Culp (CULP) 8-K Results of Operations and Financial Condition

Exhibit 99(b)
Page 1 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
(Amounts in Thousands, Except for Per Share Data)
			THREE MONTHS ENDED (UNAUDITED)
			Amounts							Percent of Sales
			August 3,		July 29,		% Over			August 3,			July 29,
			2008		2007		(Under)			2008			2007
Net sales		$	59,321		65,230		(9.1	)	%	100.0		%	100.0		%
Cost of sales			51,919		56,174		(7.6	)	%	87.5		%	86.1		%
	Gross profit		7,402		9,056		(18.3	)	%	12.5		%	13.9		%
Selling, general and
administrative expenses			5,384		6,321		(14.8	)	%	9.1		%	9.7		%
Restructuring expense			402		432		(6.9	)	%	0.7		%	0.7		%
	Income from operations		1,616		2,303		(29.8	)	%	2.7		%	3.5		%
Interest expense			431		818		(47.3	)	%	0.7		%	1.3		%
Interest income			(34	)	(58	)	(41.4	)	%	(0.1	)	%	(0.1	)	%
Other expense			14		232		(94.0	)	%	0.0		%	0.4		%
	Income before income taxes		1,205		1,311		(8.1	)	%	2.0		%	2.0		%
Income taxes*			424		460		(7.8	)	%	35.2		%	35.1		%
	Net income	$	781		851		(8.2	)	%	1.3		%	1.3		%
Net income per share-basic		$	0.06		0.07		(14.3	)	%
Net income per share-diluted		$	0.06		0.07		(14.3	)	%
Net income per share, diluted, excluding
restructuring and related charges		$	0.08		0.12		(33.3	)	%
(see pro-forma statement on page 5)
Average shares outstanding-basic			12,648		12,583		0.5		%
Average shares outstanding-diluted			12,736		12,728		0.1		%
* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 2 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
AUGUST 3, 2008, JULY 29, 2007 AND APRIL 27, 2008
Unaudited
(Amounts in Thousands)
				Amounts		Increase
				August 3,	July 29,	(Decrease)					* April 27,
				2008	2007	Dollars		Percent			2008
Current assets
	Cash and cash equivalents		$	6,352	9,017	(2,665	)	(29.6	)	%	4,914
	Accounts receivable			20,164	23,903	(3,739	)	(15.6	)	%	27,073
	Inventories			34,862	42,159	(7,297	)	(17.3	)	%	35,394
	Deferred income taxes			4,472	5,376	(904	)	(16.8	)	%	4,380
	Assets held for sale			5,610	1,906	3,704		194.3		%	5,610
	Income taxes receivable			160	-	160		100.0		%	438
	Other current assets			1,627	1,649	(22	)	(1.3	)	%	1,328
		Total current assets		73,247	84,010	(10,763	)	(12.8	)	%	79,137
Property, plant & equipment, net				33,950	36,901	(2,951	)	(8.0	)	%	32,939
Goodwill				4,114	4,114	-		0.0		%	4,114
Deferred income taxes				29,144	26,220	2,924		11.2		%	29,430
Other assets				2,335	2,831	(496	)	(17.5	)	%	2,409
		Total assets	$	142,790	154,076	(11,286	)	(7.3	)	%	148,029
Current liabilities
	Current maturities of long-term debt		$	7,378	13,849	(6,471	)	(46.7	)	%	7,375
	Current portion of obligation under a capital lease			692	-	692		100.0		%	-
	Lines of credit			-	2,641	(2,641	)	(100.0	)	%	-
	Accounts payable - trade			17,249	16,776	473		2.8		%	21,103
	Accounts payable - capital expenditures			1,020	1,219	(199	)	(16.3	)	%	1,547
	Accrued expenses			5,534	8,484	(2,950	)	(34.8	)	%	8,300
	Accrued restructuring			1,495	3,047	(1,552	)	(50.9	)	%	1,432
	Income taxes payable - current			33	856	(823	)	(96.1	)	%	150
		Total current liabilities		33,401	46,872	(13,471	)	(28.7	)	%	39,907
Accounts payable - capital expenditures				1,275	-	1,275		100.0		%	1,449
Income taxes payable - long-term				5,069	3,765	1,304		34.6		%	4,802
Deferred income taxes				1,363	-	1,363		100.0		%	1,464
Obligation under capital lease				458	-	458		100.0		%	-
Long-term debt , less current maturities				13,980	22,094	(8,114	)	(36.7	)	%	14,048
		Total liabilities		55,546	72,731	(17,185	)	(23.6	)	%	61,670
Shareholders' equity				87,244	81,345	5,899		7.3		%	86,359
		Total liabilities and
		shareholders' equity	$	142,790	154,076	(11,286	)	(7.3	)	%	148,029
Shares outstanding				12,648	12,635	13		0.1		%	12,648
	* Derived from audited financial statements.

Page 3 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
Unaudited
(Amounts in Thousands)
							THREE MONTHS ENDED
							Amounts
							August 3,		July 29,
							2008		2007
Cash flows from operating activities:
	Net income					$	781		851
	Adjustments to reconcile net income to net cash
		provided by operating activities:
			Depreciation				1,258		1,447
			Amortization of other assets				79		90
			Stock-based compensation				98		140
			Excess tax benefit related to stock options exercised				-		(21	)
			Deferred income taxes				90		(518	)
			Restructuring expenses, net of gain on sale of related assets				-		160
			Changes in assets and liabilities:
				Accounts receivable			6,909		5,387
				Inventories			532		(1,529	)
				Other current assets			(299	)	175
				Other assets			(5	)	(327	)
				Accounts payable - trade			(3,854	)	(5,251	)
				Accrued expenses			(2,757	)	(186	)
				Accrued restructuring			63		(235	)
				Income taxes			428		889
					Net cash provided by operating activities		3,323		1,072
Cash flows from investing activities:
	Capital expenditures						(986	)	(1,113	)
	Proceeds from the sale of buildings and equipment						-		702
					Net cash used in investing activities		(986	)	(411	)
Cash flows from financing activities:
	Payments on vendor-financed capital expenditures						(599	)	(70	)
	Payments on long-term debt						(65	)	(2,169	)
	Payments on capital lease obligation						(235	)	-
	Proceeds from common stock issued						-		405
	Excess tax benefit related to stock options exercised						-		21
					Net cash used in financing activities		(899	)	(1,813	)
Increase (decrease) in cash and cash equivalents							1,438		(1,152	)
Cash and cash equivalents at beginning of period							4,914		10,169
Cash and cash equivalents at end of period						$	6,352		9,017
Free Cash Flow (1)						$	1,503		591
(1) Free Cash Flow reconciliation is as follows:
							FY 2009		FY 2008
A)	Net cash provided by operating activities					$	3,323		1,072
B)	Minus: Capital Expenditures						(986	)	(1,113	)
C) Add: Proceeds from the sale of buildings and equipment							0		702
D)	Minus: Payments on vendor-financed capital expenditures						(599	)	(70	)
E)	Minus: Payments on capital lease obligation						(235	)	-
						$	1,503		591

Page 4 of 5

CULP, INC. FINANCIAL INFORMATION RELEASE
SALES, GROSS PROFIT AND OPERATING INCOME (LOSS) BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
(Amounts in thousands)
		THREE MONTHS ENDED (UNAUDITED)
		Amounts									Percent of Sales
		August 3,			July 29,			% Over			August 3,			July 29,
Net Sales by Segment		2008			2007			(Under)			2008			2007
Mattress Fabrics	$	35,561			36,536			(2.7	)	%	59.9		%	56.0		%
Upholstery Fabrics		23,760			28,694			(17.2	)	%	40.1		%	44.0		%
Net Sales	$	59,321			65,230			(9.1	)	%	100.0		%	100.0		%
Gross Profit by Segment											Gross Profit Margin
Mattress Fabrics	$	6,344			5,805			9.3		%	17.8		%	15.9		%
Upholstery Fabrics		1,070			3,768			(71.6	)	%	4.5		%	13.1		%
Subtotal		7,414			9,573			(22.6	)	%	12.5		%	14.7		%
Restructuring related charges		(12	)	(1)	(517	)	(3)	(97.7	)	%	(0.0	)	%	(0.8	)	%
Gross Profit	$	7,402			9,056			(18.3	)	%	12.5		%	13.9		%
Sales, General and Administrative expenses by Segment											Percent of Sales
Mattress Fabrics	$	2,128			2,042			4.2		%	6.0		%	5.6		%
Upholstery Fabrics		2,484			3,318			(25.1	)	%	10.5		%	11.6		%
Unallocated Corporate expenses		770			935			(17.6	)	%	1.3		%	1.4		%
Subtotal		5,382			6,295			(14.5	)	%	9.1		%	9.7		%
Restructuring related charges		2		(1)	26		(3)	(92.3	)	%	0.0		%	0.0		%
Selling, General and Administrative expenses	$	5,384			6,321			(14.8	)	%	9.1		%	9.7		%
Operating income (loss) by Segment											Operating Income (Loss) Margin
Mattress Fabrics	$	4,216			3,763			12.0		%	11.9		%	10.3		%
Upholstery Fabrics		(1,414	)		450			N.M.			(6.0	)	%	1.6		%
Unallocated corporate expenses		(770	)		(935	)		17.6		%	(1.3	)	%	(1.4	)	%
Subtotal		2,032			3,278			(38.0	)	%	3.4		%	5.0		%
Restructuring expense and restructuring related charges		(416	)	(2)	(975	)	(4)	(57.3	)	%	(0.7	)	%	(1.5	)	%
Operating income	$	1,616			2,303			(29.8	)	%	2.7		%	3.5		%
Depreciation by Segment
Mattress Fabrics	$	758			897			(15.5	)	%
Upholstery Fabrics		500			550			(9.1	)	%
Total Depreciation		1,258			1,447			(13.1	)	%

(1) The $12 represents other operating costs associated with a closed plant facility. The $2 represents other operating costs associated with a closed plant facility.

(2) The $416 represents $414 for employee termination benefits, $14 for other operating costs associated with a closed plant facility, and a credit of $12 for lease termination and other exit costs. Of this total charge, $12, $2, and $402 are included in cost of sales, selling, general, and administrative expense, and restructuring expense, respectively.

(3) The $517 represents restructuring related charges of $460 for other operating costs associated with closed plant facilities and $57 for inventory markdowns. The $26 represents other operating costs associated with a closed plant facility.

(4) The $975 represents $486 for other operating costs associated with closed plant facilities, $367 for lease termination costs, $362 for write-downs of a building and equipment, $57 for inventory markdowns, $54 for asset movement costs, a credit of $149 for employee termination benefits, and a credit of $202 for sales proceeds received on equipment with no carrying value. Of this total charge, $517, $26 and $432 are included in cost of sales, selling, general, and administrative expense, and restructuring expense, respectively.

Page 5 of 5

CULP, INC.
PROFORMA CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED AUGUST 3, 2008 AND JULY 29, 2007
(Amounts in Thousands, Except for Per Share Data)
			THREE MONTHS ENDED (UNAUDITED)
			As Reported											August 3, 2008					As Reported											July 29, 2007					Proforma
			August 3,			% of				% of				Proforma Net			% of		July 29,			% of				% of				Proforma Net			% of		% Over
				2008		Sales		Adjustments		Sales				of Adjustments			Sales			2007		Sales		Adjustments		Sales				of Adjustments			Sales		(Under)
Net sales		$		59,321		100.0	%	-		0.0	%				59,321		100.0	%		65,230		100.0	%	-		0.0	%				65,230		100.0	%	-9.1	%
Cost of sales				51,919		87.5	%	(12	)	0.0	%	(1	)		51,907		87.5	%		56,174		86.1	%	(517	)	-0.8	%	(3	)		55,657		85.3	%	-6.7	%
	Gross profit			7,402		12.5	%	(12	)	0.0	%				7,414		12.5	%		9,056		13.9	%	(517	)	-0.8	%				9,573		14.7	%	-22.6	%
Selling, general and
administrative expenses				5,384		9.1	%	(2	)	0.0	%	(1	)		5,382		9.1	%		6,321		9.7	%	(26	)	0.0	%	(3	)		6,295		9.7	%	-14.5	%
Restructuring expense				402		0.7	%	(402	)	-0.7	%	(2	)		-		0.0	%		432		0.7	%	(432	)	-0.7	%	(4	)		-		0.0	%	0.0	%
	Income from operations			1,616		2.7	%	(416	)	-0.7	%				2,032		3.4	%		2,303		3.5	%	(975	)	-1.5	%				3,278		5.0	%	-38.0	%
Interest expense				431		0.7	%	-		0.0	%				431		0.7	%		818		1.3	%	-		0.0	%				818		1.3	%	-47.3	%
Interest income				(34	)	-0.1	%	-		0.0	%				(34	)	-0.1	%		(58	)	-0.1	%	-		0.0	%				(58	)	-0.1	%	-41.4	%
Other expense				14		0.0	%	-		0.0	%				14		0.0	%		232		0.4	%	-		0.0	%				232		0.4	%	-94.0	%
	Income before income taxes			1,205		2.0	%	(416	)	-0.7	%	(5	)		1,621		2.7	%		1,311		2.0	%	(975	)	-1.5	%	(6	)		2,286		3.5	%	-29.1	%
Income taxes (7)				424		35.2	%	(149	)	35.8	%				573		35.3	%		460		35.1	%	(351	)	36.0	%				811		35.5	%	-29.3	%
Net income		$		781		1.3	%	(267	)	-0.5	%				1,048		1.8	%		851		1.3	%	(624	)	-1.0	%				1,475		2.3	%	-28.9	%
Net income per share-basic				$0.06				($0.02	)						$0.08					$0.07				($0.05	)					$	0.12
Net income per share-diluted				$0.06				($0.02	)						$0.08					$0.07				($0.05	)					$	0.12
Average shares outstanding-basic				12,648				12,648							12,648					12,583				12,583							12,583
Average shares outstanding-diluted				12,736				12,648							12,736					12,728				12,583							12,728

Notes:

(1) The $12 represents other operating costs associated with a closed plant facility. The $2 represents other operating costs associated with a closed plant facility.

(2) The $402 represents $414 for employee termination benefits and a credit of $12 for lease termination and other exit costs.

(3) The $517 represents restructuring related charges of $460 for other operating costs associated with closed plant facilities and $57 for inventory markdowns. The $26 represents other operating costs associated with closed plant facilities.

(4) The $432 represents $367 for lease termination costs, $362 for write-downs of a building and equipment, $54 for asset movement costs, and a credit of $149 for employee termination benefits, and a credit of $202 for sales proceeds received on equipment with no carrying value.

(5) The $416 represents a cash charge.

(6) Of this total charge, $556 and $419 represent cash and non-cash charges, respectively.

(7) The percent of net sales column for income taxes is calculated as a % of income before income taxes.