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

Exhibit 99(b)
Page 1 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF NET INCOME
FOR THREE AND SIX MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016
(UNAUDITED)
(Amounts in Thousands, Except for Per Share Data)
	THREE MONTHS ENDED
	Amounts									Percent of Sales
	October 29,			October 30,			% Over			October 29,			October 30,
	2017			2016			(Under)			2017			2016
Net sales	$	80,698			75,343			7.1	%		100.0	%		100.0	%
Cost of sales		64,894			58,442			11.0	%		80.4	%		77.6	%
Gross profit		15,804			16,901			(6.5	)%		19.6	%		22.4	%
Selling, general and
administrative expenses		9,415			9,602			(1.9	)%		11.7	%		12.7	%
Income from operations		6,389			7,299			(12.5	)%		7.9	%		9.7	%
Interest expense		37			-			100.0	%		0.0	%		0.0	%
Interest income		(128	)		(15	)		753.3	%		(0.2	)%		(0.0	)%
Other expense		321			155			107.1	%		0.4	%		0.2	%
Income before income taxes		6,159			7,159			(14.0	)%		7.6	%		9.5	%
Income taxes*		2,108			2,684			(21.5	)%		34.2	%		37.5	%
Loss from investment in unconsolidated joint venture		75			-			100.0	%		0.1	%		0.0	%
Net income	$	3,976			4,475			(11.2	)%		4.9	%		5.9	%
Net income per share-basic	$	0.32		$	0.36			(11.1	)%
Net income per share-diluted	$	0.32		$	0.36			(11.1	)%
Average shares outstanding-basic		12,440			12,308			1.1	%
Average shares outstanding-diluted		12,580			12,507			0.6	%
	SIX MONTHS ENDED
	Amounts									Percent of Sales
	October 29,			October 30,			% Over			October 29,			October 30,
	2017			2016			(Under)			2017			2016
Net sales	$	160,230			156,026			2.7	%		100.0	%		100.0	%
Cost of sales		127,962			120,705			6.0	%		79.9	%		77.4	%
Gross profit		32,268			35,321			(8.6	)%		20.1	%		22.6	%
Selling, general and
administrative expenses		18,916			19,348			(2.2	)%		11.8	%		12.4	%
Income from operations		13,352			15,973			(16.4	)%		8.3	%		10.2	%
Interest expense		37			-			100.0	%		0.0	%		0.0	%
Interest income		(259	)		(40	)		547.5	%		(0.2	)%		(0.0	)%
Other expense		674			307			119.5	%		0.4	%		0.2	%
Income before income taxes		12,900			15,706			(17.9	)%		8.1	%		10.1	%
Income taxes*		3,748			5,917			(36.7	)%		29.1	%		37.7	%
Loss from investment in unconsolidated joint venture		193			-			100.0	%		0.1	%		0.0	%
Net income	$	8,959			9,789			(8.5	)%		5.6	%		6.3	%
Net income per share-basic	$	0.72		$	0.80			(10.0	)%
Net income per share-diluted	$	0.71		$	0.78			(9.0	)%
Average shares outstanding-basic		12,420			12,297			1.0	%
Average shares outstanding-diluted		12,613			12,495			0.9	%
* 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 BALANCE SHEETS
OCTOBER 29, 2017, OCTOBER 30, 2016, AND APRIL 30, 2017
Unaudited
(Amounts in Thousands)
	Amounts				Increase
	October 29,		October 30,		(Decrease)						* April 30,
	2017		2016		Dollars			Percent			2017
Current assets
Cash and cash equivalents	$	15,739		13,910		1,829			13.1	%		20,795
Short-term investments - Available for Sale		2,478		2,430		48			2.0	%		2,443
Short-term investments - Held-To-Maturity		4,015		-		4,015			100.0	%		-
Accounts receivable		24,220		19,039		5,181			27.2	%		24,577
Inventories		50,209		45,954		4,255			9.3	%		51,482
Other current assets		2,263		1,675		588			35.1	%		2,894
Total current assets		98,924		83,008		15,916			19.2	%		102,191
Property, plant & equipment, net		52,530		45,537		6,993			15.4	%		51,651
Goodwill		11,462		11,462		-			0.0	%		11,462
Deferred income taxes		491		581		(90	)		(15.5	)%		419
Long-term Investments - Held-To-Maturity		26,853		31,050		(4,197	)		(13.5	)%		30,945
Long-term Investments - Rabbi Trust		6,921		4,994		1,927			38.6	%		5,466
Investment in unconsolidated joint venture		1,522		-		1,522			100.0	%		1,106
Other assets		2,340		2,495		(155	)		(6.2	)%		2,394
Total assets	$	201,043		179,127		21,916			12.2	%		205,634
Current liabilities
Accounts payable - trade	$	24,600		20,183		4,417			21.9	%		29,101
Accounts payable - capital expenditures		3,209		3,000		209			7.0	%		4,767
Accrued expenses		7,364		8,878		(1,514	)		(17.1	)%		11,947
Income taxes payable - current		692		513		179			34.9	%		287
Total current liabilities		35,865		32,574		3,291			10.1	%		46,102
Accounts payable - capital expenditures		-		-		-			0.0	%		1,322
Income taxes payable - long-term		487		3,734		(3,247	)		(87.0	)%		467
Deferred income taxes		4,641		1,699		2,942			173.2	%		3,593
Deferred compensation		6,970		5,171		1,799			34.8	%		5,520
Total liabilities		47,963		43,178		4,785			11.1	%		57,004
Shareholders' equity		153,080		135,949		17,131			12.6	%		148,630
Total liabilities and
shareholders' equity	$	201,043		179,127		21,916			12.2	%		205,634
Shares outstanding		12,435		12,312		123			1.0	%		12,357
*  Derived from audited financial statements.

Page 3 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
SUMMARY OF CASH AND INVESTMENTS
OCTOBER 29, 2017 AND OCTOBER 30, 2016, AND APRIL 30, 2017
Unaudited
(Amounts in Thousands)
	Amounts
	October 29,		October 30,		April 30,
	2017		2016		2017*
Cash and cash equivalents	$	15,739	$	13,910	$	20,795
Short-term investments - Available for Sale		2,478		2,430		2,443
Short-term investments - Held-To-Maturity		4,015		-		-
Long-term investments - Held-To-Maturity		26,853		31,050		30,945
Total Cash and Investments	$	49,085	$	47,390	$	54,183

* Derived from audited financial statements.

Page 4 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016
Unaudited
(Amounts in Thousands)
	SIX MONTHS ENDED
	Amounts
	October 29,			October 30,
	2017			2016
Cash flows from operating activities:
Net income	$	8,959			9,789
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		3,713			3,511
Amortization of assets		166			80
Stock-based compensation		1,558			1,657
Deferred income taxes		976			2,121
Realized loss on sale of short-term investments (Available for Sale)		-			12
Loss on sale of equipment		-			9
Loss from investment in unconsolidated joint venture		193			-
Foreign currency exchange loss (gain)		42			(53	)
Changes in assets and liabilities:
Accounts receivable		561			4,142
Inventories		1,597			219
Other current assets		723			751
Other assets		(35	)		-
Accounts payable		(5,074	)		(3,274	)
Accrued expenses and deferrred compensation		(3,607	)		(2,469	)
Income taxes		406			554
Net cash provided by operating activities		10,178			17,049		(2)
Cash flows from investing activities:
Capital expenditures		(4,978	)		(6,308	)
Investment in unconsolidated joint venture		(609	)		-
Proceeds from the sale of short-term investments (Available for Sale)		-			2,000
Purchase of short-term investments (Available for Sale)		(24	)		(23	)
Purchase of long-term investments (Held-To-Maturity)		-			(31,050	)
Proceeds from the sale of long-term investments (Rabbi Trust)		54			-
Purchase of long-term investments (Rabbi Trust)		(1,457	)		(929	)
Proceeds from the sale of equipment		6			-
Net cash used in investing activities		(7,008	)		(36,310	)
Cash flows from financing activities:
Proceeds from line of credit		10,000			7,000
Payments on line of credit		(10,000	)		(7,000	)
Payments on vendor-financed capital expenditures		(2,500	)		-
Dividends paid		(4,603	)		(4,307	)
Common stock surrendered for withholding taxes payable		(1,147	)		(280	)
Payments of debt issuance costs		-			(2	)
Proceeds from common stock issued		5			11
Net cash used in financing activities		(8,245	)		(4,578	)	(2)
Effect of exchange rate changes on cash and cash equivalents		19			(38	)
Decrease in cash and cash equivalents		(5,056	)		(23,877	)
Cash and cash equivalents at beginning of period		20,795			37,787
Cash and cash equivalents at end of period	$	15,739			13,910
Free Cash Flow (1)	$	713			9,774		(2)

(1)  Free Cash Flow reconciliation is as follows:
		FY 2018			FY 2017
A)	Net cash provided by operating activities	$	10,178			17,049
B)	Minus:  Capital Expenditures		(4,978	)		(6,308	)
C)	Minus:  Investment in unconsolidated joint venture		(609	)		-
D)	Plus:      Proceeds from the sale of equipment		6			-
E)	Minus:  Payments on vendor-financed capital expenditures		(2,500	)		-
F)	Plus:      Proceeds from the sale of long-term investments (Rabbi Trust)		54			-
G)	Minus:  Purchase of long-term investments (Rabbi Trust)		(1,457	)		(929	)
H)	Effects of exchange rate changes on cash and cash equivalents		19			(38	)
		$	713			9,774

(2)  During the first quarter of fiscal 2018, we adopted ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." Accordingly, we reclassified certain amounts on our Statement of Cash Flows for the six months ended October 30, 2016 to conform to the current year's presentation. As a result, our net cash provided by operating activities increased by $447 which was fully offset by a corresponding decrease of $447 to our net cash provided by financing activities. Additionally, our free cash flow increased $280. 

Page 5 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE THREE MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016
(Unaudited)
(Amounts in thousands)
	THREE MONTHS ENDED
	Amounts									Percent of Total Sales
	October 29,			October 30,			% Over			October 29,			October 30,
Net Sales by Segment	2017			2016			(Under)			2017			2016
Mattress Fabrics	$	48,601			45,527			6.8	%		60.2	%		60.4	%
Upholstery Fabrics		32,097			29,816			7.7	%		39.8	%		39.6	%
Net Sales	$	80,698			75,343			7.1	%		100.0	%		100.0	%
Gross Profit by Segment										Gross Profit Margin
Mattress Fabrics	$	9,730			10,756			(9.5	)%		20.0	%		23.6	%
Upholstery Fabrics		6,074			6,145			(1.2	)%		18.9	%		20.6	%
Gross Profit	$	15,804			16,901			(6.5	)%		19.6	%		22.4	%
Selling, General and Administrative Expenses  by Segment										Percent of Sales
Mattress Fabrics	$	3,168			3,296			(3.9	)%		6.5	%		7.2	%
Upholstery Fabrics		3,700			3,652			1.3	%		11.5	%		12.2	%
Unallocated Corporate expenses		2,547			2,654			(4.0	)%		3.2	%		3.5	%
Selling, General and Administrative Expenses	$	9,415			9,602			(1.9	)%		11.7	%		12.7	%
Operating Income (loss) by Segment										Operating Income (Loss) Margin
Mattress Fabrics	$	6,562			7,460			(12.0	)%		13.5	%		16.4	%
Upholstery Fabrics		2,374			2,493			(4.8	)%		7.4	%		8.4	%
Unallocated corporate expenses		(2,547	)		(2,654	)		(4.0	)%		(3.2	)%		(3.5	)%
Operating income	$	6,389			7,299			(12.5	)%		7.9	%		9.7	%
Depreciation by Segment
Mattress Fabrics	$	1,698			1,545			9.9	%
Upholstery Fabrics		207			206			0.5	%
Depreciation	$	1,905			1,751			8.8	%

Page 6 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
STATEMENTS OF OPERATIONS BY SEGMENT
FOR THE SIX MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016
(Unaudited)
(Amounts in thousands)
	SIX MONTHS ENDED
	Amounts									Percent of Total Sales
	October 29,			October 30,			% Over			October 29,			October 30,
Net Sales by Segment	2017			2016			(Under)			2017			2016
Mattress Fabrics	$	97,030			96,057			1.0	%		60.6	%		61.6	%
Upholstery Fabrics		63,200			59,969			5.4	%		39.4	%		38.4	%
Net Sales	$	160,230			156,026			2.7	%		100.0	%		100.0	%
Gross Profit by Segment										Gross Profit Margin
Mattress Fabrics	$	19,495			22,657			(14.0	)%		20.1	%		23.6	%
Upholstery Fabrics		12,773			12,664			0.9	%		20.2	%		21.1	%
Gross Profit	$	32,268			35,321			(8.6	)%		20.1	%		22.6	%
Selling, General and Administrative Expenses  by Segment										Percent of Sales
Mattress Fabrics	$	6,559			6,795			(3.5	)%		6.8	%		7.1	%
Upholstery Fabrics		7,511			7,185			4.5	%		11.9	%		12.0	%
Unallocated Corporate expenses		4,846			5,368			(9.7	)%		3.0	%		3.4	%
Selling, General, and Administrative Expenses	$	18,916			19,348			(2.2	)%		11.8	%		12.4	%
Operating Income (loss)  by Segment										Operating Income (Loss) Margin
Mattress Fabrics	$	12,936			15,862			(18.4	)%		13.3	%		16.5	%
Upholstery Fabrics		5,262			5,479			(4.0	)%		8.3	%		9.1	%
Unallocated corporate expenses		(4,846	)		(5,368	)		(9.7	)%		(3.0	)%		(3.4	)%
Operating income	$	13,352			15,973			(16.4	)%		8.3	%		10.2	%
Return on Capital (1)
Mattress Fabrics		29.6	%		41.8	%
Upholstery Fabrics		59.3	%		62.7	%
Unallocated Corporate		N/A			N/A
Consolidated		25.3	%		34.3	%
Capital Employed (2)
Mattress Fabrics	$	91,367			76,201			19.9	%
Upholstery Fabrics		17,749			18,181			(2.4	)%
Unallocated Corporate		257			(281	)		N/A
Consolidated	$	109,373			94,101			16.2	%
Depreciation by Segment
Mattress Fabrics	$	3,310			3,101			6.7	%
Upholstery Fabrics		403			410			(1.7	)%
Depreciation	$	3,713			3,511			5.8	%
Notes:
(1) See pages 8 and 9 of this financial information  release for calculations.
(2) The capital employed balances are as of October 29, 2017 and October 30, 2016.

Page 7 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA
FOR THE TWELVE MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
	Quarter Ended
													Trailing 12
													Months
	1/29/2017			4/30/2017			7/30/2017			10/29/2017			10/29/2017
Net income	$	6,347		$	6,198		$	4,984		$	3,976		$	21,505
Income taxes		643			778			1,640			2,108			5,169
Interest income, net		(124	)		(134	)		(131	)		(91	)		(480	)
Depreciation and amortization expense		1,875			1,863			1,889			1,990			7,617
Stock based compensation		962			739			757			801			3,259
Adjusted EBITDA	$	9,703		$	9,444		$	9,139		$	8,784		$	37,070
	Quarter Ended
													Trailing 12
													Months
	1/31/2016			5/1/2016			7/31/2016			10/30/2016			10/30/2016
Net income	$	4,862		$	3,601		$	5,313		$	4,475		$	18,251
Income taxes		2,317			3,566			3,233			2,684			11,800
Interest income, net		(38	)		(26	)		(25	)		(15	)		(104	)
Depreciation and amortization expense		1,741			1,830			1,813			1,778			7,162
Stock based compensation		625			778			761			896			3,060
Adjusted EBITDA	$	9,507		$	9,749		$	11,095		$	9,818		$	40,169
% Over (Under)		2.1	%		-3.1	%		-17.6	%		-10.5	%		-7.7	%

Page 8 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE SIX MONTHS ENDED OCTOBER 29, 2017
(Amounts in Thousands)
(Unaudited)
	Operating
	Income
	Six Months				Average			Return on
	Ended				Capital			Avg. Capital
	October 29, 2017 (1)				Employed (3)			Employed (2)
Mattress Fabrics		$	12,936			$	87,541		29.6	%
Upholstery Fabrics			5,262				17,754		59.3	%
(less: Unallocated Corporate)			(4,846	)			46		N/A
Total		$	13,352			$	105,341		25.3	%

Average Capital Employed	As of the three Months Ended October 29, 2017												As of the three Months Ended July 30, 2017												As of the three Months Ended April 30, 2017
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets	$	107,517			34,974			58,552			201,043		$	112,112			34,491			61,301			207,904		$	111,041			32,255			62,338			205,634
Total liabilities		(16,150	)		(17,225	)		(14,588	)		(47,963	)		(24,277	)		(14,983	)		(18,967	)		(58,227	)		(27,619	)		(16,249	)		(13,136	)		(57,004	)
Subtotal	$	91,367		$	17,749		$	43,964		$	153,080		$	87,835		$	19,508		$	42,334		$	149,677		$	83,422		$	16,006		$	49,202		$	148,630
Less:
Cash and cash equivalents		-			-			(15,739	)		(15,739	)		-			-			(18,322	)		(18,322	)		-			-			(20,795	)		(20,795	)
Short-term investments - Available for Sale		-			-			(2,478	)		(2,478	)		-			-			(2,469	)		(2,469	)		-			-			(2,443	)		(2,443	)
Short-term investments - Held-To-Maturity		-			-			(4,015	)		(4,015	)		-			-			-			-			-			-			-			-
Long-term investments - Held-To-Maturity		-			-			(26,853	)		(26,853	)		-			-			(30,907	)		(30,907	)		-			-			(30,945	)		(30,945	)
Long-term investments - Rabbi Trust		-			-			(6,921	)		(6,921	)		-			-			(6,714	)		(6,714	)		-			-			(5,466	)		(5,466	)
Deferred income taxes - non-current		-			-			(491	)		(491	)		-			-			(436	)		(436	)		-			-			(419	)		(419	)
Income taxes payable - current		-			-			692			692			-			-			884			884			-			-			287			287
Income taxes payable - long-term		-			-			487			487			-			-			487			487			-			-			467			467
Deferred income taxes - non-current		-			-			4,641			4,641			-			-			4,253			4,253			-			-			3,593			3,593
Line of credit		-			-			-			-			-			-			5,000			5,000			-			-			-			-
Deferred compensation		-			-			6,970			6,970			-			-			6,769			6,769			-			-			5,520			5,520
Total Capital Employed	$	91,367		$	17,749		$	257		$	109,373		$	87,835		$	19,508		$	879		$	108,222		$	83,422		$	16,006		$	(999	)	$	98,429
	Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total
Average Capital Employed (3)	$	87,541		$	17,754		$	46		$	105,341

Notes:
(1)	See reconciliation per page 6 of this financial information release.
(2)	Return on average capital employed represents operating income for the six month period ending October 29, 2017 times two 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 - Available for Sale, short-term investments - Held-To-Maturity, long-term investments - Held-To-Maturity, long-term investments - Rabbi Trust, noncurrent deferred income tax assets and liabilities, income taxes receivable and payable, line of credit, and deferred compensation.
(3)	Average capital employed was computed using the quarterly three periods ending October 29, 2017, July 30, 2017 and April 30, 2017.

Page 9 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
RETURN ON CAPITAL EMPLOYED BY SEGMENT
FOR THE SIX MONTHS ENDED OCTOBER 30, 2016
(Amounts in Thousands)
(Unaudited)
	Operating
	Income
	Six Months			Average			Return on
	Ended			Capital			Avg. Capital
	October 30, 2016 (1)			Employed (3)			Employed (2)
Mattress Fabrics	$	15,862		$	75,828			41.8	%
Upholstery Fabrics		5,479			17,476			62.7	%
(less: Unallocated Corporate)		(5,368	)		(285	)		N/A
Total	$	15,973		$	93,019			34.3	%

Average Capital Employed	As of the three Months Ended October 30, 2016												As of the three Months Ended July 31, 2016												As of the three Months Ended May 1, 2016
	Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated						Mattress			Upholstery			Unallocated
	Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total			Fabrics			Fabrics			Corporate			Total
Total assets	$	94,700			29,361			55,066			179,127		$	92,959			33,550			56,851			183,360		$	94,878			29,463			50,801			175,142
Total liabilities		(18,499	)		(11,180	)		(13,499	)		(43,178	)		(16,313	)		(16,329	)		(19,283	)		(51,925	)		(20,241	)		(12,438	)		(13,651	)		(46,330	)
Subtotal	$	76,201		$	18,181		$	41,567		$	135,949		$	76,646		$	17,221		$	37,568		$	131,435		$	74,637		$	17,025		$	37,150		$	128,812
Less:
Cash and cash equivalents		-			-			(13,910	)		(13,910	)		-			-			(45,549	)		(45,549	)		-			-			(37,787	)		(37,787	)
Short-term investments - Available for Sale		-			-			(2,430	)		(2,430	)		-			-			(2,434	)		(2,434	)		-			-			(4,359	)		(4,359	)
Long-term investments - Held-To-Maturity		-			-			(31,050	)		(31,050	)		-			-			-			-			-			-			-			-
Long-term investments - Rabbi Trust		-			-			(4,994	)		(4,994	)		-			-			(4,611	)		(4,611	)		-			-			(4,025	)		(4,025	)
Income taxes receivable		-			-			-			-			-			-			-			-			-			-			(155	)		(155	)
Deferred income taxes - non-current		-			-			(581	)		(581	)		-			-			(1,942	)		(1,942	)		-			-			(2,319	)		(2,319	)
Income taxes payable - current		-			-			513			513			-			-			358			358			-			-			180			180
Income taxes payable - long-term		-			-			3,734			3,734			-			-			3,779			3,779			-			-			3,841			3,841
Deferred income taxes - non-current		-			-			1,699			1,699			-			-			1,532			1,532			-			-			1,483			1,483
Line of credit		-			-			-			-			-			-			7,000			7,000			-			-			-			-
Deferred compensation		-			-			5,171			5,171			-			-			5,031			5,031			-			-			4,686			4,686
Total Capital Employed	$	76,201		$	18,181		$	(281	)	$	94,101		$	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)	$	75,828		$	17,476		$	(285	)	$	93,019

Notes:
(1)	See reconciliation per page 6 of this financial information release.
(2)	Return on average capital employed represents operating income for the six month period ending October 30, 2016 times two 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 - available for sale, long-term investments - Held-To-Maturity, long-term investments - Rabbi Trust, 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 three quarterly periods ending October 30, 2016, July 31, 2016 and May 1, 2016.

Page 10 of 10

CULP, INC. FINANCIAL INFORMATION RELEASE
CONSOLIDATED ADJUSTED EFFECTIVE INCOME TAX RATE
FOR THE SIX MONTHS ENDED OCTOBER 29, 2017 AND OCTOBER 30, 2016
Unaudited
(Amounts in Thousands)
		SIX MONTHS ENDED
		Amounts
		October 29,			October 30,
		2017			2016
Consolidated Effective GAAP Income Tax Rate	(1)		29.1	%		37.7	%
Non-Cash U.S. Income Tax Expense			(19.1	)%		(19.6	)%
Excess Income Tax Benefits Related To Stock-Based
Compensation			4.3	%		-
Other Non-Cash Foreign Income Tax Expense			(0.1	)%		(0.3	)%
Consolidated Adjusted Effective Income Tax Rate	(2)		14.2	%		17.8	%

(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.