content: --------------------------------------------------------------------------------
  
  
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      ---------
  
                                      Form 8-K
  
                                   CURRENT REPORT
  
                  Pursuant to Section 13 or 15(d) of the Securities
                                Exchange Act of 1934
  
                                    -------------
  
         Date of Report (Date of earliest event reported) February 24, 2003
  
                                     CULP, INC.
  
               (Exact name of registrant as specified in its charter)
  
  
           North Carolina                  0-12781                56-1001967
  (State or other jurisdiction of   (Commission File No.)       (IRS Employer
           incorporation)                                    Identification No.)
  
  
  
                               101 South Main Street
                         High Point, North Carolina  27260
                     (Address of principal executive offices)
                                  (336) 889-5161
               (Registrant's telephone number, including area code)
  
  
  
  
  
           (Former name or former address, if changed since last report)
  
  
  
  
  
  --------------------------------------------------------------------------------
  
  
  
  
  
  
  <PAGE>
  
  
  
  Item 5. Other Events
  
  See  attached  Press  Release (5 pages) and  Financial  Information  Release (13
  pages),  both dated February 24, 2003,  related to the fiscal 2003 third quarter
  ended January 26, 2003.
  
  Forward Looking Information.  This Report contains statements that may be deemed
  "forward-looking  statements" 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 27A of the Securities and Exchange Act of
  1934).  Such  statements  are  inherently  subject  to risks and  uncertainties.
  Further, Forward looking statements are intended to speak only as of the date on
  which they are made.  Forward-looking  statements  are  statements  that include
  projections, expectations or beliefs about future events of results or otherwise
  are not statements of historical  fact. Such statements are often but not always
  characterized  by  qualifying  words such as  "expect,"  "believe,"  "estimate,"
  "plan' and "project" and their  derivatives,  and include but are not limited to
  statements  about  expectations  for the company's  future  sales,  gross profit
  margins,  SG&A or  other  expenses,  and  earnings,  as  well as any  statements
  regarding the company's  view of estimates of the  company's  future  results by
  analysts.  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 the
  company's  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  the  company  adversely.   Because  of  the
  significant  percentage  of  the  company's  sales  derived  from  international
  shipments, strengthening of the U. S. dollar against other currencies could make
  the company's products less competitive on the basis of price in markets outside
  the  United  States.   Additionally,   economic  and  political  instability  in
  international areas could affect the demand for the company's products. Finally,
  unanticipated delays or costs in executing restructuring actions could cause the
  cumulative  effect of  restructuring  actions to fail to meet the objectives set
  forth by  management.  Other factors that could affect the matters  discussed in
  forward looking  statements are included in the company's periodic reports filed
  with the Securities and Exchange Commission.
  
  
  
  
                                     SIGNATURE
  
  
  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.
  
  
                                       CULP, INC.
                                      (Registrant)
  
  
                                By:    Franklin N. Saxon
                                       -----------------
                                       Executive Vice President and
                                       Chief Financial Officer
  
  
  
  
  
  Dated:  February 24, 2003
  
  
  
  
  <PAGE>
  
                                    NEWS RELEASE
  
  Investor Contact:  Kathy J. Hardy         Media Contact:  Kenneth M. Ludwig
                     Corporate Secretary                    Senior Vice President,
                     336-888-6209                           Human Resources
                                                             336-889-5161
  
  
                      CULP ANNOUNCES THIRD QUARTER 2003 RESULTS
                           ------------------------------
                          GROSS MARGIN IMPROVEMENT REFLECTS
               MORE PROFITABLE SALES MIX AND EFFECTIVE COST MANAGEMENT
  
  HIGH POINT,  N.C.  (February 24, 2003) - Culp, Inc.  (NYSE:  CFI) today reported
  financial  and  operating  results for the third  quarter and nine months  ended
  January 26, 2003. The highlights include:
  
  o     Third  quarter  2003 diluted  earnings per share of $0.16 up from $0.04 in
           the prior year period (excluding  restructuring  and related charges in
           2003 and goodwill amortization in 2002)
  
  o     Gross profit margin of 18.3% (excluding  restructuring related charges) is
           highest in fifteen years for the company's third quarter
  
  o     Cash  position  increased to $38.5 million,  up from $10.4  million a year
           ago, after the repayment of $12.3 million in debt
  
  o     Company sees further margin  improvement and is comfortable with published
           analysts  estimates  of $0.41 to $0.44 per share for the fourth quarter
           of 2003
  
       For the three months ended  January 26, 2003,  net sales were $79.3 million
  compared  with  $90.6  million a year ago.  The  company  reported  net  income,
  excluding  restructuring  and related  charges,  of $1.9  million,  or $0.16 per
  diluted share, versus net income of $400,000, or $0.04 per diluted share, in the
  third quarter of fiscal 2002,  excluding  restructuring and related charges, and
  goodwill  amortization.  The financial  results for the third quarter  include a
  total of $397,000 in  restructuring  and related  charges,  all of which reflect
  previously  announced  restructuring  initiatives.  Including  restructuring and
  related charges,  the company reported net income of $1.7 million,  or $0.14 per
  diluted share,  for the third quarter of fiscal 2003. (A  reconciliation  to the
  net income and earnings per share calculations has been set forth on Page 5.)
  
       For the nine months ended January 26, 2003, the company  reported net sales
  of $248.8 million,  compared with $273.5 million for the same period a year ago.
  Excluding  restructuring  and  related  charges  and the  cumulative  effect  of
  accounting  change, net income for the first nine months of fiscal 2003 was $5.1
  million,  or $0.43 per diluted share. This compares with net income of $447,000,
  or $0.04 per diluted share,  excluding  restructuring  and related charges,  and
  goodwill amortization for the prior-year period. Including restructuring charges
  and the cumulative effect of accounting  change, the company reported a net loss
  for the first nine months of fiscal 2003 of $28.2 million,  or $2.46 per diluted
  share.
  <PAGE>
  
  CFI Announces Third Quarter Results
  Page 3
  February 24, 2003
  
  
       As previously announced,  due to the adoption of a new accounting standard,
  "Goodwill and Other Intangible Assets," the company recorded a non-cash goodwill
  impairment charge,  net of income taxes, of $24.2 million,  or $2.11 per diluted
  share, in the first quarter of 2003 related to the goodwill  associated with its
  Culp Decorative  Fabrics ("CDF") division.  The charge,  recorded as "cumulative
  effect of  accounting  change," has no effect on  operating  income or cash flow
  from operations.
  
       "Despite a challenging  business climate, our strategic focus on increasing
  the  profitability of our sales mix and carefully  managing our costs allowed us
  to achieve meaningful  year-over-year  improvement in profitability in the third
  quarter of 2003," remarked Robert G. Culp, III, chief executive officer of Culp,
  Inc.  "Clearly our sales efforts have been  affected by the overall  softness in
  consumer spending for home furnishings.  In addition, the discontinuation of the
  wet printed flock  business at the end of 2002,  and our recent  initiatives  to
  eliminate  unprofitable  or low margin product  lines,  contributed to the 12.5%
  year-over-year  decline in third quarter sales.  However, we believe our ability
  to drive high profit margins in a difficult sales  environment  demonstrates the
  inherent  value of our strategy.  More  importantly,  we believe it confirms the
  scalability of our business and the significant opportunity to leverage earnings
  when our top line regains momentum.
  
       "In  today's  uncertain  market  conditions,  we  believe  it is a business
  imperative to maintain a strong,  liquid balance sheet.  Our results reflect the
  continued  progress in  increasing  cash flow from  operations  and  effectively
  managing our working  capital.  Notably,  we have reduced our long-term  debt by
  $12.3 million from the end of fiscal 2002, and by a total of $41.3 million since
  the end of fiscal 2000, less than three years ago. Through the first nine months
  of this year,  free cash flow from  operations was $17.9 million,  compared with
  $10.7 million for the same period last year. (A  reconciliation to the free cash
  flow  calculations  has  been  set  forth  on Page  5.) At the end of the  third
  quarter,  our balance sheet reflects $38.5 million in cash and cash investments,
  a considerable  improvement  over $10.4 million a year ago. With the build-up in
  our cash  position,  we  intend  to  further  strengthen  our  balance  sheet by
  prepaying an additional  $12.7 million in debt during the fourth  quarter.  As a
  result, we will reduce our long-term debt by a total of $25.0 million in 2003, a
  significant accomplishment.
  
       "Our  previously  announced  restructuring  initiatives  related to our CDF
  division  continue  to make  measurable  progress.  With the  completion  of the
  transfer of the Chattanooga, Tennessee, manufacturing operations to other plants
  at the end of our second  quarter,  we are now focused on achieving our targeted
  levels  of  operating  efficiencies  in  the  remaining  CDF  locations.  We are
  realizing savings from the reduced fixed manufacturing costs as a result of this
  consolidation.  Essentially  we can now  weave in two  plants  close to what was
  formerly  produced  in  three,  and  still  maintain  the  capacity  to meet our
  foreseeable levels of customer demand.
  
       Culp added,  "Looking  ahead,  we believe  that  fiscal  2003 will  reflect
  considerable progress in meeting our key objectives to improve profitability and
  generate cash flow.  While the sales  environment can still be  characterized as
  very challenging,  we believe the  year-over-year  decline in our fourth quarter
  sales will  approximate  the trend for this quarter.  However,  with solid gross
  profit  margins  and  significant  reductions  in  operating  costs,  we  remain
  comfortable with the range of published  analysts earnings estimates of $0.41 to
  $0.44 per diluted  share for the fourth  fiscal  quarter,  excluding  previously
  announced  restructuring and related charges.  Culp's financial results over the
  last few quarters and our business  outlook  clearly  demonstrate  our strategic
  focus on improving the  profitability of our sales mix,  increasing  margins and
  return on invested capital, and generating free cash flow."
  
  
  <PAGE>
  
       Culp,  Inc. is one of the world's largest  marketers of upholstery  fabrics
  for furniture  and is a leading  marketer of mattress  ticking for bedding.  The
  Company's  fabrics are used  principally in the  production of  residential  and
  commercial furniture and bedding products.
  
       This  release  contains  statements  that  may be  deemed  "forward-looking
  statements"  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 27A of the  Securities  and Exchange Act of 1934).  Such
  statements  are  inherently  subject  to  risks  and   uncertainties.   Further,
  forward-looking  statements  are  intended to speak only as of the date on which
  they  are  made.   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  "expect,"  "believe,"  "estimate,"
  "plan" and "project" and their  derivatives,  and include but are not limited to
  statements  about  expectations  for the company's  future  sales,  gross profit
  margins,  SG&A or  other  expenses,  and  earnings,  as  well as any  statements
  regarding the company's  view of estimates of the  company's  future  results by
  analysts.  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 the
  company's  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  the  company  adversely.   Because  of  the
  significant  percentage  of  the  company's  sales  derived  from  international
  shipments, strengthening of the U. S. dollar against other currencies could make
  the company's products less competitive on the basis of price in markets outside
  the  United  States.   Additionally,   economic  and  political  instability  in
  international areas could affect the demand for the company's products. Finally,
  unanticipated delays or costs in executing restructuring actions could cause the
  cumulative  effect of  restructuring  actions to fail to meet the objectives set
  forth by  management.  Other factors that could affect the matters  discussed in
  forward-looking  statements are included in the company's periodic reports filed
  with the Securities and Exchange Commission.
  <PAGE>
  
  
  CFI Announces Third Quarter Results
  Page 5
  February 24, 2003
  
                                     CULP, INC.
                           Condensed Financial Highlights
                                     (Unaudited)
  
                                                          Three Months Ended
                                                       -------------------------
                                                       January 26,   January 27,
                                                          2003          2002
                                                        ----------  ------------
  Net sales                                            $79,292,000  $ 90,618,000
  Net income                                           $ 1,667,000  $    170,000
  Net income per share:
     Basic                                             $      0.15  $       0.02
     Diluted                                           $      0.14  $       0.02
  Net income per share, diluted, excluding restructuring
    and related charges and goodwill amortization*     $      0.16  $       0.04
  Average shares outstanding:
     Basic                                              11,485,000    11,221,000
     Diluted                                            11,714,000    11,304,000
  
  
                                                           Nine Months Ended
                                                       ------------------------
                                                       January 26,   January 27,
                                                          2003          2002
                                                       ------------   ------------
  Net sales                                          $ 248,753,000  $ 273,481,000
                                                       ------------   ------------
  Loss before cumulative effect of accounting change $  (4,008,000) $  (1,855,000)
  Cumulative effect of accounting change,
     net of  income taxes                              (24,151,000)           -0-
                                                       ------------   ------------
  Net loss                                           $ (28,159,000) $  (1,855,000)
                                                       ============   ============
  Basic and diluted loss per share:
    Loss before cumulative effect of accounting
      change                                         $       (0.35)   $     (0.17)
    Cumulative effect of accounting change                   (2.11)          0.00
                                                       ------------   ------------
    Net loss                                         $       (2.46)   $     (0.17)
                                                       ============   ============
  Net income per share, diluted, excluding restructuring
    and related charges, goodwill amortization and
    cumulative effect of accounting change**         $        0.43    $      0.04
  
  Average shares outstanding:
    Basic                                               11,450,000     11,221,000
    Diluted                                             11,775,000     11,281,000
  
  * Excludes  restructuring  and related  charges of $397,000 ($240,000,  or $0.02
     per  diluted  share,  after  taxes)  for the third  quarter of  fiscal  2003.
     Excludes  goodwill  amortization of $350,000  ($230,000, or $0.02 per diluted
     share, after taxes) for the third quarter of fiscal 2002.
  
  ** Excludes  cumulative  effect of accounting  change,  net of income taxes,  of
     $24.2 million  ($2.11 per  diluted share) for the first nine months of fiscal
     2003.  Excludes  restructuring  and  related  charges of $14.9  million ($9.1
     million,  or $0.80 per diluted  share, after taxes) for the first nine months
     of fiscal 2003.  Excludes  restructuring  and related charges of $2.5 million
     ($1.6  million,  or  $0.15  per  share diluted,  after  taxes)  and  goodwill
     amortization  of $1.1 million  ($690,000,  or $0.06 per diluted  share, after
     taxes) for the first nine months of fiscal 2002.
  
  
  <PAGE>
  
  
                                     CULP, INC.
  
       Reconciliation of Net Income (Loss) as Reported to Pro Forma Net Income
                                     (Unaudited)
  
                               Three Months Ended          Nine Months Ended
                            -------------------------  -------------------------
                            January 26,    January 27,   January 26, January 27,
                               2003          2002         2003          2002
                            -----------  ------------  ------------ ------------
  Net income (loss)         $1,667,000   $   170,000   $(28,159,000) $(1,855,000)
  Cumulative effect of
    accounting change, net of
    income taxes                    --            --     24,151,000           --
  Restructuring and related
    charges, net of income
    taxes                      240,000            --      9,114,000    1,612,000
  Goodwill amortization, net of
    income taxes                    --       230,000             --      690,000
                            -----------  ------------  ------------ ------------
  Net income, adjusted      $1,907,000   $   400,000     $5,106,000  $   447,000
                            ===========  ============  ============ ============
  
  
     Reconciliation of Net Income (Loss) Per Share as Reported to Pro Forma Net
                                    Income Per Share
                                     (Unaudited)
  
  Diluted net income (loss) per
    share                   $      0.14  $       0.02  $     (2.46) $      (0.17)
  Cumulative effect of
    accounting change, net of
    income taxes                     --            --          2.11           --
  Restructuring and related
    charges, net of income taxes   0.02            --          0.80         0.15
  Goodwill amortization, net of
    income taxes                     --          0.02            --         0.06
  Effect of dilutive stock options   --            --         (0.02)          --
                            -----------  ------------   ------------ ------------
  Diluted net income
    per share, adjusted     $      0.16  $       0.04  $       0.43  $      0.04
                            ===========  ============   ============ ============
  
  
            Reconciliation of Cash Flow from Operations to Free Cash Flow
                                     (Unaudited)
  
                                                           Nine Months Ended
                                                       January 26,   January 27,
                                                          2003          2002
                                                       -----------  ------------
  Cash flow from operations                            $23,864,000  $18,381,000
  Capital expenditures                                  (9,076,000)  (3,393,000)
  Change in accounts payable-
    capital expenditures                                 3,074,000   (4,267,000)
                                                       -----------  ------------
  Free cash flow                                       $17,862,000  $10,721,000
                                                       ===========  ============
  
  
  <PAGE>
  
  
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
  FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
  
                  (Amounts in Thousands, Except for Per Share Data)
  <TABLE>
  <CAPTION>
  
                                                                          THREE MONTHS ENDED (UNAUDITED)
                                                      --------------------------------------------------------------------------
  
                                                                Amounts                                  Percent of Sales
                                                      -----------------------------                 ----------------------------
                                                       January 26,    January 27,       % Over
                                                          2003            2002         (Under)             2003         2002
                                                      --------------  -------------  -------------  ----------------  ----------
  <S>                                              <C>                    <C>         <C>               <C>           <C>
  Net sales                                        $         79,292         90,618      (12.5)%           100.0 %       100.0 %
  Cost of sales                                              65,504         77,110      (15.1)%            82.6 %        85.1 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Gross profit                                            13,788         13,508        2.1 %            17.4 %        14.9 %
  
  Selling, general and
    administrative expenses                                   9,798         11,038      (11.2)%            12.4 %        12.2 %
  Restructuring expense                                        (354)             0     (100.0)%            (0.4)%         0.0 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Income  from operations                                  4,344          2,470       75.9 %             5.5 %         2.7 %
  
  Interest expense                                            1,665          1,820       (8.5)%             2.1 %         2.0 %
  Interest income                                              (143)           (42)     240.5 %            (0.2)%        (0.0)%
  Other expense (income), net                                   192            435      (55.9)%             0.2 %         0.5 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Income before income taxes                               2,630            257      923.3 %             3.3 %         0.3 %
  
  Income taxes  *                                               963             87    1,006.9 %            36.6 %        34.0 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Net Income                                    $          1,667            170      880.6 %             2.1 %         0.2 %
                                                      ==============  =============  =============  ================  ==========
  
  Net Income per share-basic                                  $0.15          $0.02      650.0 %
  Net Income per share-diluted                                $0.14          $0.02      600.0 %
  Net income per share, diluted, excluding restructuring      $0.16          $0.04      300.0 %
    and related charges and goodwill amortization (see
    proforma statement on page 7)
  Average shares outstanding-basic                           11,485         11,221        2.4 %
  Average shares outstanding-diluted                         11,714         11,304        3.6 %
  
  
  
                                                                           NINE MONTHS ENDED (UNAUDITED)
                                                       -----------------------------------------------------------------------
  
                                                                 Amounts                                  Percent of Sales
                                                       -----------------------------                 ----------------------------
                                                        January 26,    January 27,       % Over
                                                           2003            2002         (Under)            2003          2002
                                                       --------------  -------------  -------------  ----------------  ----------
  
  Net sales                                         $       248,753        273,481       (9.0)%           100.0 %       100.0 %
  Cost of sales                                             207,368        233,642      (11.2)%            83.4 %        85.4 %
                                                       --------------  -------------  -------------  ----------------  ----------
     Gross profit                                            41,385         39,839        3.9 %            16.6 %        14.6 %
  
  Selling, general and
    administrative expenses                                  29,716         33,823      (12.1)%            11.9 %        12.4 %
  Restructuring expense                                      13,006          1,303      898.2 %             5.2 %         0.5 %
                                                       --------------  -------------  -------------  ----------------  ----------
     Income (loss) from operations                           (1,337)         4,713     (128.4)%            (0.5)%         1.7 %
  
  Interest expense                                            5,244          5,851      (10.4)%             2.1 %         2.1 %
  Interest income                                              (414)           (99)     318.2 %            (0.2)%        (0.0)%
  Other expense (income), net                                   645          1,772      (63.6)%             0.3 %         0.6 %
                                                       --------------  -------------  -------------  ----------------  ----------
     Loss before income taxes                                (6,812)        (2,811)    (142.3)%            (2.7)%        (1.0)%
  
  Income taxes *                                             (2,804)          (956)     193.3 %            41.2 %        34.0 %
                                                       --------------  -------------  -------------  ----------------  ----------
  Loss before cumulative effect of accounting change         (4,008)        (1,855)    (116.1)%            (1.6)%        (0.7)%
                                                                                                     ================  ==========
  
  Cumulative effect of accounting change, net of income
  taxes                                                     (24,151)             0
                                                       --------------  -------------
  
     Net loss                                       $       (28,159)        (1,855)
                                                       ==============  =============
  
  Basic loss per share:
     Loss before cumulative effect of accounting
        change                                      $         (0.35)         (0.17)    (111.7)%
     Cumulative effect of accounting change                   (2.11)          0.00     (100.0)%
                                                       --------------  -------------  ----------
     Net loss                                                 (2.46)         (0.17)  (1,387.6)%
                                                       ==============  =============  ==========
  
  Diluted loss per share:
     Loss before cumulative effect of accounting
        change                                      $         (0.35)         (0.17)    (111.7)%
     Cumulative effect of accounting change                   (2.11)          0.00     (100.0)%
                                                       --------------  -------------  ----------
     Net loss                                                 (2.46)         (0.17)  (1,387.6)%
                                                       ==============  =============  ==========
  
  Net income per share, diluted, excluding restructuring      $0.43          $0.04        N/A
    and related charges, goodwill amortization and cumulative
    effect of accounting change (see proforma statement on
    page 8)
  Average shares outstanding-basic                           11,450         11,221        2.0 %
  Average shares outstanding-diluted                         11,450         11,221        2.0 %
  </TABLE>
  
  * Percent of sales column for income taxes is calculated as a % of income (loss)
  before income taxes.
  
  <PAGE>
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                             CONSOLIDATED BALANCE SHEETS
               JANUARY 26, 2003, JANUARY 27, 2002, AND APRIL 28, 2002
                                      Unaudited
                               (Amounts in Thousands)
  <TABLE>
  <CAPTION>
  
                                                          Amounts                      Increase
                                               ------------------------------         (Decrease)
                                                January 26,     January 27,    -------------------------  * April 28,
                                                    2003            2002        Dollars    Percent            2002
                                               ---------------  -------------  ----------  -------------  ------------
  <S>                                        <C>                   <C>         <C>          <C>              <C>
  Current assets
     Cash and cash investments               $         38,480         10,359      28,121      271.5 %          31,993
     Accounts receivable                               32,427         46,171     (13,744)     (29.8)%          43,366
     Inventories                                       53,560         59,398      (5,838)      (9.8)%          57,899
     Other current assets                              15,339          9,323       6,016       64.5 %          13,413
                                               ---------------  -------------  ----------  -------------  ------------
                   Total current assets               139,806        125,251      14,555       11.6 %         146,671
  
  Property, plant & equipment, net                     85,396        102,457     (17,061)     (16.7)%          89,772
  Goodwill                                              9,240         47,432     (38,192)     (80.5)%          47,083
  Other assets                                          2,311          1,641         670       40.8 %           4,187
                                               ---------------  -------------  ----------  -------------  ------------
  
                   Total assets              $        236,753        276,781     (40,028)     (14.5)%         287,713
                                               ===============  =============  ==========  =============  ============
  
  
  Current liabilities
     Current maturities of long-term debt    $         13,133          3,127      10,006      320.0 %           1,483
     Accounts payable                                  21,924         21,336         588        2.8 %          24,327
     Accrued expenses                                  14,646         13,652         994        7.3 %          16,460
     Accrued restructuring                              8,465          1,363       7,102      521.1 %           2,445
                                               ---------------  -------------  ----------  -------------   ------------
                   Total current liabilities           58,168         39,478      18,690       47.3 %          44,715
  
  Long-term debt                                       83,008        106,960     (23,952)     (22.4)%         107,001
  
  Deferred income taxes                                 3,502         10,330      (6,828)     (66.1)%          16,932
                                               ---------------  -------------  ----------  -------------  ------------
                   Total liabilities                  144,678        156,768     (12,090)      (7.7)%         168,648
  
  Shareholders' equity                                 92,075        120,013     (27,938)     (23.3)%         119,065
                                               ---------------  -------------  ----------  -------------  ------------
  
                   Total liabilities and
                   shareholders' equity      $        236,753        276,781     (40,028)     (14.5)%         287,713
                                               ===============  =============  ==========  =============  ============
  
  Shares outstanding                                   11,487         11,221         266        2.4 %          11,320
                                               ===============  =============  ==========  =============  ============
  
  
  </TABLE>
  
  *  Derived from audited financial statements.
  
  <PAGE>
  
                                CULP, INC. FINANCIAL
                                 INFORMATION RELEASE
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
                                      Unaudited
                               (Amounts in Thousands)
  
  <TABLE>
  <CAPTION>
  
                                                                                   NINE MONTHS ENDED
                                                                              ----------------------------
                                                                                        Amounts
                                                                              ----------------------------
                                                                              January 26,    January 27,
                                                                                  2003           2002
                                                                              -------------  -------------
  <S>                                                                    <C>                 <C>
  Cash flows from operating activities:
       Net loss                                                           $        (28,159)        (1,855)
       Adjustments to reconcile net loss to net cash
          provided by operating activities:
             Cumulative effect of accounting change, net of income taxes            24,151              0
             Depreciation                                                           10,554         13,214
             Amortization of intangible and other assets                               286          1,177
             Amortization of stock based compensation                                  158             92
             Restructuring expense                                                  13,006          1,303
             Changes in assets and liabilities:
                Accounts receivable                                                 10,939         11,678
                Inventories                                                          4,339            599
                Other current assets                                                (1,885)        (1,453)
                Other assets                                                           295            (19)
                Accounts payable                                                    (5,477)        (1,768)
                Accrued expenses                                                    (1,551)        (1,156)
                Accrued restructuring                                               (2,792)        (2,163)
                Income taxes payable                                                     0         (1,268)
                                                                              -------------  -------------
                   Net cash provided by operating activities                        23,864         18,381
                                                                              -------------  -------------
  Cash flows from investing activities:
       Capital expenditures                                                         (9,076)        (3,393)
                                                                              -------------  -------------
                   Net cash used in investing activities                            (9,076)        (3,393)
                                                                              -------------  -------------
  Cash flows from financing activities:
       Principal payments of long-term debt                                        (12,343)        (1,569)
       Change in accounts payable-capital expenditures                               3,074         (4,267)
       Proceeds from common stock issued                                               968              0
                                                                              -------------  -------------
                   Net cash used in financing activities                            (8,301)        (5,836)
                                                                              -------------  -------------
  
  Increase in cash and cash investments                                              6,487          9,152
  
  Cash and cash investments at beginning of period                                  31,993          1,207
                                                                              -------------  -------------
  
  Cash and cash investments at end of period                              $         38,480         10,359
                                                                              =============  =============
  
  
  Free Cash Flow (1)                                                      $         17,862         10,721
                                                                              =============  =============
  
  </TABLE>
  
  
  (1) Free Cash Flow is defined as net cash provided by operating  activities less
  capital expenditures plus or minus the change in accounts
  <PAGE>
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL ANALYSIS
                                  JANUARY 26, 2003
  <TABLE>
  <CAPTION>
                                                     FISCAL 02                                         FISCAL 03
                                                 ----------------     ----------------------------------------------------------------
                                                        Q3                 Q1            Q2             Q3          Q4         LTM (3)
                                                 ----------------     ----------------------------------------------------------------
  <S>                                             <C>                 <C>          <C>            <C>           <C>              <C>
  INVENTORIES
     Inventory turns                                      5.1              4.9            4.9            4.8
  
  RECEIVABLES
     Days sales in receivables                             43               34             36             34
  
  WORKING CAPITAL
     Current ratio                                        3.2              3.4            3.0            3.1
     Operating working capital turnover (2)               4.2              4.7            4.8            4.9
     Operating working capital (2)                    $84,233          $70,762        $68,492        $64,063
  
  PROPERTY, PLANT & EQUIPMENT
     Depreciation rate                                   7.1%             6.4%           6.5%           6.2%
     Percent property, plant &
       equipment are depreciated                        59.0%            60.6%          61.5%          61.0%
     Capital expenditures                              $4,729 (1)       $3,070         $2,258         $3,748
  
  PROFITABILITY
     Net income (loss) per share (basic)                $0.02            $0.08 (5)    ($0.57)          $0.15              ($0.49) (5)
     Net income (loss) per share (diluted)              $0.02            $0.08 (5)    ($0.57)          $0.14              ($0.49) (5)
     Net income (loss) per share (diluted)              $0.04 (6)        $0.08 (5)      $0.19 (7)      $0.16 (8)            $0.81 (9)
     Return on average total capital                     2.8% (6)         3.6% (5)       6.8% (7)       6.0% (8)             6.8% (9)
     Return on average equity                            1.5% (6)         3.1% (5)       9.4% (7)       8.0% (8)             9.2% (9)
  
  
  LEVERAGE
     Total liabilities/equity                          129.6%           143.2%         160.8%         157.1%
     Funded debt/equity                                 91.7%            99.5%         106.9%         104.4%
     Funded debt/capital employed                       47.8%            49.9%          51.7%          51.1%
     Funded debt                                     $110,087          $96,533        $96,558        $96,141
     Funded debt/EBITDA (LTM) (4)                        3.64             2.71           2.67           2.57
  
  LEVERAGE (NET OF CASH AND CASH INVESTMENTS) (10)
     Total liabilities/equity                             N/A              N/A         122.0%         115.3%
     Funded debt/equity                                   N/A              N/A          68.1%          62.6%
     Funded debt/capital employed                         N/A              N/A          40.5%          38.5%
     Funded debt                                          N/A              N/A        $61,521         57,661
     Funded debt/EBITDA (LTM) (4)                         N/A              N/A           1.70           1.54
  
  OTHER
     Book value per share                              $10.62            $8.45          $7.87          $8.02
     Employees at quarter end                           3,015            2,900          2,568          2,534
     Sales per employee (annualized)                 $120,523         $116,163       $122,272       $124,306
     Capital employed                                $230,999         $193,540       $186,884       $188,216
     Effective income tax rate (11)                     34.0%            37.0%          37.0%          37.0%
     EBITDA (4)                                        $6,859           $7,356         $8,810         $8,118              $37,352
     EBITDA/net sales (4)                                8.1%             8.6%          10.5%          10.2%                10.5%
  
    (1) Expenditures for entire year
    (2) Working capital for this calculation is accounts receivable, inventories and accounts payable
    (3) LTM represents "Latest Twelve Months"
    (4) EBITDA includes earnings before interest, income taxes, depreciation, amortization, all restructuring and related
          charges, certain non-cash charges and cumulative effect of accounting change, as defined by the company's credit agreement
    (5) Excludes cumulative effect of accounting change made during first quarter fiscal 2003
    (6) Excludes goodwill amortization expense of $350,000 ($230,000 or $0.02 per share diluted, after taxes)
    (7) Excludes restructuring and related charges of $14.5 million ($8.9 million or $.77 per share diluted, after taxes)
    (8) Excludes restructuring related charges of $751,000 and a restructuring credit of $354,000 (net $397,000 or $0.02 per share,
          diluted after taxes)
    (9) Excludes restructuring and related charges of $9.7 million ($5.8 million or $.51 per share diluted, after taxes)
          and $14.5 million ($8.9 million or $0.78 per share diluted, after taxes) for the fourth quarter fiscal 2002 and second
          quarter fiscal 2003, respectively, and $24.2 million cumulative effect of accounting change for the first quarter of fiscal
          2003.  Also excludes goodwill amortization expense of $350,000 ($230,000 or $.02 per share diluted, after taxes) for the
          fourth quarter of fiscal 2002
   (10) The cash balance of $35.0 million and $38.5 million has been excluded from total liabilities, funded debt and capital
          employed to arrive at the ratios in this section for the second and third quarter of fiscal 2003, respectively
   (11) Effective income tax rate excludes restructuring and related charges
  </TABLE>
  <PAGE>
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                      SALES / GROSS PROFIT BY SEGMENT/DIVISION
  FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
  
                               (Amounts in thousands)
  <TABLE>
  <CAPTION>
  
  
                                                       THREE MONTHS ENDED (UNAUDITED)
                                     --------------------------------------------------------------------
                                                Amounts                           Percent of Total Sales
                                     -------------------------------              -----------------------
                                      January 26,      January 27,     % Over
  Segment/Division Sales                  2003            2002         (Under)       2003        2002
  --------------------------------   ---------------  --------------  ----------  -----------  ----------
  <S>                             <C>                  <C>            <C>         <C>          <C>
  Upholstery Fabrics
      Culp Decorative Fabrics     $          31,734          35,878    (11.6)%      40.0 %       39.6 %
      Culp Velvets/Prints                    22,819          28,648    (20.3)%      28.8 %       31.6 %
      Culp Yarn                               1,356           1,318      2.9 %       1.7 %        1.5 %
                                     ---------------  --------------  ----------  -----------  ----------
                                             55,909          65,844    (15.1)%      70.5 %       72.7 %
  Mattress Ticking
       Culp Home Fashions                    23,383          24,774     (5.6)%      29.5 %       27.3 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                * $          79,292          90,618    (12.5)%     100.0 %      100.0 %
                                     ===============  ==============  ==========  ===========  ==========
  
  
  Segment Gross Profit                                                            Gross Profit Margin
  --------------------------------                                                -----------------------
  
  Upholstery Fabrics  (1)         $           8,839           6,829     29.4 %      15.8 %       10.4 %
  Mattress Ticking                            5,700           6,679    (14.7)%      24.4 %       27.0 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                  $          14,539          13,508      7.6 %      18.3 %       14.9 %
                                     ===============  ==============  ==========  ===========  ==========
  
  
  
  
                                                        NINE MONTHS ENDED (UNAUDITED)
                                     --------------------------------------------------------------------
  
                                                Amounts                           Percent of Total Sales
                                     -------------------------------              -----------------------
                                      January 26,      January 27,     % Over
  Segment/Division Sales                  2003            2002         (Under)       2003        2002
  --------------------------------   ---------------  --------------  ----------  -----------  ----------
  
  Upholstery Fabrics
      Culp Decorative Fabrics     $         100,324         109,531     (8.4)%      40.3 %       40.1 %
      Culp Velvets/Prints                    69,243          84,522    (18.1)%      27.8 %       30.9 %
      Culp Yarn                               4,702           3,816     23.2 %       1.9 %        1.4 %
                                     ---------------  --------------  ----------  -----------  ----------
                                            174,269         197,869    (11.9)%      70.1 %       72.4 %
  Mattress Ticking
       Culp Home Fashions                    74,484          75,612     (1.5)%      29.9 %       27.6 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                * $         248,753         273,481     (9.0)%     100.0 %      100.0 %
                                     ===============  ==============  ==========  ===========  ==========
  
  
  Segment Gross Profit                                                            Gross Profit Margin
  --------------------------------                                                -----------------------
  
  Upholstery Fabrics (1)          $          25,649          20,696     23.9 %      14.7 %       10.5 %
  Mattress Ticking                           17,647          20,278    (13.0)%      23.7 %       26.8 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                  $          43,296          40,974      5.7 %      17.4 %       15.0 %
                                     ===============  ==============  ==========  ===========  ==========
  
  </TABLE>
  
  * U.S.  sales were $71,130 and $79,539 for the third  quarter of fiscal 2003 and
  fiscal  2002,  respectively;  and  $218,957  and $233,617 for the nine months of
  fiscal 2003 and 2002,  respectively.  The percentage  decrease in U.S. sales was
  10.6% for the third quarter and a decrease of 6.3% for the nine months.
  
  
  (1) Excludes  restructuring related charges of $751,000 for the third quarter of
  fiscal  2003;  and  excludes  $1.9  million and $1.2  million for the first nine
  months of fiscal 2003 and 2002, respectively.
  
  
  <PAGE>
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                       INTERNATIONAL SALES BY GEOGRAPHIC AREA
  FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
  <TABLE>
  <CAPTION>
  
  
                               (Amounts in thousands)
  
                                                      THREE MONTHS ENDED (UNAUDITED)
                                              ------------------------------------------------
  
                                                          Amounts
                                              ---------------------------------
                                                January 26,      January 27,       % Over
               Geographic Area                     2003              2002         (Under)
   ----------------------------------------   ----------------  ---------------  -----------
  <S>                                      <C>                      <C>           <C>
   North America (Excluding USA)           $            6,648            6,613       0.5 %
   Europe                                                 274              472     (41.9)%
   Middle East                                            260              598     (56.5)%
   Far East & Asia                                        765            2,924     (73.8)%
   South America                                           94              155     (39.4)%
   All other areas                                        121              318     (61.9)%
                                              ----------------  ---------------  -----------
  
                                           $            8,162           11,079     (26.3)%
                                              ================  ===============  ===========
  
                    Percent of total sales              10.3%            12.2%
  
  
                                                       NINE MONTHS ENDED (UNAUDITED)
                                              ------------------------------------------------
  
                                                          Amounts
                                              ---------------------------------
                                                January 26,      January 27,       % Over
               Geographic Area                     2003              2002         (Under)
   ----------------------------------------   ----------------  ---------------  -----------
   North America (Excluding USA)           $           22,622           23,023      (1.7)%
   Europe                                                 535            2,115     (74.7)%
   Middle East                                          1,907            4,804     (60.3)%
   Far East & Asia                                      3,748            8,414     (55.5)%
   South America                                          508              490       3.7 %
   All other areas                                        476            1,018     (53.2)%
                                              ----------------  ---------------  -----------
  
                                           $           29,796           39,864    (25.3) %
                                              ================  ===============  ===========
  
                    Percent of total sales              12.0%            14.6%
  
  </TABLE>
  
  International  sales,  and the  percentage of total sales,  for each of the last
  three fiscal years follows:  fiscal  2000-$111,104  (23%); fiscal 2001 - $77,824
  (19%) and fiscal 2002 - $53,501 (14%).
  
  <PAGE>
  
                                     CULP, INC.
                     PROFORMA CONSOLIDATED STATEMENTS OF INCOME
          FOR THE THREE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
                  (Amounts in Thousands, Except for Per Share Data)
  <TABLE>
  <CAPTION>
                                                                                       THREE MONTHS ENDED (UNAUDITED)
                                                    ----------------------------------------------------------------------------------
  
                                         As Reported                    January 26, 2003           January 27, 2002
                                         January 26,  Reclassification    Proforma Net    % of       Proforma Net    % of      % Over
                                             2003      & Adjustments    of Adjustments  Net Sales  of Adjustments  Net Sales   (Under)
                                         ------------  -------------    ----------------------     -----------------------   ---------
  <S>                                  <C>               <C>              <C>        <C>            <C>         <C>           <C>
  Net sales                            $      79,292             0           79,292   100.0%           90,618     100.0%        -12.5%
  Cost of sales                               65,504          (751) (3)      64,753    81.7%           77,110      85.1%        -16.0%
                                         ------------  -------------    ----------------------   -----------------------     ---------
          Gross profit                        13,788          (751)          14,539    18.3%           13,508      14.9%          7.6%
  
  Selling, general and
    administrative expenses                    9,798             0            9,798    12.4%           11,038      12.2%        -11.2%
  Restructuring expense                         (354)          354 (4)            0     0.0%                0       0.0%          0.0%
                                         ------------  -------------    ----------------------   -----------------------     ---------
          Income  (loss) from                  4,344          (397)           4,741     6.0%            2,470       2.7%         91.9%
          operations
  
  Interest expense                             1,665             0            1,665     2.1%            1,820       2.0%         -8.5%
  Interest income                               (143)            0             (143)   -0.2%              (42)      0.0%        240.5%
  Other expense (income), net                    192             0              192     0.2%               85       0.1% (6)    125.9%
                                         ------------  -------------    ----------------------   -----------------------     ---------
          Income (loss) before                 2,630          (397)           3,027     3.8%              607       0.7%        398.7%
          income taxes
  
  Income taxes  (1)                              963          (157)           1,120    37.0%              207      34.2% (2)    440.1%
                                         ------------  -------------    ----------------------   -----------------------     ---------
  Net income (loss)                    $       1,667          (240)           1,907     2.4%              400       0.4%        377.2%
                                         ============  =============    ======================   =======================     =========
  
  Net income (loss) per share-basic            $0.15        ($0.02)           $0.17                     $0.04
  Net income (loss) per share-diluted          $0.14        ($0.02)           $0.16                     $0.04
  Average shares outstanding-basic            11,485        11,485           11,485                    11,221
  Average shares outstanding-diluted          11,714        11,485           11,714 (5)                11,304
  
  Notes:
   (1) Percent of net sales column for income taxes is calculated as a % of income (loss) before income taxes
   (2) Pre-restructuring income tax rate was 37% and 34% for the third quarter of fiscal 2003 and 2002, respectively.
   (3) The $751,000 represents restructuring related charges for inventory markdowns and movement of equipment related to the
       Chattanooga plant closing
   (4) The $354,000 restructuring credit represents the reversal of excess accrued employment benefit and plant security costs
        associated with the shutdown of the wet printed flock operation
   (5) Incremental shares of 229,000 for fiscal 2003 included in fully diluted calculation
   (6) Excludes $350,000 ($230,000 or $0.02 per share diluted, after taxes) of goodwill amortization
  </TABLE>
  
  <PAGE>
  
                  PROFORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS)
           FOR THE NINE MONTHS ENDED JANUARY 26, 2002 AND JANUARY 27, 2002
                  (Amounts in Thousands, Except for Per Share Data)
  <TABLE>
  <CAPTION>
  
  
                                                                                NINE MONTHS ENDED
                                      ------------------------------------------------------------------------------------------------
  
                                      As Reported                    January 26, 2003              January 27, 2002
                                      January 26,  Reclassification    Proforma Net      % of        Proforma Net     % of     % Over
                                         2002       & Adjustments    of Restructuring  Net Sales  of Restructuring  Net Sales  (Under)
                                      ------------  -------------     ----------------------      ------------------------   ---------
  <S>                               <C>              <C>              <C>          <C>             <C>           <C>           <C>
  Net sales                         $     248,753            0          248,753     100.0%          273,481       100.0%        -9.0%
  Cost of sales                           207,368       (1,911) (3)     205,457      82.6%          232,507        85.0% (6)   -11.6%
                                      ------------  -------------    ----------------------       ------------------------   ---------
          Gross profit                     41,385       (1,911)          43,296      17.4%           40,974        15.0%         5.7%
  
  Selling, general and
    administrative expenses                29,716            0           29,716      11.9%           33,823        12.4%       -12.1%
  Restructuring expense                    13,006      (13,006) (4)           0       0.0%                0         0.0% (6)     0.0%
                                      ------------  -------------    ----------------------       ------------------------  ----------
          Income  (loss) from              (1,337)     (14,917)          13,580       5.5%            7,151         2.6%        89.9%
          operations
  
  Interest expense                          5,244            0            5,244       2.1%            5,851         2.1%       -10.4%
  Interest income                            (414)           0             (414)     -0.2%              (99)        0.0%       318.2%
  Other expense (income), net                 645            0              645       0.3%              722         0.3% (7)   -10.7%
                                      ------------  -------------    ----------------------       ------------------------   ---------
          Income (loss) before             (6,812)     (14,917)           8,105       3.3%              677         0.2%        N/A
          income taxes
  
  Income taxes  (1)                        (2,804)      (5,803)           2,999      37.0%              230        34.0% (2)    N/A
                                      ------------  -------------    ----------------------       ------------------------   ---------
  Income (loss) before cumulative
  effect of accounting change       $      (4,008)      (9,114)           5,106       2.1%              447         0.2%        N/A
                                      ============  =============    ======================       ========================   =========
  
  Net income (loss) per share-basic          ($0.35)      ($0.80)           $0.45                     $0.04
  Net income (loss) per share-diluted        ($0.35)      ($0.80)           $0.43                     $0.04
  Average shares outstanding-basic           11,450       11,450           11,450                    11,221
  Average shares outstanding-diluted         11,450       11,450           11,775 (5)                11,281
  
  
  Notes:
   (1) Percent of net sales column for income taxes is calculated as a % of income (loss) before income taxes.
   (2) Pre-restructuring income tax rate was 37% and 34% for the first nine months of fiscal 2003 and 2002, respectively.
   (3) The $1.9 million represents restructuring related charges for inventory markdowns and movement of equipment relating to the
       Chattanooga plant closing
   (4) The $13.0 million represents restructuring charges for the shut down of the Chattanooga operation, $12.1 million, and the
       additional write-down of wet printed assets held for sale, $1.3 million offset by a restructuring credit of $354,000 for over
       accrued employee benefit and plant security costs
   (5) Incremental shares of 325,000 included in fully diluted calculation
   (6) $1.2 million ($.8 million or $0.08 per share diluted, after taxes) of CDF and CYN restructuring related charges are excluded
       from the cost of sales total; and $1.3 million ($.9 million or $0.07 per share, diluted, after taxes) in CDF and CYN
       restructuring charges are excluded to arrive at the proforma amounts
   (7) Excludes $1,050,000 ($690,000 or $0.06 per share diluted, after taxes) of goodwill amortization
  
  </TABLE>
  
  
  <PAGE>
  
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
      for the three and nine months ended January 26, 2003 and January 27, 2002
  
  
  OVERVIEW
  
       GENERAL  -- For the  third  quarter,  net  sales  decreased  12.5% to $79.3
  million; and the company reported net income of $1.7 million, or $0.14 per share
  diluted  versus net income of $170,000,  or $0.02 per share diluted in the third
  quarter of fiscal 2002. Excluding restructuring and related charges and credits,
  earnings for the third  quarter of fiscal 2003 were $1.9  million,  or $0.16 per
  share diluted  versus net income of $400,000,  or $0.04 per share diluted in the
  third  quarter of fiscal  2002,  excluding  goodwill  amortization.  The company
  reported  further  improvement  in its balance sheet by reducing  funded debt by
  $12.3 million during the first nine months of fiscal 2003 and ending the quarter
  with $38.5 million in cash and cash investments.
  
  During fiscal 2003, the company placed significant focus on reducing outstanding
  accounts receivable,  including a concerted effort to collect past due accounts,
  shorten  payment  terms by offering a cash discount and resolve old items within
  receivable accounts. As of January 26, 2003, accounts receivable decreased 29.8%
  from the year earlier levels. In the third quarter,  due to the decrease in past
  due receivable balances,  there was a net reduction of $435,000 in the allowance
  for doubtful  accounts.  This  compares with bad debt expense of $703,000 in the
  year earlier period.  Additionally,  as a result of this effort, the company has
  resolved $370,000 in old, open credits with customers which were credited to net
  sales during the quarter.
  
       ADOPTION OF SFAS No. 142 -- As of April 29,  2002,  Culp  adopted  SFAS No.
  142,  "Goodwill and Other  Intangible  Assets." As a result the company recorded
  during  the first  quarter  of fiscal  2003 a  non-operating  non-cash  goodwill
  impairment  charge  of  $37.6  million  ($24.2  million  net of  taxes  of $13.4
  million),  or $2.11 per share diluted,  related to the goodwill  associated with
  the Culp Decorative Fabrics division.
  
       PROFORMA  CONSOLIDATED  STATEMENTS  OF  INCOME  (LOSS) -- The  company  has
  included,  within this financial information release, proforma income statements
  which reconcile the reported  income  statements  with proforma  results,  which
  exclude restructuring and related charges,  goodwill amortization and cumulative
  effect of  accounting  change.  See PROFORMA  CONSOLIDATED  STATEMENTS OF INCOME
  (LOSS) on pages 7 and 8 of this financial information release.
  
       RESTRUCTURING  AND RELATED  CHARGES -- The financial  results for the third
  quarter include a total of $751,000 in restructuring related charges, which were
  classified  in cost  of  sales,  and a  $354,000  credit  classified  under  the
  restructuring  expense line item. The restructuring  related charges of $751,000
  represent inventory markdowns and equipment relocation costs associated with the
  closing  of the  Chattanooga,  Tennessee  facility  within  the Culp  Decorative
  Fabrics division in October 2002. The  restructuring  credit  represents  unused
  accrued  personnel  costs,  principally  extended  health care benefit  expense,
  relating to the exit of the wet printed flock  business  during April 2002.  The
  net after tax effect of the  restructuring  related  charges  and  restructuring
  credit  reduced  net income  per share by $0.02 for the third  quarter of fiscal
  2003.
  
  The  Culp  Decorative  Fabrics  (CDF)  restructuring  actions  are  expected  to
  significantly  improve gross margins  within the  division,  while  allowing the
  ability to meet foreseeable levels of demand, all on a substantially  lower cost
  base.  The  initiative  is  projected  to  result  in  annual  cost  savings  of
  approximately $12 to $15 million, beginning in the third quarter of fiscal 2003.
  Approximately $8.0 million of these savings relate to fixed  manufacturing costs
  and the remaining $4.0 to $7.0 million relate to variable manufacturing costs. A
  substantial portion of the savings from lower fixed  manufacturing  costs, which
  were achieved due to the closing of the Chattanooga,  Tennessee operation at the
  end of the second quarter,  have been realized and have contributed to the third
  quarter  results.  However,  while there has been some  progress on savings with
  variable  manufacturing costs, the company expects these benefits to be realized
  over the next two quarters as  operations  within CDF achieve  higher  levels of
  efficiency.
  
  The remaining elements from the CDF Chattanooga  restructuring  initiative to be
  completed are as follows:  (1) achieve  targeted levels of operating  efficiency
  for the looms  transferred  into the Pageland  operation,  which is projected to
  take until the end of the first  quarter of fiscal 2004;  (2)  transfer  certain
  finishing  and warping  equipment  to other CDF plants by the end of this fiscal
  year;  and  (3)  complete  the  capital  expenditure  projects  related  to  the
  restructuring.
  
  Another  important  element  of the  CDF  restructuring  initiative  was a major
  reduction in the complexity of the dobby upholstery  product line, which has led
  to the elimination of approximately  1,500 low volume stock keeping units (SKUs)
  representing  about 70% of the  finished  goods  SKUs (but only 10% of sales) in
  that product  category.  This initiative is now  substantially  complete and has
  been accomplished without significant disruptions of customer relationships.
  
  The CDF  restructuring is expected to result in total  restructuring and related
  charges of approximately $15 million.  The company currently estimates that this
  restructuring will result in additional charges of approximately $750,000 during
  the  fourth  quarter  of the  fiscal  year,  most of which  relate to  equipment
  relocation costs.
  
  
  INCOME STATEMENT COMMENTS
  
       UPHOLSTERY FABRIC SEGMENT (See page 5 - Sales and Gross Profit by Segment)
  
       NET SALES --  Upholstery  fabric sales for the third quarter of fiscal 2003
  decreased  15.1% to $55.9  million  (see sales by  Segment/Division  on page 5).
  Domestic upholstery fabric sales decreased 11.9% to $50.9 million, due primarily
  to overall  weakness in consumer  demand for  upholstered  furniture,  and other
  factors  discussed below.  International  sales decreased 37.9% to $5.0 million,
  due primarily to the exiting of the wet printed  flock fabric  business in April
  2002.
  
  In addition to overall softness in demand during the quarter, the sales decrease
  in upholstery  fabrics is  attributable  to the  company's  strategy to focus on
  improving the profitability of its sales mix by reducing or eliminating products
  generating little or no profit. In the Culp Velvets/Prints division, the company
  discontinued  its  unprofitable  wet printed  flock  business at the end of last
  fiscal year. This product line produced annual sales last year of  approximately
  $17  million  with  approximately  $2 million in  operating  losses.  In the CDF
  division,  the company  discontinued  about half of its finished  goods SKUs (or
  approximately  10,000) over the last year, most of which were small volume items
  and were costly to produce.  These  discontinued  SKUs include the dobby product
  line  SKUs  that  were   recently   eliminated   as  part  of  the   Chattanooga
  restructuring.  The company expects this process of identifying and dropping its
  low profit items to continue through the balance of this fiscal year.
  
       The  company  believes   additional   factors  that  are  likely  impacting
  upholstery fabric sales are (1) the increasing market share of leather furniture
  being sold in the U.S.; and (2) the increase in imported fabrics, both in "piece
  goods" and "cut and sewn kits".
  
       GROSS PROFIT -- In spite of weak furniture  demand,  the upholstery  fabric
  segment improved its gross profit dollars and margins  significantly.  Excluding
  restructuring  related charges of $751,000 for the third quarter of fiscal 2003,
  gross  profit  dollars and margin  increased to $8.8 million and 15.8% from $6.8
  million and 10.4% in the third quarter of last year. The key factors behind this
  gain was a sharp improvement in CDF due to: (1) a more profitable sales mix; (2)
  the increasing  productivity  benefits from the CDF 2001 restructuring;  and (3)
  the fixed cost reduction benefits from the Chattanooga closure.
  
  The  company  is  optimistic  that  gross  profit  dollars  and  margins  in the
  upholstery  fabric  segment will  continue to improve over the next few quarters
  driven  principally by the progress within the CDF division.  More  specifically
  within CDF,  the company is focused on (1) creating  and selling  products  with
  better  margins;  (2)  continuing  to reduce low profit SKUs;  and (3) improving
  manufacturing performance, in terms of productivity and inventory obsolescence.
  
  
       MATTRESS TICKING SEGMENT (See page 5 - Sales and Gross Profit by Segment)
  
       NET SALES --  Mattress  fabric  sales for the third  quarter of fiscal 2003
  decreased 5.6% to $23.4 million.  Sales to U.S. bedding  manufacturers fell 7.2%
  to $20.3 million,  while sales to international  customers  increased by 5.9% to
  $3.1  million.  The sales  decrease is due to the  overall  weakness in consumer
  demand for mattresses.
  
       GROSS PROFIT -- The mattress  fabric  segment  (Culp Home  Fashions or CHF)
  reported  for the third  quarter of fiscal 2003 lower gross  profit  dollars and
  margins of $5.7 million and 24.4%, respectively, both down from $6.7 million and
  27.0%  during the  corresponding  quarter  of the prior  year.  The key  factors
  impacting gross profit were lower sales and the residual impact from a high cost
  European sourcing  agreement that ended October 31, 2002. During the quarter the
  division  worked  down its  inventory  position  of these  products  by reducing
  production. CHF entered into this agreement with the supplier in October 2001 as
  part of the  termination  of a  long-term  supply  relationship.  The  agreement
  provided,  among  other  things,  that the company  maintain a certain  level of
  weekly purchases through October 31, 2002. Therefore, for the first half of this
  fiscal year, the company was required to source products from this supplier that
  were  significantly  more expensive than products  manufactured at the company's
  U.S.  and  Canadian  plants in order to meet the  agreement's  minimum  purchase
  levels.  The company had planned during the last fiscal year for the termination
  of this supply  agreement by initiating a plan to increase  capacity in the U.S.
  and Canadian  plants  beginning in the first quarter and ending by January 2003.
  This capacity  expansion project accounts for approximately  $4.5 million of the
  company's fiscal 2003 capital  spending.  This supply agreement was concluded on
  October 31, 2002.
  
       SG&A EXPENSES -- SG&A expenses for the third quarter declined $1.2 million,
  or 11.2%,  from the prior  year,  and as a percent of net sales,  SG&A  expenses
  increased to 12.4% from 12.2%. SG&A expenses in the third quarter included a net
  reduction of $435,000 in the allowance for doubtful accounts,  due to a decrease
  in past due receivable balances. This compares with bad debt expense of $703,000
  in the year-earlier period.
  
       INTEREST  EXPENSE  (INCOME)  --  Interest  expense  for the  third  quarter
  declined to $1.7 million from $1.8 million due to significantly lower borrowings
  outstanding,  offset  somewhat by an increase  in the  interest  rate on the $75
  million term loan.  Interest  income  increased to $143,000  from $42,000 due to
  significantly higher invested cash as compared with the prior year.
  
       OTHER EXPENSE (INCOME), NET -- Other expense (income) for the third quarter
  of fiscal 2003 totaled  $192,000  compared with $435,000 in the prior year.  The
  decrease was principally due to the adoption of SFAS No. 142, which discontinued
  the amortization of goodwill.  Goodwill amortization during the third quarter of
  fiscal year 2002 was $350,000.
  
       INCOME TAXES -- Excluding the  cumulative  effect of accounting  change and
  restructuring and related charges, the effective tax rate for the nine months of
  fiscal 2003 was 37% compared with 34% for the year earlier period.
  
       EBITDA -- EBITDA  for the third  quarter  of fiscal  2003 was $8.1  million
  compared with $6.9 million in the prior year.  EBITDA  includes  earnings before
  interest,  income  taxes,  depreciation,  amortization,  all  restructuring  and
  related charges,  certain  non-cash charges and cumulative  effect of accounting
  change, as defined by the company's credit agreement.
  
  BALANCE SHEET COMMENTS
  
       CASH AND CASH  INVESTMENTS  -- Cash and cash  investments as of January 26,
  2003  increased to $38.5  million from $32.0  million at the end of fiscal 2002,
  reflecting  cash flow from operations of $23.9 million for the first nine months
  of fiscal 2003,  capital  expenditures of $9.1 million,  debt repayment of $12.3
  million, stock issuance from the sale of exercised stock options of $1.0 million
  and an increase in accounts payable for capital expenditures of $3.1 million.
  
       WORKING  CAPITAL -- Accounts  receivable  as of January 26, 2003  decreased
  29.8%  from  the   year-earlier   level,  due  principally  to  the  decline  in
  international  sales with their related  longer credit terms,  repayment of past
  due balances and an increase in the number of customers taking the cash discount
  for shorter payment terms. Days sales outstanding totaled 34 days at January 26,
  2003 compared with 43 a year ago and 36 at last fiscal year end.  Inventories at
  the close of the third quarter  decreased 9.8% from a year ago.  Inventory turns
  for the third quarter were 4.8 versus 5.1 for the year-earlier period. Operating
  working  capital  (comprised  of accounts  receivable,  inventory  and  accounts
  payable) was $64.1  million at January 26, 2003,  down from $84.2 million a year
  ago.
  
       PROPERTY, PLANT AND EQUIPMENT -- Capital spending for the first nine months
  of fiscal  2003 was $9.1  million.  The  company's  original  budget for capital
  spending for all of fiscal 2003 was $8.5 million,  compared with $4.7 million in
  fiscal  2002.  As  part  of the  fiscal  2003  restructuring  plan  in the  Culp
  Decorative Fabrics division, the company increased the budget by $4.5 million to
  $13.0  million.  Depreciation  for the third quarter of fiscal 2003 totaled $3.4
  million, and is estimated at $14.0 million for the full fiscal year.
  
       INTANGIBLE ASSETS -- As of January 26, 2003, goodwill in the amount of $9.2
  million is the company's only intangible asset. The company adopted SFAS No. 142
  on April  29,  2002.  During  the  first  quarter  of  fiscal  2003 the  company
  recognized  an impairment  charge of $37.6 ($24.2  million net of taxes of $13.4
  million) upon adoption of SFAS No. 142.
  
       LONG-TERM  DEBT -- As of the end of the  third  quarter,  the  company  had
  reduced  funded debt by $12.3  million  from last  fiscal year end.  Funded debt
  equals long-term debt plus current maturities.  Funded debt was $96.1 million at
  January 26,  2003,  compared  with $108.5  million at fiscal 2002 year end.  The
  company's funded debt-to-capital ratio was 51.1% at January 26, 2003.
  
       The company  also reports it leverage  statistics  in terms of funded debt,
  net of cash and cash investments,  under the assumption it could use the cash to
  repay  debt  at  any  time.  Therefore,  funded  debt,  net  of  cash  and  cash
  investments,  was $57.7  million at January 26, 2003 compared with $76.5 million
  at fiscal 2002 year end. In addition, the company's funded debt (net of cash and
  cash  investments)  to capital  employed ratio was 38.5% and funded debt (net of
  cash and cash investments) to EBITDA was 1.54, which is substantially lower than
  the highest  point level of 4.28 at January  2001.  Since the end of fiscal 2000
  (two years and nine  months  ago),  the company  has  substantially  reduced its
  funded debt (net of cash and cash  investments)  by a total of $78.8  million or
  57.7%.
  
       The company  entered into a new loan agreement  during August 2002 with its
  principal  bank lender that  provides,  among other things,  for: (1) a two year
  $34.7 million credit facility,  which includes a $15.0 million  revolving credit
  line and $19.7  million  for  letters  of credit  for the  company's  industrial
  revenue bonds (IRB's), (2) lower interest rates based upon a pricing matrix, and
  (3)  improved  financial  covenants.  The  company  was in  compliance  with all
  covenants contained in its loan agreements as of January 26, 2003.
  
       The company  has  initiated  the early  repayment  of $12.7  million of its
  long-term  debt by March 15, 2003 and  therefore has  reclassified  this debt to
  current   maturities  of  long-term  debt.  The  debt  being  repaid  represents
  Industrial Revenue Bonds ("IRBs").  Effective with this repayment of IRBs, under
  the terms of the company's bank loan  agreement,  all collateral  pledged on the
  company's  outstanding  loans  will be  removed.  In  addition,  with these debt
  retirements,  the company  will have  reduced  its funded debt by $25.0  million
  during  fiscal 2003,  and the company is  optimistic  that its cash  position at
  fiscal year end will exceed $25 million.
  
       The  remaining  funded debt after  repayment  of these IRBs will be totally
  unsecured  and  will be  comprised  of a $75  million  term  loan,  with a fixed
  interest  rate of 7.76%,  $7.0  million in  remaining  IRBs and a $1.4  million,
  non-interest bearing term loan with the Canadian government. The first scheduled
  principal  payment on the $75 million  term loan is due March 2006,  three years
  away, and it amounts to $11.0 million. The Canadian government loan is repaid in
  annual installments of approximately $450,000 per year.
  
       The company  plans to  maintain a cash  reserve of at least $25 million for
  the foreseeable future. Cash accumulated above this level will likely be used to
  repay the  remaining  $7.0 million in IRBs over the next several  quarters.  The
  company has chosen to repay the  outstanding  IRBs first due to high  prepayment
  fees and costs associated with the $75 million term loan.
  
  FREE CASH FLOW COMMENTS
  
       Free cash flow was $17.9  million  for the first nine months of fiscal 2003
  compared with $10.7  million for the same period of the prior year.  The company
  defines free cash flow as cash from operations, less capital expenditures,  plus
  or minus the  change in  accounts  payable  for  capital  expenditures.  The key
  reasons for this improvement were continued  improvement in accounts  receivable
  collections,  lower  inventory  levels,  higher  profits  and the  benefit  from
  deferred payment terms for capital expenditures.
  
  BUSINESS OUTLOOK
  
       For the fourth  quarter of fiscal 2003, the company  believes  consolidated
  sales  will  decline in the same range as the third  quarter  decrease  of 12.5%
  while gross  profit  margins  are  expected to  approximate  last year's  fourth
  quarter  gross margin of 21.8%,  excluding  restructuring  and related  charges,
  resulting in lower gross profit dollars.  More than offsetting this gross profit
  dollar decrease, total SG&A, interest and other expenses are expected to decline
  approximately  $4.0  million in the  fourth  quarter,  absent any large  unusual
  items,  from a total of $17.3  million in last year's fourth  quarter.  The cost
  reduction is due to several factors:  (1) lower incentive  compensation;  (2) an
  unusually  high bad debt expense of $1.2 million in last year's fourth  quarter;
  (3)  various  reductions  in other  SG&A  expenses;  and (4) lower net  interest
  expense.  The lower incentive  compensation  expense  reflects the fact that the
  entire  fiscal 2002 amount was recorded in the fourth  quarter since the company
  was operating at a net loss through the third quarter and therefore did not meet
  incentive  targets.  However,  this year's expense was accrued more ratably over
  the four quarterly periods as incentive targets were realized.  Therefore,  with
  gross  profit  margin  about the same on lower sales,  and  substantially  lower
  costs, the company is comfortable with the range of published analyst's earnings
  estimates  of $0.41 to $0.44 per share for the fourth  quarter  of fiscal  2003,
  excluding any  restructuring and related charges or large unusual items. The net
  earnings  for the fourth  quarter of last year were $4.4  million,  or $0.38 per
  share, excluding restructuring and related charges and goodwill amortization.
  
       The company's financial results over the last few quarters and its business
  outlook clearly  demonstrate the company's strategic focus on: (1) improving the
  profitability  of its sales mix;  (2)  increasing  margins and return on capital
  employed; and (3) generating free cash flow and strengthening its balance sheet.
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "c8kq303.txt", "description": "CULP, INC. 8-K  1-26-03", "secsgml_size_bytes": 86815}]
metadata_filer: {"company-data": {"conformed-name": "CULP INC", "cik": "0000723603", "assigned-sic": "2211", "irs-number": "561001967", "state-of-incorporation": "NC", "fiscal-year-end": "0430"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-12597", "film-number": "03578017"}, "business-address": {"street1": "101 S MAIN ST", "city": "HIGH POINT", "state": "NC", "zip": "27260", "phone": "3368895161"}, "mail-address": {"street1": "P O BOX 2686", "street2": "101 S MAIN ST", "city": "HIGH POINT", "state": "NC", "zip": "27261"}}
text: --------------------------------------------------------------------------------
  
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      ---------
  
                                      Form 8-K
  
                                   CURRENT REPORT
  
                  Pursuant to Section 13 or 15(d) of the Securities
                                Exchange Act of 1934
  
                                    -------------
  
         Date of Report (Date of earliest event reported) February 24, 2003
  
                                     CULP, INC.
  
               (Exact name of registrant as specified in its charter)
  
           North Carolina                  0-12781                56-1001967
  (State or other jurisdiction of   (Commission File No.)       (IRS Employer
           incorporation)                                    Identification No.)
  
                               101 South Main Street
                         High Point, North Carolina  27260
                     (Address of principal executive offices)
                                  (336) 889-5161
               (Registrant's telephone number, including area code)
  
           (Former name or former address, if changed since last report)
  
  --------------------------------------------------------------------------------
  Item 5. Other Events
  
  See  attached  Press  Release (5 pages) and  Financial  Information  Release (13
  pages),  both dated February 24, 2003,  related to the fiscal 2003 third quarter
  ended January 26, 2003.
  
  Forward Looking Information.  This Report contains statements that may be deemed
  "forward-looking  statements" 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 27A of the Securities and Exchange Act of
  1934).  Such  statements  are  inherently  subject  to risks and  uncertainties.
  Further, Forward looking statements are intended to speak only as of the date on
  which they are made.  Forward-looking  statements  are  statements  that include
  projections, expectations or beliefs about future events of results or otherwise
  are not statements of historical  fact. Such statements are often but not always
  characterized  by  qualifying  words such as  "expect,"  "believe,"  "estimate,"
  "plan' and "project" and their  derivatives,  and include but are not limited to
  statements  about  expectations  for the company's  future  sales,  gross profit
  margins,  SG&A or  other  expenses,  and  earnings,  as  well as any  statements
  regarding the company's  view of estimates of the  company's  future  results by
  analysts.  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 the
  company's  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  the  company  adversely.   Because  of  the
  significant  percentage  of  the  company's  sales  derived  from  international
  shipments, strengthening of the U. S. dollar against other currencies could make
  the company's products less competitive on the basis of price in markets outside
  the  United  States.   Additionally,   economic  and  political  instability  in
  international areas could affect the demand for the company's products. Finally,
  unanticipated delays or costs in executing restructuring actions could cause the
  cumulative  effect of  restructuring  actions to fail to meet the objectives set
  forth by  management.  Other factors that could affect the matters  discussed in
  forward looking  statements are included in the company's periodic reports filed
  with the Securities and Exchange Commission.
  
                                     SIGNATURE
  
  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.
  
                                       CULP, INC.
                                      (Registrant)
  
                                By:    Franklin N. Saxon
                                       -----------------
                                       Executive Vice President and
                                       Chief Financial Officer
  
  Dated:  February 24, 2003
  NEWS RELEASE
  
  Investor Contact:  Kathy J. Hardy         Media Contact:  Kenneth M. Ludwig
                     Corporate Secretary                    Senior Vice President,
                     336-888-6209                           Human Resources
                                                             336-889-5161
  
                      CULP ANNOUNCES THIRD QUARTER 2003 RESULTS
                           ------------------------------
                          GROSS MARGIN IMPROVEMENT REFLECTS
               MORE PROFITABLE SALES MIX AND EFFECTIVE COST MANAGEMENT
  
  HIGH POINT,  N.C.  (February 24, 2003) - Culp, Inc.  (NYSE:  CFI) today reported
  financial  and  operating  results for the third  quarter and nine months  ended
  January 26, 2003. The highlights include:
  
  o     Third  quarter  2003 diluted  earnings per share of $0.16 up from $0.04 in
           the prior year period (excluding  restructuring  and related charges in
           2003 and goodwill amortization in 2002)
  
  o     Gross profit margin of 18.3% (excluding  restructuring related charges) is
           highest in fifteen years for the company's third quarter
  
  o     Cash  position  increased to $38.5 million,  up from $10.4  million a year
           ago, after the repayment of $12.3 million in debt
  
  o     Company sees further margin  improvement and is comfortable with published
           analysts  estimates  of $0.41 to $0.44 per share for the fourth quarter
           of 2003
  
       For the three months ended  January 26, 2003,  net sales were $79.3 million
  compared  with  $90.6  million a year ago.  The  company  reported  net  income,
  excluding  restructuring  and related  charges,  of $1.9  million,  or $0.16 per
  diluted share, versus net income of $400,000, or $0.04 per diluted share, in the
  third quarter of fiscal 2002,  excluding  restructuring and related charges, and
  goodwill  amortization.  The financial  results for the third quarter  include a
  total of $397,000 in  restructuring  and related  charges,  all of which reflect
  previously  announced  restructuring  initiatives.  Including  restructuring and
  related charges,  the company reported net income of $1.7 million,  or $0.14 per
  diluted share,  for the third quarter of fiscal 2003. (A  reconciliation  to the
  net income and earnings per share calculations has been set forth on Page 5.)
  
       For the nine months ended January 26, 2003, the company  reported net sales
  of $248.8 million,  compared with $273.5 million for the same period a year ago.
  Excluding  restructuring  and  related  charges  and the  cumulative  effect  of
  accounting  change, net income for the first nine months of fiscal 2003 was $5.1
  million,  or $0.43 per diluted share. This compares with net income of $447,000,
  or $0.04 per diluted share,  excluding  restructuring  and related charges,  and
  goodwill amortization for the prior-year period. Including restructuring charges
  and the cumulative effect of accounting  change, the company reported a net loss
  for the first nine months of fiscal 2003 of $28.2 million,  or $2.46 per diluted
  share.
  CFI Announces Third Quarter Results
  Page 3
  February 24, 2003
  
       As previously announced,  due to the adoption of a new accounting standard,
  "Goodwill and Other Intangible Assets," the company recorded a non-cash goodwill
  impairment charge,  net of income taxes, of $24.2 million,  or $2.11 per diluted
  share, in the first quarter of 2003 related to the goodwill  associated with its
  Culp Decorative  Fabrics ("CDF") division.  The charge,  recorded as "cumulative
  effect of  accounting  change," has no effect on  operating  income or cash flow
  from operations.
  
       "Despite a challenging  business climate, our strategic focus on increasing
  the  profitability of our sales mix and carefully  managing our costs allowed us
  to achieve meaningful  year-over-year  improvement in profitability in the third
  quarter of 2003," remarked Robert G. Culp, III, chief executive officer of Culp,
  Inc.  "Clearly our sales efforts have been  affected by the overall  softness in
  consumer spending for home furnishings.  In addition, the discontinuation of the
  wet printed flock  business at the end of 2002,  and our recent  initiatives  to
  eliminate  unprofitable  or low margin product  lines,  contributed to the 12.5%
  year-over-year  decline in third quarter sales.  However, we believe our ability
  to drive high profit margins in a difficult sales  environment  demonstrates the
  inherent  value of our strategy.  More  importantly,  we believe it confirms the
  scalability of our business and the significant opportunity to leverage earnings
  when our top line regains momentum.
  
       "In  today's  uncertain  market  conditions,  we  believe  it is a business
  imperative to maintain a strong,  liquid balance sheet.  Our results reflect the
  continued  progress in  increasing  cash flow from  operations  and  effectively
  managing our working  capital.  Notably,  we have reduced our long-term  debt by
  $12.3 million from the end of fiscal 2002, and by a total of $41.3 million since
  the end of fiscal 2000, less than three years ago. Through the first nine months
  of this year,  free cash flow from  operations was $17.9 million,  compared with
  $10.7 million for the same period last year. (A  reconciliation to the free cash
  flow  calculations  has  been  set  forth  on Page  5.) At the end of the  third
  quarter,  our balance sheet reflects $38.5 million in cash and cash investments,
  a considerable  improvement  over $10.4 million a year ago. With the build-up in
  our cash  position,  we  intend  to  further  strengthen  our  balance  sheet by
  prepaying an additional  $12.7 million in debt during the fourth  quarter.  As a
  result, we will reduce our long-term debt by a total of $25.0 million in 2003, a
  significant accomplishment.
  
       "Our  previously  announced  restructuring  initiatives  related to our CDF
  division  continue  to make  measurable  progress.  With the  completion  of the
  transfer of the Chattanooga, Tennessee, manufacturing operations to other plants
  at the end of our second  quarter,  we are now focused on achieving our targeted
  levels  of  operating  efficiencies  in  the  remaining  CDF  locations.  We are
  realizing savings from the reduced fixed manufacturing costs as a result of this
  consolidation.  Essentially  we can now  weave in two  plants  close to what was
  formerly  produced  in  three,  and  still  maintain  the  capacity  to meet our
  foreseeable levels of customer demand.
  
       Culp added,  "Looking  ahead,  we believe  that  fiscal  2003 will  reflect
  considerable progress in meeting our key objectives to improve profitability and
  generate cash flow.  While the sales  environment can still be  characterized as
  very challenging,  we believe the  year-over-year  decline in our fourth quarter
  sales will  approximate  the trend for this quarter.  However,  with solid gross
  profit  margins  and  significant  reductions  in  operating  costs,  we  remain
  comfortable with the range of published  analysts earnings estimates of $0.41 to
  $0.44 per diluted  share for the fourth  fiscal  quarter,  excluding  previously
  announced  restructuring and related charges.  Culp's financial results over the
  last few quarters and our business  outlook  clearly  demonstrate  our strategic
  focus on improving the  profitability of our sales mix,  increasing  margins and
  return on invested capital, and generating free cash flow."
  Culp,  Inc. is one of the world's largest  marketers of upholstery  fabrics
  for furniture  and is a leading  marketer of mattress  ticking for bedding.  The
  Company's  fabrics are used  principally in the  production of  residential  and
  commercial furniture and bedding products.
  
       This  release  contains  statements  that  may be  deemed  "forward-looking
  statements"  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 27A of the  Securities  and Exchange Act of 1934).  Such
  statements  are  inherently  subject  to  risks  and   uncertainties.   Further,
  forward-looking  statements  are  intended to speak only as of the date on which
  they  are  made.   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  "expect,"  "believe,"  "estimate,"
  "plan" and "project" and their  derivatives,  and include but are not limited to
  statements  about  expectations  for the company's  future  sales,  gross profit
  margins,  SG&A or  other  expenses,  and  earnings,  as  well as any  statements
  regarding the company's  view of estimates of the  company's  future  results by
  analysts.  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 the
  company's  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  the  company  adversely.   Because  of  the
  significant  percentage  of  the  company's  sales  derived  from  international
  shipments, strengthening of the U. S. dollar against other currencies could make
  the company's products less competitive on the basis of price in markets outside
  the  United  States.   Additionally,   economic  and  political  instability  in
  international areas could affect the demand for the company's products. Finally,
  unanticipated delays or costs in executing restructuring actions could cause the
  cumulative  effect of  restructuring  actions to fail to meet the objectives set
  forth by  management.  Other factors that could affect the matters  discussed in
  forward-looking  statements are included in the company's periodic reports filed
  with the Securities and Exchange Commission.
  CFI Announces Third Quarter Results
  Page 5
  February 24, 2003
  
                                     CULP, INC.
                           Condensed Financial Highlights
                                     (Unaudited)
  
                                                          Three Months Ended
                                                       -------------------------
                                                       January 26,   January 27,
                                                          2003          2002
                                                        ----------  ------------
  Net sales                                            $79,292,000  $ 90,618,000
  Net income                                           $ 1,667,000  $    170,000
  Net income per share:
     Basic                                             $      0.15  $       0.02
     Diluted                                           $      0.14  $       0.02
  Net income per share, diluted, excluding restructuring
    and related charges and goodwill amortization*     $      0.16  $       0.04
  Average shares outstanding:
     Basic                                              11,485,000    11,221,000
     Diluted                                            11,714,000    11,304,000
  
                                                           Nine Months Ended
                                                       ------------------------
                                                       January 26,   January 27,
                                                          2003          2002
                                                       ------------   ------------
  Net sales                                          $ 248,753,000  $ 273,481,000
                                                       ------------   ------------
  Loss before cumulative effect of accounting change $  (4,008,000) $  (1,855,000)
  Cumulative effect of accounting change,
     net of  income taxes                              (24,151,000)           -0-
                                                       ------------   ------------
  Net loss                                           $ (28,159,000) $  (1,855,000)
                                                       ============   ============
  Basic and diluted loss per share:
    Loss before cumulative effect of accounting
      change                                         $       (0.35)   $     (0.17)
    Cumulative effect of accounting change                   (2.11)          0.00
                                                       ------------   ------------
    Net loss                                         $       (2.46)   $     (0.17)
                                                       ============   ============
  Net income per share, diluted, excluding restructuring
    and related charges, goodwill amortization and
    cumulative effect of accounting change**         $        0.43    $      0.04
  
  Average shares outstanding:
    Basic                                               11,450,000     11,221,000
    Diluted                                             11,775,000     11,281,000
  
  * Excludes  restructuring  and related  charges of $397,000 ($240,000,  or $0.02
     per  diluted  share,  after  taxes)  for the third  quarter of  fiscal  2003.
     Excludes  goodwill  amortization of $350,000  ($230,000, or $0.02 per diluted
     share, after taxes) for the third quarter of fiscal 2002.
  
  ** Excludes  cumulative  effect of accounting  change,  net of income taxes,  of
     $24.2 million  ($2.11 per  diluted share) for the first nine months of fiscal
     2003.  Excludes  restructuring  and  related  charges of $14.9  million ($9.1
     million,  or $0.80 per diluted  share, after taxes) for the first nine months
     of fiscal 2003.  Excludes  restructuring  and related charges of $2.5 million
     ($1.6  million,  or  $0.15  per  share diluted,  after  taxes)  and  goodwill
     amortization  of $1.1 million  ($690,000,  or $0.06 per diluted  share, after
     taxes) for the first nine months of fiscal 2002.
  CULP, INC.
  
       Reconciliation of Net Income (Loss) as Reported to Pro Forma Net Income
                                     (Unaudited)
  
                               Three Months Ended          Nine Months Ended
                            -------------------------  -------------------------
                            January 26,    January 27,   January 26, January 27,
                               2003          2002         2003          2002
                            -----------  ------------  ------------ ------------
  Net income (loss)         $1,667,000   $   170,000   $(28,159,000) $(1,855,000)
  Cumulative effect of
    accounting change, net of
    income taxes                    --            --     24,151,000           --
  Restructuring and related
    charges, net of income
    taxes                      240,000            --      9,114,000    1,612,000
  Goodwill amortization, net of
    income taxes                    --       230,000             --      690,000
                            -----------  ------------  ------------ ------------
  Net income, adjusted      $1,907,000   $   400,000     $5,106,000  $   447,000
                            ===========  ============  ============ ============
  
     Reconciliation of Net Income (Loss) Per Share as Reported to Pro Forma Net
                                    Income Per Share
                                     (Unaudited)
  
  Diluted net income (loss) per
    share                   $      0.14  $       0.02  $     (2.46) $      (0.17)
  Cumulative effect of
    accounting change, net of
    income taxes                     --            --          2.11           --
  Restructuring and related
    charges, net of income taxes   0.02            --          0.80         0.15
  Goodwill amortization, net of
    income taxes                     --          0.02            --         0.06
  Effect of dilutive stock options   --            --         (0.02)          --
                            -----------  ------------   ------------ ------------
  Diluted net income
    per share, adjusted     $      0.16  $       0.04  $       0.43  $      0.04
                            ===========  ============   ============ ============
  
            Reconciliation of Cash Flow from Operations to Free Cash Flow
                                     (Unaudited)
  
                                                           Nine Months Ended
                                                       January 26,   January 27,
                                                          2003          2002
                                                       -----------  ------------
  Cash flow from operations                            $23,864,000  $18,381,000
  Capital expenditures                                  (9,076,000)  (3,393,000)
  Change in accounts payable-
    capital expenditures                                 3,074,000   (4,267,000)
                                                       -----------  ------------
  Free cash flow                                       $17,862,000  $10,721,000
                                                       ===========  ============
  CULP, INC. FINANCIAL INFORMATION RELEASE
                      CONSOLIDATED STATEMENTS OF INCOME (LOSS)
  FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
  
                  (Amounts in Thousands, Except for Per Share Data)
  THREE MONTHS ENDED (UNAUDITED)
                                                      --------------------------------------------------------------------------
  
                                                                Amounts                                  Percent of Sales
                                                      -----------------------------                 ----------------------------
                                                       January 26,    January 27,       % Over
                                                          2003            2002         (Under)             2003         2002
                                                      --------------  -------------  -------------  ----------------  ----------
  Net sales                                        $         79,292         90,618      (12.5)%           100.0 %       100.0 %
  Cost of sales                                              65,504         77,110      (15.1)%            82.6 %        85.1 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Gross profit                                            13,788         13,508        2.1 %            17.4 %        14.9 %
  
  Selling, general and
    administrative expenses                                   9,798         11,038      (11.2)%            12.4 %        12.2 %
  Restructuring expense                                        (354)             0     (100.0)%            (0.4)%         0.0 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Income  from operations                                  4,344          2,470       75.9 %             5.5 %         2.7 %
  
  Interest expense                                            1,665          1,820       (8.5)%             2.1 %         2.0 %
  Interest income                                              (143)           (42)     240.5 %            (0.2)%        (0.0)%
  Other expense (income), net                                   192            435      (55.9)%             0.2 %         0.5 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Income before income taxes                               2,630            257      923.3 %             3.3 %         0.3 %
  
  Income taxes  *                                               963             87    1,006.9 %            36.6 %        34.0 %
                                                      --------------  -------------  -------------  ----------------  ----------
     Net Income                                    $          1,667            170      880.6 %             2.1 %         0.2 %
                                                      ==============  =============  =============  ================  ==========
  
  Net Income per share-basic                                  $0.15          $0.02      650.0 %
  Net Income per share-diluted                                $0.14          $0.02      600.0 %
  Net income per share, diluted, excluding restructuring      $0.16          $0.04      300.0 %
    and related charges and goodwill amortization (see
    proforma statement on page 7)
  Average shares outstanding-basic                           11,485         11,221        2.4 %
  Average shares outstanding-diluted                         11,714         11,304        3.6 %
  
                                                                           NINE MONTHS ENDED (UNAUDITED)
                                                       -----------------------------------------------------------------------
  
                                                                 Amounts                                  Percent of Sales
                                                       -----------------------------                 ----------------------------
                                                        January 26,    January 27,       % Over
                                                           2003            2002         (Under)            2003          2002
                                                       --------------  -------------  -------------  ----------------  ----------
  
  Net sales                                         $       248,753        273,481       (9.0)%           100.0 %       100.0 %
  Cost of sales                                             207,368        233,642      (11.2)%            83.4 %        85.4 %
                                                       --------------  -------------  -------------  ----------------  ----------
     Gross profit                                            41,385         39,839        3.9 %            16.6 %        14.6 %
  
  Selling, general and
    administrative expenses                                  29,716         33,823      (12.1)%            11.9 %        12.4 %
  Restructuring expense                                      13,006          1,303      898.2 %             5.2 %         0.5 %
                                                       --------------  -------------  -------------  ----------------  ----------
     Income (loss) from operations                           (1,337)         4,713     (128.4)%            (0.5)%         1.7 %
  
  Interest expense                                            5,244          5,851      (10.4)%             2.1 %         2.1 %
  Interest income                                              (414)           (99)     318.2 %            (0.2)%        (0.0)%
  Other expense (income), net                                   645          1,772      (63.6)%             0.3 %         0.6 %
                                                       --------------  -------------  -------------  ----------------  ----------
     Loss before income taxes                                (6,812)        (2,811)    (142.3)%            (2.7)%        (1.0)%
  
  Income taxes *                                             (2,804)          (956)     193.3 %            41.2 %        34.0 %
                                                       --------------  -------------  -------------  ----------------  ----------
  Loss before cumulative effect of accounting change         (4,008)        (1,855)    (116.1)%            (1.6)%        (0.7)%
                                                                                                     ================  ==========
  
  Cumulative effect of accounting change, net of income
  taxes                                                     (24,151)             0
                                                       --------------  -------------
  
     Net loss                                       $       (28,159)        (1,855)
                                                       ==============  =============
  
  Basic loss per share:
     Loss before cumulative effect of accounting
        change                                      $         (0.35)         (0.17)    (111.7)%
     Cumulative effect of accounting change                   (2.11)          0.00     (100.0)%
                                                       --------------  -------------  ----------
     Net loss                                                 (2.46)         (0.17)  (1,387.6)%
                                                       ==============  =============  ==========
  
  Diluted loss per share:
     Loss before cumulative effect of accounting
        change                                      $         (0.35)         (0.17)    (111.7)%
     Cumulative effect of accounting change                   (2.11)          0.00     (100.0)%
                                                       --------------  -------------  ----------
     Net loss                                                 (2.46)         (0.17)  (1,387.6)%
                                                       ==============  =============  ==========
  
  Net income per share, diluted, excluding restructuring      $0.43          $0.04        N/A
    and related charges, goodwill amortization and cumulative
    effect of accounting change (see proforma statement on
    page 8)
  Average shares outstanding-basic                           11,450         11,221        2.0 %
  Average shares outstanding-diluted                         11,450         11,221        2.0 %
  * Percent of sales column for income taxes is calculated as a % of income (loss)
  before income taxes.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                             CONSOLIDATED BALANCE SHEETS
               JANUARY 26, 2003, JANUARY 27, 2002, AND APRIL 28, 2002
                                      Unaudited
                               (Amounts in Thousands)
  Amounts                      Increase
                                               ------------------------------         (Decrease)
                                                January 26,     January 27,    -------------------------  * April 28,
                                                    2003            2002        Dollars    Percent            2002
                                               ---------------  -------------  ----------  -------------  ------------
  Current assets
     Cash and cash investments               $         38,480         10,359      28,121      271.5 %          31,993
     Accounts receivable                               32,427         46,171     (13,744)     (29.8)%          43,366
     Inventories                                       53,560         59,398      (5,838)      (9.8)%          57,899
     Other current assets                              15,339          9,323       6,016       64.5 %          13,413
                                               ---------------  -------------  ----------  -------------  ------------
                   Total current assets               139,806        125,251      14,555       11.6 %         146,671
  
  Property, plant & equipment, net                     85,396        102,457     (17,061)     (16.7)%          89,772
  Goodwill                                              9,240         47,432     (38,192)     (80.5)%          47,083
  Other assets                                          2,311          1,641         670       40.8 %           4,187
                                               ---------------  -------------  ----------  -------------  ------------
  
                   Total assets              $        236,753        276,781     (40,028)     (14.5)%         287,713
                                               ===============  =============  ==========  =============  ============
  
  Current liabilities
     Current maturities of long-term debt    $         13,133          3,127      10,006      320.0 %           1,483
     Accounts payable                                  21,924         21,336         588        2.8 %          24,327
     Accrued expenses                                  14,646         13,652         994        7.3 %          16,460
     Accrued restructuring                              8,465          1,363       7,102      521.1 %           2,445
                                               ---------------  -------------  ----------  -------------   ------------
                   Total current liabilities           58,168         39,478      18,690       47.3 %          44,715
  
  Long-term debt                                       83,008        106,960     (23,952)     (22.4)%         107,001
  
  Deferred income taxes                                 3,502         10,330      (6,828)     (66.1)%          16,932
                                               ---------------  -------------  ----------  -------------  ------------
                   Total liabilities                  144,678        156,768     (12,090)      (7.7)%         168,648
  
  Shareholders' equity                                 92,075        120,013     (27,938)     (23.3)%         119,065
                                               ---------------  -------------  ----------  -------------  ------------
  
                   Total liabilities and
                   shareholders' equity      $        236,753        276,781     (40,028)     (14.5)%         287,713
                                               ===============  =============  ==========  =============  ============
  
  Shares outstanding                                   11,487         11,221         266        2.4 %          11,320
                                               ===============  =============  ==========  =============  ============
  *  Derived from audited financial statements.
  CULP, INC. FINANCIAL
                                 INFORMATION RELEASE
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
                                      Unaudited
                               (Amounts in Thousands)
  NINE MONTHS ENDED
                                                                              ----------------------------
                                                                                        Amounts
                                                                              ----------------------------
                                                                              January 26,    January 27,
                                                                                  2003           2002
                                                                              -------------  -------------
  Cash flows from operating activities:
       Net loss                                                           $        (28,159)        (1,855)
       Adjustments to reconcile net loss to net cash
          provided by operating activities:
             Cumulative effect of accounting change, net of income taxes            24,151              0
             Depreciation                                                           10,554         13,214
             Amortization of intangible and other assets                               286          1,177
             Amortization of stock based compensation                                  158             92
             Restructuring expense                                                  13,006          1,303
             Changes in assets and liabilities:
                Accounts receivable                                                 10,939         11,678
                Inventories                                                          4,339            599
                Other current assets                                                (1,885)        (1,453)
                Other assets                                                           295            (19)
                Accounts payable                                                    (5,477)        (1,768)
                Accrued expenses                                                    (1,551)        (1,156)
                Accrued restructuring                                               (2,792)        (2,163)
                Income taxes payable                                                     0         (1,268)
                                                                              -------------  -------------
                   Net cash provided by operating activities                        23,864         18,381
                                                                              -------------  -------------
  Cash flows from investing activities:
       Capital expenditures                                                         (9,076)        (3,393)
                                                                              -------------  -------------
                   Net cash used in investing activities                            (9,076)        (3,393)
                                                                              -------------  -------------
  Cash flows from financing activities:
       Principal payments of long-term debt                                        (12,343)        (1,569)
       Change in accounts payable-capital expenditures                               3,074         (4,267)
       Proceeds from common stock issued                                               968              0
                                                                              -------------  -------------
                   Net cash used in financing activities                            (8,301)        (5,836)
                                                                              -------------  -------------
  
  Increase in cash and cash investments                                              6,487          9,152
  
  Cash and cash investments at beginning of period                                  31,993          1,207
                                                                              -------------  -------------
  
  Cash and cash investments at end of period                              $         38,480         10,359
                                                                              =============  =============
  
  Free Cash Flow (1)                                                      $         17,862         10,721
                                                                              =============  =============
  (1) Free Cash Flow is defined as net cash provided by operating  activities less
  capital expenditures plus or minus the change in accounts
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL ANALYSIS
                                  JANUARY 26, 2003
  FISCAL 02                                         FISCAL 03
                                                 ----------------     ----------------------------------------------------------------
                                                        Q3                 Q1            Q2             Q3          Q4         LTM (3)
                                                 ----------------     ----------------------------------------------------------------
  INVENTORIES
     Inventory turns                                      5.1              4.9            4.9            4.8
  
  RECEIVABLES
     Days sales in receivables                             43               34             36             34
  
  WORKING CAPITAL
     Current ratio                                        3.2              3.4            3.0            3.1
     Operating working capital turnover (2)               4.2              4.7            4.8            4.9
     Operating working capital (2)                    $84,233          $70,762        $68,492        $64,063
  
  PROPERTY, PLANT & EQUIPMENT
     Depreciation rate                                   7.1%             6.4%           6.5%           6.2%
     Percent property, plant &
       equipment are depreciated                        59.0%            60.6%          61.5%          61.0%
     Capital expenditures                              $4,729 (1)       $3,070         $2,258         $3,748
  
  PROFITABILITY
     Net income (loss) per share (basic)                $0.02            $0.08 (5)    ($0.57)          $0.15              ($0.49) (5)
     Net income (loss) per share (diluted)              $0.02            $0.08 (5)    ($0.57)          $0.14              ($0.49) (5)
     Net income (loss) per share (diluted)              $0.04 (6)        $0.08 (5)      $0.19 (7)      $0.16 (8)            $0.81 (9)
     Return on average total capital                     2.8% (6)         3.6% (5)       6.8% (7)       6.0% (8)             6.8% (9)
     Return on average equity                            1.5% (6)         3.1% (5)       9.4% (7)       8.0% (8)             9.2% (9)
  
  LEVERAGE
     Total liabilities/equity                          129.6%           143.2%         160.8%         157.1%
     Funded debt/equity                                 91.7%            99.5%         106.9%         104.4%
     Funded debt/capital employed                       47.8%            49.9%          51.7%          51.1%
     Funded debt                                     $110,087          $96,533        $96,558        $96,141
     Funded debt/EBITDA (LTM) (4)                        3.64             2.71           2.67           2.57
  
  LEVERAGE (NET OF CASH AND CASH INVESTMENTS) (10)
     Total liabilities/equity                             N/A              N/A         122.0%         115.3%
     Funded debt/equity                                   N/A              N/A          68.1%          62.6%
     Funded debt/capital employed                         N/A              N/A          40.5%          38.5%
     Funded debt                                          N/A              N/A        $61,521         57,661
     Funded debt/EBITDA (LTM) (4)                         N/A              N/A           1.70           1.54
  
  OTHER
     Book value per share                              $10.62            $8.45          $7.87          $8.02
     Employees at quarter end                           3,015            2,900          2,568          2,534
     Sales per employee (annualized)                 $120,523         $116,163       $122,272       $124,306
     Capital employed                                $230,999         $193,540       $186,884       $188,216
     Effective income tax rate (11)                     34.0%            37.0%          37.0%          37.0%
     EBITDA (4)                                        $6,859           $7,356         $8,810         $8,118              $37,352
     EBITDA/net sales (4)                                8.1%             8.6%          10.5%          10.2%                10.5%
  
    (1) Expenditures for entire year
    (2) Working capital for this calculation is accounts receivable, inventories and accounts payable
    (3) LTM represents "Latest Twelve Months"
    (4) EBITDA includes earnings before interest, income taxes, depreciation, amortization, all restructuring and related
          charges, certain non-cash charges and cumulative effect of accounting change, as defined by the company's credit agreement
    (5) Excludes cumulative effect of accounting change made during first quarter fiscal 2003
    (6) Excludes goodwill amortization expense of $350,000 ($230,000 or $0.02 per share diluted, after taxes)
    (7) Excludes restructuring and related charges of $14.5 million ($8.9 million or $.77 per share diluted, after taxes)
    (8) Excludes restructuring related charges of $751,000 and a restructuring credit of $354,000 (net $397,000 or $0.02 per share,
          diluted after taxes)
    (9) Excludes restructuring and related charges of $9.7 million ($5.8 million or $.51 per share diluted, after taxes)
          and $14.5 million ($8.9 million or $0.78 per share diluted, after taxes) for the fourth quarter fiscal 2002 and second
          quarter fiscal 2003, respectively, and $24.2 million cumulative effect of accounting change for the first quarter of fiscal
          2003.  Also excludes goodwill amortization expense of $350,000 ($230,000 or $.02 per share diluted, after taxes) for the
          fourth quarter of fiscal 2002
   (10) The cash balance of $35.0 million and $38.5 million has been excluded from total liabilities, funded debt and capital
          employed to arrive at the ratios in this section for the second and third quarter of fiscal 2003, respectively
   (11) Effective income tax rate excludes restructuring and related charges
  CULP, INC. FINANCIAL INFORMATION RELEASE
                      SALES / GROSS PROFIT BY SEGMENT/DIVISION
  FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
  
                               (Amounts in thousands)
  THREE MONTHS ENDED (UNAUDITED)
                                     --------------------------------------------------------------------
                                                Amounts                           Percent of Total Sales
                                     -------------------------------              -----------------------
                                      January 26,      January 27,     % Over
  Segment/Division Sales                  2003            2002         (Under)       2003        2002
  --------------------------------   ---------------  --------------  ----------  -----------  ----------
  Upholstery Fabrics
      Culp Decorative Fabrics     $          31,734          35,878    (11.6)%      40.0 %       39.6 %
      Culp Velvets/Prints                    22,819          28,648    (20.3)%      28.8 %       31.6 %
      Culp Yarn                               1,356           1,318      2.9 %       1.7 %        1.5 %
                                     ---------------  --------------  ----------  -----------  ----------
                                             55,909          65,844    (15.1)%      70.5 %       72.7 %
  Mattress Ticking
       Culp Home Fashions                    23,383          24,774     (5.6)%      29.5 %       27.3 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                * $          79,292          90,618    (12.5)%     100.0 %      100.0 %
                                     ===============  ==============  ==========  ===========  ==========
  
  Segment Gross Profit                                                            Gross Profit Margin
  --------------------------------                                                -----------------------
  
  Upholstery Fabrics  (1)         $           8,839           6,829     29.4 %      15.8 %       10.4 %
  Mattress Ticking                            5,700           6,679    (14.7)%      24.4 %       27.0 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                  $          14,539          13,508      7.6 %      18.3 %       14.9 %
                                     ===============  ==============  ==========  ===========  ==========
  
                                                        NINE MONTHS ENDED (UNAUDITED)
                                     --------------------------------------------------------------------
  
                                                Amounts                           Percent of Total Sales
                                     -------------------------------              -----------------------
                                      January 26,      January 27,     % Over
  Segment/Division Sales                  2003            2002         (Under)       2003        2002
  --------------------------------   ---------------  --------------  ----------  -----------  ----------
  
  Upholstery Fabrics
      Culp Decorative Fabrics     $         100,324         109,531     (8.4)%      40.3 %       40.1 %
      Culp Velvets/Prints                    69,243          84,522    (18.1)%      27.8 %       30.9 %
      Culp Yarn                               4,702           3,816     23.2 %       1.9 %        1.4 %
                                     ---------------  --------------  ----------  -----------  ----------
                                            174,269         197,869    (11.9)%      70.1 %       72.4 %
  Mattress Ticking
       Culp Home Fashions                    74,484          75,612     (1.5)%      29.9 %       27.6 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                * $         248,753         273,481     (9.0)%     100.0 %      100.0 %
                                     ===============  ==============  ==========  ===========  ==========
  
  Segment Gross Profit                                                            Gross Profit Margin
  --------------------------------                                                -----------------------
  
  Upholstery Fabrics (1)          $          25,649          20,696     23.9 %      14.7 %       10.5 %
  Mattress Ticking                           17,647          20,278    (13.0)%      23.7 %       26.8 %
                                     ---------------  --------------  ----------  -----------  ----------
  
                                  $          43,296          40,974      5.7 %      17.4 %       15.0 %
                                     ===============  ==============  ==========  ===========  ==========
  * U.S.  sales were $71,130 and $79,539 for the third  quarter of fiscal 2003 and
  fiscal  2002,  respectively;  and  $218,957  and $233,617 for the nine months of
  fiscal 2003 and 2002,  respectively.  The percentage  decrease in U.S. sales was
  10.6% for the third quarter and a decrease of 6.3% for the nine months.
  
  (1) Excludes  restructuring related charges of $751,000 for the third quarter of
  fiscal  2003;  and  excludes  $1.9  million and $1.2  million for the first nine
  months of fiscal 2003 and 2002, respectively.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                       INTERNATIONAL SALES BY GEOGRAPHIC AREA
  FOR THE THREE MONTHS AND NINE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
  (Amounts in thousands)
  
                                                      THREE MONTHS ENDED (UNAUDITED)
                                              ------------------------------------------------
  
                                                          Amounts
                                              ---------------------------------
                                                January 26,      January 27,       % Over
               Geographic Area                     2003              2002         (Under)
   ----------------------------------------   ----------------  ---------------  -----------
  North America (Excluding USA)           $            6,648            6,613       0.5 %
   Europe                                                 274              472     (41.9)%
   Middle East                                            260              598     (56.5)%
   Far East & Asia                                        765            2,924     (73.8)%
   South America                                           94              155     (39.4)%
   All other areas                                        121              318     (61.9)%
                                              ----------------  ---------------  -----------
  
                                           $            8,162           11,079     (26.3)%
                                              ================  ===============  ===========
  
                    Percent of total sales              10.3%            12.2%
  
                                                       NINE MONTHS ENDED (UNAUDITED)
                                              ------------------------------------------------
  
                                                          Amounts
                                              ---------------------------------
                                                January 26,      January 27,       % Over
               Geographic Area                     2003              2002         (Under)
   ----------------------------------------   ----------------  ---------------  -----------
   North America (Excluding USA)           $           22,622           23,023      (1.7)%
   Europe                                                 535            2,115     (74.7)%
   Middle East                                          1,907            4,804     (60.3)%
   Far East & Asia                                      3,748            8,414     (55.5)%
   South America                                          508              490       3.7 %
   All other areas                                        476            1,018     (53.2)%
                                              ----------------  ---------------  -----------
  
                                           $           29,796           39,864    (25.3) %
                                              ================  ===============  ===========
  
                    Percent of total sales              12.0%            14.6%
  International  sales,  and the  percentage of total sales,  for each of the last
  three fiscal years follows:  fiscal  2000-$111,104  (23%); fiscal 2001 - $77,824
  (19%) and fiscal 2002 - $53,501 (14%).
  CULP, INC.
                     PROFORMA CONSOLIDATED STATEMENTS OF INCOME
          FOR THE THREE MONTHS ENDED JANUARY 26, 2003 AND JANUARY 27, 2002
                  (Amounts in Thousands, Except for Per Share Data)
  THREE MONTHS ENDED (UNAUDITED)
                                                    ----------------------------------------------------------------------------------
  
                                         As Reported                    January 26, 2003           January 27, 2002
                                         January 26,  Reclassification    Proforma Net    % of       Proforma Net    % of      % Over
                                             2003      & Adjustments    of Adjustments  Net Sales  of Adjustments  Net Sales   (Under)
                                         ------------  -------------    ----------------------     -----------------------   ---------
  Net sales                            $      79,292             0           79,292   100.0%           90,618     100.0%        -12.5%
  Cost of sales                               65,504          (751) (3)      64,753    81.7%           77,110      85.1%        -16.0%
                                         ------------  -------------    ----------------------   -----------------------     ---------
          Gross profit                        13,788          (751)          14,539    18.3%           13,508      14.9%          7.6%
  
  Selling, general and
    administrative expenses                    9,798             0            9,798    12.4%           11,038      12.2%        -11.2%
  Restructuring expense                         (354)          354 (4)            0     0.0%                0       0.0%          0.0%
                                         ------------  -------------    ----------------------   -----------------------     ---------
          Income  (loss) from                  4,344          (397)           4,741     6.0%            2,470       2.7%         91.9%
          operations
  
  Interest expense                             1,665             0            1,665     2.1%            1,820       2.0%         -8.5%
  Interest income                               (143)            0             (143)   -0.2%              (42)      0.0%        240.5%
  Other expense (income), net                    192             0              192     0.2%               85       0.1% (6)    125.9%
                                         ------------  -------------    ----------------------   -----------------------     ---------
          Income (loss) before                 2,630          (397)           3,027     3.8%              607       0.7%        398.7%
          income taxes
  
  Income taxes  (1)                              963          (157)           1,120    37.0%              207      34.2% (2)    440.1%
                                         ------------  -------------    ----------------------   -----------------------     ---------
  Net income (loss)                    $       1,667          (240)           1,907     2.4%              400       0.4%        377.2%
                                         ============  =============    ======================   =======================     =========
  
  Net income (loss) per share-basic            $0.15        ($0.02)           $0.17                     $0.04
  Net income (loss) per share-diluted          $0.14        ($0.02)           $0.16                     $0.04
  Average shares outstanding-basic            11,485        11,485           11,485                    11,221
  Average shares outstanding-diluted          11,714        11,485           11,714 (5)                11,304
  
  Notes:
   (1) Percent of net sales column for income taxes is calculated as a % of income (loss) before income taxes
   (2) Pre-restructuring income tax rate was 37% and 34% for the third quarter of fiscal 2003 and 2002, respectively.
   (3) The $751,000 represents restructuring related charges for inventory markdowns and movement of equipment related to the
       Chattanooga plant closing
   (4) The $354,000 restructuring credit represents the reversal of excess accrued employment benefit and plant security costs
        associated with the shutdown of the wet printed flock operation
   (5) Incremental shares of 229,000 for fiscal 2003 included in fully diluted calculation
   (6) Excludes $350,000 ($230,000 or $0.02 per share diluted, after taxes) of goodwill amortization
  PROFORMA CONSOLIDATED STATEMENTS OF INCOME (LOSS)
           FOR THE NINE MONTHS ENDED JANUARY 26, 2002 AND JANUARY 27, 2002
                  (Amounts in Thousands, Except for Per Share Data)
  NINE MONTHS ENDED
                                      ------------------------------------------------------------------------------------------------
  
                                      As Reported                    January 26, 2003              January 27, 2002
                                      January 26,  Reclassification    Proforma Net      % of        Proforma Net     % of     % Over
                                         2002       & Adjustments    of Restructuring  Net Sales  of Restructuring  Net Sales  (Under)
                                      ------------  -------------     ----------------------      ------------------------   ---------
  Net sales                         $     248,753            0          248,753     100.0%          273,481       100.0%        -9.0%
  Cost of sales                           207,368       (1,911) (3)     205,457      82.6%          232,507        85.0% (6)   -11.6%
                                      ------------  -------------    ----------------------       ------------------------   ---------
          Gross profit                     41,385       (1,911)          43,296      17.4%           40,974        15.0%         5.7%
  
  Selling, general and
    administrative expenses                29,716            0           29,716      11.9%           33,823        12.4%       -12.1%
  Restructuring expense                    13,006      (13,006) (4)           0       0.0%                0         0.0% (6)     0.0%
                                      ------------  -------------    ----------------------       ------------------------  ----------
          Income  (loss) from              (1,337)     (14,917)          13,580       5.5%            7,151         2.6%        89.9%
          operations
  
  Interest expense                          5,244            0            5,244       2.1%            5,851         2.1%       -10.4%
  Interest income                            (414)           0             (414)     -0.2%              (99)        0.0%       318.2%
  Other expense (income), net                 645            0              645       0.3%              722         0.3% (7)   -10.7%
                                      ------------  -------------    ----------------------       ------------------------   ---------
          Income (loss) before             (6,812)     (14,917)           8,105       3.3%              677         0.2%        N/A
          income taxes
  
  Income taxes  (1)                        (2,804)      (5,803)           2,999      37.0%              230        34.0% (2)    N/A
                                      ------------  -------------    ----------------------       ------------------------   ---------
  Income (loss) before cumulative
  effect of accounting change       $      (4,008)      (9,114)           5,106       2.1%              447         0.2%        N/A
                                      ============  =============    ======================       ========================   =========
  
  Net income (loss) per share-basic          ($0.35)      ($0.80)           $0.45                     $0.04
  Net income (loss) per share-diluted        ($0.35)      ($0.80)           $0.43                     $0.04
  Average shares outstanding-basic           11,450       11,450           11,450                    11,221
  Average shares outstanding-diluted         11,450       11,450           11,775 (5)                11,281
  
  Notes:
   (1) Percent of net sales column for income taxes is calculated as a % of income (loss) before income taxes.
   (2) Pre-restructuring income tax rate was 37% and 34% for the first nine months of fiscal 2003 and 2002, respectively.
   (3) The $1.9 million represents restructuring related charges for inventory markdowns and movement of equipment relating to the
       Chattanooga plant closing
   (4) The $13.0 million represents restructuring charges for the shut down of the Chattanooga operation, $12.1 million, and the
       additional write-down of wet printed assets held for sale, $1.3 million offset by a restructuring credit of $354,000 for over
       accrued employee benefit and plant security costs
   (5) Incremental shares of 325,000 included in fully diluted calculation
   (6) $1.2 million ($.8 million or $0.08 per share diluted, after taxes) of CDF and CYN restructuring related charges are excluded
       from the cost of sales total; and $1.3 million ($.9 million or $0.07 per share, diluted, after taxes) in CDF and CYN
       restructuring charges are excluded to arrive at the proforma amounts
   (7) Excludes $1,050,000 ($690,000 or $0.06 per share diluted, after taxes) of goodwill amortization
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
      for the three and nine months ended January 26, 2003 and January 27, 2002
  
  OVERVIEW
  
       GENERAL  -- For the  third  quarter,  net  sales  decreased  12.5% to $79.3
  million; and the company reported net income of $1.7 million, or $0.14 per share
  diluted  versus net income of $170,000,  or $0.02 per share diluted in the third
  quarter of fiscal 2002. Excluding restructuring and related charges and credits,
  earnings for the third  quarter of fiscal 2003 were $1.9  million,  or $0.16 per
  share diluted  versus net income of $400,000,  or $0.04 per share diluted in the
  third  quarter of fiscal  2002,  excluding  goodwill  amortization.  The company
  reported  further  improvement  in its balance sheet by reducing  funded debt by
  $12.3 million during the first nine months of fiscal 2003 and ending the quarter
  with $38.5 million in cash and cash investments.
  
  During fiscal 2003, the company placed significant focus on reducing outstanding
  accounts receivable,  including a concerted effort to collect past due accounts,
  shorten  payment  terms by offering a cash discount and resolve old items within
  receivable accounts. As of January 26, 2003, accounts receivable decreased 29.8%
  from the year earlier levels. In the third quarter,  due to the decrease in past
  due receivable balances,  there was a net reduction of $435,000 in the allowance
  for doubtful  accounts.  This  compares with bad debt expense of $703,000 in the
  year earlier period.  Additionally,  as a result of this effort, the company has
  resolved $370,000 in old, open credits with customers which were credited to net
  sales during the quarter.
  
       ADOPTION OF SFAS No. 142 -- As of April 29,  2002,  Culp  adopted  SFAS No.
  142,  "Goodwill and Other  Intangible  Assets." As a result the company recorded
  during  the first  quarter  of fiscal  2003 a  non-operating  non-cash  goodwill
  impairment  charge  of  $37.6  million  ($24.2  million  net of  taxes  of $13.4
  million),  or $2.11 per share diluted,  related to the goodwill  associated with
  the Culp Decorative Fabrics division.
  
       PROFORMA  CONSOLIDATED  STATEMENTS  OF  INCOME  (LOSS) -- The  company  has
  included,  within this financial information release, proforma income statements
  which reconcile the reported  income  statements  with proforma  results,  which
  exclude restructuring and related charges,  goodwill amortization and cumulative
  effect of  accounting  change.  See PROFORMA  CONSOLIDATED  STATEMENTS OF INCOME
  (LOSS) on pages 7 and 8 of this financial information release.
  
       RESTRUCTURING  AND RELATED  CHARGES -- The financial  results for the third
  quarter include a total of $751,000 in restructuring related charges, which were
  classified  in cost  of  sales,  and a  $354,000  credit  classified  under  the
  restructuring  expense line item. The restructuring  related charges of $751,000
  represent inventory markdowns and equipment relocation costs associated with the
  closing  of the  Chattanooga,  Tennessee  facility  within  the Culp  Decorative
  Fabrics division in October 2002. The  restructuring  credit  represents  unused
  accrued  personnel  costs,  principally  extended  health care benefit  expense,
  relating to the exit of the wet printed flock  business  during April 2002.  The
  net after tax effect of the  restructuring  related  charges  and  restructuring
  credit  reduced  net income  per share by $0.02 for the third  quarter of fiscal
  2003.
  
  The  Culp  Decorative  Fabrics  (CDF)  restructuring  actions  are  expected  to
  significantly  improve gross margins  within the  division,  while  allowing the
  ability to meet foreseeable levels of demand, all on a substantially  lower cost
  base.  The  initiative  is  projected  to  result  in  annual  cost  savings  of
  approximately $12 to $15 million, beginning in the third quarter of fiscal 2003.
  Approximately $8.0 million of these savings relate to fixed  manufacturing costs
  and the remaining $4.0 to $7.0 million relate to variable manufacturing costs. A
  substantial portion of the savings from lower fixed  manufacturing  costs, which
  were achieved due to the closing of the Chattanooga,  Tennessee operation at the
  end of the second quarter,  have been realized and have contributed to the third
  quarter  results.  However,  while there has been some  progress on savings with
  variable  manufacturing costs, the company expects these benefits to be realized
  over the next two quarters as  operations  within CDF achieve  higher  levels of
  efficiency.
  
  The remaining elements from the CDF Chattanooga  restructuring  initiative to be
  completed are as follows:  (1) achieve  targeted levels of operating  efficiency
  for the looms  transferred  into the Pageland  operation,  which is projected to
  take until the end of the first  quarter of fiscal 2004;  (2)  transfer  certain
  finishing  and warping  equipment  to other CDF plants by the end of this fiscal
  year;  and  (3)  complete  the  capital  expenditure  projects  related  to  the
  restructuring.
  
  Another  important  element  of the  CDF  restructuring  initiative  was a major
  reduction in the complexity of the dobby upholstery  product line, which has led
  to the elimination of approximately  1,500 low volume stock keeping units (SKUs)
  representing  about 70% of the  finished  goods  SKUs (but only 10% of sales) in
  that product  category.  This initiative is now  substantially  complete and has
  been accomplished without significant disruptions of customer relationships.
  
  The CDF  restructuring is expected to result in total  restructuring and related
  charges of approximately $15 million.  The company currently estimates that this
  restructuring will result in additional charges of approximately $750,000 during
  the  fourth  quarter  of the  fiscal  year,  most of which  relate to  equipment
  relocation costs.
  
  INCOME STATEMENT COMMENTS
  
       UPHOLSTERY FABRIC SEGMENT (See page 5 - Sales and Gross Profit by Segment)
  
       NET SALES --  Upholstery  fabric sales for the third quarter of fiscal 2003
  decreased  15.1% to $55.9  million  (see sales by  Segment/Division  on page 5).
  Domestic upholstery fabric sales decreased 11.9% to $50.9 million, due primarily
  to overall  weakness in consumer  demand for  upholstered  furniture,  and other
  factors  discussed below.  International  sales decreased 37.9% to $5.0 million,
  due primarily to the exiting of the wet printed  flock fabric  business in April
  2002.
  
  In addition to overall softness in demand during the quarter, the sales decrease
  in upholstery  fabrics is  attributable  to the  company's  strategy to focus on
  improving the profitability of its sales mix by reducing or eliminating products
  generating little or no profit. In the Culp Velvets/Prints division, the company
  discontinued  its  unprofitable  wet printed  flock  business at the end of last
  fiscal year. This product line produced annual sales last year of  approximately
  $17  million  with  approximately  $2 million in  operating  losses.  In the CDF
  division,  the company  discontinued  about half of its finished  goods SKUs (or
  approximately  10,000) over the last year, most of which were small volume items
  and were costly to produce.  These  discontinued  SKUs include the dobby product
  line  SKUs  that  were   recently   eliminated   as  part  of  the   Chattanooga
  restructuring.  The company expects this process of identifying and dropping its
  low profit items to continue through the balance of this fiscal year.
  
       The  company  believes   additional   factors  that  are  likely  impacting
  upholstery fabric sales are (1) the increasing market share of leather furniture
  being sold in the U.S.; and (2) the increase in imported fabrics, both in "piece
  goods" and "cut and sewn kits".
  
       GROSS PROFIT -- In spite of weak furniture  demand,  the upholstery  fabric
  segment improved its gross profit dollars and margins  significantly.  Excluding
  restructuring  related charges of $751,000 for the third quarter of fiscal 2003,
  gross  profit  dollars and margin  increased to $8.8 million and 15.8% from $6.8
  million and 10.4% in the third quarter of last year. The key factors behind this
  gain was a sharp improvement in CDF due to: (1) a more profitable sales mix; (2)
  the increasing  productivity  benefits from the CDF 2001 restructuring;  and (3)
  the fixed cost reduction benefits from the Chattanooga closure.
  
  The  company  is  optimistic  that  gross  profit  dollars  and  margins  in the
  upholstery  fabric  segment will  continue to improve over the next few quarters
  driven  principally by the progress within the CDF division.  More  specifically
  within CDF,  the company is focused on (1) creating  and selling  products  with
  better  margins;  (2)  continuing  to reduce low profit SKUs;  and (3) improving
  manufacturing performance, in terms of productivity and inventory obsolescence.
  
       MATTRESS TICKING SEGMENT (See page 5 - Sales and Gross Profit by Segment)
  
       NET SALES --  Mattress  fabric  sales for the third  quarter of fiscal 2003
  decreased 5.6% to $23.4 million.  Sales to U.S. bedding  manufacturers fell 7.2%
  to $20.3 million,  while sales to international  customers  increased by 5.9% to
  $3.1  million.  The sales  decrease is due to the  overall  weakness in consumer
  demand for mattresses.
  
       GROSS PROFIT -- The mattress  fabric  segment  (Culp Home  Fashions or CHF)
  reported  for the third  quarter of fiscal 2003 lower gross  profit  dollars and
  margins of $5.7 million and 24.4%, respectively, both down from $6.7 million and
  27.0%  during the  corresponding  quarter  of the prior  year.  The key  factors
  impacting gross profit were lower sales and the residual impact from a high cost
  European sourcing  agreement that ended October 31, 2002. During the quarter the
  division  worked  down its  inventory  position  of these  products  by reducing
  production. CHF entered into this agreement with the supplier in October 2001 as
  part of the  termination  of a  long-term  supply  relationship.  The  agreement
  provided,  among  other  things,  that the company  maintain a certain  level of
  weekly purchases through October 31, 2002. Therefore, for the first half of this
  fiscal year, the company was required to source products from this supplier that
  were  significantly  more expensive than products  manufactured at the company's
  U.S.  and  Canadian  plants in order to meet the  agreement's  minimum  purchase
  levels.  The company had planned during the last fiscal year for the termination
  of this supply  agreement by initiating a plan to increase  capacity in the U.S.
  and Canadian  plants  beginning in the first quarter and ending by January 2003.
  This capacity  expansion project accounts for approximately  $4.5 million of the
  company's fiscal 2003 capital  spending.  This supply agreement was concluded on
  October 31, 2002.
  
       SG&A EXPENSES -- SG&A expenses for the third quarter declined $1.2 million,
  or 11.2%,  from the prior  year,  and as a percent of net sales,  SG&A  expenses
  increased to 12.4% from 12.2%. SG&A expenses in the third quarter included a net
  reduction of $435,000 in the allowance for doubtful accounts,  due to a decrease
  in past due receivable balances. This compares with bad debt expense of $703,000
  in the year-earlier period.
  
       INTEREST  EXPENSE  (INCOME)  --  Interest  expense  for the  third  quarter
  declined to $1.7 million from $1.8 million due to significantly lower borrowings
  outstanding,  offset  somewhat by an increase  in the  interest  rate on the $75
  million term loan.  Interest  income  increased to $143,000  from $42,000 due to
  significantly higher invested cash as compared with the prior year.
  
       OTHER EXPENSE (INCOME), NET -- Other expense (income) for the third quarter
  of fiscal 2003 totaled  $192,000  compared with $435,000 in the prior year.  The
  decrease was principally due to the adoption of SFAS No. 142, which discontinued
  the amortization of goodwill.  Goodwill amortization during the third quarter of
  fiscal year 2002 was $350,000.
  
       INCOME TAXES -- Excluding the  cumulative  effect of accounting  change and
  restructuring and related charges, the effective tax rate for the nine months of
  fiscal 2003 was 37% compared with 34% for the year earlier period.
  
       EBITDA -- EBITDA  for the third  quarter  of fiscal  2003 was $8.1  million
  compared with $6.9 million in the prior year.  EBITDA  includes  earnings before
  interest,  income  taxes,  depreciation,  amortization,  all  restructuring  and
  related charges,  certain  non-cash charges and cumulative  effect of accounting
  change, as defined by the company's credit agreement.
  
  BALANCE SHEET COMMENTS
  
       CASH AND CASH  INVESTMENTS  -- Cash and cash  investments as of January 26,
  2003  increased to $38.5  million from $32.0  million at the end of fiscal 2002,
  reflecting  cash flow from operations of $23.9 million for the first nine months
  of fiscal 2003,  capital  expenditures of $9.1 million,  debt repayment of $12.3
  million, stock issuance from the sale of exercised stock options of $1.0 million
  and an increase in accounts payable for capital expenditures of $3.1 million.
  
       WORKING  CAPITAL -- Accounts  receivable  as of January 26, 2003  decreased
  29.8%  from  the   year-earlier   level,  due  principally  to  the  decline  in
  international  sales with their related  longer credit terms,  repayment of past
  due balances and an increase in the number of customers taking the cash discount
  for shorter payment terms. Days sales outstanding totaled 34 days at January 26,
  2003 compared with 43 a year ago and 36 at last fiscal year end.  Inventories at
  the close of the third quarter  decreased 9.8% from a year ago.  Inventory turns
  for the third quarter were 4.8 versus 5.1 for the year-earlier period. Operating
  working  capital  (comprised  of accounts  receivable,  inventory  and  accounts
  payable) was $64.1  million at January 26, 2003,  down from $84.2 million a year
  ago.
  
       PROPERTY, PLANT AND EQUIPMENT -- Capital spending for the first nine months
  of fiscal  2003 was $9.1  million.  The  company's  original  budget for capital
  spending for all of fiscal 2003 was $8.5 million,  compared with $4.7 million in
  fiscal  2002.  As  part  of the  fiscal  2003  restructuring  plan  in the  Culp
  Decorative Fabrics division, the company increased the budget by $4.5 million to
  $13.0  million.  Depreciation  for the third quarter of fiscal 2003 totaled $3.4
  million, and is estimated at $14.0 million for the full fiscal year.
  
       INTANGIBLE ASSETS -- As of January 26, 2003, goodwill in the amount of $9.2
  million is the company's only intangible asset. The company adopted SFAS No. 142
  on April  29,  2002.  During  the  first  quarter  of  fiscal  2003 the  company
  recognized  an impairment  charge of $37.6 ($24.2  million net of taxes of $13.4
  million) upon adoption of SFAS No. 142.
  
       LONG-TERM  DEBT -- As of the end of the  third  quarter,  the  company  had
  reduced  funded debt by $12.3  million  from last  fiscal year end.  Funded debt
  equals long-term debt plus current maturities.  Funded debt was $96.1 million at
  January 26,  2003,  compared  with $108.5  million at fiscal 2002 year end.  The
  company's funded debt-to-capital ratio was 51.1% at January 26, 2003.
  
       The company  also reports it leverage  statistics  in terms of funded debt,
  net of cash and cash investments,  under the assumption it could use the cash to
  repay  debt  at  any  time.  Therefore,  funded  debt,  net  of  cash  and  cash
  investments,  was $57.7  million at January 26, 2003 compared with $76.5 million
  at fiscal 2002 year end. In addition, the company's funded debt (net of cash and
  cash  investments)  to capital  employed ratio was 38.5% and funded debt (net of
  cash and cash investments) to EBITDA was 1.54, which is substantially lower than
  the highest  point level of 4.28 at January  2001.  Since the end of fiscal 2000
  (two years and nine  months  ago),  the company  has  substantially  reduced its
  funded debt (net of cash and cash  investments)  by a total of $78.8  million or
  57.7%.
  
       The company  entered into a new loan agreement  during August 2002 with its
  principal  bank lender that  provides,  among other things,  for: (1) a two year
  $34.7 million credit facility,  which includes a $15.0 million  revolving credit
  line and $19.7  million  for  letters  of credit  for the  company's  industrial
  revenue bonds (IRB's), (2) lower interest rates based upon a pricing matrix, and
  (3)  improved  financial  covenants.  The  company  was in  compliance  with all
  covenants contained in its loan agreements as of January 26, 2003.
  
       The company  has  initiated  the early  repayment  of $12.7  million of its
  long-term  debt by March 15, 2003 and  therefore has  reclassified  this debt to
  current   maturities  of  long-term  debt.  The  debt  being  repaid  represents
  Industrial Revenue Bonds ("IRBs").  Effective with this repayment of IRBs, under
  the terms of the company's bank loan  agreement,  all collateral  pledged on the
  company's  outstanding  loans  will be  removed.  In  addition,  with these debt
  retirements,  the company  will have  reduced  its funded debt by $25.0  million
  during  fiscal 2003,  and the company is  optimistic  that its cash  position at
  fiscal year end will exceed $25 million.
  
       The  remaining  funded debt after  repayment  of these IRBs will be totally
  unsecured  and  will be  comprised  of a $75  million  term  loan,  with a fixed
  interest  rate of 7.76%,  $7.0  million in  remaining  IRBs and a $1.4  million,
  non-interest bearing term loan with the Canadian government. The first scheduled
  principal  payment on the $75 million  term loan is due March 2006,  three years
  away, and it amounts to $11.0 million. The Canadian government loan is repaid in
  annual installments of approximately $450,000 per year.
  
       The company  plans to  maintain a cash  reserve of at least $25 million for
  the foreseeable future. Cash accumulated above this level will likely be used to
  repay the  remaining  $7.0 million in IRBs over the next several  quarters.  The
  company has chosen to repay the  outstanding  IRBs first due to high  prepayment
  fees and costs associated with the $75 million term loan.
  
  FREE CASH FLOW COMMENTS
  
       Free cash flow was $17.9  million  for the first nine months of fiscal 2003
  compared with $10.7  million for the same period of the prior year.  The company
  defines free cash flow as cash from operations, less capital expenditures,  plus
  or minus the  change in  accounts  payable  for  capital  expenditures.  The key
  reasons for this improvement were continued  improvement in accounts  receivable
  collections,  lower  inventory  levels,  higher  profits  and the  benefit  from
  deferred payment terms for capital expenditures.
  
  BUSINESS OUTLOOK
  
       For the fourth  quarter of fiscal 2003, the company  believes  consolidated
  sales  will  decline in the same range as the third  quarter  decrease  of 12.5%
  while gross  profit  margins  are  expected to  approximate  last year's  fourth
  quarter  gross margin of 21.8%,  excluding  restructuring  and related  charges,
  resulting in lower gross profit dollars.  More than offsetting this gross profit
  dollar decrease, total SG&A, interest and other expenses are expected to decline
  approximately  $4.0  million in the  fourth  quarter,  absent any large  unusual
  items,  from a total of $17.3  million in last year's fourth  quarter.  The cost
  reduction is due to several factors:  (1) lower incentive  compensation;  (2) an
  unusually  high bad debt expense of $1.2 million in last year's fourth  quarter;
  (3)  various  reductions  in other  SG&A  expenses;  and (4) lower net  interest
  expense.  The lower incentive  compensation  expense  reflects the fact that the
  entire  fiscal 2002 amount was recorded in the fourth  quarter since the company
  was operating at a net loss through the third quarter and therefore did not meet
  incentive  targets.  However,  this year's expense was accrued more ratably over
  the four quarterly periods as incentive targets were realized.  Therefore,  with
  gross  profit  margin  about the same on lower sales,  and  substantially  lower
  costs, the company is comfortable with the range of published analyst's earnings
  estimates  of $0.41 to $0.44 per share for the fourth  quarter  of fiscal  2003,
  excluding any  restructuring and related charges or large unusual items. The net
  earnings  for the fourth  quarter of last year were $4.4  million,  or $0.38 per
  share, excluding restructuring and related charges and goodwill amortization.
  
       The company's financial results over the last few quarters and its business
  outlook clearly  demonstrate the company's strategic focus on: (1) improving the
  profitability  of its sales mix;  (2)  increasing  margins and return on capital
  employed; and (3) generating free cash flow and strengthening its balance sheet.