<SEC-DOCUMENT>0001157523-20-000214.txt : 20200218
<SEC-HEADER>0001157523-20-000214.hdr.sgml : 20200218
<ACCEPTANCE-DATETIME>20200218071013
ACCESSION NUMBER:		0001157523-20-000214
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20200214
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Material Impairments
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20200218
DATE AS OF CHANGE:		20200218

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CULP INC
		CENTRAL INDEX KEY:			0000723603
		STANDARD INDUSTRIAL CLASSIFICATION:	BROADWOVEN FABRIC MILLS, COTTON [2211]
		IRS NUMBER:				561001967
		STATE OF INCORPORATION:			NC
		FISCAL YEAR END:			0503

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12597
		FILM NUMBER:		20623468

	BUSINESS ADDRESS:	
		STREET 1:		1823 EASTCHESTER DRIVE
		CITY:			HIGH POINT
		STATE:			NC
		ZIP:			27265
		BUSINESS PHONE:		3368895161

	MAIL ADDRESS:	
		STREET 1:		P O BOX 2686
		CITY:			HIGH POINT
		STATE:			NC
		ZIP:			27265
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>a52174910.htm
<DESCRIPTION>CULP, INC. 8-K
<TEXT>
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    <div style="text-align: center; font-size: 12pt; font-weight: bold;">UNITED STATES</div>
    <div style="text-align: center; font-size: 12pt; font-weight: bold;">SECURITIES AND EXCHANGE COMMISSION</div>
    <div style="text-align: center; font-size: 12pt; font-weight: bold;">WASHINGTON, D.C.&#160; 20549</div>
    <div><br>
    </div>
    <div style="text-align: center; font-size: 14pt; font-weight: bold;">FORM 8-K</div>
    <div><br>
    </div>
    <div style="text-align: center; font-size: 12pt; font-weight: bold;">CURRENT REPORT PURSUANT</div>
    <div style="text-align: center; font-size: 12pt; font-weight: bold;">TO SECTION 13 OR 15(d) OF THE</div>
    <div style="text-align: center; font-size: 12pt; font-weight: bold;">SECURITIES EXCHANGE ACT OF 1934</div>
    <div><br>
    </div>
    <div style="text-align: center; font-size: 12pt;"><u>Date of Report (Date of earliest event reported) February 14, 2020</u></div>
    <div><br>
    </div>
    <div style="text-align: center; font-size: 18pt; font-weight: bold;"><u>Culp, Inc.</u></div>
    <div style="text-align: center;">(Exact Name of Registrant as Specified in its Charter)</div>
    <div><br>
    </div>
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            <div style="text-align: center; font-size: 12pt;">North Carolina</div>
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          <td style="width: 2%; vertical-align: top;">&#160;</td>
          <td style="width: 32%; vertical-align: top; border-bottom: 2px solid rgb(0, 0, 0);">
            <div style="text-align: center; font-size: 12pt;">1-12597</div>
          </td>
          <td style="width: 2%; vertical-align: top;">&#160;</td>
          <td style="width: 32%; vertical-align: top; border-bottom: 2px solid rgb(0, 0, 0);">
            <div style="text-align: center; font-size: 12pt;">56-1001967</div>
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            <div style="text-align: center;">(State or Other Jurisdiction</div>
            <div style="text-align: center;">of Incorporation)</div>
          </td>
          <td style="width: 2%; vertical-align: top;">&#160;</td>
          <td style="width: 32%; vertical-align: top;">
            <div style="text-align: center;">(Commission File Number)</div>
          </td>
          <td style="width: 2%; vertical-align: top;">&#160;</td>
          <td style="width: 32%; vertical-align: top;">
            <div style="text-align: center;">(I.R.S. Employer</div>
            <div style="text-align: center;">Identification No.)</div>
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    <table cellspacing="0" cellpadding="0" border="0" align="center" id="z5cbaa3cf15f74c9590bd8212c30b14ea" style="border-collapse: collapse; width: 50%; color: #000000; font-family: 'Times New Roman', Times, serif; font-size: 10pt; text-align: left;">

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            <div style="text-align: center; font-size: 12pt;">1823 Eastchester Drive</div>
            <div style="text-align: center; font-size: 12pt;">High Point, North Carolina&#160; 27265</div>
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          <td style="width: 100%; vertical-align: top;">
            <div style="text-align: center;">(Address of Principal Executive Offices)</div>
            <div style="text-align: center;">(Zip Code)</div>
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    <table cellspacing="0" cellpadding="0" border="0" align="center" id="z57d8b169360349b18fbeb5362482c2e8" style="border-collapse: collapse; width: 60%; color: #000000; font-family: 'Times New Roman', Times, serif; font-size: 10pt; text-align: left;">

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            <div style="text-align: center; font-size: 12pt;">(336) 889-5161</div>
          </td>
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          <td style="width: 100%; vertical-align: top;">
            <div style="text-align: center; font-size: 12pt;">(<font style="font-size: 10pt;">Registrant&#8217;s Telephone Number, Including Area Code)</font></div>
          </td>
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            <div style="text-align: center; font-size: 12pt;">Not Applicable</div>
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            <div style="text-align: center;">(Former name or address, if changed from last report)</div>
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    <div><br>
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    <div style="text-align: justify; text-indent: 36pt;">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (<font style="font-style: italic;">see</font> General Instruction A.2. below):</div>
    <div><br>
    </div>
    <div style="text-align: justify; text-indent: 36pt;">&#9744;<font class="HorizontalTab" style="width: 9pt; font-size: 1px; display: inline-block;"> </font>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</div>
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    <div style="text-indent: 36pt;"> &#9744;<font class="HorizontalTab" style="width: 9pt; font-size: 1px; display: inline-block;"> </font>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) </div>
    <div><br>
    </div>
    <div style="text-indent: 36pt;">&#9744;<font class="HorizontalTab" style="width: 9pt; font-size: 1px; display: inline-block;"> </font>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) </div>
    <div><br>
    </div>
    <div style="text-indent: 36pt;">&#9744;<font class="HorizontalTab" style="width: 9pt; font-size: 1px; display: inline-block;"> </font>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </div>
    <div><br>
    </div>
    <div style="text-align: justify; color: rgb(0, 0, 0);">Securities registered pursuant to Section 12(b) of the Act:</div>
    <div><br>
    </div>
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            <div style="text-align: center; color: rgb(0, 0, 0);">Title of each class</div>
          </td>
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            <div style="text-align: center; color: rgb(0, 0, 0);">Trading Symbol</div>
          </td>
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            <div style="text-align: center; color: rgb(0, 0, 0);">Name of exchange on which registered</div>
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            <div style="text-align: center; color: rgb(0, 0, 0);">Common stock, par value $0.05 per share</div>
          </td>
          <td style="width: 24%; vertical-align: top; border-width: 2px; border-style: solid; border-color: rgb(0, 0, 0);">
            <div style="text-align: center; color: rgb(0, 0, 0);">CULP</div>
          </td>
          <td style="width: 38%; vertical-align: top; border-width: 2px; border-style: solid; border-color: rgb(0, 0, 0);">
            <div style="text-align: center; color: rgb(0, 0, 0);">New York Stock Exchange</div>
          </td>
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    </div>
    <div style="background-color: rgb(255, 255, 255);">
      <div style="color: rgb(0, 0, 0);">Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR &#167;230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR
        &#167;240.12b-2).&#160; Emerging growth company &#9744;</div>
      <div>&#160;</div>
      <div><br>
      </div>
    </div>
    <div style="text-align: justify; color: rgb(0, 0, 0);">If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
      provided pursuant to Section 13(a) of the Exchange Act. &#9744;</div>
    <div><br>
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    <div style="text-align: justify; font-weight: bold;"> <br>
    </div>
    <div style="text-align: justify; font-weight: bold;">This report and the exhibits attached hereto contain &#8220;forward-looking statements&#8221; within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995
      (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934).&#160;&#160;Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such
      statements.&#160;&#160;Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management&#8217;s expectations or any change in the assumptions
      or circumstances on which such statements are based, whether due to new information, future events, or otherwise.&#160;&#160;Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or
      otherwise are not statements of historical fact.&#160;&#160;Such statements are often but not always characterized by qualifying words such as &#8220;expect,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;estimate,&#8221; &#8220;intend,&#8221; &#8220;plan,&#8221; &#8220;project,&#8221; and their derivatives, and include but
      are not limited to statements about expectations for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, income taxes, SG&amp;A or other
      expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding potential acquisitions, future economic or industry trends, or future developments. There can be no assurance that the
      company will realize these expectations, meet its guidance, or that these beliefs will prove correct.</div>
    <div><br>
    </div>
    <div style="text-align: justify; font-weight: bold;">Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general
      economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects.&#160;&#160;Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of
      inflation, could affect&#160;us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer
      tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a
      significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and
      strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of goods in those
      areas, as well as demand for our products in international markets.&#160; The impact of public health epidemics on employees, suppliers, and the global economy, such as the coronavirus currently impacting China, could also adversely affect our operations
      and financial performance.&#160; In addition, the impact of potential goodwill or intangible asset impairments could affect our financial results, including without limitation possible additional future write-downs with respect to our home accessories
      segment in accordance with our policy described in our Form 10-Q filed with the Securities and Exchange Commission on December 13, 2019 for the quarterly period ended November 3, 2019. Finally, increases in market prices for petrochemical products
      can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability.&#160; Further information about these factors, as well as other factors that could affect our future operations or
      financial results and the matters discussed in forward-looking statements, is included in Item 1A &#8220;Risk Factors&#8221; in our Form 10-K filed with the Securities and Exchange Commission on July&#160;12, 2019 for the fiscal year ended April 28, 2019, and our
      subsequent periodic reports filed with the Securities and Exchange Commission.</div>
    <div style="text-align: justify;"><font style="font-weight: bold;"> </font><br>
    </div>
    <div><br>
    </div>
    <div style="text-align: justify; font-weight: bold;">Item 2.02 &#8211; Results of Operations and Financial Condition</div>
    <div><br>
    </div>
    <div style="text-align: justify;">The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99, is intended to be &#8220;furnished&#8221; under Item 2.02 of Form 8-K.&#160; Such information shall not be deemed &#8220;filed&#8221; for the purposes of
      Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.</div>
    <div><br>
    </div>
    <div style="text-align: justify;">On February 18, 2020, Culp, Inc. (the &#8220;Company&#8221;) issued a news release regarding revised expectations about its financial results for the third quarter of the Company&#8217;s fiscal 2020.&#160; A copy of the news release is
      attached hereto as Exhibit 99.</div>
    <div><br>
    </div>
    <div style="text-align: justify;">The news release contains disclosures about adjusted pre-tax income, a non-GAAP performance measure which excludes impairment charges and gains or losses recognized on changes in the fair value of contingent
      consideration arrangements (contingent earnout liability reversal) that are included in the determination of pre-tax income under GAAP.&#160; The Company has included this adjusted information in order to show revised expectations for projected
      operational performance excluding the effects of impairment charges and gains or losses recognized on changes in the fair value of contingent consideration arrangements.&#160; Details of these calculations and a reconciliation of the non-GAAP adjusted
      pre-tax income information to the most comparable GAAP measure are set forth in the news release.&#160; Management believes this information aids in the comparison of financial results among comparable financial periods.&#160; In addition, this information is
      used by management to make operational decisions about the Company&#8217;s business and is used by the Company as a financial goal for purposes of determining management incentive compensation. We note, however, that this adjusted information should not be
      viewed in isolation or as a substitute for pre-tax income calculated in accordance with GAAP, as non-recurring charges do have an effect on our financial performance.</div>
    <div><br>
    </div>
    <div style="clear: both; margin-top: 10pt; margin-bottom: 10pt;" id="DSPFPageBreakArea">
      <div style="text-align: center;" id="DSPFPageNumberArea"><font style="font-weight: normal; font-style: normal;" id="DSPFPageNumber">2</font></div>
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    <div style="text-align: justify; font-weight: bold;"> <br>
    </div>
    <div style="text-align: justify; font-weight: bold;">Item 2.06 &#8211; Material Impairments</div>
    <div><br>
    </div>
    <div style="text-align: justify;">On February 14, management concluded that it expects the Company to record non-cash impairment charges for the quarter ending February 2, 2020, of approximately $13.6 million for goodwill and other intangible assets
      associated with the Company&#8217;s home accessories segment.&#160; The goodwill and other intangible assets were initially recorded as part of the Company&#8217;s June 2018 acquisition of an 80% ownership interest in eLuxury, LLC.</div>
    <div><br>
    </div>
    <div style="text-align: justify;">In accordance with Accounting Standards Codification (ASC) Topic 350, &#8220;Intangibles Goodwill and Other,&#8221; the Company is required to assess its goodwill and other indefinite-lived intangible assets for impairment at the
      end of each fiscal year or between annual tests if events or changes in circumstances indicate the carrying value of the asset may not be recovered. As a result of a slower than expected pace of growth for the home accessories segment relating to the
      recovery of lost sales volume from the Amazon marketplace, slower growth on new e-commerce and business to business sales channels, and changes in future growth assumptions for this business based on current economic conditions in the e-commerce
      space, management determined that impairment indicators existed for the third quarter of fiscal 2020.&#160; Accordingly, this determination required an interim assessment of the goodwill and other intangible assets for the home accessories segment.</div>
    <div><br>
    </div>
    <div style="text-align: justify;">Based on the initial assessment conducted using a measurement date of February 2, 2020, the Company expects to record a non-cash impairment charge of approximately $11.2 million for goodwill and approximately $2.4
      million for certain indefinite-lived assets (trademarks and tradenames) associated with its home accessories segment.&#160; The Company is in the process of finalizing the impairment analysis and expects it to be completed in time for the Company&#8217;s third
      quarter earnings release.&#160; No portion of these impairment charges relate to future cash expenditures.</div>
    <div><br>
    </div>
    <div><br>
    </div>
    <div style="text-align: justify; font-weight: bold;">Item 9.01 (d) -- Exhibits</div>
    <div><br>
    </div>
    <div style="text-align: justify;">99 - News Release dated February 18, 2020</div>
    <div><br>
    </div>
    <div style="clear: both; margin-top: 10pt; margin-bottom: 10pt;" id="DSPFPageBreakArea">
      <div style="text-align: center;" id="DSPFPageNumberArea"><font style="font-weight: normal; font-style: normal;" id="DSPFPageNumber">3</font></div>
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    </div>
    <div>&#160;</div>
    <div style="text-align: center; font-weight: bold;">SIGNATURES</div>
    <div><br>
    </div>
    <div><br>
    </div>
    <div style="text-align: justify; font-weight: bold;">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</div>
    <div><br>
    </div>
    <div>
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            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%; font-weight: bold;"><br>
            </td>
            <td style="width: 50%; font-weight: bold;">CULP, INC.</td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%; font-weight: bold;"><br>
            </td>
            <td style="width: 50%; font-weight: bold;">(Registrant)</td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%; font-weight: bold;">By:<br>
            </td>
            <td style="width: 50%; font-weight: bold;"><u> /s/ Kenneth R. Bowling</u></td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%; font-weight: bold;">Chief Financial Officer</td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%; font-weight: bold;">(principal financial officer)</td>
          </tr>
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            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%; font-weight: bold;">By:<br>
            </td>
            <td style="width: 50%; font-weight: bold;"><u>/s/ Thomas B. Gallagher, Jr.</u></td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%; font-weight: bold;">Corporate Controller</td>
          </tr>
          <tr>
            <td style="width: 46%;">
              <div>&#160;</div>
            </td>
            <td style="width: 4%;">
              <div style="font-weight: bold;">&#160;</div>
            </td>
            <td style="width: 50%; font-weight: bold;">(principal accounting officer)</td>
          </tr>

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    <div style="text-align: justify; font-weight: bold;"><u>Dated:&#160; February 18, 2020</u></div>
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    <div style="text-align: center; font-weight: bold;">EXHIBIT INDEX</div>
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                          <div style="margin-left: 9pt"><u>Exhibit</u></div>
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            <td style="width: 20%;"><a href="a52174910ex99.htm">99</a><br>
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            <td style="width: 30%;"><a href="a52174910ex99.htm">News Release dated February 18, 2020</a></td>
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    <div style="font-family: 'Times New Roman',Times,serif;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <br>
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<TYPE>EX-99
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<FILENAME>a52174910ex99.htm
<DESCRIPTION>EXHIBIT 99
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  <div style="text-align: right;"><font style="font-weight: bold;">Exhibit 99</font><br>
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          <h1 style="text-align: center; list-style-position:inside;FONT-SIZE: 14pt;"> <b>Culp Announces Revised Expectations, </b><b>Anticipated Non-Cash Intangible Asset Impairment Charges, </b><b>for Third Quarter Fiscal 2020</b> </h1>
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              <p>HIGH POINT, N.C.--(BUSINESS WIRE)--February 18, 2020--Culp, Inc. (NYSE: CULP) today announced that, based on unaudited preliminary results and current estimates, the company<i> </i>expects pre-tax loss (GAAP) to be in the range of $(5.4)
                million to $(5.1) million for the third quarter of fiscal 2020. This includes a reversal of a $6.1 million recorded contingent earnout liability, as well as non-cash impairment charges of approximately $13.6 million relating to the home
                accessories division (discussed below), resulting in a non-cash net charge of approximately $7.6 million. Excluding the gain from the contingent earnout liability reversal and estimated impairment charges, adjusted pre-tax income (non-GAAP)
                is expected to be in the range of $2.2 million to $2.5 million (see reconciliation table on page 4). These projected results are lower than the company&#8217;s previously announced expectation of $3.2 million to $3.8 million in pre-tax income for
                the third quarter, which excluded any restructuring and related charges or credits, contingent earnout liability reversals, and impairment charges. Sales and profitability for the third quarter of fiscal 2020 are lower than the company&#8217;s
                previously announced outlook, with overall sales and all three business segments&#8217; sales now expected to be down moderately as compared with the third quarter of last year. Profitability is now expected to be moderately down for the
                upholstery fabrics segment and significantly down for the mattress fabrics segment as compared with the third quarter of last year. </p>
              <p> The home accessories segment, which sells bedding accessories and home goods directly to consumers and businesses, is expected to meet the company&#8217;s previously announced outlook for an improvement in operating loss for the third quarter.
                This progression reflects continued sequential improvement compared to the first and second quarters of fiscal 2020. However, in connection with the company&#8217;s quarterly assessment of the fair value of its acquisition-related contingent
                earnout consideration arrangement and the future outlook for this segment, management determined it was necessary to adjust the forecasted EBITDA performance relating to this recorded liability. This determination was based on slower than
                expected business improvement and updated assumptions on economic conditions in the e-commerce space, combined with the upcoming timeframe for determining the contingent earnout payment obligation. The adjustment resulted in a reversal of
                the full $6.1 million recorded contingent earnout liability. </p>
              <p> Additionally, in accordance with Accounting Standards Codification (ASC) Topic 350, the company is required to assess its goodwill and other indefinite-lived intangible assets for impairment at the end of each fiscal year or between
                annual tests if events or changes in circumstances indicate the carrying value of the asset may not be recovered. As a result of the slower pace of growth for the home accessories segment and changes in future growth assumptions for this
                business based on current economic conditions in the e-commerce space, management determined that impairment indicators existed. Accordingly, this determination required an interim assessment of the goodwill and other intangible assets for
                the home accessories segment. Based on the initial assessment conducted, the company expects to record non-cash impairment charges of approximately $13.6 million. The company is in the process of finalizing the impairment analysis and
                expects it to be completed in time for its third quarter earnings release. These impairment charges are adjustments that do not affect the company&#8217;s cash position, cash flow from operating activities, or debt covenants. </p>
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              <p> Commenting on the announcement, Iv Culp, chief executive officer of Culp, Inc., said, &#8220;The revised expectations for the third quarter of fiscal 2020 are due to lower than expected sales. For our upholstery fabrics segment, shipments
                slowed more than anticipated heading into the Chinese New Year shutdown period. Additionally, our mattress fabrics business, and specifically CLASS, was pressured more than expected by the holiday shutdowns in Haiti and China. Mattress
                covers have become an increasingly important part of the mattress fabrics business, and losing multiple productive weeks caused a greater than expected impact when combined with continued industry weakness in our legacy business. These
                factors, along with lower than anticipated domestic benefit thus far from the anti-dumping measures associated with mattress imports from China, affected our results for the third quarter.&#8221; </p>
              <p> The company is also updating its outlook for the fourth quarter of fiscal 2020, with current expectations for overall sales and profitability for the quarter to be slightly better than the results achieved in the fourth quarter of fiscal
                2019. This projected outlook for the fourth quarter is adjusted from the previously announced outlook for overall performance to be significantly better than the prior year period. The company now projects mattress fabrics sales for the
                fourth quarter of fiscal 2020 to be slightly lower than the prior-year period. However, expectations are still for all three business segments to have improved profitability in the fourth quarter of fiscal 2020 as compared to the fourth
                quarter of fiscal 2019, assuming the coronavirus outbreak in China does not have a greater than anticipated impact on the operations of the company, its suppliers, and the global economy. The updated expectations reflect an uncertain
                business environment associated with ongoing trade and health issues primarily related to Asia, which may affect each of the company&#8217;s divisions to varying levels. The potential impact of the coronavirus is difficult to estimate reasonably
                at this point given the fluidity in circumstances related to the disease and the actions being taken to contain its spread. </p>
              <p> &#8220;Although we are disappointed with the third quarter financial results and revised expectations for the fourth quarter, the company remains well-positioned for the long term with our creative designs, innovative products, efficient global
                platform, and diversified sales channels, both domestically and in Asia,&#8221; said Culp. &#8220;Additionally, while the updated forecast prompting the partial impairment for our home accessories segment is less favorable than originally projected, we
                still expect continued improvement for this business and remain encouraged about the opportunity to leverage this sales channel and reach new customers for Culp. Our financial position remains strong, with approximately $35.0 million of
                cash and investments and outstanding borrowings totaling $925,000 as of the third quarter of fiscal 2020, for a net cash position of approximately $34.1 million. We also repurchased 55,750 shares of Culp common stock during the third
                quarter, leaving approximately $4.3 million remaining under our share repurchase program approved by the Board in September 2019. We will continue seeking opportunities to repurchase shares when the price reflects a discount to our
                calculated intrinsic value per share. We remain optimistic about opportunities for our businesses as we respond to changing demand trends for our diverse customer base. We have the financial strength to support and execute our strategies
                and are confident in our position as market conditions evolve,&#8221; added Culp. </p>
              <p> The company expects to report its complete financial and operating results for the third quarter and fiscal 2020 in early March. </p>
              <p> <b>About the Company</b> </p>
              <p> Culp, Inc. is one of the world's largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture. The company markets a variety of fabrics to its global customer base of leading bedding
                and furniture companies, including fabrics produced at Culp&#8217;s manufacturing facilities and fabrics sourced through other suppliers. Culp has operations located in the United States, Canada, China, and Haiti. </p>
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              <p> <i>This release contains &#8220;forward-looking statements&#8221; within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the
                  Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Further, forward looking statements are intended
                  to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management&#8217;s expectations or any change in the assumptions or circumstances on which such statements are
                  based, whether due to new information, future events, or otherwise. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical
                  fact. Such statements are often but not always characterized by qualifying words such as &#8220;expect,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;estimate,&#8221; &#8220;plan,&#8221; &#8220;project,&#8221; and their derivatives, and include but are not limited to statements about
                  expectations for our future operations, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, income taxes, SG&amp;A or other expenses, pre-tax
                  income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding potential acquisitions, future economic or industry trends, or future developments. There can be no assurance that the company
                  will realize these expectations, meet its guidance, or that these beliefs will prove correct.</i> </p>
              <p> <i>Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in
                  these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect
                  us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or
                  preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a
                  significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States,
                  and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. Also, economic and political instability in international areas could affect our operations or sources of
                  goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, suppliers, and the global economy, such as the coronavirus currently impacting China, could also
                  adversely affect our operations and financial performance. In addition, the impact of potential goodwill or intangible asset impairments could affect our financial results, including without limitation possible additional future
                  write-downs with respect to our home accessories segment in accordance with our policy described in our Form 10-Q filed with the Securities and Exchange Commission on December 13, 2019 for the quarterly period ended November 3, 2019.
                  Finally, increases in market prices for petrochemical products can significantly affect the prices we pay for raw materials, and in turn, increase our operating costs and decrease our profitability. Further information about these
                  factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A &#8220;Risk Factors&#8221; in our Form 10-K filed with the Securities and
                  Exchange Commission on July 12, 2019 for the fiscal year ended April 28, 2019, and our subsequent periodic reports filed with the Securities and Exchange Commission.</i> </p>
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                  <tr>
                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" colspan="2" style="padding-left: 0.0px;">&#160;</td>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" style="padding-left: 0.0px;text-align: center; list-style-position:inside;" colspan="2">
                      <p style="list-style-position: inside; margin-bottom: 0px; margin-top: 0px;"> <b>Reconciliation of Projected Pre-Tax Loss (GAAP) to </b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" style="padding-left: 0.0px;text-align: center; list-style-position:inside;" colspan="2">
                      <p style="list-style-position: inside; margin-bottom: 0px; margin-top: 0px;"> <b>Projected Adjusted Pre-Tax Income (non-GAAP)</b> </p>
                    </td>
                  </tr>
                  <tr>
                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" style="padding-left: 0.0px;text-align: center; list-style-position:inside;" colspan="2">
                      <p style="list-style-position: inside; margin-bottom: 0px; margin-top: 0px;"> <b>For Three Months Ended February 2, 2020</b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" style="padding-left: 0.0px;text-align: center; list-style-position:inside;" colspan="2">
                      <p style="list-style-position: inside; margin-bottom: 0px; margin-top: 0px;"> <b>(Unaudited)</b> </p>
                    </td>
                  </tr>
                  <tr>
                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" style="padding-left: 0.0px;text-align: center; list-style-position:inside;" colspan="2">
                      <p style="list-style-position: inside; margin-bottom: 0px; margin-top: 0px;"> <b>(in thousands, rounded)</b> </p>
                    </td>
                  </tr>
                  <tr>
                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="padding-left: 0.0px;width: 60%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="padding-left: 0.0px;width: 38%;">&#160;</td>
                  </tr>
                  <tr>
                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 60%;">
                      <p style="margin-bottom: 0px; margin-top: 0px;"> &#160; </p>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;border-bottom: solid black 1.0pt;padding-left: 0.0px;white-space: nowrap;width: 38%;">
                      <p style="text-align: center; list-style-position:inside;margin-bottom: 0px; margin-top: 0px;"> <b>February 2, 2020</b> </p>
                    </td>
                  </tr>
                  <tr>
                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 60%;">
                      <p style="margin-bottom: 0px; margin-top: 0px;"> &#160; </p>
                      <p style="margin-bottom: 0px; margin-top: 0px;"> <b>Range of Projected Pre-Tax Loss (GAAP)</b> </p>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 38%;">
                      <p style="text-align: center; list-style-position:inside;margin-bottom: 0px; margin-top: 0px;"> <b>$(5,400) &#8211; $(5,100)</b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 60%;">
                      <p style="margin-bottom: 0px; margin-top: 0px;"> <b>Gain on reversal of contingent consideration &#8211; earnout obligation </b> </p>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;padding-right: 0.0px;text-align: center; list-style-position:inside;width: 38%;">
                      <p style="margin-bottom: 0px; margin-top: 0px; list-style-position: inside;"> <b>6,100</b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 60%;">
                      <p style="margin-bottom: 0px; margin-top: 0px;"> <b>Goodwill impairment (home accessories segment) <sup style="vertical-align: text-top; line-height: 1; font-size: smaller;">(1)</sup></b> </p>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;padding-right: 0.0px;text-align: center; list-style-position:inside;width: 38%;">
                      <p style="margin-bottom: 0px; margin-top: 0px; list-style-position: inside;"> <b>(11,200)</b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 60%;">
                      <p style="margin-bottom: 0px; margin-top: 0px;"> <b>Other intangible asset (trademark &amp; tradename) impairment (home accessories segment) <sup style="vertical-align: text-top; line-height: 1; font-size: smaller;">(1)</sup></b> </p>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;padding-right: 0.0px;text-align: center; list-style-position:inside;border-bottom: solid black 1.0pt;width: 38%;">
                      <p style="margin-bottom: 0px; margin-top: 0px; list-style-position: inside;"> <b>(2,400)</b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;width: 60%;">
                      <p style="margin-bottom: 0px; margin-top: 0px;"> <b>Range of Projected Adjusted Pre-Tax Income (non-GAAP)</b> </p>
                    </td>
                    <td colspan="1" rowspan="1" style="vertical-align: bottom;padding-left: 0.0px;border-bottom: solid black 1.0pt;width: 38%;">
                      <p style="text-align: center; list-style-position:inside;margin-bottom: 0px; margin-top: 0px;"> <b>$2,200 - $2,500</b> </p>
                    </td>
                  </tr>
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                    <td colspan="1" rowspan="1" style="width: 2%;"><br>
                    </td>
                    <td rowspan="1" colspan="2" style="padding-left: 0.0px;">&#160;</td>
                  </tr>
                  <tr>
                    <td colspan="1" rowspan="1" style="text-align: right; list-style-position:inside;vertical-align: top;width: 2%;">
                      <p style="list-style-position: inside; margin-bottom: 0px; margin-top: 0px;"> (1) </p>
                    </td>
                    <td rowspan="1" style="padding-left: 10.0px;" colspan="2">Based on initial impairment assessment for the home accessories segment. The company is in the process of finalizing the impairment analysis and expects it to be completed in
                      time for the company&#8217;s third quarter earnings release.</td>
                  </tr>

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              <p> &#160; </p>
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            <div class="bw-release-contact">
              <h2 style="FONT-SIZE: 14pt;">Contacts</h2>
              <p> Kenneth R. Bowling <br>
                Chief Financial Officer <br>
                336-881-5630 </p>
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