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

EXHIBIT 99(b)

Page 1 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED (UNAUDITED)
	Amounts									Percent of Sales
	August 1,			August 2,			% Over			August 1,			August 2,
	2010			2009			(Under)			2010			2009
Net sales	$	55,912			45,478		22.9		%	100.0		%	100.0		%
Cost of sales		46,203			37,891		21.9		%	82.6		%	83.3		%
Gross profit		9,709			7,587		28.0		%	17.4		%	16.7		%
Selling, general and
administrative expenses		5,212			4,895		6.5		%	9.3		%	10.8		%
Restructuring credit		(6	)		(158	)	(96.2	)	%	(0.0	)	%	(0.3	)	%
Income from operations		4,503			2,850		58.0		%	8.1		%	6.3		%
Interest expense		210			357		(41.2	)	%	0.4		%	0.8		%
Interest income		(38	)		(12	)	216.7		%	(0.1	)	%	(0.0	)	%
Other expense		53			514		(89.7	)	%	0.1		%	1.1		%
Income before income taxes		4,278			1,991		114.9		%	7.7		%	4.4		%
Income taxes*		531			115		361.7		%	12.4		%	5.8		%
Net income	$	3,747			1,876		99.7		%	6.7		%	4.1		%
Net income per share-basic	$	0.29			0.15		93.3		%
Net income per share-diluted	$	0.28			0.15		86.7		%
Average shares outstanding-basic		12,870			12,653		1.7		%
Average shares outstanding-diluted		13,199			12,751		3.5		%

* Percent of sales column for income taxes is calculated as a % of income before income taxes.

Page 2 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
AUGUST 1, 2010, AUGUST 2, 2009 AND MAY 2, 2010
Unaudited
(Amounts in Thousands)
	Amounts				Increase
	August 1,		August 2,		(Decrease)						* May 2,
	2010		2009		Dollars			Percent			2010
Current assets
Cash and cash equivalents	$	14,045		15,481		(1,436	)	(9.3	)	%		18,295
Short-term investments		4,009		-		4,009		100.0		%		3,023
Accounts receivable		18,342		13,837		4,505		32.6		%		19,822
Inventories		29,687		21,717		7,970		36.7		%		26,002
Deferred income taxes		138		52		86		165.4		%		150
Assets held for sale		123		1,037		(914	)	(88.1	)	%		123
Income taxes receivable		568		396		172		43.4		%		728
Other current assets		1,646		1,531		115		7.5		%		1,698
Total current assets		68,558		54,051		14,507		26.8		%		69,841
Property, plant & equipment, net		30,471		24,013		6,458		26.9		%		28,403
Goodwill		11,462		11,462		-		0.0		%		11,462
Deferred income taxes		245		-		245		100.0		%		324
Other assets		2,361		2,885		(524	)	(18.2	)	%		2,568
Total assets	$	113,097		92,411		20,686		22.4		%		112,598
Current liabilities
Current maturities of long-term debt	$	194		4,817		(4,623	)	(96.0	)	%		196
Current portion of obligation under a capital lease		-		452		(452	)	(100.0	)	%		-
Accounts payable - trade		22,821		13,592		9,229		67.9		%		22,278
Accounts payable - capital expenditures		498		725		(227	)	(31.3	)	%		567
Accrued expenses		5,964		5,215		749		14.4		%		9,613
Accrued restructuring		316		584		(268	)	(45.9	)	%		324
Income taxes payable - current		182		72		110		152.8		%		224
Total current liabilities		29,975		25,457		4,518		17.7		%		33,202
Accounts payable - capital expenditures		-		550		(550	)	(100.0	)	%		-
Income taxes payable - long-term		3,877		3,538		339		9.6		%		3,876
Deferred income taxes		666		1,072		(406	)	(37.9	)	%		982
Long-term debt , less current maturities		11,453		11,618		(165	)	(1.4	)	%		11,491
Total liabilities		45,971		42,235		3,736		8.8		%		49,551
Shareholders' equity		67,126		50,176		16,950		33.8		%		63,047
Total liabilities and
shareholders' equity	$	113,097		92,411		20,686		22.4		%		112,598
Shares outstanding		13,084		12,848		236		1.8		%		13,052

* Derived from audited financial statements.

Page 3 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009
Unaudited
(Amounts in Thousands)
		THREE MONTHS ENDED
		Amounts
		August 1,			August 2,
		2010			2009 (2)
Cash flows from operating activities:
Net income		$	3,747		$	1,876
Adjustments to reconcile net income  to net cash
(used in) provided by operating activities:
Depreciation			1,014			933
Amortization of other assets			130			157
Stock-based compensation			96			208
Excess tax benefit related to stock-based compensation			(169	)		-
Deferred income taxes			(55	)		-
Restructuring expenses, net of gain on sale of related assets			-			(112	)
Foreign currency exchange losses			87			427
Changes in assets and liabilities:
Accounts receivable			1,475			4,291
Inventories			(3,686	)		2,263
Other current assets			41			(271	)
Other assets			(27	)		(15	)
Accounts payable-trade			541			(3,431	)
Accrued expenses			(3,626	)		(1,317	)
Accrued restructuring			(8	)		(269	)
Income taxes			149			(169	)
Net cash (used in) provided by operating activities			(291	)		4,571
Cash flows from investing activities:
Capital expenditures			(3,151	)		(892	)
Purchase of short-term investments			(986	)		-
Proceeds from the sale of equipment			-			284
Net cash used in investing activities			(4,137	)		(608	)
Cash flows from financing activities:
Payments on vendor-financed capital expenditures			-			(87	)
Payments on a capital lease obligation			-			(174	)
Payments on long-term debt			(32	)		-
Debt issuance costs			-			(15	)
Proceeds from common stock issued			170			-
Excess tax benefit related to stock-based compensation			169			-
Net cash provided by (used in) financing activities			307			(276	)
Effect of exchange rate changes on cash and cash equivalents			(129	)		(3	)
(Decrease) increase in cash and cash equivalents			(4,250	)		3,684
Cash and cash equivalents at beginning of year			18,295			11,797
Cash and cash equivalents at end of year		$	14,045		$	15,481
Free Cash Flow (1)		$	(3,402	)	$	3,699
(1)	Free Cash Flow reconciliation is as follows:
			FY 2011			FY 2010
A)	Net cash (used in) provided by operating activities	$	(291	)	$	4,571
B)	Minus:  Capital Expenditures		(3,151	)		(892	)
C)	Add:  Proceeds from the sale of equipment		-			284
D)	Minus:  Payments on vendor-financed capital expenditures		-			(87	)
E)	Minus:  Payments on a capital lease obligation		-			(174	)
F)	Add: Excess tax benefit related to stock-based compensation		169			-
G)	Effects of exchange rate changes on cash and cash equivalents		(129	)		(3	)
		$	(3,402	)	$	3,699

(2) Certain prior year amounts have been reclassified to conform to current year presentation to reflect the effects of foreign exchange losses and gains in operating cash flows and cash and cash equivalents held as of August 2, 2009. Reclassifications are not material to total net cash provided by operating activities, total net cash used in investing activities, and total net cash used in financing activities.

Page 4 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 1, 2010 AND AUGUST 2, 2009
(Amounts in thousands)
	THREE MONTHS ENDED (UNAUDITED)
	Amounts											Percent of Sales
	August 1,				August 2,				% Over			August 1,			August 2,
Net Sales by Segment	2010				2009				(Under)			2010			2009
Mattress Fabrics	$	30,918				26,275			17.7		%	55.3		%	57.8		%
Upholstery Fabrics		24,994				19,203			30.2		%	44.7		%	42.2		%
Net Sales	$	55,912				45,478			22.9		%	100.0		%	100.0		%
Gross Profit by Segment												Gross Profit Margin
Mattress Fabrics	$	5,990				4,761			25.8		%	19.4		%	18.1		%
Upholstery Fabrics		3,719				2,797			33.0		%	14.9		%	14.6		%
Subtotal		9,709				7,558			28.5		%	17.4		%	16.6		%
Restructuring related credit		-				29		(2)	(100.0	)	%	0.0		%	0.1		%
Gross Profit	$	9,709				7,587			28.0		%	17.4		%	16.7		%
Sales, General and Administrative expenses by Segment												Percent of Sales
Mattress Fabrics	$	1,996				1,809			10.3		%	6.5		%	6.9		%
Upholstery Fabrics		2,101				2,033			3.3		%	8.4		%	10.6		%
Unallocated Corporate expenses		1,115				1,053			5.9		%	2.0		%	2.3		%
Selling, General and Administrative expenses		5,212				4,895			6.5		%	9.3		%	10.8		%
Operating income (loss) by Segment												Operating Income (Loss) Margin
Mattress Fabrics	$	3,994				2,952			35.3		%	12.9		%	11.2		%
Upholstery Fabrics		1,618				764			111.8		%	6.5		%	4.0		%
Unallocated corporate expenses		(1,115	)			(1,053	)		(5.9	)	%	(2.0	)	%	(2.3	)	%
Subtotal		4,497				2,663			68.9		%	8.0		%	5.9		%
Restructuring and related credit		6		(1)		187		(3)	(96.8	)	%	0.0		%	0.4		%
Operating income	$	4,503				2,850			58.0		%	8.1		%	6.3		%
Return on Capital (4)
Mattress Fabrics		32.2	%			24.9	%
Upholstery Fabrics		51.5	%			31.3	%
Unallocated Corporate		N/A				N/A
Consolidated		29.5	%			19.0	%
Capital Employed (4)
Mattress Fabrics		52,017				47,634			9.2		%
Upholstery Fabrics		13,289				8,458			57.1		%
Unallocated Corporate		(813	)			(728	)		N/A
Consolidated		64,493				55,364			16.5		%
Depreciation Expense by Segment
Mattress Fabrics	$	877				900			(2.6	)	%
Upholstery Fabrics		137				33			315.2		%
Total depreciation expense		1,014				933			8.7		%

Notes:
(1)	The $6 restructuring credit primarily represents a credit for employee termination benefits.
(2)	The $29 restructuring related credit represents a credit of $50 for inventory markdowns associated with sales on inventory previously reserved for and a charge of $21 for operating costs associated with a closed plant facility.
(3)	The $187 restructuring and related credit represents a credit of $112 for sales proceeds received on equipment with no carrying value, a credit of $78 for lease termination and other exit costs, a credit of $50 for inventory markdowns associated with sales on inventory previously reserved for, offset by a charge of $21 for other operating costs associated with a closed plant facility, and a charge of $32 for employee termination benefits.
(4)	See pages 5 and 6 of this financial information release for calculations.

Page 5 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 1, 2010
(UNAUDITED)
	Operating Income
	Three Months			Average			Return on
	Ended			Capital			Avg. Capital
	August 1, 2010 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	3,994		$	49,610		32.2		%
Upholstery Fabrics		1,618			12,575		51.5		%
(less: Unallocated Corporate)		(1,115	)		(1,290	)	N/A
Total	$	4,497		$	60,895		29.5		%
Average Capital Employed	As of the three Months Ended August 1, 2010												As of the three Months Ended May 2, 2010
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		66,919			24,415			21,763			113,097			61,922			25,420			25,256			112,598
Total liabilities		(14,902	)		(11,126	)		(19,943	)		(45,971	)		(14,720	)		(13,559	)		(21,272	)		(49,551	)
Subtotal	$	52,017		$	13,289		$	1,820		$	67,126		$	47,202		$	11,861		$	3,984		$	63,047
Less:
Cash and cash equivalents		-			-			(14,045	)		(14,045	)		-			-			(18,295	)		(18,295	)
Short-term investments		-			-			(4,009	)		(4,009	)								(3,023	)		(3,023	)
Deferred income taxes - current		-			-			(138	)		(138	)		-			-			(150	)		(150	)
Income taxes receivable		-			-			(568	)		(568	)		-			-			(728	)		(728	)
Deferred income taxes - non-current		-			-			(245	)		(245	)		-			-			(324	)		(324	)
Current maturities of long-term debt		-			-			194			194			-			-			196			196
Income taxes payable - current		-			-			182			182			-			-			224			224
Income taxes payable - long-term		-			-			3,877			3,877			-			-			3,876			3,876
Deferred income taxes - non-current		-			-			666			666			-			-			982			982
Long-term debt, less current maturities		-			-			11,453			11,453			-			-			11,491			11,491
Total Capital Employed	$	52,017		$	13,289		$	(813	)	$	64,493		$	47,202		$	11,861		$	(1,767	)	$	57,296
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	49,610		$	12,575		$	(1,290	)	$	60,895

Notes:
(1)	Operating income excludes restructuring and related charges--see reconciliation per page 4 of this financial information release.
(2)	Return on average capital employed represents operating income for the 3 month period ending August 1, 2010 times 4 quarters to arrive at an annualized value then divided by average capital employed.  Average capital employed does not include cash and cash equivalents, short-term investments, long-term debt, including current maturities, current and noncurrent deferred tax assets and liabilities, current and long-term income taxes payable, and income taxes receivable.
(3)	Average capital employed computed using the two periods ending May 2, 2010 and August 1, 2010.

Page 6 of 6

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 2, 2009
(UNAUDITED)
	Operating Income
	Three Months			Average			Return on
	Ended			Capital			Avg. Capital
	August 2, 2009 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	2,952		$	47,444			24.9	%
Upholstery Fabrics		764			9,769			31.3	%
(less: Unallocated Corporate)		(1,053	)		(1,201	)		N/A
Total	$	2,663		$	56,012			19.0	%
Average Capital Employed	As of the three Months Ended August 2, 2009													As of the three Months Ended May 3, 2009
	Mattress			Upholstery			Unallocated							Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			��	Fabrics			Fabrics			Corporate			Total
Total assets		57,772			16,128			18,511			92,411				58,626			22,078			14,590			95,294
Total liabilities		(10,138	)		(7,670	)		(24,427	)		(42,235	)			(11,372	)		(10,999	)		(24,892	)		(47,263	)
Subtotal	$	47,634		$	8,458		$	(5,916	)	$	50,176			$	47,254		$	11,079		$	(10,302	)	$	48,031
Less:
Cash and cash equivalents		-			-			(15,481	)		(15,481	)			-			-			(11,797	)		(11,797	)
Deferred income taxes - current		-			-			(52	)		(52	)			-			-			(54	)		(54	)
Income taxes receivable		-			-			(396	)		(396	)			-			-			(210	)		(210	)
Current maturities of long-term debt		-			-			4,817			4,817				-			-			4,764			4,764
Income taxes payable - current		-			-			72			72				-			-			83			83
Income taxes payable - long-term		-			-			3,538			3,538				-			-			3,264			3,264
Deferred income taxes - non-current		-			-			1,072			1,072				-			-			974			974
Long-term debt, less current maturities		-			-			11,618			11,618				-			-			11,604			11,604
Total Capital Employed	$	47,634		$	8,458		$	(728	)	$	55,364			$	47,254		$	11,079		$	(1,674	)	$	56,659
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	47,444		$	9,769		$	(1,201	)	$	56,012

Notes:
(1)	Operating income excludes restructuring and related charges--see reconciliation per page 4 of this financial information release.
(2)	Return on average capital employed represents operating income for the 3 month period ending August 2, 2009 times 4 quarters to arrive at an annualized value then divided by average capital employed.  Average capital employed does not include cash and cash equivalents, long-term debt, including current maturities, current and noncurrent deferred tax assets and liabilities, current and long-term income taxes payable, and income taxes receivable.
(3)	Average capital employed computed using the two periods ending May 3, 2009 and August 2, 2009.