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

Exhibit 99(b)

Page 1 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THE THREE MONTHS ENDED AUGUST 3, 2014, AND JULY 28, 2013
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED
	Amounts									Percent of Sales
	August 3,			July 28,			% Over			August 3,			July 28,
	2014			2013			(Under)			2014			2013
Net sales	$	76,060			70,141			8.4	%		100.0	%		100.0	%
Cost of sales		63,345			57,067			11.0	%		83.3	%		81.4	%
Gross profit		12,715			13,074			(2.7	) %		16.7	%		18.6	%
Selling, general and
administrative expenses		7,419			7,100			4.5	%		9.8	%		10.1	%
Income from operations		5,296			5,974			(11.3	) %		7.0	%		8.5	%
Interest expense		68			140			(51.4	) %		0.1	%		0.2	%
Interest income		(142	)		(92	)		54.3	%		(0.2	) %		(0.1	) %
Other (income) expense		(89	)		391		N.M.				(0.1	) %		0.6	%
Income before income taxes		5,459			5,535			(1.4	) %		7.2	%		7.9	%
Income taxes*		2,115			2,305			(8.2	) %		38.7	%		41.6	%
Net income	$	3,344			3,230			3.5	%		4.4	%		4.6	%
Net income per share-basic	$	0.27		$	0.27			0.0	%
Net income per share-diluted	$	0.27		$	0.26			3.8	%
Average shares outstanding-basic		12,212			12,148			0.5	%
Average shares outstanding-diluted		12,404			12,366			0.3	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
	THREE MONTHS ENDED
	Amounts							Percent of Sales
	August 3,		July 28,		% Over			August 3,			July 28,
	2014		2013		(Under)			2014			2013
Income before income taxes (see above)	$	5,459		5,535		(1.4	) %		7.2	%		7.9	%
Adjusted Income taxes (2)*		912		786		16.0	%		16.7	%		14.2	%
Adjusted net income		4,547		4,749		(4.3	) %		6.0	%		6.8
Adjusted net income per share-basic	$	0.37	$	0.39		(5.1	) %
Adjusted net income per share-diluted	$	0.37	$	0.38		(2.6	) %
Average shares outstanding-basic		12,212		12,148		0.5	%
Average shares outstanding-diluted		12,404		12,366		0.3	%

(1) Culp, Inc. currently does not incur cash income tax expense in the US due to its $45.7 million in net operating loss carryforwards as of April 27, 2014. Therefore, adjusted net income is calculated using only income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 8 of 8.

(2) Represents estimated income tax expense for our subsidiaries located in Canada and China. See reconciliation on page 8 of 8.

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

Page 2 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED BALANCE SHEETS
AUGUST 3, 2014, JULY 28, 2013, AND APRIL 27, 2014
Unaudited
(Amounts in Thousands)
	Amounts				Increase
	August 3,		July 28,		(Decrease)						* April 27,
	2014		2013		Dollars			Percent			2014
Current assets
Cash and cash equivalents	$	24,665		21,423		3,242			15.1	%		29,303
Short-term investments		6,311		6,174		137			2.2	%		6,294
Accounts receivable		24,239		24,493		(254	)		(1.0	) %		27,409
Inventories		41,688		41,770		(82	)		(0.2	) %		40,674
Deferred income taxes		6,203		7,747		(1,544	)		(19.9	) %		6,230
Income taxes receivable		136		292		(156	)		(53.4	) %		121
Other current assets		2,308		3,408		(1,100	)		(32.3	) %		2,344
Total current assets		105,550		105,307		243			0.2	%		112,375
Property, plant & equipment, net		31,891		30,808		1,083			3.5	%		31,376
Goodwill		11,462		11,462		-			0.0	%		11,462
Deferred income taxes		973		651		322			49.5	%		2,040
Long-term Investments		1,749		-		1,749			100.0	%		765
Other assets		2,587		2,873		(286	)		(10.0	) %		2,917
Total assets	$	154,212		151,101		3,111			2.1	%		160,935
Current liabilities
Current maturities of long-term debt	$	2,200		2,200		-			0.0	%		2,200
Accounts payable - trade		24,458		27,821		(3,363	)		(12.1	) %		26,686
Accounts payable - capital expenditures		204		-		204			100.0	%		277
Accrued expenses		6,365		8,704		(2,339	)		(26.9	) %		9,181
Income taxes payable - current		387		320		67			20.9	%		442
Total current liabilities		33,614		39,045		(5,431	)		(13.9	) %		38,786
Income taxes payable - long-term		4,037		4,176		(139	)		(3.3	) %		3,962
Deferred income taxes		1,013		4,335		(3,322	)		(76.6	) %		1,013
Line of credit		569		560		9			1.6	%		586
Deferred compensation		3,632		-		3,632			100.0	%		2,644
Long-term debt , less current maturities		2,200		4,400		(2,200	)		(50.0	) %		2,200
Total liabilities		45,065		52,516		(7,451	)		(14.2	) %		49,191
Shareholders' equity		109,147		98,585		10,562			10.7	%		111,744
Total liabilities and
shareholders' equity	$	154,212		151,101		3,111			2.1	%		160,935
Shares outstanding		12,217		12,241		(24	)		(0.2	) %		12,250
*  Derived from audited financial statements.

Page 3 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 3, 2014 AND JULY 28, 2013
Unaudited
(Amounts in Thousands)
	THREE MONTHS ENDED
	Amounts
	August 3,			July 28,
	2014			2013
Cash flows from operating activities:
Net income	$	3,344			3,230
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		1,399			1,305
Amortization of other assets		47			39
Stock-based compensation		46			152
Deferred income taxes		1,193			1,438
Gain on sale of equipment		(45	)		(74	)
Excess tax benefits related to stock-based compensation		(99	)		(114	)
Foreign currency exchange (gains) losses		(201	)		96
Changes in assets and liabilities, net of effects of acquisition of assets:
Accounts receivable		3,168			(1,049	)
Inventories		(1,021	)		(3,271	)
Other current assets		40			(1,300	)
Other assets		283			(11	)
Accounts payable		(2,224	)		5,284
Accrued expenses and deferrred compensation		(1,855	)		(3,131	)
Income taxes		(24	)		81
Net cash provided by operating activities		4,051			2,675
Cash flows from investing activities:
Capital expenditures		(2,333	)		(884	)
Proceeds from the sale of equipment		391			104
Net cash paid for acquisition of assets		-			(2,640	)
Purchase of short-term investments		(27	)		(1,023	)
Purchase of long-term investments		(984	)		-
Net cash used in investing activities		(2,953	)		(4,443	)
Cash flows from financing activities:
Excess tax benefits related to stock-based compensation		99			114
Repurchase of common stock		(556	)		-
Dividends paid		(5,502	)		(489	)
Proceeds from common stock issued		-			145
Net cash used in financing activities		(5,959	)		(230	)
Effect of exchange rate changes on cash and cash equivalents		223			(109	)
Decrease in cash and cash equivalents		(4,638	)		(2,107	)
Cash and cash equivalents at beginning of period		29,303			23,530
Cash and cash equivalents at end of period	$	24,665			21,423
Free Cash Flow (1)	$	1,447			1,900

(1)  Free Cash Flow reconciliation is as follows:
		FY 2015		FY 2014
A) Net cash provided by operating activities	$	4,051		2,675
B) Minus:  Capital Expenditures		(2,333	)	(884	)
C) Add:     Proceeds from the sale of equipment		391		104
D) Add:     Excess tax benefits related to stock-based compensation		99		114
E) Minus:  Purchase of long-term investments		(984	)	-
F) Effects of exchange rate changes on cash and cash equivalents		223		(109	)
	$	1,447		1,900

Page 4 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 3, 2014 AND JULY 28, 2013
(Unaudited)
(Amounts in thousands)
	THREE MONTHS ENDED
	Amounts									Percent of Total Sales
	August 3,			July 28,			% Over			August 3,			July 28,
Net Sales by Segment	2014			2013			(Under)			2014			2013
Mattress Fabrics	$	42,822			38,164			12.2	%		56.3	%		54.4	%
Upholstery Fabrics		33,238			31,977			3.9	%		43.7	%		45.6	%
Net Sales	$	76,060			70,141			8.4	%		100.0	%		100.0	%
Gross Profit by Segment										Gross Profit Margin
Mattress Fabrics	$	7,202			7,392			(2.6	) %		16.8	%		19.4	%
Upholstery Fabrics		5,513			5,682			(3.0	) %		16.6	%		17.8	%
Gross Profit		12,715			13,074			(2.7	) %		16.7	%		18.6	%
Selling, General and Administrative expenses by Segment											Percent of Sales
Mattress Fabrics	$	2,574			2,374			8.4	%		6.0	%		6.2	%
Upholstery Fabrics		3,452			3,266			5.7	%		10.4	%		10.2	%
Unallocated Corporate expenses		1,393			1,460			(4.6	) %		1.8	%		2.1	%
Selling, General and Administrative Expenses		7,419			7,100			4.5	%		9.8	%		10.1	%
Operating Income (loss)  by Segment										Operating Income (Loss) Margin
Mattress Fabrics	$	4,629			5,018			(7.8	) %		10.8	%		13.1	%
Upholstery Fabrics		2,060			2,416			(14.7	) %		6.2	%		7.6	%
Unallocated corporate expenses		(1,393	)		(1,460	)		(4.6	) %		(1.8	) %		(2.1	) %
Operating Income		5,296			5,974			(11.3	) %		7.0	%		8.5	%
Return on Capital (1)
Mattress Fabrics		29.5	%		34.2	%
Upholstery Fabrics		45.2	%		51.5	%
Unallocated Corporate		N/A			N/A
Consolidated		27.0	%		31.7	%
Capital Employed (2)
Mattress Fabrics		62,936			59,590			5.6	%
Upholstery Fabrics		19,052			20,209			(5.7	) %
Unallocated Corporate		(2,472	)		(1,510	)		N/A
Consolidated		79,516			78,289			1.6	%
Depreciation expense by Segment
Mattress Fabrics	$	1,219			1,149			6.1	%
Upholstery Fabrics		180			156			15.4	%
Depreciation expense		1,399			1,305			7.2	%

Notes:

(1) See pages 6 and 7 of this financial information release for calculations.

(2) The capital employed balances are as of August 3, 2014 and July 28, 2013.

Page 5 of 8

CULP, INC.  FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED AUGUST 3, 2014 AND JULY 28, 2013
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
	Quarter Ended
													Trailing 12
													Months
	10/27/2013			1/26/2014				4/27/2014		8/3/2014			8/3/2014
Net income	$	3,096		$	8,381		$	2,740		$	3,344		$	17,561
Income taxes		1,718			(3,807	)		1,380			2,115			1,406
Interest income, net		(3	)		(57	)		(43	)		(74	)		(177	)
Depreciation and amortization expense		1,373			1,370			1,394			1,446			5,583
Stock based compensation		224			175			159			46			604
Adjusted EBITDA	$	6,408		$	6,062		$	5,630		$	6,877		$	24,977
	Quarter Ended
													Trailing 12
													Months
	10/28/2012			1/27/2013				4/28/2013		7/28/2013			7/28/2013
Net income	$	8,268		$	2,823		$	3,702		$	3,230		$	18,023
Income taxes		(3,736	)		1,700			2,161			2,305			2,430
Interest expense, net		60			40			50			48			198
Depreciation and amortization expense		1,344			1,338			1,354			1,344			5,380
Stock based compensation		127			111			254			152			644
Adjusted EBITDA	$	6,063		$	6,012		$	7,521		$	7,079		$	26,675

Page 6 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 3, 2014
(Amounts in Thousands)
(Unaudited)
	Operating Income
	Three Months			Average			Return on
	Ended			Capital			Avg. Capital
	August 3, 2014 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	4,629		$	62,697			29.5	%
Upholstery Fabrics		2,060			18,236			45.2	%
(less: Unallocated Corporate)		(1,393	)		(2,477	)		N/A
Total	$	5,296		$	78,455			27.0	%

Average Capital Employed		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			42,292			154,212			79,055			34,987			46,893			160,935
Total liabilities		(18,464	)		(11,468	)		(15,133	)		(45,065	)		(16,598	)		(17,568	)		(15,025	)		(49,191	)
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 - current		-			-			(6,203	)		(6,203	)		-			-			(6,230	)		(6,230	)
Deferred income taxes - non-current		-			-			(973	)		(973	)		-			-			(2,040	)		(2,040	)
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		-			-			1,013			1,013			-			-			1,013			1,013
Long-term debt, less current maturities		-			-			2,200			2,200			-			-			2,200			2,200
Total Capital Employed	$	62,936		$	19,052		$	(2,472	)	$	79,516		$	62,457		$	17,419		$	(2,482	)	$	77,394
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	62,697		$	18,236		$	(2,477	)	$	78,455

Notes:

(1) See reconciliation per page 4 of this financial information release.

(2) Return on average capital employed represents operating income for the three month period ending August 3, 2014 times four quarters to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term investments, long-term debt, including current maturities, line of credit, current and noncurrent deferred tax assets and liabilities,and income taxes receivable and payable.

(3) Average capital employed was computed using the two periods ending August 3, 2014 and April 27, 2014.

Page 7 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED JULY 28, 2013
(Amounts in Thousands)
(Unaudited)
	Operating Income
	Three Months			Average			Return on
	Ended			Capital			Avg. Capital
	July 28, 2013 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	5,018		$	58,770			34.2	%
Upholstery Fabrics		2,416			18,761			51.5	%
(less: Unallocated Corporate)		(1,460	)		(2,037	)		N/A
Total	$	5,974		$	75,494			31.7	%

Average Capital Employed	As of the three Months Ended July 28, 2013												As of the three Months Ended April 28, 2013
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		78,217			34,381			38,503			151,101			73,954			30,995			39,757			144,706
Total liabilities		(18,627	)		(14,172	)		(19,717	)		(52,516	)		(16,004	)		(13,682	)		(19,437	)		(49,123	)
Subtotal	$	59,590		$	20,209		$	18,786		$	98,585		$	57,950		$	17,313		$	20,320		$	95,583
Less:
Cash and cash equivalents		-			-			(21,423	)		(21,423	)		-			-			(23,530	)		(23,530	)
Short-term investments		-			-			(6,174	)		(6,174	)		-			-			(5,286	)		(5,286	)
Income taxes receivable		-			-			(292	)		(292	)		-			-			(318	)		(318	)
Deferred income taxes - current		-			-			(7,747	)		(7,747	)		-			-			(7,709	)		(7,709	)
Deferred income taxes - non-current		-			-			(651	)		(651	)		-			-			(753	)		(753	)
Current maturities of long-term debt		-			-			2,200			2,200			-			-			2,200			2,200
Line of credit		-			-			560			560									561			561
Income taxes payable - current		-			-			320			320			-			-			285			285
Income taxes payable - long-term		-			-			4,176			4,176			-			-			4,191			4,191
Deferred income taxes - non-current		-			-			4,335			4,335			-			-			3,075			3,075
Long-term debt, less current maturities		-			-			4,400			4,400			-			-			4,400			4,400
Total Capital Employed	$	59,590		$	20,209		$	(1,510	)	$	78,289		$	57,950		$	17,313		$	(2,564	)	$	72,699
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	58,770		$	18,761		$	(2,037	)	$	75,494

Notes:

(1) See reconciliation per page 4 of this financial information release.

(2) Return on average capital employed represents operating income for the three month period ending July 28, 2013 times four quarters to arrive at an annualized value then divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments, long-term debt, including current maturities, line of credit, current and noncurrent deferred tax assets and liabilities, and income taxes receivable and payable.

(3) Average capital employed was computed using the two periods ending July 28, 2013 and April 28, 2013.

Page 8 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE

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

FOR THE THREE MONTHS ENDED AUGUST 3, 2014 AND JULY 28, 2013

Unaudited

(Amounts in Thousands)

			THREE MONTHS ENDED
			Amounts
			August 3,			July 28,
			2014			2013
Consolidated Effective GAAP Income Tax Rate	(1	)		38.7	%		41.6	%
Non-Cash U.S. Income Tax Expense				(21.2	)%		(27.0	)%
Non-Cash Foreign Income Tax Expense				(0.8	)%		(0.4	)%
Consolidated Adjusted Effective Income Tax Rate	(2	)		16.7	%		14.2	%

	THREE MONTHS ENDED
	As reported					As Adjusted		As reported					As Adjusted
	August 3,					August 3,		July 28,					July 28,
		2014	Adjustments				2014		2013	Adjustments				2013
Income before income taxes	$	5,459				$	5,459	$	5,535				$	5,535
Income taxes (3)		2,115	$	(1,203	)		912		2,305	$	(1,519	)		786
Net income	$	3,344	$	1,203		$	4,547	$	3,230	$	1,519		$	4,749
Net income per share-basic	$	0.27	$	(0.10	)	$	0.37	$	0.27	$	(0.13	)	$	0.39
Net income per share-diluted	$	0.27	$	(0.10	)	$	0.37	$	0.26	$	(0.12	)	$	0.38
Average shares outstanding-basic		12,212		12,212			12,212		12,148		12,148			12,148
Average shares outstanding-diluted		12,404		12,404			12,404		12,366		12,366			12,366

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