8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)    June 15, 2016

Culp, Inc.

(Exact Name of Registrant as Specified in its Charter)

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

1823 Eastchester Drive

High Point, North Carolina  27265

(Address of Principal Executive Offices)

(Zip Code)

(336) 889-5161

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

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

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

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

INDEX

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

2

This report and the exhibits attached hereto contain “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 27A of the Securities and Exchange Act of 1934).  Such statements are inherently subject to risks and uncertainties.  Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements.  Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical fact.  Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “estimate,” “plan” and “project” and their derivatives, and include but are not limited to statements about expectations for our future operations, production levels, sales, profit margins, profitability, operating income, capital expenditures, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance measures, as well as any statements regarding future economic or industry trends or future developments. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions.  Decreases in these economic indicators could have a negative effect on our business and prospects.  Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in the value of the U.S. dollar versus other currencies could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on July 17, 2015 for the fiscal year ended May 3, 2015.

Item 2.02 – Results of Operations and Financial Condition

On June 15, 2016, we issued a news release to announce our financial results for our fourth quarter and the year ended May 1, 2016.  The news release is attached hereto as Exhibit 99(a).

Also on June 15, 2016, we released a Financial Information Release containing additional financial information and disclosures about our fourth quarter and the year ended May 1, 2016.  The Financial Information Release is attached hereto as Exhibit 99(b).

The news release and Financial Information Release contain disclosures about free cash flow, a non-GAAP liquidity measure that we define as net cash provided by operating activities, less cash capital expenditures, plus any proceeds from sales of equipment, plus any proceeds from life insurance policies, minus payments on life insurance policies, plus excess tax benefits related to stock-based compensation, minus the purchase of long-term investments, and plus or minus the effects of exchange rate changes on cash and cash equivalents.  Details of these calculations and a reconciliation to information from our GAAP financial statements is set forth in the Financial Information Release.  Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, and additions to cash and cash equivalents.  We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use.  In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.

3

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

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

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

4

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

Item 9.01 (d) -- Exhibits

99(a) News Release dated June 15, 2016

99(b) Financial Information Release dated June 15, 2016

5

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		CULP, INC.
		(Registrant)
	By:	/s/ Kenneth R. Bowling
		Chief Financial Officer
		(principal financial officer)
	By:	/s/ Thomas B. Gallagher, Jr.
		Corporate Controller
		(principal accounting officer)
Dated: June 15, 2016

6

EXHIBIT INDEX

Exhibit NumberExhibit

99(a)News Release dated June 15, 2016

99(b)Financial Information Release dated June 15, 2016

7

EX-99.A

Exhibit 99(a)

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

CULP ANNOUNCES RESULTS FOR FOURTH QUARTER AND FISCAL 2016

Company Announces Special Cash Dividend of $0.21 Per Share and

Board of Directors Authorizes Additional Share Repurchases

HIGH POINT, N.C. (June 15, 2016) ─ Culp, Inc. (NYSE: CFI) today reported financial and operating results for the fourth quarter and fiscal year ended May 1, 2016.

Fiscal 2016 Full Year Highlights

§ Net sales were $312.9 million, up 1.0 percent from fiscal 2015, representing the seventh consecutive year of overall annual sales growth, with mattress fabric sales up 3.7 percent, a record year, and upholstery fabric sales down 3.1 percent over the prior year.

§ Pre-tax income was $27.9 million, the highest annual pre-tax income in Culp’s history, and a 21.5 percent increase compared with the previous record of $23.0 million in pre-tax income for fiscal 2015.

§ Net income (GAAP) was $16.9 million, or $1.36 per diluted share, compared with net income of $15.1 million, or $1.21 per diluted share, in fiscal 2015.

§ Adjusted net income (non-GAAP) was $22.7 million, or $1.82 per diluted share, compared with $19.4 million, or $1.56 per diluted share, for the prior year period.  (Adjusted net income is calculated using estimated cash income tax expense.  See the reconciliation to net income on page 6).

§ Return on capital was 32 percent, the highest return in the company’s history, compared with 28 percent in fiscal 2015.

§ Free cash flow for the year was strong at $15.2 million, up slightly from last year’s $15.1 million, after spending $11.5 million in capital expenditures.

§ The company’s financial position remained solid with cash and cash equivalents and short term investments of $42.1 million, up from $39.7 million at the end of the previous fiscal year, after spending $24.2 million in capital expenditures, dividends, debt repayments and share repurchases during fiscal 2016.

Fiscal 2016 Fourth Quarter Highlights

§ Net sales were $77.3 million, down 2.0 percent, with mattress fabric sales up 1.5 percent and upholstery fabric sales down 7.5 percent, compared with the fourth quarter last year.

§ Pre-tax income was $7.2 million, up 7.2 percent compared with $6.7 million in the fourth quarter of fiscal 2015.

§ Net income (GAAP) was $3.6 million, or $0.29 per diluted share, compared with net income of $4.9 million, or $0.39 per diluted share, in the prior year period. Both years were affected by income tax adjustments.

§ Adjusted net income (non-GAAP) was $5.8 million, or $0.47 per diluted share, for the current quarter, compared with $5.6 million, or $0.45 per diluted share, for the prior year period.

§ The company announced a special cash dividend of $0.21 per share, the fourth special dividend in the past five fiscal years, and a quarterly cash dividend of $0.07 per share, both payable in July 2016.

Financial Outlook

§ The projection for first quarter fiscal 2017 is for overall sales to be comparable to slightly lower than the previous year’s first quarter, which was a very strong quarter. Pre-tax income for the first quarter of fiscal 2017 is expected to be in the range of $7.0 million to $7.5 million. Pre-tax income for the first quarter of fiscal 2016 was $7.4 million. The company expects fiscal 2017 to be another good year for free cash flow.

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 2

June 15, 2016

Overview

For the fourth quarter ended May 1, 2016, net sales were $77.3 million, compared with $78.8 million a year ago.  The company reported net income of $3.6 million, or $0.29 per diluted share, for the fourth quarter of fiscal 2016, compared with net income of $4.9 million, or $0.39 per diluted share, for the fourth quarter of fiscal 2015.  The income tax rates for the fourth quarters of fiscal 2016 and 2015 include a change in estimate adjustments due to the mix of earnings between the company’s U.S. parent and foreign subsidiaries and also changes in forecasted and actual year-end results.

Given the volatility in the income tax area during fiscal 2016 and previous years, the company is reporting adjusted net income (non-GAAP), which is calculated using estimated cash income tax expense for its foreign subsidiaries.  (A presentation of adjusted net income and a reconciliation to net income is set forth on page 6).  The company currently does not incur cash income tax expense in the U.S., nor does it expect to for a few more years, due to approximately $18.0 million in U.S. net operating loss carryforwards as of the end of fiscal 2016.  For the fourth quarter of fiscal 2016, adjusted net income was $5.8 million, or $0.47 per diluted share, compared with $5.6 million, or $0.45 per diluted share, for the fourth quarter of fiscal 2015.  On a pre-tax basis, the company reported income of $7.2 million compared with pre-tax income of $6.7 million for the fourth quarter of fiscal 2015.

Net sales for fiscal 2016 were $312.9 million, up 1.0 percent, compared with net sales of $310.2 million in fiscal 2015.  Net income for fiscal 2016 was $16.9 million, or $1.36 per diluted share, compared with $15.1 million, or $1.21 per diluted share, in fiscal 2015. Net income for fiscal 2016 was affected by a higher income tax rate compared with the previous year due mostly to taxable foreign exchange gains associated with the company’s China operations.  Adjusted net income for fiscal 2016 was $22.7 million, or $1.82 per diluted share, compared with $19.4 million, or $1.56 per diluted share, in fiscal 2015.  On a pre-tax basis, the company reported income of $27.9 million for fiscal 2016, compared with pre-tax income of $23.0 million in fiscal 2015.

Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, “Culp delivered another solid performance in fiscal 2016, as we reported our seventh consecutive year of overall annual sales growth.  Both of our businesses achieved a strong operating performance with significantly improved profitability over fiscal 2015.  Notably, our pre-tax income for the year was the highest in the company’s history.  Further, we achieved excellent free cash flow of $15.2 million, slightly above last year’s $15.1 million, after spending $11.5 million on capital expenditures.

“Throughout fiscal 2016, we have continued to execute our strategy with a focus on design creativity and product innovation, supported by exceptional customer service.  Our ability to sustain excellence in creating innovative fabrics and offering a product mix that meets changing customer demands is an important advantage for Culp.  As a result, we have further enhanced our competitive position in both businesses, and we look forward to continued success in the year ahead.

“We are pleased to announce today that our Board of Directors approved a special cash dividend of $0.21 per share, in line with our capital allocation strategy, as well as approved our regular quarterly cash dividend of $0.07 per share.  This action, together with our $2.4 million in share repurchases during fiscal 2016, reflects our commitment to delivering value to our shareholders.  At the same time, we have the financial strength to make the strategic investments necessary to further enhance our production capabilities and take advantage of additional growth opportunities in fiscal 2017,” added Saxon.

Mattress Fabric Segment

Sales for this segment were $48.9 million for the fourth quarter, up 1.5 percent, compared with sales of $48.2 million in the fourth quarter of fiscal 2015.  For fiscal 2016, mattress fabric sales were $186.4 million, up 3.7 percent, compared with $179.7 million in fiscal 2015.

“Our results for the fourth quarter were in line with expectations, reflecting consistent execution of our strategy throughout fiscal 2016,” said Iv Culp, president of Culp’s mattress fabric division.  “Notably, we delivered another record performance for the year, topping the previous year’s record with the highest annual mattress fabric sales and profits in Culp’s history.  We are especially pleased with our steady sales growth this year, which has outperformed overall industry trends.  In addition, we have continued to make strategic investments for the future and expand our operations in line with expected demand.  Our operating performance in fiscal 2016 includes the benefits of our capital investments with increased capacity, enhanced finishing capabilities, overall improved efficiency and throughput, and lower input costs.  Importantly, we have enhanced our ability to meet our growing customer demand with excellent service and delivery performance.

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 3

June 15, 2016

“With our outstanding performance in fiscal 2016, we have established a strong competitive position, and we are excited about the opportunities to build upon our success.  Looking ahead, we continue to move forward with our multi-year expansion plans.  We have already commenced work on additional expansion projects in our North Carolina facilities to add more production capacity, expand our design facilities and significantly enhance our distribution capabilities.  Additionally, phase two of our Canadian expansion project is expected to begin in early fiscal 2017, including additional equipment, finishing capabilities and a new distribution platform that will allow us to improve deliveries and better serve our customers in Canada.

“Our focus on design and innovation continues to distinguish our products in the mattress fabric marketplace.  Our product mix of mattress fabrics and sewn covers across most price points and style trends has allowed us to execute our diversification strategy and enhance our strong value proposition.  We are also pleased with the recent growth in CLASS, our mattress cover business.  Importantly, CLASS has allowed us to reach new customers and additional market segments, especially the Internet bedding space, with solid growth prospects.  We look forward to the opportunities ahead for another strong performance in both mattress fabrics and sewn covers during fiscal 2017,” noted Culp.

Upholstery Fabric Segment

Sales for this segment were $28.4 million for the fourth quarter, down 7.5 percent compared with sales of $30.7 million in the fourth quarter of fiscal 2015.  For fiscal 2016, upholstery fabric sales were $126.4 million, down 3.1 percent compared with $130.4 million in fiscal 2015.

“Our sales for the fourth quarter of fiscal 2016 were somewhat lower than expected, reflecting our customer mix strategy and softer retail demand for furniture,” noted Boyd Chumbley, executive vice president of Culp’s upholstery fabrics division.  “However, even with lower sales, we were pleased with our overall operating performance and improved profitability compared with the fourth quarter of fiscal 2015.

“For fiscal 2016, Culp continued to deliver a solid operating performance and further enhanced our reputation as an industry leader with exceptional products and service for our customers,” added Chumbley.  “Our strategic focus on three critical areas – driving design and innovation, providing a diverse range of products, and expanding our customer base, both to new end-user markets as well as to a broader global marketplace – was the key driver of our performance for the year.

“Our China platform has provided significant manufacturing flexibility, and we have continued to leverage this capability to support our product-driven strategy.  Sales of China produced fabrics accounted for 91 percent of upholstery fabric sales in fiscal 2016, and our improved operating performance reflects a more favorable product mix of fabric styles and price points as well as a more favorable currency exchange rate in China.

“Looking ahead, in spite of current retail market conditions, we remain confident about the long-term opportunities for our upholstery fabric business. Our recent showing at the April furniture market was very encouraging with strong placements for Culp.  Customer response to our latest product offerings was very favorable, especially with the introduction of our new ‘performance’ line of highly durable, stain-resistant upholstery fabrics. We will continue our relentless drive to meet the changing demands of our customers and keep pace with current style trends. As such, we believe Culp is well positioned for growth in upholstery fabric, especially as a stronger economy and a more stable U.S. housing market support higher consumer spending for home furnishings,” said Chumbley.

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 4

June 15, 2016

Balance Sheet

“We are pleased to end fiscal 2016 with a strong financial position,” added Ken Bowling, chief financial officer of Culp, Inc.  “As of May 1, 2016, we reported $42.1 million in cash and cash equivalents and short-term investments, up from the previous year’s ending balance of $39.7 million, with no debt.  This year over year increase in cash was achieved despite spending $11.5 million on capital expenditures, $8.1 million on dividends, and $4.6 million on debt repayments and share repurchases, for a total of $24.2 million spent during fiscal 2016.  Free cash flow for the year was $15.2 million, slightly up from last year’s $15.1 million.  As we look to fiscal 2017, we expect another good year of free cash flow, with capital expenditures projected to approximate the $11.5 million spent during fiscal 2016 and modest growth in working capital.  We are well positioned to make the capital investments to support our growth strategy and continue to return funds to our shareholders.”

Dividends and Share Repurchases

Consistent with its capital allocation strategy to return funds to shareholders through dividends and share repurchases, the company announced that its Board of Directors has approved the payment of a special cash dividend of $0.21 per share.  In addition, the Board approved the payment of the company’s quarterly cash dividend of $0.07 per share.  Both of these payments will be made on July 15, 2016, to shareholders of record as of July 1, 2016.  Future dividend payments are subject to Board approval and may be adjusted at the Board’s discretion as business needs or market conditions change.

For fiscal 2016, the company purchased 100,776 shares of Culp common stock for $2.4 million at an average price of $23.79 per share, all of which were purchased in the third quarter, pursuant to the $5.0 million share repurchase program authorized by the Board of Directors in February 2014, leaving $1.9 million available under the previous program.  The Board has approved an increase in the authorization for the company to acquire its common stock back to a total of $5.0 million.

Since June 2011, and including the special and regular dividends to be paid in July, the company will have returned approximately $43 million to shareholders in the form of regular quarterly and special dividends and share repurchases.  Notably, since fiscal 2012 the company has repurchased approximately 10 percent of its outstanding stock.

Saxon said, “We are pleased that our solid financial performance and strong balance sheet have provided an opportunity to pay another special dividend, our fourth in five years, even after spending $2.4 million in share repurchases in fiscal 2016.  These actions reflect our confidence in Culp’s future and our ongoing commitment to generating value for our shareholders.”

Financial Outlook

Commenting on the outlook for the first quarter of fiscal 2017, Saxon remarked, “At this time, we expect overall sales to be comparable to slightly lower than the first quarter of fiscal 2016 due to a soft retail environment.

“We expect first quarter sales in our mattress fabrics business to be comparable to the first quarter of fiscal 2016, which was a record first quarter performance in both sales and profitability.  Operating income and margins in this segment are expected to be comparable to the same period a year ago.

“In our upholstery fabrics business, we expect first quarter sales to be down slightly compared with the first quarter of fiscal 2016.  We believe the upholstery fabrics segment’s operating income and margins will be comparable with the same quarter of last year.

“Considering these factors, the company expects to report pre-tax income for the first fiscal quarter of 2017 in the range of $7.0 million to $7.5 million.  Pre-tax income for last year’s first quarter was $7.4 million.

“Based on our current budget, capital expenditures for fiscal 2017 are expected to approximate the $11.5 million spent in fiscal 2016, primarily related to our mattress fabrics business.  Additionally, the company expects another good year of free cash flow, even after another year of higher than normal capital expenditures and modest growth in working capital.”

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 5

June 15, 2016

In closing, Saxon remarked, “We are pleased with Culp’s performance in fiscal 2016 and our ability to execute our strategy.  Our success in the marketplace reflects our ability to leverage our outstanding design capabilities and deliver a wide range of innovative fabrics that keep pace with customer demand and style trends.  We are well positioned to support our continued growth with our flexible and scalable global manufacturing platform, backed by exceptional customer service.  We have continued to make the right investments to enhance our design and production capabilities to strengthen our competitive advantage.  At the same time, we have followed a disciplined capital allocation strategy, allowing us to reward our shareholders with significant dividend payments and share repurchases.  Above all, we are committed to outstanding performance for our customers as a financially stable and trusted source for innovative fabrics.  We are excited about the opportunities before us as we look ahead to fiscal 2017 and beyond.”

About the Company

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

This release contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 27A of the Securities and Exchange Act of 1934).  Such statements are inherently subject to risks and uncertainties.  Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements.  Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical fact.  Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “estimate,” “plan” and “project” and their derivatives, and include but are not limited to statements about expectations for our future operations, production levels, sales, profit margins, profitability, operating income, capital expenditures, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance measures, as well as any statements regarding future economic or industry trends or future developments. Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions.  Decreases in these economic indicators could have a negative effect on our business and prospects.  Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in the value of the U.S. dollar versus other currencies could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission on July 17, 2015, for the fiscal year ended May 3, 2015.In addition, please note that the company is not responsible for changes made to this release by wire services, internet services, or other media.

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 6

June 15, 2016

CULP, INC.
Condensed Financial Highlights
(Unaudited)
	Three Months Ended				Fiscal Year Ended
	May 1,		May 3,		May 1,		May 3,
	2016		2015		2016		2015
Net sales	$	77,253,000	$	78,846,000	$	312,860,000	$	310,166,000
Income before income taxes	$	7,167,000	$	6,685,000	$	27,898,000	$	22,956,000
Net income	$	3,601,000	$	4,913,000	$	16,935,000	$	15,071,000
Net income per share:
Basic	$	0.29	$	0.40	$	1.38	$	1.23
Diluted	$	0.29	$	0.39	$	1.36	$	1.21
Adjusted net income	$	5,834,000	$	5,635,000	$	22,709,000	$	19,352,000
Adjusted net income per share
Basic	$	0.48	$	0.46	$	1.85	$	1.58
Diluted	$	0.47	$	0.45	$	1.82	$	1.56
Average shares outstanding:
Basic		12,257,000		12,219,000		12,302,000		12,217,000
Diluted		12,434,000		12,440,000		12,475,000		12,422,000

Presentation of Adjusted Net Income and Adjusted Income Taxes (1)
	Three Months Ended				Fiscal Year Ended
	May 1,		May 3,		May 1,		May 3,
	2016		2015		2016		2015
Income before income taxes	$	7,167,000	$	6,685,000	$	27,898,000	$	22,956,000
Adjusted income taxes (2)	$	1,333,000	$	1,050,000	$	5,189,000	$	3,604,000
Adjusted net income	$	5,834,000	$	5,635,000	$	22,709,000	$	19,352,000

(1) Culp, Inc. currently does not incur cash income tax expense in the U.S. due to its estimated $18.0 million in net operating loss carryforwards as of May 1, 2016.  Adjusted net income is calculated using only estimated cash income tax expense for the company’s subsidiaries in Canada and China.

(2) Represents estimated cash income tax expense for the company’s subsidiaries in Canada and China, calculated with a consolidated adjusted effective income tax rate of 18.6% for fiscal 2016 and 15.7% for fiscal 2015.

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 7

June 15, 2016

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

For the Twelve Months Ended May 1, 2016, and May 3, 2015

(Unaudited)

(Amounts in Thousands)

		TWELVE MONTHS ENDED
		Amounts
		May 1,		May 3,
		2016		2015
Consolidated Effective GAAP Income Tax Rate	(1)	39.3	%		34.3	%
Non-Cash U.S. Income Tax Expense		(20.3	)%		(18.2	)%
Non-Cash Foreign Income Tax Expense		(0.4	)%		(0.4	)%
Consolidated Adjusted Effective Income Tax Rate	(2)	18.6	%		15.7	%

	THREE MONTHS ENDED
	As reported					May 1, 2016		As reported					May 3, 2015
	May 1,					Proforma Net		May 3,					Proforma Net
	2016		Adjustments			of Adjustments		2015		Adjustments			of Adjustments
Income before income taxes	$	7,167	$	-		$	7,167	$	6,685	$	-		$	6,685
Income taxes (3)		3,566	$	(2,233	)		1,333		1,772	$	(722	)		1,050
Net income	$	3,601	$	2,233		$	5,834	$	4,913	$	722		$	5,635
Net income per share-basic	$	0.29	$	0.18		$	0.48	$	0.40	$	0.06		$	0.46
Net income per share-diluted	$	0.29	$	0.18		$	0.47	$	0.39	$	0.06		$	0.45
Average shares outstanding-basic		12,257		12,257			12,257		12,219		12,219			12,219
Average shares outstanding-diluted		12,434		12,434			12,434		12,440		12,440			12,440
	TWELVE MONTHS ENDED
	As reported					May 1, 2016		As reported					May 3, 2015
	May 1,					Proforma Net		May 3,					Proforma Net
	2016		Adjustments			of Adjustments		2015		Adjustments			of Adjustments
Income before income taxes	$	27,898	$	-		$	27,898	$	22,956	$	-		$	22,956
Income taxes (3)		10,963	$	(5,774	)		5,189		7,885	$	(4,281	)		3,604
Net income	$	16,935	$	5,774		$	22,709	$	15,071	$	4,281		$	19,352
Net income per share-basic	$	1.38	$	0.47		$	1.85	$	1.23	$	0.35		$	1.58
Net income per share-diluted	$	1.36	$	0.46		$	1.82	$	1.21	$	0.34		$	1.56
Average shares outstanding-basic		12,302		12,302			12,302		12,217		12,217			12,217
Average shares outstanding-diluted		12,475		12,475			12,475		12,422		12,422			12,422

(1)  Calculated by dividing consolidated income tax expense  by

       consolidated income before income taxes.

(2)  Represents estimated cash income tax expense for our subsidiaries located

       in Canada and China divided by consolidated income before income taxes.

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

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 8

June 15, 2016

Reconciliation of Free Cash Flow

For the Twelve Months Ended May 1, 2016, and May 3, 2015

(Unaudited)

(Amounts in thousands)

	Twelve Months Ended			Twelve Months Ended
	May 1, 2016			May 3, 2015
Net cash provided by operating activities	$	26,795		$	26,111
Minus: Capital Expenditures		(11,475	)		(10,461	)
Add: Proceeds from the sale of equipment		233			727
Add: Proceeds from life insurance policies		-			320
Minus: Payments on life insurance policies		(18	)		(18	)
Minus: Purchase of long-term investments		(1,649	)		(1,650	)
Add: Excess tax benefits related to stock-based compensation		841			109
Effect of exchange rate changes on cash and cash equivalents		498			(21	)
Free Cash Flow	$	15,225		$	15,117

-MORE-

CFI Announces Results for Fourth Quarter and Fiscal 2016

Page 9

June 15, 2016

Reconciliation of Return on Capital

For the Twelve Months Ended May 1, 2016, and May 3, 2015

(Unaudited)

(Amounts in thousands)

	Twelve Months Ended			Twelve Months Ended
	May 1, 2016			May 3, 2015
Consolidated Income from Operations	$	28,338		$	22,789
Average Capital Employed (2)		88,691			81,497
Return on Average Capital Employed (1)		32.0	%		28.0	%

Average Capital Employed
	May 1, 2016			January 31, 2016			November 1, 2015			August 2, 2015			May 3, 2015
Total assets	$	175,142		$	173,551		$	168,947		$	166,879		$	171,300
Total liabilities		(46,330	)		(48,477	)		(45,972	)		(48,154	)		(51,873	)
Subtotal	$	128,812		$	125,074		$	122,975		$	118,725		$	119,427
Less:
Cash and cash equivalents		(37,787	)		(31,713	)		(31,176	)		(25,933	)		(29,725	)
Short-term investments		(4,359	)		(4,259	)		(6,320	)		(6,336	)		(10,004	)
Long-term investments		(4,025	)		(3,590	)		(3,279	)		(2,893	)		(2,415	)
Income taxes receivable		(155	)		(23	)		(75	)		(142	)		(229	)
Deferred income taxes - non-current		(2,319	)		(4,312	)		(3,415	)		(4,405	)		(5,169	)
Current maturities of long-term debt		-			-			-			2,200			2,200
Income taxes payable - current		180			622			305			392			325
Income taxes payable - long-term		3,841			3,480			3,655			3,634			3,792
Deferred income taxes - non-current		1,483			1,209			1,206			1,071			982
Deferred compensation		4,686			4,495			4,421			4,280			4,041
Total Capital Employed	$	90,357		$	90,983		$	88,297		$	90,593		$	83,225
Average Capital Employed (2)	$	88,691
	May 3, 2015			February 1, 2015			November 2, 2014			August 3, 2014			April 27, 2014
Total assets	$	171,300		$	165,358		$	156,163		$	154,218		$	160,928
Total liabilities		(51,873	)		(50,386	)		(44,489	)		(45,071	)		(49,184	)
Subtotal	$	119,427		$	114,972		$	111,674		$	109,147		$	111,744
Less:
Cash and cash equivalents		(29,725	)		(28,772	)		(28,953	)		(24,665	)		(29,303	)
Short-term investments		(10,004	)		(8,384	)		(6,318	)		(6,311	)		(6,294	)
Long-term investments		(2,415	)		(2,063	)		(1,911	)		(1,749	)		(765	)
Income taxes receivable		(229	)		(104	)		-			(136	)		(121	)
Deferred income taxes - non-current		(5,169	)		(5,020	)		(6,200	)		(7,182	)		(8,263	)
Current maturities of long-term debt		2,200			2,200			2,200			2,200			2,200
Line of credit		-			-			-			569			586
Income taxes payable - current		325			325			268			387			442
Income taxes payable - long-term		3,792			3,630			3,980			4,037			3,962
Deferred income taxes - non-current		982			927			896			1,019			1,006
Deferred compensation		4,041			3,934			3,794			3,632			2,644
Long-term debt, less current maturities		-			-			-			2,200			2,200
Total Capital Employed	$	83,225		$	81,645		$	79,430		$	83,148		$	80,038
Average Capital Employed (2)	$	81,497

Notes:

(1)  Return on average capital employed represents operating income for fiscal  2016 or fiscal 2015 divided by average capital employed.

       Average capital employed does not include cash and cash equivalents, short-term investments, long-term investments, long-term debt,

       including current maturities, line of credit,  noncurrent deferred tax assets and liabilities, income taxes receivable and payable,

       and deferred compensation.

(2)  Average capital employed used for fiscal 2016 was computed using the five quarterly periods ending May 1, 2016, January 31, 2016,

       November 1, 2015, August 2, 2015 and May 3, 2015.

       Average capital employed used for fiscal 2015 was computed using the five quarterly periods ending May 3, 2015, February 1, 2015,

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

-END-

EX-99.B

Exhibit 99(b)

Page 1 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THREE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED
	Amounts											Percent of Sales
	May 1,				May 3,				% Over			May 1,			May 3,
	2016				2015				(Under)			2016			2015
Net sales		$	77,253				78,846			(2.0	)%		100.0	%		100.0	%
Cost of sales			60,640				62,674			(3.2	)%		78.5	%		79.5	%
Gross profit			16,613				16,172			2.7	%		21.5	%		20.5	%
Selling, general and
administrative expenses			9,261				9,605			(3.6	)%		12.0	%		12.2	%
Income from operations			7,352				6,567			12.0	%		9.5	%		8.3	%
Interest expense			-				15			(100.0	)%		0.0	%		0.0	%
Interest income			(26	)			(143	)		(81.8	)%		(0.0	)%		(0.2	)%
Other expense			211				10		N.M.				0.3	%		0.0	%
Income before income taxes			7,167				6,685			7.2	%		9.3	%		8.5	%
Income taxes*			3,566				1,772			101.2	%		49.8	%		26.5	%
Net income		$	3,601				4,913			(26.7	)%		4.7	%		6.2	%
Net income per share-basic		$	0.29			$	0.40			(27.5	)%
Net income per share-diluted		$	0.29			$	0.39			(25.6	)%
Average shares outstanding-basic			12,257				12,219			0.3	%
Average shares outstanding-diluted			12,434				12,440			(0.0	)%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
	THREE MONTHS ENDED
	Amounts									Percent of Sales
	May 1,			May 3,			% Over			May 1,			May 3,
	2016			2015			(Under)			2016			2015
Income before income taxes (see above)		$	7,167			6,685		7.2	%		9.3	%		8.5	%
Adjusted Income taxes (2)*			1,333			1,050		27.0	%		18.6	%		15.7	%
Adjusted net income			5,834			5,635		3.5	%		7.6	%		7.1	%
Adjusted net income per share-basic		$	0.48		$	0.46		4.3	%
Adjusted net income per share-diluted		$	0.47		$	0.45		4.4	%
Average shares outstanding-basic			12,257			12,219		0.3	%
Average shares outstanding-diluted			12,434			12,440		(0.0	)%
(1) Culp, Inc. currently does not incur cash income tax expense in the US and has an estimated $18.0 million in net operating loss carryforwards as of May 1, 2016.
Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on
page 10 of 10.
(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 2 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE TWELVE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	TWELVE MONTHS ENDED
	Amounts											Percent of Sales
	May 1,				May 3,				% Over			May 1,			May 3,
	2016				2015				(Under)			2016			2015
Net sales		$	312,860				310,166			0.9	%		100.0	%		100.0	%
Cost of sales			247,749				254,599			(2.7	)%		79.2	%		82.1	%
Gross profit			65,111				55,567			17.2	%		20.8	%		17.9	%
Selling, general and
administrative expenses			36,773				32,778			12.2	%		11.8	%		10.6	%
Income from operations			28,338				22,789			24.3	%		9.1	%		7.3	%
Interest expense			-				64			(100.0	)%		0.0	%		0.0	%
Interest income			(176	)			(622	)		(71.7	)%		(0.1	)%		(0.2	)%
Other expense			616				391			57.5	%		0.2	%		0.1	%
Income before income taxes			27,898				22,956			21.5	%		8.9	%		7.4	%
Income taxes*			10,963				7,885			39.0	%		39.3	%		34.3	%
Net income		$	16,935				15,071			12.4	%		5.4	%		4.9	%
Net income per share-basic		$	1.38			$	1.23			12.2	%
Net income per share-diluted		$	1.36			$	1.21			12.4	%
Average shares outstanding-basic			12,302				12,217			0.7	%
Average shares outstanding-diluted			12,475				12,422			0.4	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
	TWELVE MONTHS ENDED
	Amounts							Percent of Sales
	May 1,		May 3,		% Over			May 1,			May 3,
	2016		2015		(Under)			2016			2015
Income before income taxes (see above)	$	27,898		22,956		21.5	%		8.9	%		7.4	%
Adjusted Income taxes (2)*		5,189		3,604		44.0	%		18.6	%		15.7	%
Adjusted net income		22,709		19,352		17.3	%		7.3	%		6.2	%
Adjusted net income per share-basic	$	1.85	$	1.58		17.1	%
Adjusted net income per share-diluted	$	1.82	$	1.56		16.7	%
Average shares outstanding-basic		12,302		12,217		0.7	%
Average shares outstanding-diluted		12,475		12,422		0.4	%
(1) Culp, Inc. currently does not incur cash income tax expense in the US and has an estimated $18.0 million in net operating loss carryforwards as of May 1, 2016.
Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on
page 10 of 10.
(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 10 of 10.
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 3 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
MAY 1, 2016   AND MAY 3, 2015
Unaudited
(Amounts in Thousands)
	Amounts				Increase
	May 1,		* May 3,		(Decrease)
	2016		2015		Dollars			Percent
Current assets
Cash and cash equivalents	$	37,787		29,725		8,062			27.1	%
Short-term investments		4,359		10,004		(5,645	)		(56.4	)%
Accounts receivable		23,481		28,749		(5,268	)		(18.3	)%
Inventories		46,531		42,484		4,047			9.5	%
Income taxes receivable		155		229		(74	)		(32.3	)%
Other current assets		2,477		2,440		37			1.5	%
Total current assets		114,790		113,631		1,159			1.0	%
Property, plant & equipment, net		39,973		36,078		3,895			10.8	%
Goodwill		11,462		11,462		-			0.0	%
Deferred income taxes		2,319		5,169		(2,850	)		(55.1	)%
Long-term Investments		4,025		2,415		1,610			66.7	%
Other assets		2,573		2,545		28			1.1	%
Total assets	$	175,142		171,300		3,842			2.2	%
Current liabilities
Current maturities of long-term debt	$	-		2,200		(2,200	)		(100.0	)%
Accounts payable - trade		23,994		28,414		(4,420	)		(15.6	)%
Accounts payable - capital expenditures		224		990		(766	)		(77.4	)%
Accrued expenses		11,922		11,129		793			7.1	%
Income taxes payable - current		180		325		(145	)		(44.6	)%
Total current liabilities		36,320		43,058		(6,738	)		(15.6	)%
Income taxes payable - long-term		3,841		3,792		49			1.3	%
Deferred income taxes		1,483		982		501			51.0	%
Deferred compensation		4,686		4,041		645			16.0	%
Total liabilities		46,330		51,873		(5,543	)		(10.7	)%
Shareholders' equity		128,812		119,427		9,385			7.9	%
Total liabilities and
shareholders' equity	$	175,142		171,300		3,842			2.2	%
Shares outstanding		12,265		12,219		46			0.4	%
* Derived from audited financial statements.

Page 4 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015
Unaudited
(Amounts in Thousands)
	TWELVE MONTHS ENDED
	Amounts
	May 1,			May 3,
	2016			2015
Cash flows from operating activities:
Net income	$	16,935			15,071
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		6,671			5,773
Amortization of other assets		170			187
Stock-based compensation		2,742			786
Deferred income taxes		4,192			3,179
Gain on sale of equipment		(35	)		(78	)
Realized loss on sale of short-term investments		127			-
Excess tax benefits related to stock-based compensation		(841	)		(109	)
Foreign currency exchange gains		(40	)		(84	)
Changes in assets and liabilities:
Accounts receivable		4,476			(1,636	)
Inventories		(4,407	)		(1,883	)
Other current assets		(206	)		(151	)
Other assets		(46	)		(117	)
Accounts payable-trade		(3,785	)		1,964
Accrued expenses and deferrred compensation		751			3,372
Income taxes		91			(163	)
Net cash provided by operating activities		26,795			26,111
Cash flows from investing activities:
Capital expenditures		(11,475	)		(10,461	)
Proceeds from the sale of equipment		233			727
Proceeds from life insurance policies		-			320
Payments on life insurance policies		(18	)		(18	)
Proceeds from the sale of short-term investments		5,612			1,628
Purchase of short-term investments		(104	)		(5,355	)
Purchase of long-term investments		(1,649	)		(1,650	)
Net cash used in investing activities		(7,401	)		(14,809	)
Cash flows from financing activities:
Proceeds from line of credit		7,000			-
Payments on line of credit		(7,000	)		(538	)
Payments on long-term debt		(2,200	)		(2,200	)
Repurchase of common stock		(2,397	)		(745	)
Dividends paid		(8,140	)		(7,579	)
Payments on debt issuance costs		(134	)		-
Proceeds from common stock issued		200			94
Excess tax benefits related to stock-based compensation		841			109
Net cash used in financing activities		(11,830	)		(10,859	)
Effect of exchange rate changes on cash and cash equivalents		498			(21	)
Increase in cash and cash equivalents		8,062			422
Cash and cash equivalents at beginning of period		29,725			29,303
Cash and cash equivalents at end of period	$	37,787			29,725
Free Cash Flow (1)	$	15,225			15,117

(1)  Free Cash Flow reconciliation is as follows:
		FY 2016			FY 2015
A)	Net cash provided by operating activities	$	26,795			26,111
B)	Minus:  Capital Expenditures		(11,475	)		(10,461	)
C)	Add:     Proceeds from the sale of equipment		233			727
D)	Add:     Proceeds from life insurance policies		-			320
E)	Minus:  Payments on life insurance policies		(18	)		(18	)
F)	Add:     Excess tax benefits related to stock-based compensation		841			109
G)	Minus:  Purchase of long-term investments		(1,649	)		(1,650	)
H)	Effects of exchange rate changes on cash and cash equivalents		498			(21	)
		$	15,225			15,117

Page 5 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015
(Unaudited)
(Amounts in thousands)
	THREE MONTHS ENDED
	Amounts									Percent of Total Sales
	May 1,			May 3,			% Over			May 1,				May 3,
Net Sales by Segment	2016			2015			(Under)			2016				2015
Mattress Fabrics	$	48,897			48,196			1.5	%			63.3	%		61.1	%
Upholstery Fabrics		28,356			30,650			(7.5	)%			36.7	%		38.9	%
Net Sales	$	77,253			78,846			(2.0	)%			100.0	%		100.0	%
Gross Profit by Segment												Gross Profit Margin
Mattress Fabrics	$	10,585			10,274			3.0	%			21.6	%		21.3	%
Upholstery Fabrics		6,028			5,898			2.2	%			21.3	%		19.2	%
Gross Profit	$	16,613			16,172			2.7	%			21.5	%		20.5	%
Selling, General and Administrative Expenses by Segment											Percent of Sales
Mattress Fabrics	$	3,357			3,187			5.3	%			6.9	%		6.6	%
Upholstery Fabrics		3,723			4,044			(7.9	)%			13.1	%		13.2	%
Unallocated Corporate expenses		2,181			2,374			(8.1	)%			2.8	%		3.0	%
Selling, General and Administrative Expenses	$	9,261			9,605			(3.6	)%			12.0	%		12.2	%
Operating Income (loss) by Segment										Operating Income (Loss) Margin
Mattress Fabrics	$	7,228			7,087			2.0	%			14.8	%		14.7	%
Upholstery Fabrics		2,305			1,854			24.3	%			8.1	%		6.0	%
Unallocated corporate expenses		(2,181	)		(2,374	)		(8.1	)%			(2.8	)%		(3.0	)%
Operating income	$	7,352			6,567			12.0	%			9.5	%		8.3	%
Depreciation by Segment
Mattress Fabrics	$	1,564			1,341			16.6	%
Upholstery Fabrics		219			187			17.1	%
Depreciation	$	1,783			1,528			16.7	%

Page 6 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE TWELVE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015
(Unaudited)
(Amounts in thousands)
	TWELVE MONTHS ENDED
	Amounts									Percent of Total Sales
	May 1,			May 3,			% Over			May 1,			May 3,
Net Sales by Segment	2016			2015			(Under)			2016			2015
Mattress Fabrics	$	186,419			179,739			3.7	%		59.6	%		57.9	%
Upholstery Fabrics		126,441			130,427			(3.1	))%		40.4	%		42.1	%
Net Sales	$	312,860			310,166			0.9	%		100.0	%		100.0	%
Gross Profit by Segment										Gross Profit Margin
Mattress Fabrics	$	38,718			32,877			17.8	%		20.8	%		18.3	%
Upholstery Fabrics		26,393			22,690			16.3	%		20.9	%		17.4	%
Gross Profit	$	65,111			55,567			17.2	%		20.8	%		17.9	%
Selling, General and Administrative Expenses by Segment											Percent of Sales
Mattress Fabrics	$	12,223			11,206			9.1	%		6.6	%		6.2	%
Upholstery Fabrics		15,094			14,562			3.7	%		11.9	%		11.2	%
Unallocated Corporate expenses		9,456			7,010			34.9	%		3.0	%		2.3	%
Selling, General, and Administrative Expenses	$	36,773			32,778			12.2	%		11.8	%		10.6	%
Operating Income (loss)  by Segment										Operating Income (Loss) Margin
Mattress Fabrics	$	26,496			21,671			22.3	%		14.2	%		12.1	%
Upholstery Fabrics		11,298			8,128			39.0	%		8.9	%		6.2	%
Unallocated corporate expenses		(9,456	)		(7,010	)		34.9	%		(3.0	)%		(2.3	)%
Operating income	$	28,338			22,789			24.3	%		9.1	%		7.3	%
Return on Capital (1)
Mattress Fabrics		36.7	%		33.5	%
Upholstery Fabrics		65.2	%		48.7	%
Unallocated Corporate		N/	A		N/	A
Consolidated		32.0	%		28.0	%
Capital Employed (2)
Mattress Fabrics		74,637			70,472			5.9	%
Upholstery Fabrics		17,025			14,026			21.4	%
Unallocated Corporate		(1,305	)		(1,273	)		N/	A
Consolidated		90,357			83,225			8.6	%
Depreciation by Segment
Mattress Fabrics	$	5,837			5,034			16.0	%
Upholstery Fabrics		834			739			12.9	%
Depreciation	$	6,671			5,773			15.6	%
Notes:
(1) See pages 8 and 9 of this financial information release for calculations.
(2) The capital employed balances are as of May 1, 2016 and May 3, 2015.

Page 7 of 10

 CULP, INC. FINANCIAL INFORMATION RELEASE 

CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA 

FOR THE TWELVE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015         

(UNAUDITED)    

(AMOUNTS IN THOUSANDS) 

	Quarter Ended
																	Trailing 12
																	Months
	8/2/2015				11/1/2015				1/31/2016				5/1/2016				5/1/2016
Net income		$	4,701			$	3,771			$	4,862			$	3,601			$	16,935
Income taxes			2,707				2,373				2,317				3,566				10,963
Interest income, net			(43	)			(69	)			(38	)			(26	)			(176	)
Depreciation and amortization expense			1,602				1,668				1,741				1,830				6,841
Stock based compensation			265				1,074				625				778				2,742
Adjusted EBITDA		$	9,232			$	8,817			$	9,507			$	9,749			$	37,305
	Quarter Ended
																	Trailing 12
																	Months
			8/3/2014				11/2/2014				2/1/2015				5/3/2015			5/3/2015
Net income		$	3,345			$	3,001			$	3,812			$	4,913			$	15,071
Income taxes			2,114				1,889				2,110				1,772				7,885
Interest income, net			(75	)			(153	)			(202	)			(128	)			(558	)
Depreciation and amortization expense			1,446				1,460				1,478				1,576				5,960
Stock based compensation			46				245				191				304				786
Adjusted EBITDA		$	6,876			$	6,442			$	7,389			$	8,437			$	29,144
% Over (Under)			34.3	%			36.9	%			28.7	%			15.6	%			28.0	%

Page 8 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE RETURN ON CAPITAL EMPLOYED BY SEGMENT FOR THE TWELVE MONTHS ENDED MAY 1, 2016
(Amounts in Thousands)
(Unaudited)
	Operating Income  Twelve Months  Ended  May 1, 2016 (1)			Average  Capital  Employed (3)			Return on  Avg. Capital  Employed (2)
Mattress Fabrics	$	26,496		$	72,121			36.7	%
Upholstery Fabrics		11,298			17,336			65.2	%
(less: Unallocated Corporate)		(9,456	)		(765	)		N/	A
Total	$	28,338		$	88,691			32.0	%
Average Capital Employed	As of the three Months Ended May 1, 2016												As of the three Months Ended January 31, 2016												As of the three Months Ended November 1, 2015
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		94,878			29,463			50,801			175,142			93,779			33,975			45,797			173,551			90,730			32,187			46,030			168,947
Total liabilities		(20,241	)		(12,438	)		(13,651	)		(46,330	)		(21,135	)		(14,352	)		(12,990	)		(48,477	)		(19,228	)		(15,129	)		(11,615	)		(45,972	)
Subtotal	$	74,637		$	17,025		$	37,150		$	128,812		$	72,644		$	19,623		$	32,807		$	125,074		$	71,502		$	17,058		$	34,415		$	122,975
Less:
Cash and cash equivalents		-			-			(37,787	)		(37,787	)		-			-			(31,713	)		(31,713	)		-			-			(31,176	)		(31,176	)
Short-term investments		-			-			(4,359	)		(4,359	)		-			-			(4,259	)		(4,259	)		-			-			(6,320	)		(6,320	)
Long-term investments		-			-			(4,025	)		(4,025	)		-			-			(3,590	)		(3,590	)		-			-			(3,279	)		(3,279	)
Income taxes receivable		-			-			(155	)		(155	)		-			-			(23	)		(23	)		-			-			(75	)		(75	)
Deferred income taxes - non-current		-			-			(2,319	)		(2,319	)		-			-			(4,312	)		(4,312	)		-			-			(3,415	)		(3,415	)
Current maturities of long-term debt		-			-			-			-			-			-			-			-			-			-			-			-
Income taxes payable - current		-			-			180			180			-			-			622			622			-			-			305			305
Income taxes payable - long-term		-			-			3,841			3,841			-			-			3,480			3,480			-			-			3,655			3,655
Deferred income taxes - non-current		-			-			1,483			1,483			-			-			1,209			1,209			-			-			1,206			1,206
Deferred compensation		-			-			4,686			4,686			-			-			4,495			4,495			-			-			4,421			4,421
Total Capital Employed	$	74,637		$	17,025		$	(1,305	)	$	90,357		$	72,644		$	19,623		$	(1,284	)	$	90,983		$	71,502		$	17,058		$	(263	)	$	88,297
	As of the three Months Ended August 2, 2015												As of the three Months Ended May 3, 2015
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		91,614			33,795			41,470			166,879			89,066			32,838			49,396			171,300
Total liabilities		(20,265	)		(14,849	)		(13,040	)		(48,154	)		(18,594	)		(18,812	)		(14,467	)		(51,873	)
Subtotal	$	71,349		$	18,946		$	28,430		$	118,725		$	70,472		$	14,026		$	34,929		$	119,427
Less:
Cash and cash equivalents		-			-			(25,933	)		(25,933	)		-			-			(29,725	)		(29,725	)
Short-term investments		-			-			(6,336	)		(6,336	)		-			-			(10,004	)		(10,004	)
Long-term investments		-			-			(2,893	)		(2,893	)		-			-			(2,415	)		(2,415	)
Income taxes receivable		-			-			(142	)		(142	)		-			-			(229	)		(229	)
Deferred income taxes - non-current		-			-			(4,405	)		(4,405	)		-			-			(5,169	)		(5,169	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200
Income taxes payable - current		-			-			392			392			-			-			325			325
Income taxes payable - long-term		-			-			3,634			3,634			-			-			3,792			3,792
Deferred income taxes - non-current		-			-			1,071			1,071			-			-			982			982
Deferred compensation		-			-			4,280			4,280			-			-			4,041			4,041
Total Capital Employed	$	71,349		$	18,946		$	298		$	90,593		$	70,472		$	14,026		$	(1,273	)	$	83,225
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	72,121		$	17,336		$	(765	)	$	88,691
Notes:
(1) See reconciliation per page 6 of this financial information release.
(2) Return on average capital employed represents operating income for fiscal 2016 divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term investments, current maturities of long-term debt, noncurrent deferred tax assets and liabilities, income taxes receivable and payable, and deferred compensation.
(3) Average capital employed was computed using the five quarterly periods ending May 1, 2016 January 31, 2016, November 1, 2015, August 2, 2015 and May 3, 2015.

Page 9 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE RETURN ON CAPITAL EMPLOYED BY SEGMENT FOR THE TWELVE MONTHS ENDED MAY 3, 2015
(Amounts in Thousands)
(Unaudited)
	Operating Income  Twelve Months  Ended  May 3, 2015 (1)			Average  Capital  Employed (3)			Return on  Avg. Capital  Employed (2)
Mattress Fabrics	$	21,671		$	64,783			33.5	%
Upholstery Fabrics		8,128			16,680			48.7	%
(less: Unallocated Corporate)		(7,010	)		34			N/	A
Total	$	22,789		$	81,497			28.0	%
Average Capital Employed	As of the three Months Ended May 3, 2015												As of the three Months Ended February 1, 2015												As of the three Months Ended November 2, 2014
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		89,066			32,838			49,396			171,300			83,648			35,761			45,949			165,358			80,121			30,916			45,126			156,163
Total liabilities		(18,594	)		(18,812	)		(14,467	)		(51,873	)		(18,470	)		(18,927	)		(12,989	)		(50,386	)		(17,247	)		(14,847	)		(12,395	)		(44,489	)
Subtotal	$	70,472		$	14,026		$	34,929		$	119,427		$	65,178		$	16,834		$	32,960		$	114,972		$	62,874		$	16,069		$	32,731		$	111,674
Less:
Cash and cash equivalents		-			-			(29,725	)		(29,725	)		-			-			(28,772	)		(28,772	)		-			-			(28,953	)		(28,953	)
Short-term investments		-			-			(10,004	)		(10,004	)		-			-			(8,384	)		(8,384	)		-			-			(6,318	)		(6,318	)
Long-term investments		-			-			(2,415	)		(2,415	)		-			-			(2,063	)		(2,063	)								(1,911	)		(1,911	)
Income taxes receivable		-			-			(229	)		(229	)		-			-			(104	)		(104	)		-			-			-			-
Deferred income taxes - non-current		-			-			(5,169	)		(5,169	)		-			-			(5,020	)		(5,020	)		-			-			(6,200	)		(6,200	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200			-			-			2,200			2,200
Line of credit		-			-			-			-			-			-			-			-			-			-			-			-
Income taxes payable - current		-			-			325			325			-			-			325			325			-			-			268			268
Income taxes payable - long-term		-			-			3,792			3,792			-			-			3,630			3,630			-			-			3,980			3,980
Deferred income taxes - non-current		-			-			982			982			-			-			927			927			-			-			896			896
Long-term debt, less current maturities		-			-			-			-			-			-			-			-			-			-			-			-
Deferred compensation		-			-			4,041			4,041			-			-			3,934			3,934			-			-			3,794			3,794
Total Capital Employed	$	70,472		$	14,026		$	(1,273	)	$	83,225		$	65,178		$	16,834		$	(367	)	$	81,645		$	62,874		$	16,069		$	487		$	79,430
	As of the three Months Ended August 3, 2014												As of the three Months Ended April 27, 2014
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		81,400			30,520			42,298			154,218			79,055			34,987			46,886			160,928
Total liabilities		(18,464	)		(11,468	)		(15,139	)		(45,071	)		(16,598	)		(17,568	)		(15,018	)		(49,184	)
Subtotal	$	62,936		$	19,052		$	27,159		$	109,147		$	62,457		$	17,419		$	31,868		$	111,744
Less:
Cash and cash equivalents		-			-			(24,665	)		(24,665	)		-			-			(29,303	)		(29,303	)
Short-term investments		-			-			(6,311	)		(6,311	)		-			-			(6,294	)		(6,294	)
Long-term investments								(1,749	)		(1,749	)								(765	)		(765	)
Income taxes receivable		-			-			(136	)		(136	)		-			-			(121	)		(121	)
Deferred income taxes - non-current		-			-			(7,182	)		(7,182	)		-			-			(8,263	)		(8,263	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200
Line of credit		-			-			569			569									586			586
Income taxes payable - current		-			-			387			387			-			-			442			442
Income taxes payable - long-term		-			-			4,037			4,037			-			-			3,962			3,962
Deferred income taxes - non-current		-			-			1,019			1,019			-			-			1,006			1,006
Long-term debt, less current maturities		-			-			2,200			2,200			-			-			2,200			2,200
Deferred compensation		-			-			3,632			3,632			-			-			2,644			2,644
Total Capital Employed	$	62,936		$	19,052		$	1,160		$	83,148		$	62,457		$	17,419		$	162		$	80,038
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	64,783		$	16,680		$	34		$	81,497
Notes:
(1) See reconciliation per page 6 of this financial information release.
(2) Return on average capital employed represents operating income for fiscal 2015 divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term investments, long-term debt, including current maturities, line of credit, noncurrent deferred tax assets and liabilities, income taxes payable and receivable, and deferred compensation.
(3) Average capital employed was computed using the five quarterly periods ending May 3, 2015, February 1, 2015, November 2, 2014, August 3, 2014 and April 27, 2014.

Page 10 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE

CONSOLIDATED ADJUSTED EFFECTIVE INCOME TAX RATE, NET INCOME AND EARNINGS PER SHARE

FOR THE TWELVE MONTHS ENDED MAY 1, 2016 AND MAY 3, 2015

Unaudited 

(Amounts in Thousands) 

	TWELVE MONTHS ENDED
	Amounts
	May 1,			May 3,
	2016			2015
Consolidated Effective GAAP Income Tax Rate          (1)		39.3	%		34.3	%
Non-Cash U.S. Income Tax Expense		(20.3)	%		(18.2)	%
Non-Cash Foreign Income Tax Expense		(0.4)	%		(0.4)	%
Consolidated Adjusted Effective Income Tax Rate      (2)		18.6	%		15.7	%

	THREE MONTHS ENDED
	As reported					May 1, 2016		As reported					May 3, 2015
	May 1,					Proforma Net		May 3,					Proforma Net
	2016		Adjustments			of Adjustments		2015		Adjustments			of Adjustments
Income before income taxes	$	7,167	$	-		$	7,167	$	6,685				$	6,685
Income taxes (3)		3,566	$	(2,233	)		1,333		1,772	$	(722	)		1,050
Net income	$	3,601	$	2,233		$	5,834	$	4,913	$	722		$	5,635
Net income per share-basic	$	0.29	$	0.18		$	0.48	$	0.40	$	0.06		$	0.46
Net income per share-diluted	$	0.29	$	0.18		$	0.47	$	0.39	$	0.06		$	0.45
Average shares outstanding-basic		12,257		12,257			12,257		12,219		12,219			12,219
Average shares outstanding-diluted		12,434		12,434			12,434		12,440		12,440			12,440
	TWELVE MONTHS ENDED
	As reported					May 1, 2016		As reported					May 3, 2015
	May 1,					Proforma Net		May 3,					Proforma Net
	2016		Adjustments			of Adjustments		2015		Adjustments			of Adjustments
Income before income taxes	$	27,898	$	-		$	27,898	$	22,956	$	-		$	22,956
Income taxes (3)		10,963	$	(5,774	)		5,189		7,885	$	(4,281	)		3,604
Net income	$	16,935	$	5,774		$	22,709	$	15,071	$	4,281		$	19,352
Net income per share-basic	$	1.38	$	0.47		$	1.85	$	1.23	$	0.35		$	1.58
Net income per share-diluted	$	1.36	$	0.46		$	1.82	$	1.21	$	0.34		$	1.56
Average shares outstanding-basic		12,302		12,302			12,302		12,217		12,217			12,217
Average shares outstanding-diluted		12,475		12,475			12,475		12,422		12,422			12,422
(1) Calculated by dividing consolidated income tax expense  by consolidated income before income taxes.
(2) Represents estimated cash income tax expense for our subsidiaries located in Canada and China divided by consolidated income before income taxes.
(3) Proforma income taxes calculated using the Consolidated Adjusted Effective Income Tax Rate as reflected above.