory surplus reserve was $5.1 million, representing 10% of accumulated earnings and profits determined in accordance with PRC accounting rules and regulations. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

Our subsidiaries located in China can transfer funds to the parent company with the exception of the statutory surplus reserve of $5.1 million to assist with debt repayment, capital expenditures, and other expenses of the company’s business.

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Segment Information (Tables)

6 Months Ended

Nov. 02, 2014

Segment Reporting [Abstract]

Schedule of Operating Segments Information

Financial information for the company’s operating segments follows:

	Three months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Net sales:
Mattress Fabrics	$	43,038		$	40,331
Upholstery Fabrics		30,953			30,258
	$	73,991		$	70,589
Gross profit:
Mattress Fabrics	$	7,324		$	7,322
Upholstery Fabrics		4,954			4,913
	$	12,278		$	12,235
Selling, general, and administrative expenses:
Mattress Fabrics	$	2,592		$	2,620
Upholstery Fabrics		3,285			3,170
Total segment selling, general, and
administrative expenses		5,877			5,790
Unallocated corporate expenses		1,502			1,410
	$	7,379		$	7,200
Income from operations:
Mattress Fabrics	$	4,733		$	4,702
Upholstery Fabrics		1,668			1,743
Total segment income from operations		6,401			6,445
Unallocated corporate expenses		(1,502	)		(1,410	)
Total income from operations		4,899			5,035
Interest expense		-			(99	)
Interest income		153			102
Other expense		(162	)		(224	)
Income before income taxes	$	4,890		$	4,814

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Net sales:
Mattress Fabrics	$	85,860		$	78,494
Upholstery Fabrics		64,191			62,236
	$	150,051		$	140,730
Gross profit:
Mattress Fabrics	$	14,527		$	14,713
Upholstery Fabrics		10,466			10,595
	$	24,993		$	25,308
Selling, general, and administrative expenses:
Mattress Fabrics	$	5,166		$	4,994
Upholstery Fabrics		6,737			6,436
Total segment selling, general, and
administrative expenses		11,903			11,430
Unallocated corporate expenses		2,895			2,869
	$	14,798		$	14,299
Income from operations:
Mattress Fabrics	$	9,361		$	9,719
Upholstery Fabrics		3,729			4,159
Total segment income from operations		13,090			13,878
Unallocated corporate expenses		(2,895	)		(2,869	)
Total income from operations		10,195			11,009
Interest expense		(67	)		(239	)
Interest income		294			195
Other expense		(73	)		(616	)
Income before income taxes	$	10,349		$	10,349

Balance sheet information for the company’s operating segments follow:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Segment assets:
Mattress Fabrics
Current assets (1)	$	35,406	$	37,373	$	36,229
Non-compete agreement		1,017		1,054		1,041
Customer relationships		791		842		817
Goodwill		11,462		11,462		11,462
Property, plant and equipment (2)		30,938		28,307		29,040
Total mattress fabrics assets		79,614		79,038		78,589
Upholstery Fabrics
Current assets (1)		27,867		32,447		31,854
Property, plant and equipment (3)		1,578		1,612		1,573
Total upholstery fabrics assets		29,445		34,059		33,427
Total segment assets		109,059		113,097		112,016
Non-segment assets:
Cash and cash equivalents		28,953		24,267		29,303
Short-term investments		6,318		6,220		6,294
Deferred income taxes		6,699		8,406		8,270
Income taxes receivable		-		-		121
Other current assets		2,303		2,550		2,344
Property, plant and equipment (4)		688		640		763
Long-term investments		1,911		-		765
Other assets		731		1,062		1,059
Total assets	$	156,662	$	156,242	$	160,935
			Six months ended
(dollars in thousands)			November 2, 2014		October 27, 2013
Capital expenditures (5):
Mattress Fabrics			$	4,692	$	1,199
Upholstery Fabrics				258		521
Unallocated Corporate				38		20
Total capital expenditures			$	4,988	$	1,740
Depreciation expense:
Mattress Fabrics			$	2,448	$	2,331
Upholstery Fabrics				364		305
Total depreciation expense			$	2,812	$	2,636

(1)   Current assets represent accounts receivable and inventory for the respective segment.

(2)   The $30.9 million at November 2, 2014, represents property, plant, and equipment of $22.2 million and $8.7 million located in the U.S. and Canada, respectively. The $28.3 million at October 27, 2013, represents property, plant, and equipment of $20.5 million and $7.8 million located in the U.S. and Canada, respectively. The $29.0 million at April 27, 2014, represents property, plant, and equipment of $20.6 million and $8.4 million located in the U.S. and Canada, respectively.

(3)   The $1.6 million at November 2, 2014, represents property, plant, and equipment of $977 and $601 located in the U.S. and China, respectively. The $1.6 million at October 27, 2013, represents property, plant, and equipment located in the U.S. of $1.1 million, located in China of $464, and located in Poland of $49. The $1.6 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $957, located in China of $572, and located in Poland of $44.

(4)   The $688, $640, and $763 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate are located in the U.S.

(5)   Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.

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Common Stock Repurchase Program

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Common Stock Repurchase Program

17.  Common Stock Repurchase Program

On February 25, 2014, we announced that our board of directors approved an authorization for us to acquire up to $5.0 million of our common stock. Under the common stock repurchase program, shares may be purchased from time to time in open market transactions, block trades, through plans established under the Securities Exchange Act Rule 10b5-1, or otherwise. The amount of shares purchased and the timing of such purchases will be based on working capital requirements, market and general business conditions, and other factors including alternative investment opportunities.

During the first half of fiscal 2015, we repurchased 43,014 shares of our common stock at a cost of $745,000. During the first half of fiscal 2014, we did not repurchase any shares of common stock.

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Commitments and Contingencies (Detail) (USD $)				3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Nov. 02, 2014 Mattress Fabrics [Member] Capital Addition Purchase Commitments [Member]	Apr. 27, 2014 Mattress Fabrics [Member] Capital Addition Purchase Commitments [Member]	Oct. 27, 2013 Mattress Fabrics [Member] Capital Addition Purchase Commitments [Member]	Apr. 27, 2014 Settled Litigation [Member] Environmental Issue [Member]	Nov. 02, 2014 Settled Litigation [Member] Environmental Issue [Member]	Jul. 28, 2013 Settled Litigation [Member] Environmental Issue [Member] Other Expense [Member]	Nov. 02, 2014 Settled Litigation [Member] Environmental Issue [Member] Site of former manufacturing plant in West Hazleton, Pennsylvania [Member]
Commitments and Contingencies Disclosure [Line Items]
Lawsuit filing date					February 5, 2008
Actions taken by court which impacted the lawsuit							The lawsuit involved court judgments that were entered against the plaintiffs and against defendant Chromatex, Inc. requiring them to pay costs incurred by the United States Environmental Protection Agency ("USEPA") responding to environmental contamination at the Site, in amounts approximating $14 million, plus unspecified future environmental costs.
Amount of judgment against plaintiffs for which recovery is being sought from defendants							$ 14,000,000
Damages sought by plaintiffs							Costs incurred by the United States Environmental Protection Agency ("USEPA") responding to environmental contamination at the Site, in amounts approximating $14 million, plus unspecified future environmental costs.
Charge resulted from settlement of lawsuit						206,000
Payments made for settlement of lawsuit				206,000
Lawsuit dismissed date					Jun. 05, 2014
Open purchase commitments	$ 3,000,000	$ 3,400,000	$ 1,600,000

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (USD $) In Thousands, except Share data		Total	Common Stock	Capital Contributed in Excess of Par Value	Accumulated Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at Apr. 28, 2013		$ 95,583	$ 611	$ 41,901	$ 53,017	$ 54
Balance (in shares) at Apr. 28, 2013			12,224,894
Net income		17,447			17,447
Stock-based compensation		710		710
Unrealized loss on investments		(114)				(114)
Excess tax benefit related to stock based compensation		143		143
Fully vested common stock award			3,000
Common stock issued in connection with exercise of stock options (in shares)			23,125
Common stock issued in connection with exercise of stock options		194	1	193
Common stock surrendered for withholding taxes payable (in shares)			(989)
Common stock surrendered for withholding taxes payable		(15)		(15)
Dividends paid		(2,204)			(2,204)
Balance at Apr. 27, 2014	[1]	111,744	612	42,932	68,260	(60)
Balance (in shares) at Apr. 27, 2014	[1]		12,250,030
Net income		6,346			6,346
Stock-based compensation		291		291
Unrealized loss on investments		(28)				(28)
Excess tax benefit related to stock based compensation		108		108
Common stock repurchased (in shares)			(43,014)
Common stock repurchased		(745)	(2)	(743)
Fully vested common stock award			3,000
Common stock issued in connection with exercise of stock options (in shares)			9,500
Common stock issued in connection with exercise of stock options		89	1	88
Common stock surrendered for withholding taxes payable (in shares)			(995)
Common stock surrendered for withholding taxes payable		(18)		(18)
Dividends paid		(6,113)			(6,113)
Balance at Nov. 02, 2014		$ 111,674	$ 611	$ 42,658	$ 68,493	$ (88)
Balance (in shares) at Nov. 02, 2014			12,218,521

[1] Derived from audited financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Nov. 02, 2014	Oct. 27, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 3,001	$ 3,096	$ 6,346	$ 6,326
Other comprehensive (loss) gain
Unrealized (losses) gains on investments	(18)	22	(28)	(113)
Total other comprehensive (loss) gain	(18)	22	(28)	(113)
Comprehensive income	$ 2,983	$ 3,118	$ 6,318	$ 6,213

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Fair Value of Financial Instruments

6 Months Ended

Nov. 02, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

10. Fair Value of Financial Instruments

ASC Topic 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either level 1 or level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy. The hierarchy consists of three broad levels as follows:

Level 1 – Quoted market prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than level 1 inputs that are either directly or indirectly observable, and

Level 3 – Unobservable inputs developed using the company’s estimates and assumptions, which reflect those that market participants would use.

Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a recurring basis:

	Fair value measurements at November 2, 2014 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,576		N/A		N/A	$	2,576
Low Duration Bond Fund		2,081		N/A		N/A		2,081
Premier Money Market Fund		1,818		N/A		N/A		1,818
Intermediate Term Bond Fund		1,661		N/A		N/A		1,661
Other		93		N/A		N/A		93

	Fair value measurements at October 27, 2013 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,561		N/A		N/A	$	2,561
Low Duration Bond Fund		2,060		N/A		N/A		2,060
Intermediate Term Bond Fund		1,599		N/A		N/A		1,599

	Fair value measurements at April 27, 2014 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Limited Term Bond Fund	$	2,576		N/A		N/A	$	2,576
Low Duration Bond Fund		2,077		N/A		N/A		2,077
Intermediate Term Bond Fund		1,641		N/A		N/A		1,641
Premier Money Market Fund		755		N/A		N/A		755
Other		10		N/A		N/A		10

The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter based on various factors and it is possible that an asset or liability may be classified differently from quarter to quarter. However, we expect that changes in classifications between different levels will be rare.

Our short-term investments include short-term bond funds, are classified as available-for-sale, and their unrealized gains or losses are included in other comprehensive income (loss). Our short-term bond funds were recorded at their fair value of $6.3 million, $6.2 million and $6.3 million at November 2, 2014, October 27, 2013, and April 27, 2014, respectively. Our short-term bond funds had an accumulated unrealized loss totaling $88,000, $59,000, and $60,000 at November 2, 2014, October 27, 2013, and April 27, 2014, respectively. At November 2, 2014, October 27, 2013, and April 27, 2014, the fair value of our short-term bond funds approximated its cost basis.

Effective, January 1, 2014, we established a Rabbi Trust to set aside funds for participants of our deferred compensation plan (the “Plan”) and enable the participants to credit their contributions to various investment options of the Plan. The investments associated with the Rabbi Trust consist of investments in a money market fund and various mutual funds that are classified as available for sale. Our long-term investments are recorded at its fair value of $1.9 million and $765,000 at November 2, 2014 and April 27, 2014, respectively. The fair value of our long-term investments approximates its cost basis.

The carrying amount of cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses, and line of credit approximates fair value because of the short maturity of these financial instruments.

Nonrecurring Basis

During the six months ended November 2, 2014, we did not have any financial assets that were required to be measured at fair value on a nonrecurring basis.

During fiscal 2014, we did not have any financial assets that were required to be measured at fair value on a nonrecurring basis other than the assets acquired from Bodet & Horst (see note 3) that were acquired at fair value.

	Fair value measurements at April 27, 2014 and October 27, 2013 using:
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(amounts in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Equipment	$	-	$	890	$	-	$	890
Non-compete Agreement		-		-		882		882
Customer Relationships		-		-		868		868

The equipment was classified as level 2 as the fair value was determined using quoted market prices from a third party. The non-compete was recorded at its fair value using a discounted cash flow valuation model that used significant unobservable inputs and was classified as level 3. The customer relationships were recorded at a fair value using a multi-period excess earnings valuation model that used significant unobservable inputs and was classified as level 3.

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Document and Entity Information	6 Months Ended
	Nov. 02, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 02, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	CFI
Entity Registrant Name	CULP INC
Entity Central Index Key	0000723603
Current Fiscal Year End Date	--05-03
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding	12,218,521

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Cash Flow Information

6 Months Ended

Nov. 02, 2014

Supplemental Cash Flow Elements [Abstract]

Cash Flow Information

11.  Cash Flow Information

Payments for interest and income taxes follows:

	Six months ended
(dollars in thousands)	November 2, 2014		October 27, 2013
Interest	$	180	$	276
Net income tax payments		1,943		1,515

Interest costs of $82,000 for the construction of qualifying fixed assets were capitalized and are being amortized over the related assets’ useful lives for the six months ended November 2, 2014. No interest costs were capitalized for the six months ended October 27, 2013.

During the six months ended November 2, 2014, 995 shares of common stock were surrendered to satisfy withholding tax liabilities totaling $18,000 in connection with the vesting of 3,334 shares of time vested restricted common stock. During the six months ended October 27, 2013, 989 shares of common stock were surrendered to satisfy withholding tax liabilities totaling $15,000 in connection with the vesting of 3,333 shares of time vested restricted common stock.

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) In Thousands, unless otherwise specified	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Current assets:
Cash and cash equivalents	$ 28,953	$ 29,303	[1]	$ 24,267
Short-term investments	6,318	6,294	[1]	6,220
Accounts receivable, net	25,045	27,409	[1]	24,937
Inventories	38,228	40,674	[1]	44,882
Deferred income taxes	6,191	6,230	[1]	7,745
Income taxes receivable		121	[1]
Other current assets	2,303	2,344	[1]	2,550
Total current assets	107,038	112,375	[1]	110,601
Property, plant and equipment, net	33,204	31,376	[1]	30,559
Goodwill	11,462	11,462	[1]	11,462
Deferred income taxes	508	2,040	[1]	661
Long-term investments	1,911	765	[1]
Other assets	2,539	2,917	[1]	2,959
Total assets	156,662	160,935	[1]	156,242
Current liabilities:
Current maturities of long-term debt	2,200	2,200	[1]	2,200
Accounts payable-trade	25,450	26,686	[1]	28,543
Accounts payable - capital expenditures	178	277	[1]	66
Accrued expenses	7,723	9,181	[1]	11,672
Income taxes payable - current	268	442	[1]	304
Total current liabilities	35,819	38,786	[1]	42,785
Income taxes payable - long-term	3,980	3,962	[1]	4,141
Deferred income taxes	1,395	1,013	[1]	5,016
Line of credit		586	[1]	585
Deferred compensation	3,794	2,644	[1]
Long-term debt, less current maturities		2,200	[1]	2,200
Total liabilities	44,988	49,191	[1]	54,727
Commitments and Contingencies (Note 16)			[1]
Shareholders' equity
Preferred stock, $0.05 par value, authorized 10,000,000			[1]
Common stock, $0.05 par value, authorized 40,000,000 shares, issued and outstanding 12,218,521 at November 2, 2014; 12,250,030 at October 27, 2013; and 12,250,030 at April 27, 2014	611	612	[1]	612
Capital contributed in excess of par value	42,658	42,932	[1]	42,598
Accumulated earnings	68,493	68,260	[1]	58,364
Accumulated other comprehensive loss	(88)	(60)	[1]	(59)
Total shareholders' equity	111,674	111,744	[1]	101,515
Total liabilities and shareholders' equity	$ 156,662	$ 160,935	[1]	$ 156,242

[1] Derived from audited financial statements.

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Accounts Receivable

6 Months Ended

Nov. 02, 2014

Receivables [Abstract]

Accounts Receivable

5.  Accounts Receivable

A summary of accounts receivable follows:

(dollars in thousands)	November 2, 2014			October 27, 2013			April 27, 2014
Customers	$	26,082		$	26,022		$	28,461
Allowance for doubtful accounts		(442	)		(513	)		(573	)
Reserve for returns and allowances and discounts		(595	)		(572	)		(479	)
	$	25,045		$	24,937		$	27,409

A summary of the activity in the allowance for doubtful accounts follows:

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Beginning balance	$	(573	)	$	(780	)
Provision for bad debts		57			211
Net write-offs, net of recoveries		74			56
Ending balance	$	(442	)	$	(513	)

A summary of the activity in the allowance for returns and allowances and discounts accounts follows:

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Beginning balance	$	(479	)	$	(543	)
Provision for returns, allowances and discounts		(1,334	)		(1,129	)
Credits issued		1,218			1,100
Ending balance	$	(595	)	$	(572	)

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Stock-Based Compensation

6 Months Ended

Nov. 02, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

4.  Stock-Based Compensation

Incentive Stock Option Awards

We did not grant any incentive stock option awards through the second quarter of fiscal 2015.

At November 2, 2014, options to purchase 140,700 shares of common stock were outstanding and exercisable, had a weighted average exercise price of $6.50 per share, and a weighted average contractual term of 3.2 years. At November 2, 2014, the aggregate intrinsic value for options outstanding and exercisble was $1.8 million.

The aggregate intrinsic value for options exercised for the six months ending November 2, 2014 and October 27, 2013, was $80,000 and $224,000, respectively.

At November 2, 2014, there were no unvested incentive stock option awards. Therefore, there was no unrecognized compensation cost related to incentive stock option awards at November 2, 2014.

No compensation expense was recorded on incentive stock options for the six months ended November 2, 2014. We recorded $8,000 of compensation expense on incentive stock option grants within selling, general, and administrative expense for the six months ended October 27, 2013.

Common Stock Awards

On October 1, 2014, we granted a total of 3,000 shares of common stock to our outside directors. These shares of common stock vested immediately and were measured at $17.95 per share, which represents the closing price of the company’s common stock at the date of grant.

On October 1, 2013, we granted a total of 3,000 shares of common stock to our outside directors. These shares of common stock vested immediately and were measured at $18.84 per share, which represents the closing price of the company’s common stock at the date of grant.

We recorded $54,000 and $57,000 of compensation expense within selling, general, and administrative expense for these common stock awards for the six month periods ending November 2, 2014, and October 27, 2013, respectively.

Time Vested Restricted Stock Awards

We did not grant any time vested restricted stock awards through the second quarter of fiscal 2015.

We recorded $4,000 and $38,000 of compensation expense within selling, general, and administrative expense for time vested restricted stock awards for the six month periods ending November 2, 2014, and October 27, 2013, respectively.

At November 2, 2014, there were no outstanding and unvested shares of time vested restricted stock. Therefore, there was no unrecognized compensation cost related to time vested restricted stock awards at November 2, 2014.

During the six month period ended November 2, 2014, 61,667 shares of time vested restricted stock vested and had a weighted average fair value of $257,000 or $4.17 per share. During the six month period ended October 27, 2013, 61,667 shares of time vested restricted stock vested and had a weighted average fair value of $249,000 or $4.04 per share.

Performance Based Restricted Stock Units

Fiscal 2015 Grant

On June 24, 2014, certain key members of management were granted performance based restricted common stock units which could earn up to 102,845 shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. These awards were valued based on the fair market value on the date of grant. The fair value of these awards was $17.70 per share, which represents the closing price of our common stock on the date of grant. The vesting of these awards is over the requisite service period of three years.

Fiscal 2014 Grant

On June 25, 2013, certain key members of management were granted performance based restricted common stock units which could earn up to 72,380 shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. These awards were valued based on the fair market value on the date of grant. The fair value of these awards was $17.12 per share, which represents the closing price of our common stock on the date of grant. The vesting of these awards is over the requisite service period of three years.

Fiscal 2013 Grant

On July 11, 2012, certain key members of management were granted performance based restricted common stock units which could earn up to 120,000 shares of common stock if certain performance targets are met as defined in the related restricted stock unit agreements. These awards were valued based on the fair market value on the date of grant. The fair value of these awards was $10.21 per share, which represents the closing price of our common stock on the date of grant. The vesting of these awards is over the requisite service period of three years.

Overall

The company recorded compensation expense of $233,000 and $273,000 within selling, general, and administrative expense for performance based restricted stock units for the six month periods ending November 2, 2014 and October 27, 2013, respectively. Compensation cost is recorded based on an assessment each reporting period of the probability if certain performance goals will be met during the vesting period. If performance goals are not probable of occurrence, no compensation cost will be recognized and any recognized compensation cost would be reversed.

As of November 2, 2014, the remaining unrecognized compensation cost related to the performance based restricted stock units was $1.1 million, which is expected to be recognized over a weighted average vesting period of 2.0 years.

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Commitments and Contingencies

6 Months Ended

Nov. 02, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

16.   Commitments and Contingencies

Chromatex Environmental Claim

A lawsuit was filed against us and other defendants (Chromatex, Inc., Rossville Industries, Inc., Rossville Companies, Inc. and Rossville Investments, Inc.) on February 5, 2008 in the United States District Court for the Middle District of Pennsylvania.  The plaintiffs are Alan Shulman, Stanley Siegel, Ruth Cherenson as Personal Representative of Estate of Alan Cherenson, and Adrienne Rolla and M.F. Rolla as Executors of the Estate of Joseph Byrnes.  The plaintiffs were partners in a general partnership that formerly owned a manufacturing plant in West Hazleton, Pennsylvania (the “Site”).  Approximately two years after this general partnership sold the Site to defendants Chromatex, Inc. and Rossville Industries, Inc., we leased and operated the Site as part of our Rossville/Chromatex division.  The lawsuit involved court judgments that were entered against the plaintiffs and against defendant Chromatex, Inc. requiring them to pay costs incurred by the United States Environmental Protection Agency (“USEPA”) responding to environmental contamination at the Site, in amounts approximating $14 million, plus unspecified future environmental costs. Neither USEPA nor any other governmental authority asserted any claim against us on account of these matters.  The plaintiffs sought contribution from us and other defendants declaring that the company and the other defendants were responsible for environmental response costs under environmental laws and certain agreements.  The plaintiffs also asserted that we tortiously interfered with contracts between them and other defendants in the case and diverted assets to prevent the plaintiffs from being paid monies owed to them.  We defended ourselves vigorously with regards to the matters described in this litigation.

In the first quarter of fiscal 2014, the parties to this lawsuit reached a settlement of all matters, which required us to contribute cash to a global settlement fund. Consequently, we recorded a charge of $206,000 to other expense in the fiscal 2014 Consolidated Statement of Net Income. In the fourth quarter of fiscal 2014, we paid the $206,000 settlement amount. Subsequently, the settlement was reviewed by the government and during the first quarter of fiscal 2015 the court approved the final agreement by the parties involved. The lawsuit was dismissed on June 5, 2014.

Other Litigation

The company is involved in legal proceedings and claims which have arisen in the ordinary course of business. Management has determined that it is not reasonably possible that these actions, when ultimately concluded and settled, will have a material adverse effect upon the financial position, results of operations, or cash flows of the company.

Purchase Commitments

At November 2, 2014, October 27, 2013, and April 27, 2014, we had open purchase commitments to acquire equipment for our mattress fabrics segment totaling $3.0 million, $1.6 million, and $3.4 million, respectively.

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Net Income Per Share

6 Months Ended

Nov. 02, 2014

Earnings Per Share [Abstract]

Net Income Per Share

12.  Net Income Per Share

Basic net income per share is computed using the weighted-average number of shares outstanding during the period.  Diluted net income per share uses the weighted-average number of shares outstanding during the period plus the dilutive effect of stock-based compensation calculated using the treasury stock method.  Weighted average shares used in the computation of basic and diluted net income per share follows:

	Three months ended
(amounts in thousands)	November 2, 2014		October 27, 2013
Weighted average common shares outstanding, basic		12,218		12,183
Dilutive effect of stock-based compensation		183		206
Weighted average common shares outstanding, diluted		12,401		12,389

All options to purchase shares of common stock were included in the computation of diluted net income for the three months ended November 2, 2014 and October 27, 2013, as the exercise price of the options was less than the average market price of the common shares.

The computation of basic net income per share did not include 61,667 shares of time vested restricted common stock as these shares were unvested for the three months ending October 27, 2013. At November 2, 2014, there were no outstanding and unvested shares of time vested restricted common stock and therefore, the computation of basic net income per share was not affected.

	Six months ended
(amounts in thousands)	November 2, 2014		October 27, 2013
Weighted average common shares outstanding, basic		12,215		12,165
Dilutive effect of stock-based compensation		188		226
Weighted average common shares outstanding, diluted		12,403		12,391

All options to purchase shares of common stock were included in the computation of diluted net income for the six months ended November 2, 2014 and October 27, 2013, as the exercise price of the options was less than the average market price of the common shares.

The computation of basic net income per share did not include 61,667 shares of time vested restricted common stock as these shares were unvested for the six months ending October 27, 2013. At November 2, 2014, there were no outstanding and unvested shares of time vested restricted common stock and therefore, the computation of basic net income per share was not affected.

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Accrued Expenses

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Accrued Expenses

8.  Accrued Expenses

A summary of accrued expenses follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Compensation, commissions and related benefits	$	4,969	$	8,567	$	7,388
Interest		38		74		71
Other accrued expenses		2,716		3,031		1,722
	$	7,723	$	11,672	$	9,181

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Segment Information - Capital Expenditures and Depreciation Expense By Operating Segments (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 02, 2014		Oct. 27, 2013
Segment Reporting Information [Line Items]
Capital expenditures	$ 4,988	[1]	$ 1,740	[1]
Depreciation expense	2,812		2,636
Operating Segments [Member] | Mattress Fabrics [Member]
Segment Reporting Information [Line Items]
Capital expenditures	4,692		1,199
Depreciation expense	2,448		2,331
Operating Segments [Member] | Upholstery Fabrics [Member]
Segment Reporting Information [Line Items]
Capital expenditures	258		521
Depreciation expense	364		305
Unallocated corporate [Member]
Segment Reporting Information [Line Items]
Capital expenditures	$ 38		$ 20

[1] Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.

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Inventories

6 Months Ended

Nov. 02, 2014

Inventory Disclosure [Abstract]

Inventories

6.  Inventories

Inventories are carried at the lower of cost or market.  Cost is determined using the FIFO (first-in, first-out) method.

A summary of inventories follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Raw materials	$	5,657	$	5,592	$	6,707
Work-in-process		2,190		2,383		2,263
Finished goods		30,381		36,907		31,704
	$	38,228	$	44,882	$	40,674

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Other Assets

6 Months Ended

Nov. 02, 2014

Text Block [Abstract]

Other Assets

7.  Other Assets

A summary of other assets follows:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Cash surrender value - life insurance	$	320	$	649	$	644
Non-compete agreement		1,017		1,054		1,041
Customer relationships		791		842		817
Other		411		414		415
	$	2,539	$	2,959	$	2,917

Non-Compete Agreement

In connection with the asset purchase and consulting agreement with Bodet & Horst on May 8, 2013 (see Note 3), we restructured our prior non-compete agreement pursuant to our asset purchase and consulting agreement dated August 11, 2008. We have agreed with Bodet & Horst to replace the prior non-compete agreement that prevented us from selling certain mattress fabrics and products to a leading manufacturer, that will now allow us to make such sales. In addition, the prior consulting and non-compete agreement, under which Bodet & Horst agreed not to sell mattress fabrics in North America, was replaced, expanded, and extended pursuant to the new asset purchase consulting agreement. We recorded this non-compete agreement at its fair value based on a discounted cash flow valuation model. This non-compete agreement is amortized on a straight-line basis over the fifteen year life of the agreement.

The gross carrying amount of this non-compete agreement was $2.0 million at November 2, 2014, October 27, 2013 and April 27, 2014, respectively. At November 2, 2014, October 27, 2013, and April 27, 2014, accumulated amortization for the non-compete agreement was $1.0 million.

Of the $1.0 million non-compete agreement carrying amount at November 2, 2014, $223,000 pertains to the non-compete agreement that was in place as part of the asset purchase agreement dated August 11, 2008, and $794,000 pertains to the non-compete agreement pursuant to the asset purchase agreement dated May 8, 2013 that was restructured to expand the non-compete agreement in place effective August 11, 2008.

Amortization expense for the non-compete agreement was $38,000 for the six month periods ended November 2, 2014 and October 27, 2013. The remaining amortization expense for the next five fiscal years and thereafter follows: FY 2015 - $38,000; FY 2016 - $75,000; FY 2017 - $75,000; FY 2018- $75,000; FY 2019 - $75,000; and Thereafter - $679,000.

The weighted average amortization period for the non-compete agreement is 13.5 years as of November 2, 2014.

Customer Relationships

In connection with the asset purchase and consulting agreement with Bodet & Horst noted above, we purchased certain customer relationships. We recorded the customer relationships at its fair value based on a multi-period excess earnings valuation model. The gross carrying amount of these customer relationships was $868,000 at November 2, 2014, October 27, 2013, and April 27, 2014, respectively. Accumulated amortization for these customer relationships was $77,000, $26,000, and $51,000 at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

The customer relationships are amortized on a straight-line basis over its seventeen year useful life. Amortization expense for the customer relationships was $26,000 for the six months ending November 2, 2014 and October 27, 2013. The remaining amortization expense for the next five fiscal years and thereafter follows: FY 2015 - $25,000; FY 2016 - $51,000; FY 2017 - $51,000; FY 2018 - $51,000; FY 2019 - $51,000; and Thereafter - $562,000.

The weighted average amortization period for the non-compete agreement is 15.5 years as of November 2, 2014.

Cash Surrender Value – Life Insurance

On May 16, 2014, we entered into an agreement with a former employee and his irrevocable trust (the “Trust”) dated September 7, 1995. As a result of this agreement, a previous split dollar life insurance agreement in which we purchased a policy on the life of this former employee and his spouse, in which we retained ownership of the policy, paid premiums to support the policy, had the right to receive cash surrender value of the policy upon the second to die of the former employee and his spouse, with the Trust receiving the remainder of the policy’s death benefit ($2.5 million), was terminated. In connection with the termination of the previous split dollar life insurance agreement, we transferred the life insurance policy to the Trust and received cash proceeds in the amount of the cash surrender value policy totaling $320,000 during the second quarter of fiscal 2015.

At November 2, 2014, we had one life insurance contract with a death benefit of $1.4 million. At October 27, 2013 and April 27, 2014, we had two life insurance contracts with death benefits to the respective insured totaling $3.9 million. Our cash surrender value – life insurance balances totaling $320,000, $649,000 and $644,000 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, are collectible upon death of the respective insured.

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Long-Term Debt and Lines of Credit

6 Months Ended

Nov. 02, 2014

Debt Disclosure [Abstract]

Long-Term Debt and Lines of Credit

9.  Long-Term Debt and Lines of Credit

A summary of long-term debt follows:

(dollars in thousands)	November 2, 2014			October 27, 2013			April 27, 2014
Unsecured senior term notes	$	2,200		$	4,400		$	4,400
Current maturities of long-term debt		(2,200	)		(2,200	)		(2,200	)
Long-term debt, less current maturities of long-term debt	$	-		$	2,200		$	2,200

Unsecured Term Notes

We entered into a note agreement dated August 11, 2008 that provided for the issuance of $11.0 million of unsecured term notes with a fixed interest rate of 8.01% and a term of seven years. Principal payments of $2.2 million per year are due on the notes beginning August 11, 2011. The remaining principal payments are payable over an average term of 0.8 years through August 11, 2015. Any principal pre-payments would be assessed a penalty as defined in the agreement. The agreement contains customary financial and other covenants as defined in the agreement.

As of November 2, 2014, we have one remaining annual payment of $2.2 million due on August 11, 2015.

Revolving Credit Agreement – United States

We have an unsecured credit agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) that provides for an unsecured revolving loan commitment of $10.0 million to be used to finance working capital and general corporate purposes. The amount of borrowings that are outstanding under the credit agreement with Culp Europe noted below decrease the $10.0 million available. Interest is charged at a rate (applicable interest rate of 1.76%, 1.77%, and 1.75% at November 2, 2014, October 27, 2013, and April 27, 2014, respectively) equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement. The credit agreement contains customary financial and other covenants as defined in the agreement and expires on August 31, 2015.

At November 2, 2014, October 27, 2013, and April 27, 2014, there was a $195,000 outstanding letter of credit (all of which related to workers compensation). At November 2, 2014, October 27, 2013, and April 27, 2014, there were no borrowings outstanding under the agreement.

Revolving Credit Agreement – China

We have an unsecured credit agreement associated with our operations in China that provides for a line of credit of up to 40 million RMB (approximately $6.5 million USD at November 2, 2014), expiring on May 9, 2015. This agreement has an interest rate determined by the Chinese government. There were no borrowings outstanding under the agreement as of November 2, 2014, October 27, 2013 and April 27, 2014.

Revolving Credit Agreement – Europe

As of April 27, 2014, we had an unsecured credit agreement with Wells Fargo that incurred interest at WIBOR (Warsaw Interbank Offered Rate) plus 2% (applicable interest rate of 4.38% at April 27, 2014). There was $586,000 (1.8 million Polish Zloty) in borrowings outstanding under the agreement at April 27, 2014.

Effective May 2, 2014, we converted our 1.8 million Polish Zloty denominated borrowings under the credit agreement to EURO denominated borrowings totaling €424,000 ($569,000 USD). In addition, the applicable interest rate was converted to EURO LIBOR plus 2% (applicable interest rate of 2.2% at November 2, 2014).

At November 2, 2014, no borrowings were outstanding under this agreement, as the outstanding balance was paid in full during the second quarter of fiscal 2015.

Overall

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. At November 2, 2014, the company was in compliance with these financial covenants.

The fair value of the company’s long-term debt is estimated by discounting the future cash flows at rates currently offered to the company for similar debt instruments of comparable maturities. At November 2, 2014, the carrying value of our long-term debt was $2.2 million and the fair value was $2.3 million. At October 27, 2013, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.6 million. At April 27, 2014, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.6 million.

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Income Taxes - Deferred Income Taxes - Undistributed Earnings - Narrative (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended		12 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Apr. 27, 2014
Income Tax Disclosure [Abstract]
Deferred tax liability, undistributed earnings from foreign subsidiaries	$ 2.2	$ 7.1	$ 2.0
U.S. income and foreign withholding taxes	30.6	22.4	28.1
U.S. foreign income tax credits	28.4	15.3	26.1
Undistributed earnings from our foreign subsidiaries that will not be reinvested indefinitely	$ 78.9	$ 57.7	$ 72.8

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Income Taxes - Uncertainty in Income Taxes - Narrative (Detail) (USD $)	Nov. 02, 2014	Apr. 27, 2014	Oct. 27, 2013
Income Taxes [Line Items]
Unrecognized tax benefits	$ 14,100,000	$ 13,700,000	$ 13,500,000
Unrecognized tax benefits that would favorably impact effective income tax rate if recognized	4,000,000	4,000,000	4,100,000
Expected increase in unrecognized tax benefits related to double taxation under applicable tax treaties with foreign tax jurisdictions	905,000
Net Non-current Deferred Income Taxes [Member]
Income Taxes [Line Items]
Unrecognized tax benefits	10,100,000	9,700,000	9,400,000
Income Taxes Payable - Long-Term [Member]
Income Taxes [Line Items]
Unrecognized tax benefits	$ 4,000,000	$ 4,000,000	$ 4,100,000

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Income Taxes - Deferred Income Taxes - Valuation Allowance - Narrative (Detail) (USD $)	Nov. 02, 2014	Apr. 27, 2014	Oct. 27, 2013
U.S. Tax Authorities and Poland Tax Authorities [Member] | Deferred Tax Asset Loss Carryforwards [Member]
Income Taxes [Line Items]
Valuation allowance	$ 1,100,000	$ 977,000	$ 1,000,000
U.S. State Tax [Member] | Deferred Tax Asset Loss Carryforwards [Member]
Income Taxes [Line Items]
Valuation allowance	666,000	666,000	722,000
Poland [Member] | Deferred Tax Asset Loss Carryforwards [Member] | Culp Europe [Member]
Income Taxes [Line Items]
Valuation allowance	456,000	311,000	315,000
Canada and China [Member]
Income Taxes [Line Items]
Valuation allowance	$ 0	$ 0	$ 0

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Cash Flow Information (Tables)

6 Months Ended

Nov. 02, 2014

Supplemental Cash Flow Elements [Abstract]

Schedule of Payments for Interest and Income Taxes

Payments for interest and income taxes follows:

	Six months ended
(dollars in thousands)	November 2, 2014		October 27, 2013
Interest	$	180	$	276
Net income tax payments		1,943		1,515

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Fair Value of Financial Instruments - Narrative (Detail) (USD $)	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Long-term investments	$ 1,911,000	$ 765,000	[1]
Short-term Investments [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Short-term bond funds	6,300,000	6,300,000		6,200,000
Unrealized gain (loss) on short-term bond funds	$ (88,000)	$ (60,000)		$ (59,000)

[1] Derived from audited financial statements.

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Income Taxes

6 Months Ended

Nov. 02, 2014

Income Tax Disclosure [Abstract]

Income Taxes

14.  Income Taxes

Effective Income Tax Rate

We recorded income tax expense of $4.0 million, or 38.7% of income before income tax expense, for the six month period ended November 2, 2014, compared to income tax expense of $4.0 million, or 38.9% of income before income tax expense, for the six month period ended October 27, 2013. Our effective income tax rates for the six month periods ended November 2, 2014 and October 27, 2013 were based upon the estimated effective income tax rate applicable for the full year after giving effect to any significant items related specifically to interim periods. The effective income tax rate can be affected over the fiscal year by the mix and timing of actual earnings from our U.S. operations and foreign sources versus annual projections and changes in foreign currencies in relation to the U.S. dollar.

The income tax expense for the six month period ended November 2, 2014 is different from the amount obtained by applying our statutory rate of 34% to income before income taxes for the following reasons:

·   The income tax rate decreased by 6% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States.

·   The income tax rate increased by 4% for an increase in unrecognized tax benefits.

·   The income tax rate increased by 6.7% for stock-based compensation and other miscellaneous items.

The income tax expense for six month period ended October 27, 2013 is different from the amount obtained by applying our statutory rate of 34% to income before income taxes for the following reasons:

·   The income tax rate increased 3% for adjustments primarily made to our state of North Carolina loss carryforwards for the decrease in future North Carolina corporate income tax rates commencing in fiscal 2015 and beyond. These adjustments totaled $273,000 and represented a discrete event in which the full tax effects were recorded in the six month period ending October 27, 2013.

·   The income tax rate decreased by 6% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States.

·   The income tax rate increased 4% for an increase in unrecognized tax benefits.

·   The income tax rate was increased by 3.9% for stock-based compensation and other miscellaneous items.

Deferred Income Taxes

Valuation Allowance

In accordance with ASC Topic 740, we evaluate our deferred income taxes to determine if a valuation allowance is required. ASC Topic 740 requires that companies assess whether a valuation allowance should be established based on the consideration of all available evidence using a “more likely than not” standard, with significant weight being given to evidence that can be objectively verified. Since the company operates in multiple jurisdictions, we assess the need for a valuation allowance on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law. Based on our assessment at November 2, 2014, we recorded a partial valuation allowance of $1.1 million, of which $666,000 pertained to certain U.S. state net operating loss carryforwards and credits and $456,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.  Based on our assessment at October 27, 2013, we recorded a partial valuation allowance of $1.0 million, of which $722,000 pertained to certain U.S. state net operating loss carryforwards and credits and $315,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.  Based on our assessment at April 27, 2014, we recorded a partial valuation allowance of $977,000, of which $666,000 pertained to certain U.S. state net operating loss carryforwards and credits and $311,000 pertained to loss carryfowards associated with our Culp Europe operation located in Poland.

No valuation allowance was recorded against our net deferred tax assets associated with our operations located in China and Canada at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

The recorded valuation allowance of $1.1 million at November 2, 2014, has no effect on our operations, loan covenant compliance, or the possible realization of certain U.S. state net operating loss carryforwards and credits and our loss carryforwards associated with our Culp Europe operation located in Poland. If it is determined that it is more-likely-than-not that we will realize any of these deferred tax assets, an income tax benefit will be recognized at that time.

Undistributed Earnings

In accordance with ASC Topic 740, we assess whether the undistributed earnings from our foreign subsidiaries will be reinvested indefinitely or eventually distributed to our U.S. parent company. ASC Topic 740 requires that a deferred tax liability should be recorded for undistributed earnings from foreign subsidiaries that will not be reinvested indefinitely. Based on our assessment as of November 2, 2014, it is our intention not to permanently invest our undistributed earnings from our foreign subsidiaries. Also, we assess the recognition of U.S. foreign income tax credits associated with foreign withholding and income tax payments and whether it is more-likely-than-not that our foreign income tax credits will not be realized. If it is determined that any foreign income tax credits need to be recognized or it is more-likely-than-not our foreign income tax credits will not be realized, an adjustment to our provision for income taxes will be recognized at that time.

At November 2, 2014, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $2.2 million, which included U.S. income and foreign withholding taxes totaling $30.6 million, offset by U.S. foreign income tax credits of $28.4 million. At October 27, 2013, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $7.1 million, which included U.S. income and foreign withholding taxes totaling $22.4 million, offset by U.S. foreign income tax credits of $15.3 million. At April 27, 2014, the deferred tax liability associated with our undistributed earnings from our foreign subsidiaries totaled $2.0 million, which included U.S. income and foreign withholding taxes totaling $28.1 million, offset by U.S. foreign income tax credits of $26.1 million.

We had accumulated earnings from our foreign subsidiaries totaling $78.9 million, $57.7 million, and $72.8 million at November 2, 2014, October 27, 2013, and April 27, 2014, respectively.

Overall

At November 2, 2014, the current deferred tax asset of $6.2 million represents $5.8 million and $428,000 from our operations located in the U.S. and China, respectively. At November 2, 2014, the non-current deferred tax asset of $508,000 pertains to our operations located in China. At November 2, 2014, the non-current deferred tax liability of $1.4 represents $886,000 and $509,000 from our operations located in Canada and the U.S., respectively.

At October 27, 2013, the current deferred tax asset of $7.8 million represents $7.4 million and $386,000 from our operations located in the U.S. and China, respectively. At October 27, 2013, the non-current deferred tax asset of $661,000 pertains to our operations located in China. At October 27, 2013, the non-current deferred tax liability of $5.0 million represents $4.1 million and $945,000 from operations located in the U.S. and Canada, respectively.

At April 27, 2014, the current deferred tax asset of $6.2 million represents $5.8 million and $372,000 from our operations located in the U.S. and China, respectively. At April 27, 2014, the non-current deferred tax asset of $2.0 million represents $1.4 million and $572,000 from our operations located in the U.S. and China, respectively. At April 27, 2014, the non-current deferred tax liability of $1.0 million pertained to our operations located in Canada.

Uncertainty In Income Taxes

At November 2, 2014, we had a $14.1 million total gross unrecognized tax benefit, of which $4.0 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods. At October 27, 2013, we had a $13.5 million total gross unrecognized tax benefit, of which $4.1 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods. At April 27, 2014, we had a $13.7 million total gross unrecognized tax benefit, of which $4.0 million represents the amount of gross unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods.

At November 2, 2014, we had a $14.1 million total gross unrecognized tax benefit, of which $10.1 million and $4.0 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets. At October 27, 2013, we had a $13.5 million total gross unrecognized tax benefit, of which $9.4 million and $4.1 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets. At April 27, 2014, we had $13.7 million of total gross unrecognized tax benefit, of which $9.7 million and $4.0 million were classified as net non-current deferred income taxes and income taxes payable – long-term, respectively, in the accompanying consolidated balance sheets.

We estimate that the amount of gross unrecognized tax benefits will increase by approximately $905,000 for fiscal 2015. This increase primarily relates to double taxation under applicable tax treaties with foreign tax jurisdictions.

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Significant Accounting Policies (Policies)

6 Months Ended

Nov. 02, 2014

Accounting Policies [Abstract]

Recently Adopted and Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

None

Recently Issued Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) amended its authoritative guidance on accounting for certain share-based payment awards. The amended guidance requires that share-based compensation awards with terms of a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The guidance will be effective in our fiscal 2017 first quarter. The guidance will permit an entity to apply the amendments in the update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the consolidated financial statements and to all new or modified awards thereafter. Currently, we do not have any share-based payment awards with terms of a performance target that affects vesting and could be achieved after the requisite service period. We will apply this new guidance when it becomes effective, and we will evaluate the impact of adoption on our consolidated financial statements.

In May 2014, the FASB issued accounting guidance on revenue recognition. The amended guidance will enhance the comparability of revenue recognition practices and will be applied to all contracts with customers. Improved disclosures related to the nature, amount, timing, and uncertainty of revenue that is recognized are requirements under the amended guidance. This guidance will be effective in our fiscal 2018 first quarter and will be required to be applied retrospectively. We are currently assessing the impact that this guidance will have on our consolidated financial statements at this time.

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Long-Term Debt and Lines of Credit - Lines of Credit - Narrative (Detail)	6 Months Ended			6 Months Ended				6 Months Ended	12 Months Ended				6 Months Ended
	Nov. 02, 2014 United States [Member] Revolving Credit Facility [Member] USD ($)	Apr. 27, 2014 United States [Member] Revolving Credit Facility [Member] USD ($)	Oct. 27, 2013 United States [Member] Revolving Credit Facility [Member] USD ($)	Nov. 02, 2014 China [Member] Revolving credit agreement [Member] USD ($)	Nov. 02, 2014 China [Member] Revolving credit agreement [Member] CNY	Apr. 27, 2014 China [Member] Revolving credit agreement [Member] USD ($)	Oct. 27, 2013 China [Member] Revolving credit agreement [Member] USD ($)	Nov. 02, 2014 Poland [Member] Revolving credit agreement [Member] USD ($)	Apr. 27, 2014 Poland [Member] Revolving credit agreement [Member] USD ($)	Apr. 27, 2014 Poland [Member] Revolving credit agreement [Member] PLN	May 02, 2014 Poland [Member] Revolving credit agreement [Member] USD ($)	May 02, 2014 Poland [Member] Revolving credit agreement [Member] EUR (€)	Nov. 02, 2014 Poland [Member] Revolving credit agreement [Member] Interest rate description for April 27, 2014 [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 10,000,000			$ 6,500,000	40,000,000
Interest rate description	Interest is charged at a rate equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement.			This agreement has an interest rate determined by the Chinese government	This agreement has an interest rate determined by the Chinese government			The applicable interest rate was converted to EURO LIBOR plus 2%					Agreement with Wells Fargo that incurred interest at WIBOR (Warsaw Interbank Offered Rate) plus 2%
Expiration date	Aug. 31, 2015			May 09, 2015	May 09, 2015			Aug. 31, 2015
Reference rate on which the interest rate is based	One-month LIBOR rate							EURO LIBOR					Warsaw Interbank Offered Rate
Applicable interest rate at end of period	1.76%	1.75%	1.77%					2.20%	4.38%	4.38%
Letter of credit, outstanding amount	195,000	195,000	195,000
Outstanding amount	$ 0	$ 0	$ 0	$ 0	0	$ 0	$ 0	$ 0	$ 586,000	1,800,000	$ 569,000	€ 424,000
Percent added to reference rate in effect from time to time to set the interest rate								2.00%	2.00%	2.00%

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Accounts Receivable - Allowance for Doubtful Accounts (Detail) (Allowance for doubtful accounts [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013
Allowance for doubtful accounts [Member]
Valuation and Qualifying Accounts Disclosure [Line Items]
Beginning balance	$ (573)	$ (780)
Provision for bad debts	57	211
Net write-offs, net of recoveries	74	56
Ending balance	$ (442)	$ (513)

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)	Nov. 02, 2014	Apr. 27, 2014		Oct. 27, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.05	$ 0.05	[1]	$ 0.05
Preferred stock, authorized shares	10,000,000	10,000,000	[1]	10,000,000
Common stock, par value	$ 0.05	$ 0.05	[1]	$ 0.05
Common stock, authorized shares	40,000,000	40,000,000	[1]	40,000,000
Common stock, issued	12,218,521	12,250,030	[1]	12,250,030
Common stock, outstanding	12,218,521	12,250,030	[1]	12,250,030

[1] Derived from audited financial statements.

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Business Combinations - Mattress Fabric Segment

6 Months Ended

Nov. 02, 2014

Business Combinations [Abstract]

Business Combinations - Mattress Fabric Segment

3.   Business Combinations – Mattress Fabric Segment

On May 8, 2013, we entered into an asset purchase and consulting agreement with Bodet & Horst GMBH & Co. KG and certain affiliates (“Bodet & Horst”) that provided for, among other things, the purchase of equipment and certain other assets from Bodet & Horst and the restructuring of prior consulting and non-compete agreements pursuant to an earlier asset purchase and consulting agreement with Bodet & Horst dated August 11, 2008. This agreement was accounted for as a business combination in accordance with ASC Topic 805, Business Combinations. We agreed with Bodet & Horst to replace the prior non-compete agreement that prevented us from selling certain mattress fabrics and products to a leading manufacturer, which now allows us to make such sales. In addition, the prior consulting and non-compete agreement, under which Bodet & Horst agreed not to sell most  mattress fabrics in North America, was replaced, expanded, and extended pursuant to the new asset purchase and consulting agreement.

The purchase price for the equipment and the other certain assets noted below was $2.6 million in cash.

Direct acquisition costs related to this business combination totaled $83,000.

The following table presents the allocation of the acquisition cost to the assets acquired based on their fair values:

(dollars in thousands)	Fair Value
Equipment (Note 10)	$	890
Non-compete agreement (Notes 7 and 10)		882
Customer relationships (Notes 7 and 10)		868
	$	2,640

The company recorded its non-compete at its fair value based on a discounted cash flow valuation model. The company recorded its customer relationships at its fair value based on a multi-period excess earnings valuation model. This non-compete agreement will be amortized on a straight line basis over the fifteen year life of the agreement. The customer relationships will be amortized on a straight line basis over their useful life of seventeen years. The equipment will be amortized on a straight line basis over its useful life of seven years.

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Segment Information - Financial Information for Operating Segments (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013	Nov. 02, 2014	Oct. 27, 2013
Segment Reporting Information [Line Items]
Net sales	$ 73,991	$ 70,589	$ 150,051	$ 140,730
Gross profit	12,278	12,235	24,993	25,308
Selling, general, and administrative expenses	7,379	7,200	14,798	14,299
Income from operations	4,899	5,035	10,195	11,009
Interest expense		(99)	(67)	(239)
Interest income	153	102	294	195
Other expense	(162)	(224)	(73)	(616)
Income before income taxes	4,890	4,814	10,349	10,349
Operating Segments [Member]
Segment Reporting Information [Line Items]
Selling, general, and administrative expenses	5,877	5,790	11,903	11,430
Income from operations	6,401	6,445	13,090	13,878
Operating Segments [Member] | Mattress Fabrics [Member]
Segment Reporting Information [Line Items]
Net sales	43,038	40,331	85,860	78,494
Gross profit	7,324	7,322	14,527	14,713
Selling, general, and administrative expenses	2,592	2,620	5,166	4,994
Income from operations	4,733	4,702	9,361	9,719
Operating Segments [Member] | Upholstery Fabrics [Member]
Segment Reporting Information [Line Items]
Net sales	30,953	30,258	64,191	62,236
Gross profit	4,954	4,913	10,466	10,595
Selling, general, and administrative expenses	3,285	3,170	6,737	6,436
Income from operations	1,668	1,743	3,729	4,159
Unallocated corporate [Member]
Segment Reporting Information [Line Items]
Selling, general, and administrative expenses	1,502	1,410	2,895	2,869
Income from operations	$ (1,502)	$ (1,410)	$ (2,895)	$ (2,869)

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Common Stock Repurchase Program (Detail) (USD $)	6 Months Ended
	Nov. 02, 2014	Oct. 27, 2013
Stockholders Equity Note [Line Items]
Cost of common stock repurchased	$ 745,000
Common Stock
Stockholders Equity Note [Line Items]
Common stock repurchased	43,014
Cost of common stock repurchased	2,000
Common Stock Repurchase Program February 25, 2014 [Member] | Common Stock
Stockholders Equity Note [Line Items]
Authorization amount for repurchase of common stock	5,000,000
Common stock repurchased	43,014	0
Cost of common stock repurchased	$ 745,000

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Business Combinations - Mattress Fabric Segment (Tables)

6 Months Ended

Nov. 02, 2014

Business Combinations [Abstract]

Schedule of Allocation of Acquisition Cost to Assets Acquired Based on Fair Values

The following table presents the allocation of the acquisition cost to the assets acquired based on their fair values:

(dollars in thousands)	Fair Value
Equipment (Note 10)	$	890
Non-compete agreement (Notes 7 and 10)		882
Customer relationships (Notes 7 and 10)		868
	$	2,640

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Business Combinations - Mattress Fabric Segment - Allocation of Acquisition Cost to Assets Acquired Based on Fair Values (Detail) (Bodet And Horst [Member], USD $) In Thousands, unless otherwise specified	May 08, 2013
Business Acquisition [Line Items]
Equipment	$ 890
Purchase price for equipment and other certain assets	2,640
Non-compete Agreement [Member]
Business Acquisition [Line Items]
Intangible assets	882
Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets	$ 868

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Segment Information

6 Months Ended

Nov. 02, 2014

Segment Reporting [Abstract]

Segment Information

13.  Segment Information

Our operations are classified into two business segments: mattress fabrics and upholstery fabrics.  The mattress fabrics segment manufactures, sources, and sells fabrics and mattress covers to bedding manufacturers.  The upholstery fabrics segment manufactures, sources, and sells fabrics primarily to residential furniture manufacturers.

We evaluate the operating performance of our segments based upon income from operations before certain unallocated corporate expenses and other non-recurring items. Cost of sales in both segments include costs to manufacture or source our products, including costs such as raw material and finished goods purchases, direct and indirect labor, overhead and incoming freight charges.  Unallocated corporate expenses primarily represent compensation and benefits for certain executive officers and all costs related to being a public company.  Segment assets include assets used in the operations of each segment and primarily consist of accounts receivable, inventories, and property, plant and equipment.  The mattress fabrics segment also includes in segment assets, goodwill, a non-compete agreement, and customer relationships associated with an acquisition.

Financial information for the company’s operating segments follows:

	Three months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Net sales:
Mattress Fabrics	$	43,038		$	40,331
Upholstery Fabrics		30,953			30,258
	$	73,991		$	70,589
Gross profit:
Mattress Fabrics	$	7,324		$	7,322
Upholstery Fabrics		4,954			4,913
	$	12,278		$	12,235
Selling, general, and administrative expenses:
Mattress Fabrics	$	2,592		$	2,620
Upholstery Fabrics		3,285			3,170
Total segment selling, general, and
administrative expenses		5,877			5,790
Unallocated corporate expenses		1,502			1,410
	$	7,379		$	7,200
Income from operations:
Mattress Fabrics	$	4,733		$	4,702
Upholstery Fabrics		1,668			1,743
Total segment income from operations		6,401			6,445
Unallocated corporate expenses		(1,502	)		(1,410	)
Total income from operations		4,899			5,035
Interest expense		-			(99	)
Interest income		153			102
Other expense		(162	)		(224	)
Income before income taxes	$	4,890		$	4,814

	Six months ended
(dollars in thousands)	November 2, 2014			October 27, 2013
Net sales:
Mattress Fabrics	$	85,860		$	78,494
Upholstery Fabrics		64,191			62,236
	$	150,051		$	140,730
Gross profit:
Mattress Fabrics	$	14,527		$	14,713
Upholstery Fabrics		10,466			10,595
	$	24,993		$	25,308
Selling, general, and administrative expenses:
Mattress Fabrics	$	5,166		$	4,994
Upholstery Fabrics		6,737			6,436
Total segment selling, general, and
administrative expenses		11,903			11,430
Unallocated corporate expenses		2,895			2,869
	$	14,798		$	14,299
Income from operations:
Mattress Fabrics	$	9,361		$	9,719
Upholstery Fabrics		3,729			4,159
Total segment income from operations		13,090			13,878
Unallocated corporate expenses		(2,895	)		(2,869	)
Total income from operations		10,195			11,009
Interest expense		(67	)		(239	)
Interest income		294			195
Other expense		(73	)		(616	)
Income before income taxes	$	10,349		$	10,349

Balance sheet information for the company’s operating segments follow:

(dollars in thousands)	November 2, 2014		October 27, 2013		April 27, 2014
Segment assets:
Mattress Fabrics
Current assets (1)	$	35,406	$	37,373	$	36,229
Non-compete agreement		1,017		1,054		1,041
Customer relationships		791		842		817
Goodwill		11,462		11,462		11,462
Property, plant and equipment (2)		30,938		28,307		29,040
Total mattress fabrics assets		79,614		79,038		78,589
Upholstery Fabrics
Current assets (1)		27,867		32,447		31,854
Property, plant and equipment (3)		1,578		1,612		1,573
Total upholstery fabrics assets		29,445		34,059		33,427
Total segment assets		109,059		113,097		112,016
Non-segment assets:
Cash and cash equivalents		28,953		24,267		29,303
Short-term investments		6,318		6,220		6,294
Deferred income taxes		6,699		8,406		8,270
Income taxes receivable		-		-		121
Other current assets		2,303		2,550		2,344
Property, plant and equipment (4)		688		640		763
Long-term investments		1,911		-		765
Other assets		731		1,062		1,059
Total assets	$	156,662	$	156,242	$	160,935
			Six months ended
(dollars in thousands)			November 2, 2014		October 27, 2013
Capital expenditures (5):
Mattress Fabrics			$	4,692	$	1,199
Upholstery Fabrics				258		521
Unallocated Corporate				38		20
Total capital expenditures			$	4,988	$	1,740
Depreciation expense:
Mattress Fabrics			$	2,448	$	2,331
Upholstery Fabrics				364		305
Total depreciation expense			$	2,812	$	2,636

(1)   Current assets represent accounts receivable and inventory for the respective segment.

(2)   The $30.9 million at November 2, 2014, represents property, plant, and equipment of $22.2 million and $8.7 million located in the U.S. and Canada, respectively. The $28.3 million at October 27, 2013, represents property, plant, and equipment of $20.5 million and $7.8 million located in the U.S. and Canada, respectively. The $29.0 million at April 27, 2014, represents property, plant, and equipment of $20.6 million and $8.4 million located in the U.S. and Canada, respectively.

(3)   The $1.6 million at November 2, 2014, represents property, plant, and equipment of $977 and $601 located in the U.S. and China, respectively. The $1.6 million at October 27, 2013, represents property, plant, and equipment located in the U.S. of $1.1 million, located in China of $464, and located in Poland of $49. The $1.6 million at April 27, 2014, represents property, plant, and equipment located in the U.S. of $957, located in China of $572, and located in Poland of $44.

(4)   The $688, $640, and $763 at November 2, 2014, October 27, 2013 and April 27, 2014, respectively, represent property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate are located in the U.S.

(5)   Capital expenditure amounts are stated on the accrual basis. See Consolidated Statements of Cash Flows for capital expenditure amounts on a cash basis.