Highlights for the first quarter of fiscal 2010 include the following:

Net sales were $45.5 million, 23 percent lower than the first quarter of the last year, with mattress fabrics segment sales down 26 percent and upholstery fabric segment sales down 19 percent, in line with expectations. The first quarter of fiscal 2010 had a total of 13 weeks compared with 14 weeks for the first quarter of fiscal 2009.

Pre-tax income was $2.0 million, or 4.4 percent of sales, compared with $1.2 million, or 2.0 percent of sales in the prior year period, an increase of 65 percent.

Net income was $1.9 million, or $0.15 per diluted share, compared with net income of $781,000, or $0.06 per diluted share,for the first quarter of fiscal 2009.

The mattress fabrics business achieved continued solid profitability, with operating income of $3.0million in the first quarter and operating margins only slightly below the first quarter of last year, in spite of unprecedented weak consumer demand in the bedding industry.

The upholstery fabrics business showed a significant turnaround for the first quarter, with operating income of $764,000, or four percent of sales, reversing an operating loss of $1.4 million in the first quarter of the prior year. This performance was in the face of continued challenging furniture industry conditions.

Cash flow from operations was $4.6 million for the first quarter. This quarter's performance is due to consistent profitability in mattress fabrics, the profit turnaround in upholstery fabrics and continued 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 first quarter, with an ending cash balance of $15.5 million and total debt of $16.4 million. Total debt, which includes current maturities of long term debt and long term debt, less cash (net debt) was $0.9 million, compared with $4.6 million at the end of fiscal 2009. The company is close to a positive net debt position for the first time in over thirty years.

The second quarter projection for fiscal 2010 is for overall sales to decrease in the range of five percent, the lowest year-over-year decline since the third quarter of fiscal 2008. Pre-tax income for the second quarter of fiscal 2010 is expected to be in the range of $2.0 million to $2.8 million.

Overview

The first quarter of fiscal 2010 had a total of 13 weeks compared with 14 weeks for the first quarter of fiscal 2009. For the period ended August 2, 2009, net sales were $45.5 million, comparedwith $59.3 million a year ago. The company reported net income of $1.9 million, or $0.15 per diluted share,forthe first quarter of fiscal 2010, compared with net income of $781,000, or $0.06 per diluted share,for the first quarter of fiscal 2009. On a pre-tax basis, the company reported income of $2.0 million compared with pre-tax income of $1.2million for the first quarter of fiscal 2009. The pre-tax results for the firstquarter of fiscal 2010 included restructuring and related credits in the upholstery fabrics segment of $187,000. The pre-tax results for the firstquarter of fiscal 2009 included restructuring and related charges in the upholstery fabrics segment of $416,000. Excluding these credits/charges in both periods, pre-tax income for the first quarter of fiscal 2010 was $1.8million compared with $1.6 million in the first quarter of fiscal 2009. (A reconciliation of pre-tax income has been set forth on Page 5.)

Commenting on the results, Frank Saxon, president and chief executive officer of Culp, Inc., said, "Our sales for the first quarter of fiscal 2010 are indicative of recent consumer demand trends for bedding and furniture. In spite of the sales decline, we are very pleased with the strong turnaround in profitability for our upholstery fabrics business and continued solid profitability in our mattress fabrics segment. We began fiscal 2010 with a much leaner operating platform than we had a year ago, and we are realizing the benefits of our strategic actions, especially during the economic downturn. Today, Culp has a strong competitive position in both businesses and, as always, our primary focus is on execution for our customers. We have also further strengthened our financial position during the first quarter, providing us with a solid foundation to support our growth strategy as market conditions improve."

Mattress Fabrics Segment

Mattress fabric sales for the first quarter were $26.3 million, a 26percent decline compared with $35.6million for the first quarter of fiscal 2009. Average sales per week declined by 20 percent when comparing the two quarters, as the first quarter of fiscal 2009 had one more week than the first quarter of this year. Operating income for this segment was $3.0million, or 11.2 percent of sales, compared with $4.2million, or 11.9percent of sales, for the prior-year period.

"Our consistent operating performance in mattress fabrics reflects the benefits of the significant investments we have made to improve our manufacturing platform over the last several years," said Saxon. "While the sales environment has remained challenging, we have continued to drive our operating efficiencies, achieve solid profit margins and enhance our competitive position. We see many opportunities to further develop our product offerings and will continue to make capital investments in our manufacturing capabilities during this fiscal year, including improved knit and weaving capacities and finishing enhancements on all product lines, with capital expenditures of approximately $3.5 million. We are committed to the growth of this important business for Culp, and, with these projects, we believe we are well positioned to leverage any upside in mattress fabrics demand as it occurs. Our customers know they can rely on Culp for outstanding service, reliable delivery performance and consistent quality and value."

Upholstery Fabrics Segment

Sales for this segment, which include both fabric and cut and sewn kits, were $19.2 million, a 19percent decline compared with $23.8 million in the first quarter of fiscal2009. Average sales per week declined by 13percent when comparing the two quarters, as the first quarter of fiscal 2009 was one week longer than the first quarter of this year. Sales of non-U.S.