Highlights for the fourth quarter and fiscal year 2009 include the following:

Net sales were $47.8 million, 25 percent lower than the fourth quarter of the last year, with mattress fabrics segment sales down 23 percent and upholstery fabric segment sales down 28 percent.

Pre-tax income was $2.2 million, or 4.6% of sales, for the fourth quarter of fiscal 2009 compared with $1.4 million, or 2.2% of sales, in the prior year period.

Net income for the fourth quarter was $1.7 million, or $0.13 per share, compared with $2.1 million, or $0.16per share, in the prior year quarter. The current quarter included income tax expense of $517,000 whilethe prior year's quarter included a tax benefit of $647,000, which was principally due to the tax effects offoreign currency exchange losses in the company's Canadian operation.

The mattress fabrics business achieved continued profitability, with operating income of $3.5 million in the fourth quarter and operating margins exceeding the fourth quarter of last year, in spite of unprecedented weak consumer demand in the bedding industry.

The upholstery fabrics business showed improved profitability for the fourth quarter, with an operating income of $666,000, or 3.1 percent of sales, reversing operating losses of $2.2 million in the first half of this fiscal year. This performance was in the face of the most challenging furniture industry conditions in many years.

Cash flow from operations was $8.0 million for the fourth quarter and $22.8 million for the fiscal year. This compares with $16.4 million for last year. This year's performance is due to consistent profitability in mattress fabrics and outstanding working capital management in both segments. Key measures forworking capital, such as days' sales in receivables and inventory turnover, continued to improve, even with lower sales volume.

The company's financial position continued to strengthen significantly during the fourth quarter, with an ending cash balance of $11.8 million and total debt reduced to $16.4 million. As of year end, total debt less cash (net debt) was $4.6 million, compared with $12.3 million at the end of the third quarter and $23.7million at the end of the second quarter.

Including debt repayments during the fourth quarter totaling $11.7 million, the company has repaid $35.4 million in total debt over the last two fiscal years.

The first quarter projection of fiscal 2010 is for overall sales to decrease 21 to 26 percent, with mattress fabric and upholstery fabric sales both expected to decline about the same percentage as consumer demand for furniture and bedding remains very weak. The prior year's first quarter had 14 weeks compared with 13 weeks for the first quarter of fiscal 2010. Pre-tax income for the first quarter of fiscal 2010 is expected to be in the range of $1.4 to $2.2 million.

Overview

For the three months ended May 3, 2009, net sales were $47.8 million, comparedwith $64.0 million a year ago. The company reported net income of $1.7 million, or $0.13 per diluted share,forthe fourth quarter of fiscal 2009, compared with net income of $2.1 million, or $0.16 per diluted share,for the fourth quarter of fiscal 2008. On a pre-tax basis, the company reported income of $2.2 million compared with pre-tax income of $1.4million for the fourth quarter of fiscal 2008. The pre-tax results for the fourthquarters of fiscal 2009 and 2008 included restructuring and related charges in the upholstery fabrics segment of $48,000 and $633,000, respectively. Excluding these charges in both periods, pre-tax income for the fourth quarter of fiscal 2009 was $2.3million compared with $2.1 million in the fourth quarter of fiscal 2008. (A reconciliation of pre-tax income has been set forth on Page 6.)

For the fiscal year ended May 3, 2009, the company reported net sales of $203.9 million compared with$254.0 million for the same period a year ago. Net loss forfiscal 2009 was $38.8million, or $3.07 per diluted share, compared with net incomeof $5.4million, or $0.42 per diluted share, for fiscal 2008. This net loss for fiscal 2009 included a $27.2 million non-cash charge for the establishment of a valuation allowance against substantially all of the company's net deferred tax assets. On a pre-tax basis, the company reported a loss of $6.9 million compared with pre-tax income of $4.8 million in fiscal 2008. The pre-tax results for fiscal 2009 include restructuring and related charges in the upholstery fabrics segment of $13.1 million, of which $11.5 million related to non-cash charges and $1.6million related to cash charges. The pre-tax results for fiscal 2008 include restructuring and related charges in the upholstery fabrics segment of $2.9 million, of which $1.5 million related to non-cash charges and $1.4million related to cash charges. Excluding these charges in both periods, pre-tax income for fiscal 2009 was $6.2 million, compared with pre-tax income of $7.8 million for fiscal 2008.

Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, "Ourfourth quarter performance reflects excellent progress and consistent execution through what has been an extremely challenging business environment. In spite of a decline in sales, both our mattress fabrics and upholstery fabrics businesses showed improved margins, as we continued to realize the incremental benefits of aleaner and more agile operating platform. At the same time, we have been diligent in our efforts to carefully manage our working capital, generate cash and reduce our debt substantially through this unprecedented economic downturn. As a result, we have strengthened our financial position considerably, which is an increasingly important competitive advantage in today's market. We have also continued to make important investments in our businesses during the year with a strategic acquisition and major capital expenditures in our mattress fabrics segment, along with product andmarketing initiatives in both segments. Most importantly, Culp continues to represent a strong and stable supplier for our customers."

Mattress Fabrics Segment

Mattress fabric sales for the fourth quarter were $26.6 million, a 23 percent decline compared with $34.6million for the fourth quarter of fiscal 2008. Operating income was $3.5 million for this segmentcompared with $3.9 million a year ago, while operating income margin improved to 13.3percent of sales, compared with 11.1percent of sales, for the prior-year period. Mattress fabric sales for the year were $115.4 million, down 16.4 percent from $138.1 million in fiscal 2008, reflecting a decline in demand for bedding products. Operating income for fiscal 2009 was $13.2 million, or 11.5 percent of sales, compared with $14.1 million, or 10.2 percent of sales in fiscal 2008.

"While the sales environment has been very challenging, we are pleased with the strong operating performance of our mattress fabrics business," said Saxon. "The continued solid margin improvement reflects the implementation of the $5.0 million capital project completed earlier this year, as well as the successful integration of the mattress fabrics operation of Bodet & Horst, or B&H, acquired in August 2008. Together, these investments have significantly enhanced our operating platform in mattress fabrics, with more efficient, vertically-integrated manufacturing capabilities in all major product categories. We believe that we are well positioned to effectively compete during this downturn in the bedding industry, and to benefit very well from any upside in demand when it occurs.