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 JULY 31, 2016, AND AUGUST 2, 2015
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED
	Amounts									Percent of Sales
	July 31,			August 2,			% Over			July 31,			August 2,
	2016			2015			(Under)			2016			2015
Net sales	$	80,682			80,185			0.6	%		100.0	%		100.0	%
Cost of sales		62,263			63,983			(2.7	)%		77.2	%		79.8	%
Gross profit		18,419			16,202			13.7	%		22.8	%		20.2	%
Selling, general and
administrative expenses		9,746			8,741			11.5	%		12.1	%		10.9	%
Income from operations		8,673			7,461			16.2	%		10.7	%		9.3	%
Interest expense		-			24			(100.0	)%		0.0	%		0.0	%
Interest income		(25	)		(66	)		(62.1	)%		(0.0	)%		(0.1	)%
Other expense		152			95			60.0	%		0.2	%		0.1	%
Income before income taxes		8,546			7,408			15.4	%		10.6	%		9.2	%
Income taxes*		3,233			2,707			19.4	%		37.8	%		36.5	%
Net income	$	5,313			4,701			13.0	%		6.6	%		5.9	%
Net income per share-basic	$	0.43		$	0.38			13.2	%
Net income per share-diluted	$	0.43		$	0.38			13.2	%
Average shares outstanding-basic		12,286			12,277			0.1	%
Average shares outstanding-diluted		12,463			12,456			0.1	%

PRESENTATION OF ADJUSTED NET INCOME, ADJUSTED INCOME TAXES AND EARNINGS PER SHARE (1)
	THREE MONTHS ENDED
	Amounts							Percent of Sales
	July 31,		August 2,		% Over			July 31,			August 2,
	2016		2015		(Under)			2016			2015
Income before income taxes (see above)	$	8,546		7,408		15.4	%		10.6	%		9.2	%
Adjusted Income taxes (2)*		1,521		1,163		30.8	%		17.8	%		15.7	%
Adjusted net income		7,025		6,245		12.5	%		8.7	%		7.8	%
Adjusted net income per share-basic	$	0.57	$	0.51		11.8	%
Adjusted net income per share-diluted	$	0.56	$	0.50		12.0	%
Average shares outstanding-basic		12,286		12,277		0.1	%
Average shares outstanding-diluted		12,463		12,456		0.1	%

(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. 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
JULY 31, 2016, AUGUST 2, 2015, AND MAY 1, 2016
Unaudited
(Amounts in Thousands)
	Amounts				Increase
	July 31,		August 2,		(Decrease)						* May 1,
	2016		2015		Dollars			Percent			2016
Current assets
Cash and cash equivalents	$	45,549		25,933		19,616			75.6	%		37,787
Short-term investments		2,434		6,336		(3,902	)		(61.6	)%		4,359
Accounts receivable		22,690		25,707		(3,017	)		(11.7	)%		23,481
Inventories		48,131		46,544		1,587			3.4	%		46,531
Income taxes receivable		-		142		(142	)		(100.0	)%		155
Other current assets		2,294		3,502		(1,208	)		(34.5	)%		2,477
Total current assets		121,098		108,164		12,934			12.0	%		114,790
Property, plant & equipment, net		41,745		37,480		4,265			11.4	%		39,973
Goodwill		11,462		11,462		-			0.0	%		11,462
Deferred income taxes		1,942		4,406		(2,464	)		(55.9	)%		2,319
Long-term Investments		4,611		2,893		1,718			59.4	%		4,025
Other assets		2,502		2,475		27			1.1	%		2,573
Total assets	$	183,360		166,880		16,480			9.9	%		175,142
Current liabilities
Current maturities of long-term debt	$	-		2,200		(2,200	)		(100.0	)%		-
Accounts payable - trade		26,708		28,233		(1,525	)		(5.4	)%		23,994
Accounts payable - capital expenditures		627		613		14			2.3	%		224
Accrued expenses		6,890		7,731		(841	)		(10.9	)%		11,922
Income taxes payable - current		358		392		(34	)		(8.7	)%		180
Total current liabilities		34,583		39,169		(4,586	)		(11.7	)%		36,320
Income taxes payable - long-term		3,779		3,634		145			4.0	%		3,841
Deferred income taxes		1,532		1,072		460			42.9	%		1,483
Line of credit		7,000		-		7,000			100.0	%		-
Deferred compensation		5,031		4,280		751			17.5	%		4,686
Total liabilities		51,925		48,155		3,770			7.8	%		46,330
Shareholders' equity		131,435		118,725		12,710			10.7	%		128,812
Total liabilities and
shareholders' equity	$	183,360		166,880		16,480			9.9	%		175,142
Shares outstanding		12,307		12,339		(32	)		(0.3	)%		12,265

* Derived from audited financial statements.

Page 3 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JULY 31, 2016 AND AUGUST 2, 2015
Unaudited
(Amounts in Thousands)
		THREE MONTHS ENDED
		Amounts
		July 31,			August 2,
		2016			2015
Cash flows from operating activities:
Net income		$	5,313			4,701
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation			1,761			1,555
Amortization of other assets			52			47
Stock-based compensation			761			265
Deferred income taxes			593			1,641
Realized loss on sale of short-term investments			12			-
Loss (gain) on sale of equipment			9			(46	)
Excess tax benefits related to stock-based compensation			(167	)		(788	)
Foreign currency exchange gains			(62	)		(57	)
Changes in assets and liabilities:
Accounts receivable			611			2,774
Inventories			(1,808	)		(4,068	)
Other current assets			158			(1,149	)
Other assets			19			23
Accounts payable			3,036			(132	)
Accrued expenses and deferrred compensation			(4,911	)		(3,870	)
Income taxes			375			159
Net cash provided by operating activities			5,752			1,055
Cash flows from investing activities:
Capital expenditures			(3,139	)		(3,336	)
Proceeds from the sale of equipment			-			104
Proceeds from the sale of short-term investments			2,000			3,612
Purchase of short-term investments			(21	)		(33	)
Purchase of long-term investments			(559	)		(478	)
Net cash used in investing activities			(1,719	)		(131	)
Cash flows from financing activities:
Proceeds from line of credit			7,000			-
Excess tax benefits related to stock-based compensation			167			788
Dividends paid			(3,445	)		(5,676	)
Proceeds from common stock issued			11			56
Net cash provided by (used in) financing activities			3,733			(4,832	)
Effect of exchange rate changes on cash and cash equivalents			(4	)		116
Increase (decrease) in cash and cash equivalents			7,762			(3,792	)
Cash and cash equivalents at beginning of period			37,787			29,725
Cash and cash equivalents at end of period		$	45,549			25,933
Free Cash Flow (1)		$	2,217			(1,751	)
(1)  Free Cash Flow reconciliation is as follows:
		FY 2017			FY 2016
A)	Net cash provided by operating activities	$	5,752			1,055
B)	Minus:  Capital Expenditures		(3,139	)		(3,336	)
C)	Add:     Proceeds from the sale of equipment		-			104
D)	Add:     Excess tax benefits related to stock-based compensation		167			788
E)	Minus:  Purchase of long-term investments		(559	)		(478	)
F)	Effects of exchange rate changes on cash and cash equivalents		(4	)		116
		$	2,217			(1,751	)

Page 4 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED JULY 31, 2016 AND AUGUST 2, 2015
(Unaudited)
(Amounts in thousands)
	THREE MONTHS ENDED
	Amounts									Percent of Total Sales
	July 31,			August 2,			% Over			July 31,			August 2,
Net Sales by Segment	2016			2015			(Under)			2016			2015
Mattress Fabrics	$	50,530			47,808			5.7	%		62.6	%		59.6	%
Upholstery Fabrics		30,152			32,377			(6.9	)%		37.4	%		40.4	%
Net Sales	$	80,682			80,185			0.6	%		100.0	%		100.0	%
Gross Profit by Segment										Gross Profit Margin
Mattress Fabrics	$	11,901			9,925			19.9	%		23.6	%		20.8	%
Upholstery Fabrics		6,518			6,277			3.8	%		21.6	%		19.4	%
Gross Profit		18,419			16,202			13.7	%		22.8	%		20.2	%
Selling, General and Administrative expenses by Segment										Percent of Sales
Mattress Fabrics	$	3,499			2,923			19.7	%		6.9	%		6.1	%
Upholstery Fabrics		3,534			3,595			(1.7	)%		11.7	%		11.1	%
Unallocated Corporate expenses		2,713			2,223			22.0	%		3.4	%		2.8	%
Selling, General and Administrative Expenses		9,746			8,741			11.5	%		12.1	%		10.9	%
Operating Income (loss) by Segment										Operating Income (Loss) Margin
Mattress Fabrics	$	8,402			7,003			20.0	%		16.6	%		14.6	%
Upholstery Fabrics		2,984			2,681			11.3	%		9.9	%		8.3	%
Unallocated corporate expenses		(2,713	)		(2,223	)		22.0	%		(3.4	)%		(2.8	)%
Operating Income		8,673			7,461			16.2	%		10.7	%		9.3	%
Return on Capital (1)
Mattress Fabrics		44.4	%		39.5	%
Upholstery Fabrics		69.7	%		65.0	%
Unallocated Corporate		N/A			N/A
Consolidated		37.5	%		34.3	%
Capital Employed (2)
Mattress Fabrics		76,646			71,349			7.4	%
Upholstery Fabrics		17,221			18,946			(9.1	)%
Unallocated Corporate		732			298			N/A
Consolidated		94,599			90,593			4.4	%
Depreciation expense by Segment
Mattress Fabrics	$	1,556			1,359			14.5	%
Upholstery Fabrics		205			196			4.6	%
Depreciation expense		1,761			1,555			13.2	%

Notes:
(1)	See pages 6 and 7 of this financial information release for calculations.
(2)	The capital employed balances are as of July 31, 2016 and August 2, 2015.

Page 5 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED JULY 31, 2016 AND AUGUST 2, 2015
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
	Quarter Ended
													Trailing 12
													Months
	11/1/2015			1/31/2016			5/1/2016			7/31/2016			7/31/2016
Net income	$	3,771		$	4,862		$	3,601		$	5,313		$	17,547
Income taxes		2,373			2,317			3,566			3,233			11,489
Interest income, net		(69	)		(38	)		(26	)		(25	)		(158	)
Depreciation and amortization expense		1,668			1,741			1,830			1,813			7,052
Stock based compensation		1,074			625			778			761			3,238
Adjusted EBITDA	$	8,817		$	9,507		$	9,749		$	11,095		$	39,168
	Quarter Ended
													Trailing 12
													Months
	11/2/2014			2/1/2015			5/3/2015			8/2/2015			8/2/2015
Net income	$	3,001		$	3,812		$	4,913		$	4,701		$	16,427
Income taxes		1,889			2,110			1,772			2,707			8,478
Interest income, net		(153	)		(202	)		(128	)		(42	)		(525	)
Depreciation and amortization expense		1,460			1,478			1,576			1,602			6,116
Stock based compensation		245			191			304			265			1,005
Adjusted EBITDA	$	6,442		$	7,389		$	8,437		$	9,233		$	31,501
% Over (Under)		36.9	%		28.7	%		15.6	%		20.2	%		24.3	%

Page 6 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED JULY 31, 2016
(Amounts in Thousands)
(Unaudited)
	Operating Income
	Three Months			Average			Return on
	Ended			Capital			Avg. Capital
	July 31, 2016 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	8,402		$	75,642			44.4	%
Upholstery Fabrics		2,984			17,123			69.7	%
(less: Unallocated Corporate)		(2,713	)		(287	)		N/A
Total	$	8,673		$	92,478			37.5	%
Average Capital Employed	As of the three Months Ended July 31, 2016												As of the three Months Ended May 1, 2016
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets		92,959			33,550			56,851			183,360			94,878			29,463			50,801			175,142
Total liabilities		(16,313	)		(16,329	)		(19,283	)		(51,925	)		(20,241	)		(12,438	)		(13,651	)		(46,330	)
Subtotal	$	76,646		$	17,221		$	37,568		$	131,435		$	74,637		$	17,025		$	37,150		$	128,812
Less:
Cash and cash equivalents		-			-			(45,549	)		(45,549	)		-			-			(37,787	)		(37,787	)
Short-term investments		-			-			(2,434	)		(2,434	)		-			-			(4,359	)		(4,359	)
Long-term investments		-			-			(4,611	)		(4,611	)		-			-			(4,025	)		(4,025	)
Income taxes receivable		-			-			-			-			-			-			(155	)		(155	)
Deferred income taxes - non-current		-			-			(1,942	)		(1,942	)		-			-			(2,319	)		(2,319	)
Income taxes payable - current		-			-			358			358			-			-			180			180
Income taxes payable - long-term		-			-			3,779			3,779			-			-			3,841			3,841
Deferred income taxes - non-current		-			-			1,532			1,532			-			-			1,483			1,483
Line of credit		-			-			7,000			7,000			-			-			-			-
Deferred compensation		-			-			5,031			5,031			-			-			4,686			4,686
Total Capital Employed	$	76,646		$	17,221		$	732		$	94,599		$	74,637		$	17,025		$	(1,305	)	$	90,357
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	75,642		$	17,123		$	(287	)	$	92,478

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 31, 2016 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, noncurrent deferred tax assets and liabilities, income taxes receivable and payable,
	line of credit, and deferred compensation.
(3)	Average capital employed was computed using the two periods ending July 31, 2016 and May 1, 2016.

Page 7 of 8

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE THREE MONTHS ENDED AUGUST 2, 2015
(Amounts in Thousands)
(Unaudited)
	Operating Income
	Three Months			Average			Return on
	Ended			Capital			Avg. Capital
	August 2, 2015 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	7,003		$	70,911			39.5	%
Upholstery Fabrics		2,681			16,486			65.0	%
(less: Unallocated Corporate)		(2,223	)		(488	)		N/A
Total	$	7,461		$	86,909			34.3	%
Average Capital Employed	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			41,471			166,880			89,066			32,838			49,396			171,300
Total liabilities		(20,265	)		(14,849	)		(13,041	)		(48,155	)		(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		-			-			(4,406	)		(4,406	)		-			-			(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		-			-			1,072			1,072			-			-			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)	$	70,911		$	16,486		$	(488	)	$	86,909

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 2, 2015 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, 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 two periods ending August 2, 2015 and May 3, 2015.

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 JULY 31, 2016 AND AUGUST 2, 2015
Unaudited
(Amounts in Thousands)
		THREE MONTHS ENDED
		Amounts
		July 31,			August 2,
		2016			2015
Consolidated Effective GAAP Income Tax Rate	(1)		37.8	%		36.5	%
Non-Cash U.S. Income Tax Expense			(19.6	)%		(20.5	)%
Non-Cash Foreign Income Tax Expense			(0.4	)%		(0.3	)%
Consolidated Adjusted Effective Income Tax Rate	(2)		17.8	%		15.7	%

	THREE MONTHS ENDED
	As reported						As Adjusted		As reported					As Adjusted
	July 31,						July 31,		August 2,					August 2,
	2016			Adjustments			2016		2015		Adjustments			2015
Income before income taxes	$	8,546					$	8,546	$	7,408				$	7,408
Income taxes (3)		3,233		$	(1,712	)		1,521		2,707	$	(1,544	)		1,163
Net income	$	5,313	��	$	1,712		$	7,025	$	4,701	$	1,544		$	6,245
Net income per share-basic	$	0.43		$	0.14		$	0.57	$	0.38	$	0.13		$	0.51
Net income per share-diluted	$	0.43		$	0.14		$	0.56	$	0.38	$	0.12		$	0.50
Average shares outstanding-basic		12,286			12,286			12,286		12,277		12,277			12,277
Average shares outstanding-diluted		12,463			12,463			12,463		12,456		12,456			12,456

(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.