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 18, 1998
  
                                     CULP, INC.
  
              (Exact name of registrant as specified in its charter)
  
  
          North Carolina                  0-12781                56-1001967
  
   (State or other jurisdiction    (Commission File No.)       (IRS Employer
         of 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>
  
                                       -MORE-
  
  
  
  
  
  
  FOR IMMEDIATE RELEASE
  
  
  
                          CULP REPORTS THIRD QUARTER GAINS
                                       
                NET INCOME INCREASES 33% TO NEW THIRD-QUARTER RECORD
  
  
  HIGH  POINT,  N. C. (Feb.  18,  1998) - Culp,  Inc.  (NYSE:CFI)  today  reported
  higher sales and earnings for the third fiscal quarter ended February 1, 1998.
  
        For the three  months  ended  February  1, 1998,  Culp  reported  that net
  sales  increased 22% to $118.5  million  compared with $97.5 million a year ago.
  Net income for the quarter  increased  33% to $4.0  million  compared  with $3.0
  million.  Earnings  per share  increased  19% to $0.32 on 12.7  million  average
  shares  outstanding  versus $0.27 on 11.3 million average shares  outstanding in
  the year-earlier period.
  
        The gain for the third  quarter  brought  net  sales  for the  first  nine
  months to $340.9  million,  up 16% from $293.2  million in the first nine months
  of fiscal  1997.  Net income for the first nine  months  increased  27% to $11.4
  million  versus  $8.9  million.  Earnings  per share  increased  14% to $0.90 on
  12.7 million  average shares  outstanding  versus $0.79 on 11.3 million  average
  shares outstanding in the year-earlier period.
  
        The increase of 12% in the average  number of shares  outstanding  for the
  third  quarter  and first  nine  months  was due  principally  to the  Company's
  secondary stock offering completed in February 1997.
  
        The  Company  noted that $11.2  million of the  increase  in net sales for
  the third quarter was  attributable to the Phillips Mills  acquisition  that was
  completed  in  August  1997.  The  Company's  effective  tax rate for the  third
  quarter  was  22%  compared  with  38% a  year  ago.  The  lower  rate  was  due
  principally  to increased tax benefits  related to the  Company's  international
  sales.  The reduced  tax rate also  reflected  a higher  proportion  of earnings
  from the Company's Canadian subsidiary that is taxed at a lower effective rate.
  
  <PAGE>
  CULP Reports Third Quarter Gains
  Page 4
  Feb. 18, 1998
  
  
        "We have now achieved  record  earnings in 21 consecutive  quarters versus
  the comparable  year-earlier  period," said Robert G. Culp, III, chief executive
  officer.  "One  of the  strategic  initiatives  that  has  contributed  to  that
  consistency  is the use of Culp's strong  financial  position to complement  our
  ongoing  internal  progress with the  acquisition of  complementary  businesses.
  The gains in sales for the third  quarter  and first nine  months  were aided by
  the  contribution  of Phillips  Mills which we acquired  earlier  this year.  We
  also  completed  the  acquisition  of the Wetumpka  Yarn  operations  during the
  third  quarter  and  earlier  this  month  completed  the  previously  announced
  acquisition  of  Artee   Industries.   Transactions  such  as  the  purchase  of
  Phillips  Mills have enabled us to broaden our product  line and customer  base,
  while the  Wetumpka  and Artee  Industries  acquisitions  extended  our vertical
  integration  into the  manufacturing  and marketing of spun and chenille  yarns.
  The  trend  toward  consolidation  continues  at  all  levels  within  the  home
  furnishings  industry,  and our intent is to capitalize  on other  opportunities
  as they may occur over the longer term."
  
        Culp added,  "Industry-wide  demand for certain  categories  of upholstery
  fabrics  from   U.S.-based   residential   furniture   customers  has  not  been
  especially  strong in the current  fiscal  year.  We achieved  higher  sales for
  the third  quarter,  aided  principally  by the  incremental  contribution  from
  acquisitions,  further growth in  international  shipments and continuing  gains
  in sales of mattress  ticking.  The  positive  momentum in shipments of mattress
  ticking  by  our  Home   Fashions   business   unit   reflects  the   successful
  introduction  of  new  textures  and  patterns  as  well  as our  investment  in
  increased capacity to meet customers' needs.
   
       "We are continuing to realize strong growth in our international  business.
  Shipments  to  customers  outside  the United  States  were up 45% for the third
  quarter and are  expected  to set a new record for fiscal  1998 as a whole.  Our
  competitive  position  is  benefiting  from the  introduction  of more  patterns
  designed for the preferences of specific markets.  The addition of new customers
  is expanding our marketing coverage,  and we are also being aided by the capital
  investment made in printed flock fabrics that are especially popular in a number
  of international areas."
  
       Culp added,  "We have already begun  integrating  the resources of Wetumpka
  Yarn and Artee  Industries into the design  functions of our business units. Our
  entry into the spun and chenille yarn business offers an exciting opportunity to
  accelerate our design  activities.  Our staff of designers and support personnel
  has never been more experienced,  and we have the physical  resources to support
  their design and  development  of proprietary  patterns and styles.  We have now
  moved most of our design  personnel  into the new Design  Center in  Burlington,
  North  Carolina.  This facility will encourage the sharing of design ideas among
  business units and provide a unique  environment for customers to participate in
  the development of new patterns.  Our focus on design is directly related to our
  goal of superior customer service which includes the need to provide distinctive
  fabrics to our worldwide base of customers."
  
  
  <PAGE>
  
        Culp  concluded,   "During  the  fourth  fiscal  quarter,   we  expect  to
  strengthen  our capital  structure  with the closing of a private  placement  of
  $75 million of senior  unsecured  notes.  The notes are expected to have a fixed
  coupon  rate of 6.76% and an  average  term of 10 years.  The  proceeds  will be
  used to repay  borrowings  under the  Company's  bank credit  facility,  thereby
  enhancing our financial flexibility."
  
        Culp,   Inc.  is  the  world's  largest   manufacturer   and  marketer  of
  upholstery  fabrics for furniture and is a leading  producer of mattress ticking
  for bedding.  The  Company's  fabrics are used  primarily in the  production  of
  residential and commercial furniture and bedding products.
  
        This Release  contains  statements  that could be deemed  "forward-looking
  statements"   within  the  meaning  of  the  federal   securities   laws,  which
  statements are inherently  subject to risks and  uncertainties.  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  characterized  by  qualifying  words such as
  "expect,"  "believe,"  "estimate,"  "plan" and "project" and their  derivatives.
  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 adversely  affect the Company.  In addition,  the value of the
  U.S. dollar relative to other currencies can affect the  competitiveness  of the
  Company's products in international markets.
  
  
  
  
  <PAGE>
  
  
                                     CULP, INC.
                           Condensed Financial Highlights
                                     (Unaudited)
                                                       Three Months Ended     
                                                  February 1,       January 26,
                                                     1998             1997    
                                                 ------------      -----------
  Net sales                                      $118,457,000      $97,468,000
  Net income                                        4,002,000        3,010,000
  Earnings per share
    Basic                                        $       0.32      $      0.27
    Diluted                                      $       0.31      $      0.26
  Average shares outstanding
    Basic                                          12,692,000       11,342,000
    Diluted                                        12,986,000       11,653,000
  
                                                       Nine Months Ended      
                                                  February 1,      January 26,
                                                     1998              1997   
                                                 ------------     ------------
  Net sales                                      $340,881,000     $293,201,000
  Net income                                       11,357,000        8,930,000
  Earnings per share
     Basic                                       $       0.90     $      0.79
     Diluted                                     $       0.88     $      0.77
  Average shares outstanding
    Basic                                          12,663,000       11,317,000
    Diluted                                        12,964,000       11,618,000
  
  
  
                                        -END-
  <PAGE>
  
  
  Item 5. Other Events
  
  See  attached  Press  Release (4 pages) and  Financial  Information  Release (12
  pages),  both dated February 18, 1998,  related to the quarter ended February 1,
  1998.
  
  Forward  Looking  Information.  The  discussion  in this  Form  8-K may  contain
  statements  that  could  be  deemed   forward-looking   statements,   which  are
  inherently  subject  to risks  and  uncertainties.  These  statements  are often
  characterized  by  qualifying  words such as  "expect,"  "believe,"  "estimate,"
  "plan" and "project"  and their  derivatives.  Factors that could  influence the
  matters  discussed  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 adversely affect the company.
  
  
   
  <PAGE>
  
  
                                    SIGNATURES
  
  
  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                          
                                       Senior Vice President and
                                       Chief Financial Officer
  
  
                                By:    Stephen T. Hancock                         
                                       Stephen T. Hancock
                                       General Accounting Manager
  
  
  
  
  Dated:   February 18, 1998
  
  
  
  <PAGE>
  
  >
  
  
  
                        CULP, INC. FINANCIAL INFORMATION RELEASE
                             CONSOLIDATED INCOME STATEMENTS
      FOR THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
  
                    (Amounts in Thousands, Except for Per Share Data)
  <TABLE>
  <CAPTION>
  
                                             THREE MONTHS ENDED (UNAUDITED)
                                 --------------------------------------------------------
  
                                       Amounts                         Percent of Sales
                                 ---------------------                --------------------
                                 February   January      % Over
                                    1,         26,
                                   1998       1997      (Under)        1998       1997
                                 ---------- ----------  ---------     ---------  ---------
  
  <S>                          <C>             <C>        <C>           <C>        <C>    
  Net sales                    $   118,457     97,468     21.5 %        100.0 %    100.0 %
  Cost of sales                     97,554     80,317     21.5 %         82.4 %     82.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Gross profit                20,903     17,151     21.9 %         17.6 %     17.6 %
  
  Selling, general and
    administrative expenses         13,162     10,760     22.3 %         11.1 %     11.0 %
                                 ---------- ----------  ---------     ---------  ---------
        Income from operations       7,741      6,391     21.1 %          6.5 %      6.6 %
  
  Interest expense                   2,180      1,228     77.5 %          1.8 %      1.3 %
  Interest income                     (73)       (73)      0.0 %        (0.1) %    (0.1) %
  Other expense (income), net          492        421     16.9 %          0.4 %      0.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Income before income taxes   5,142      4,815      6.8 %          4.3 %      4.9 %
       
  Income taxes  *                    1,140      1,805   (36.8) %         22.2 %     37.5 %
                                 ---------- ----------  ---------     ---------  ---------
        Net income             $     4,002      3,010     33.0 %          3.4 %      3.1 %
                                 ========== ==========  =========     =========  =========
  
  Net income per share               $0.32      $0.27     18.5 %
  Net income per share               
    (assuming dilution)              $0.31      $0.26     19.2 %
  Dividends per share              $0.0350    $0.0325      7.7 %
  Average shares outstanding        12,692     11,342     11.9 %
  Average shares outstanding        
    (assuming dilution)             12,986     11,653     11.4 %
  
  
  
                                              NINE MONTHS ENDED (UNAUDITED)
                                 --------------------------------------------------------
  
                                       Amounts                         Percent of Sales
                                 ---------------------                --------------------
                                 February   January      % Over
                                    1,         26,
                                   1998       1997      (Under)        1998       1997
                                 ---------- ----------  ---------     ---------  ---------
  
  Net sales                    $   340,881    293,201     16.3 %        100.0 %    100.0 %
  Cost of sales                    280,510    241,008     16.4 %         82.3 %     82.2 %
                                 ---------- ----------  ---------     ---------  ---------
        Gross profit                60,371     52,193     15.7 %         17.7 %     17.8 %
  
  Selling, general and
    administrative expenses         37,710     33,328     13.1 %         11.1 %     11.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Income from operations      22,661     18,865     20.1 %          6.6 %      6.4 %
  
  Interest expense                   5,280      3,652     44.6 %          1.5 %      1.2 %
  Interest income                    (235)      (190)     23.7 %         (0.1) %    (0.1) %
  Other expense (income), net        1,159      1,117      3.8 %          0.3 %      0.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Income before income taxes  16,457     14,286     15.2 %          4.8 %      4.9 %
  
  Income taxes  *                    5,100      5,356    (4.8) %         31.0 %     37.5 %
                                 ---------- ----------  ---------     ---------  ---------
        Net income             $    11,357      8,930     27.2 %          3.3 %      3.0 %
                                 ========== ==========  =========     =========  =========
  
  Net income per share               $0.90      $0.79     13.9 %
  Net income per share              
     (assuming dilution)             $0.88      $0.77     14.3 %
  Dividends per share              $0.1050    $0.0975      7.7 %
  Average shares outstanding        12,663     11,317     11.9 %
  Average shares outstanding        
     (assuming dilution)            12,964     11,618     11.6 %
  
   * Percent of sales column is calculated as a % of income before income taxes.
  </TABLE>
  
  <PAGE>
  
                          CULP, INC. FINANCIAL INFORMATION RELEASE
                                CONSOLIDATED BALANCE SHEETS
                   FEBRUARY 1, 1998, JANUARY 26, 1997 AND APRIL 27, 1997
  
                             (Unaudited, Amounts in Thousands)
  <TABLE>
  <CAPTION>
  
                                               Amounts              Increase
                                        -----------------------
                                        February 1,  January       (Decrease)       *
                                                       26,                          April
                                                                                     27,
                                                               --------------------
                                           1998        1997    Dollars     Percent   1997
                                        ------------ --------- ---------   -------- -------
  
  Current assets
  <S>                                 <C>             <C>       <C>      <C>          <C>
       Cash and cash investments      $         348       406      (58)    (14.3)%      830
       Accounts receivable                   73,109    50,157    22,952     45.8 %   56,691
       Inventories                           75,032    50,755    24,277     47.8 %   53,463
       Other current assets                   7,202     3,701     3,501     94.6 %    5,450
                                        ------------ --------- ---------   -------- -------
              Total current assets          155,691   105,019    50,672     48.3 %  116,434
                                                                
  Restricted investments                      3,976    11,778   (7,802)    (66.2)%   11,018
  Property, plant & equipment, net          113,658    86,146    27,512     31.9 %   91,231
  Goodwill                                   48,558    22,413    26,145    116.7 %   22,262
  Other assets                                5,439     2,906     2,533     87.2 %    3,007
                                        ------------ --------- ---------   -------- -------
                                                                            
              Total assets            $     327,322   228,262    99,060     43.4 %  243,952
                                        ============ ========= =========   ======== =======
  
                                                                            
                                                                            
  Current liabilities
       Current maturities of          
          long-term debt              $       1,120     6,100   (4,980)    (81.6)%      100
       Accounts payable                      35,921    20,833    15,088     72.4 %   29,903
       Accrued expenses                      12,683    15,644   (2,961)    (18.9)%   15,074
       Income taxes payable                   1,941     1,753       188     10.7 %    1,580
                                        ------------ --------- ---------   -------- -------
              Total current liabilities      51,665    44,330     7,335     16.5 %   46,657
                                                                                       
  Long-term debt                            144,079    86,266    57,813     67.0 %   76,541
                                                                            
  Deferred income taxes                       9,965     8,088     1,877     23.2 %    9,965
                                        ------------ --------- ---------   -------- -------
              Total liabilities             205,709   138,684    67,025     48.3 %  133,163
                                                                            
  Shareholders' equity                      121,613    89,578    32,035     35.8 %  110,789
                                        ------------ --------- ---------   -------- -------
                                                                            
              Total liabilities and                                         
              shareholders' equity    $     327,322   228,262    99,060     43.4 %  243,952
                                        ============ ========= =========   ======== =======
                                                                            
  Shares outstanding                         12,700    11,352     1,348     11.9 %   12,609
                                        ============ ========= =========   ======== =======
  
  
  * Derived from audited financial statements.
  </TABLE>
  
  <PAGE>
  
   
                                     CULP, INC.
                            FINANCIAL INFORMATION RELEASE
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
                          (Unaudited, Amounts in Thousands)
  
  
                                                              NINE MONTHS ENDED
                                                            ----------------------
  
  <TABLE>
  <CAPTION>
                                                                  Amounts
                                                            --------------------
                                                         February 1,   January 26,
                                                              1998       1997
                                                         -----------   -----------
  
  Cash flows from operating activities:                                 
  <S>                                                    <C>             <C>  
      Net income                                         $   11,357        8,930
      Adjustments to reconcile net income to net
        cash provided by (used in) operating
        activities:
          Depreciation                                       10,660        9,440
          Amortization of intangible assets                     883          634
          Changes in assets and liabilities, net of
          effects of businesses acquired:
             Accounts receivable                            (16,418)       1,881
             Inventories                                    (16,330)      (3,360)
             Other current assets                            (1,752)         466
             Other assets                                    (1,942)        (642)
             Accounts payable                                 8,783       (2,213)
             Accrued expenses                                (2,175)       3,080
             Income taxes payable                               361        1,556
                                                            ---------   ---------
               Net cash provided by (used in)               
               operating activities                          (6,573)      19,772
                                                            ---------   ---------
  Cash flows from investing activities:                                 
      Capital expenditures                                  (28,183)     (18,625)
      Purchases of restricted investments                    (8,724)      (9,681)
      Purchase of investments to fund deferred                 (581)           0
      compensation liability
      Sale of restricted investments                         15,766        3,177
      Businesses acquired                                   (37,156)           0
                                                            ---------   ---------
               Net cash used in investing activities        (58,878)     (25,129)
                                                            ---------   ---------
  Cash flows from financing activities:                                 
      Proceeds from issuance of long-term debt               77,600       15,900
      Principal payments on long-term debt                   (9,042)      (5,575)
      Change in accounts payable-capital expenditures        (2,765)      (4,262)
      Dividends paid                                         (1,333)      (1,103)
      Proceeds from common stock issued                         509          305
                                                            ---------   ---------
               Net cash provided by financing activities     64,969        5,265
                                                            ---------   ---------
                                                                        
  Decrease  in cash and cash investments                       (482)         (92)
                                                                        
  Cash and cash investments at beginning of period              830          498
                                                            ---------   ---------
                                                                        
  Cash and cash investments at end of period            $       348          406
                                                            =========   =========
  </TABLE>
   
  <PAGE>
   
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL ANALYSIS
                                  FEBRUARY 1, 1998
  <TABLE>
  <CAPTION>
  
  
                                             FISCAL 97                            FISCAL 98
                                           -------------   ---------------------------------------------------------   ---------------
                                                Q3              Q1             Q2            Q3            Q4               LTM
                                           -------------   ---------------------------------------------------------   ---------------
  
  INVENTORIES
  <S>                                         <C>              <C>            <C>           <C>
          Inventory turns                           6.2              5.8            6.1           5.4
  
  RECEIVABLES
          Days sales in receivables                47               50             55            52
          Percent current & less than 30
            days past due                         99.8%            95.0%          97.8%         94.1%
  
  WORKING CAPITAL
          Current ratio                             2.4              3.6            2.9           3.0
          Working capital turnover (4)              5.3              5.1            4.8           4.7
          Working capital                       $60,689          $88,969        $98,833      $104,026
          Working capital as a % of sales (4)      15.6%            23.8%          21.9%         23.7%
  
  PROPERTY, PLANT & EQUIPMENT
          Depreciation rate                        7.5%             7.1%           7.4%          7.4%
          Percent property, plant &
            equipment are depreciated             47.9%            46.8%          45.3%         44.8%
          Capital expenditures                  $26,958 (1)       $9,153        $10,063        $8,967
  
  PROFITABILITY
          Return on average total capital          7.5%             7.6%          10.0%          8.3%                            9.3%
          Return on average equity                14.1%            10.2%          15.6%         13.4%                           14.6%
          Net income per share                    $0.27            $0.23          $0.36         $0.32                           $1.28
          Net income per share (diluted)(7)       $0.26            $0.22          $0.35         $0.31                           $1.25
  
  LEVERAGE (3)
          Total liabilities/equity               154.8%           123.1%         172.0%        169.2%
          Funded debt/equity                      90.0%            77.4%         111.7%        116.1%
          Funded debt/capital employed            47.4%            43.6%          52.8%         53.7%
          Funded debt                           $80,588          $87,930       $131,833      $141,223
          Funded debt/EBITDA (LTM) (6)             2.09             2.18           2.83          2.95
          EBITDA/Interest expense, net (LTM)       8.8              9.1            8.5           7.5
  
  OTHER
          Book value per share                    $7.89            $8.98          $9.30         $9.58
          Employees at quarter end                3,143            3,180          3,554         3,771
          Sales per employee (annualized)      $125,000         $125,000       $146,000      $129,000                        $134,000
          Capital employed (3)                 $170,166         $201,467       $249,838      $262,836
          Effective income tax rate               37.5%            35.0%          35.0%         22.2%
          EBITDA (2)                             $9,279           $9,012        $12,643       $11,390                         $44,627
          EBITDA/net sales                         9.5%             9.1%          10.3%          9.6%                           10.0%
  
    (1) Expenditures for entire year
    (2) Earnings before interest, income taxes, and depreciation & amortization.
    (3) Long-term debt, funded debt and capital employed are all net of restricted
        investments.
    (4) Working capital for this calculation is accounts receivable, inventories 
        and accounts payable.
    (5) LTM represents "Latest Twelve Months"
    (6) EBITDA includes pro forma amounts for Phillips and Wetumpka acquisitions
        in Qtr 2 and Qtr 3 of fiscal 1998.
    (7) Net income per share (diluted) represents the potential dilution that 
        could occur if  securities  to issue  common stock were  exercised  or
        converted into common stock as required by Statement of Financial 
        Accounting Standards No.128 which was adopted during Qtr 3 of fiscal 1998.
  </TABLE>
  
   
  <PAGE>
  
                
  
  
                    CULP, INC. FINANCIAL INFORMATION RELEASE
                     SALES BY PRODUCT CATEGORY/BUSINESS UNIT
  FOR THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
  
  
                             (Amounts in thousands)
  <TABLE>
  <CAPTION>
  
                                       THREE MONTHS ENDED (UNAUDITED)
                             ---------------------------------------------------
  
                                  Amounts                     Percent of Total
                                                                   Sales
                             ------------------              -------------------
                             February  January    % Over
                               1,        26,
  Product                     1998      1997      (Under)    1998      1997
  Category/Business Unit
  -------------------------  --------  --------  ----------  --------  ---------
  Upholstery Fabrics
  <S>                      <C>          <C>       <C>       <C>        <C>   
      Culp Textures        $  21,059    20,389     3.3 %     17.8 %     20.9 %
      Rossville/Chromatex     21,120    18,953    11.4 %     17.8 %     19.4 %
                             --------  --------  ----------  --------  ---------
                              42,179    39,342     7.2 %     35.6 %     40.4 %
  
      Velvets/Prints          44,020    40,387     9.0 %     37.2 %     41.4 %
  
      Phillips                11,236         0   100.0 %      9.5 %      0.0 %
                             --------  --------  ----------  --------  ---------
                              97,435    79,729    22.2 %     82.3 %     81.8 %
  
  Mattress Ticking
      Culp Home Fashions      20,261    17,739    14.2 %     17.1 %     18.2 %
  
  Yarn
     Artee                       761         0   100.0 %      0.6 %      0.0 %
                             --------  --------  ----------  --------  ---------
  
                         * $ 118,457    97,468    21.5 %     100.0%    100.0 %
                             ========  ========  ==========  ========  =========
  
  
                                       NINE MONTHS ENDED (UNAUDITED)
                             ---------------------------------------------------
                                  Amounts                     Percent of Total
                                                                   Sales
                             ------------------              -------------------
                             February  January    % Over
                               1,        26,
  Product                     1998      1997      (Under)    1998      1997
  Category/Business Unit
  -------------------------  --------  --------  ----------  --------  ---------
  Upholstery Fabrics
      Culp Textures        $  67,206    65,191     3.1 %     19.7 %     22.2 %
      Rossville/Chromatex     60,843    58,840     3.4 %     17.8 %     20.1 %
                             --------  --------  ----------  --------  ---------
                             128,049   124,031     3.2 %     37.6 %     42.3 %
  
      Velvets/ Prints        126,345   115,487     9.4 %     37.1 %     39.4 %
  
      Phillips                21,961         0   100.0 %      6.4 %      0.0 %
                             --------  --------  ----------  --------  ---------
                             276,355   239,518    15.4 %     81.1 %     81.7 %
  
  Mattress Ticking
      Culp Home Fashions      63,765    53,683    18.8 %     18.7 %     18.3 %
  
  Yarn
     Artee                       761         0   100.0 %      0.2 %      0.0 %
                             --------  --------  ----------  --------  ---------
  
                         * $ 340,881   293,201    16.3 %     100.0%    100.0 %
                             ========  ========  ==========  ========  =========
  
  </TABLE>
  
  
  *U.S. sales were $ 79,873 and $70,931 for the current quarter of fiscal 1998 and
  fiscal  1997,  respectively;  and  $242,123 and $220,791 for the year to date of
  fiscal 1998 and fiscal 1997, respectively. The percentage increase in U.S. sales
  was 13% for the current quarter and an increase of 10% for the year to date.
                                      
  
  <PAGE>
  
  
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                       INTERNATIONAL SALES BY GEOGRAPHIC AREA
    FOR THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
  
  
                               (Amounts in thousands)
  <TABLE>
  <CAPTION>
  
                                         THREE MONTHS ENDED (UNAUDITED)
                             -----------------------------------------------------
  
                                   Amounts                       Percent of Total
                                                                      Sales
                             ---------------------             -------------------
                             February    January     % Over
                                1,         26,
     Geographic Area           1998        1997     (Under)     1998       1997
  -----------------------    ----------  ---------  ---------  ---------   -------
  <S>                    <C>                <C>    <C>          <C>        <C>   
  North America          $       7,562      6,482   16.7 %       19.6 %     24.4 %
  (Excluding USA)
  Europe                        11,581      7,213   60.6 %       30.0 %     27.2 %
  Middle East                    9,326      4,580   103.6%       24.2 %     17.3 %
  Far East & Asia                7,957      6,862   16.0 %       20.6 %     25.9 %
  South America                  1,230        855   43.9 %        3.2 %      3.2 %
  All other areas                  928        545   70.3 %        2.4 %      2.1 %
                             ----------  ---------  ---------  ---------   -------
  
                         $      38,584     26,537   45.4 %      100.0 %    100.0 %
                             ==========  =========  =========  =========   =======
  
  
                                         NINE MONTHS ENDED (UNAUDITED)
                             -----------------------------------------------------
  
                                   Amounts                       Percent of Total
                                                                      Sales
                             ---------------------             -------------------
                             February    January     % Over
                                1,         26,
     Geographic Area           1998        1997     (Under)     1998       1997
  -----------------------    ----------  ---------  ---------  ---------   -------
  North America          $      22,574     20,555    9.8 %       22.9 %     28.4 %
  (Excluding USA)
  Europe                        22,811     17,573   29.8 %       23.1 %     24.3 %
  Middle East                   23,452     13,736   70.7 %       23.7 %     19.0 %
  Far East & Asia               23,951     15,893   50.7 %       24.3 %     21.9 %
  South America                  3,487      2,464   41.5 %        3.5 %      3.4 %
  All other areas                2,483      2,189   13.4 %        2.5 %      3.0 %
                             ----------  ---------  ---------  ---------   -------
  
                         $      98,758     72,410   36.4 %      100.0 %    100.0 %
                             ==========  =========  =========  =========   =======
  
  </TABLE>
  
  
  
  International sales, and the percentage of total sales, for each of the last six
  years  follows:fiscal  1992-$ 34,094 (18%);  fiscal 1993-$ 40,729 (20%);  fiscal
  1994-$ 44,038 (18%);  fiscal 1995-$ 57,971 (19%);fiscal 1996-$ 77,397 (22%); and
  fiscal  1997-$  101,571  (25%).  International  sales  for the  current  quarter
  represented  33%  and  27%  for  1998  and  1997,   respectively.   Year-to-date
  international  sales  represented  29% and 25% of total sales for 1998 and 1997,
  respectively.
  
  Certain amounts for fiscal year 1997 have been  reclassified to conform with the
  fiscal year 1998 presentation.  Additionally,  certain amounts were reclassified
  from the fiscal year 1998 second quarter presentation.
  
  <PAGE>
                                     Culp, Inc.
                       SALES BY BUSINESS UNIT - TREND ANALYSIS
                                1996 vs 1997 vs 1998
  
                                                            (Amounts in thousands)
  <TABLE>
  <CAPTION>
  
                                      Fiscal 1996                           Fiscal 1997                             Fiscal 1998
                          ------------------------------------  ------------------------------------- 
  Product                 Q1     Q2      Q3     Q4    TOTAL      Q1     Q2     Q3      Q4    TOTAL    
  Category/Business Units
  ------------------------
  Upholstery Fabrics
  <S>                     <C>    <C>    <C>     <C>    <C>      <C>     <C>      <C>     <C>    <C>     
      Culp Textures       17,584 22,715 20,685  23,400  84,384    20,801 24,001  20,389  23,027  88,218  
      Rossville/Chromatex 15,358 17,960 18,567  22,318  74,203    18,165 21,722  18,953  20,672  79,512  
                          ------------------------------------  --------------------------------------- 
                          32,942 40,675 39,252  45,718 158,587    38,966 45,723  39,342  43,699 167,730 
  
      Velvets/Prints      23,523 32,081 31,836  38,261 125,701    34,867 40,233  40,387  40,980 156,467 
  
      Phillips               -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------  --------------------------------------- 
                          56,465 72,756 71,088  83,979 284,288    73,833 85,956  79,729  84,679 324,197 
  
  Mattress Ticking
      Culp Home Fashions  15,892 17,916 15,388  18,183  67,379    16,696 19,248  17,739  20,999 74,682  
  
  Yarn
      Artee                  -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------   -------------------------------------- 
  
                          72,357 90,672 86,476 102,162 351,667    90,529 105,204 97,468 105,678 398,879 
                          ====================================   ====================================== 
  
  
                     Percent increase(decrease) from prior year:
                           
  ----------------------------------------------------------------------------------------------------
          Product 
  Category/Business Units
  -----------------------
  Upholstery Fabrics
      Culp Textures       (10.3)  (0.5)  (1.2)     7.6  (0.9)      18.3   5.7   (1.4)   (1.6)    4.5  
      Rossville/Chromatex   1.4    14.0   13.2    35.5   16.4      18.3  20.9     2.1   (7.4)    7.2  
                          ------------------------------------  ------------------------------------- 
                          (5.2)     5.4    5.1    19.7    6.5      18.3  12.4     0.2   (4.4)    5.8  
  
      Velvets/Prints       13.9    21.3   12.5    21.8   17.7      48.2  25.4    26.9     7.1   24.5  
  
      Phillips              -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------  ------------------------------------- 
                            1.9    11.9    8.3    20.6   11.2      30.8  18.1    12.2     0.8   14.0  
  
  Mattress Ticking
      Culp Home Fashions   45.1    33.6   26.7    14.9   28.8       5.1   7.4    15.3    15.5   10.8  
  
  Yarn
      Artee                 -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------  ------------------------------------- 
  
                            9.1    15.6   11.2    19.6   14.2      25.1  16.0    12.7     3.4   13.4  
                          ====================================  ===================================== 
  
   Overall Growth Rate
  
  Internal(without          6.4    13.0    8.7    19.6   12.3      25.1  16.0    12.7     3.4   13.4  
  acquistions)
  External                  2.7     2.6    2.5            1.9                                         
                                                     -                -     -       -       -      -  
                          ------------------------------------  ------------------------------------- 
                            9.1    15.6   11.2    19.6   14.2      25.1  16.0    12.7     3.4   13.4  
                          ====================================  ===================================== 
  </TABLE>
  
  <PAGE>
  
                                     Culp, Inc.
                       SALES BY BUSINESS UNIT - TREND ANALYSIS
                                1996 vs 1997 vs 1998
  
                                                            (Amounts in thousands)
  <TABLE>
  <CAPTION>
  
                                         Fiscal 1998
                            --------------------------------------
  Product                    Q1       Q2      Q3      Q4   TOTAL
  Category/Business Units
  ------------------------
  Upholstery Fabrics
  <S>                        <C>      <C>     <C>           <C>   
      Culp Textures          21,693   24,454  21,059        67,206
                             18,121   21,602  21,120        60,843
  Rossville/Chromatex
                            --------------------------------------
                             39,814   46,056  42,179       128,049
      Velvets/Prints         38,397   43,928  44,020       126,345
  
      Phillips                    -   10,725  11,236        21,961
                             
                            --------------------------------------
                             78,211  100,709  97,435       276,355
  
  Mattress Ticking
      Culp Home Fashions     21,287   22,217  20,261        63,765
  
  Yarn
      Artee                    -        -        761           761
                            --------------------------------------
  
                             99,498  122,926 118,457       340,881
                            ======================================
  
  
   
  Upholstery Fabrics
      Culp Textures            4.3      1.9      3.3          3.1
                              (0.2)    (0.6)    11.4          3.4
  Rossville/Chromatex
                            --------------------------------------
                                2.2      0.7     7.2          3.2
  
      Velvets/Prints           10.1      9.2     9.0          9.4
  
      Phillips                   -     100.0   100.0        100.0
                            --------------------------------------
                                5.9     17.2    22.2         15.4
  
  Mattress Ticking
      Culp Home Fashions       27.5     15.4    14.2         18.8
  
  Yarn
      Artee                     -        -     100.0        100.0
                            --------------------------------------
  
                                9.9     16.8    21.5         16.3
                            ======================================
  
   Overall Growth Rate
  
  Internal(without              9.9      6.6     9.2          8.5
  acquistions)
  External                                                    7.8
                                  -     10.2    12.3
                            ======================================
                                9.9     16.8    21.5         16.3
                            ======================================
  </TABLE>
  
                                                                  
   
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
  for the three and nine month periods ended February 1, 1998 and January 26, 1997
  
  
  INCOME STATEMENT COMMENTS
  
       GENERAL  - Net  sales  increased  21.5% to $118.5  million  and net  income
  increased 33.0% to $4.0 million for the third quarter, as compared with the same
  quarter of last year. This  performance  marks the 21st  consecutive  quarter of
  record  earnings  and the 19th  consecutive  quarter of record  sales  (based on
  comparable  year-earlier  periods).  Net sales  for the  quarter  excluding  the
  acquisitions  of Phillips Mills and Wetumpka Yarn increased 9.2% versus the same
  quarter of last year. The company's net profit margin increased slightly to 3.4%
  for the quarter from 3.1% a year ago. Also, the company has achieved a return on
  average  shareholders'  equity of 14.6% for the latest twelve month period.  The
  company acquired  Phillips Mills on August 5, 1997 and Wetumpka Yarn on December
  30, 1997;  the results of these  companies are included  since their  respective
  acquisition dates.
   
       The company  attributes  its consistent  record to several key  competitive
  strengths:
  
       Diverse  Global  Customer  Base -  penetrating  other  end-use  markets  in
  addition  to  U.S.  residential  furniture,  such  as  bedding,   international,
  commercial  furniture  and  juvenile  furniture;  sales to these  other  markets
  accounted  for  approximately  47%  of  net  sales  during  the  third  quarter;
  additionally,  no one  customer  accounted  for more than 7% of sales during the
  quarter;
  
       Design  Innovation - investing in the creative aspect of our business - the
  company  has   significantly   increased  the  resources   (both  designers  and
  computer-aided  design  (CAD)  systems)  dedicated  to the  design  and  product
  development areas in each business unit; the company's in-house design,  product
  development,  CAD and support staff now includes  over 90 people.  Additionally,
  the company  opened its  state-of-the-art  Design  Center in  Burlington,  North
  Carolina  during  January 1998.  This  facility now brings  together most of the
  company's design resources in one location and utilizes advanced CAD systems and
  technology;
  
       Vertical  Integration - realizing additional  manufacturing  integration by
  producing  various raw material  components  that are used in the manufacture of
  its products; and
  
       Ability to Identify and  Integrate  Acquisitions  - investing in selective,
  accretive acquisitions in complementary businesses which we know and understand,
  and that  strengthen  existing  marketing  positions or add  strategic  vertical
  manufacturing capabilities.
  
       NET SALES - Compared with the third quarter of last year, upholstery fabric
  sales  increased  22.2% to $97.4 million and mattress  ticking  sales  increased
  14.2% to $20.3  million for the quarter (See Sales by Business  Unit schedule on
  Page 5 and Sales by  Business  Unit - Trend  Analysis  on Page 7). The growth in
  upholstery  fabric sales for the third quarter  reflects the  incremental  sales
  from the Phillips  acquisition of $11.2 million and gains in Velvets/Prints - up
  9.0%; Rossville/Chromatex - up 11.4%; and Culp Textures - up 3.3%. The growth in
  demand for upholstery fabrics from U.S.  manufacturers of residential  furniture
  as a group began  slowing  during the second  half of fiscal 1997 and  continued
  through  calendar  1997.  The company  believes the  financial  difficulties  of
  several significant furniture retailers,  including the summer 1997 bankruptcies
  of Levitz and Montgomery Wards,  significantly contributed to the slower rate of
  growth. Sales to U.S.-based residential furniture customers excluding sales from
  Phillips Mills decreased 3% for the quarter.  Including Phillips,  sales to this
  customer segment  increased 9%. Sales of wet printed flock  upholstery  fabrics,
  which remain one of the company's faster growing product lines  internationally,
  increased 69% from the same quarter a year ago. The increased sales by Culp Home
  Fashions  during the third  quarter (up 14.2%)  reflect the  continued  positive
  response to new designs and fabric  constructions,  notably in printed  jacquard
  ticking.  The growth in Culp Home Fashions has been  significantly  aided by the
  company's investment in additional weaving capacity to manufacture wide jacquard
  greige, or unfinished, goods at the company's Rayonese facility in Canada. These
  greige goods are then further processed at other facilities by printing,  dyeing
  and other finishing steps to produce mattress ticking.
  
  
  <PAGE>
  
   
  
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
  for the three and nine month periods ended February 1, 1998 and January 26, 1997
  
  
       International  sales were up 45.4% for the quarter  compared with the third
  quarter  of  fiscal  1997.  International  sales in all major  regions  and each
  upholstery fabric business unit were strong,  and accounted for 33% of net sales
  for the quarter  versus 27% for the same quarter of last year. The vast majority
  of the international  sales represent sales of upholstery fabrics to residential
  furniture distributors and manufacturers. (See International Sales by Geographic
  Area  schedule on page 6.) Almost all of the company's  international  sales are
  denominated in U.S. dollars.
  
  
       GROSS  PROFIT - The gross  profit  increase of 21.9% for the third  quarter
  versus the same  quarter of last year  reflects a  substantial  gain in the Culp
  Home Fashions  business  unit,  the  incremental  gross profit from the Phillips
  Mills  business  unit,  a moderate  increase in  Rossville/Chromatex,  and lower
  results in Velvets/Prints and Culp Textures.  The overall gross profit margin of
  17.6%  remained  the same for the quarter  versus the same quarter of last year.
  The company is benefiting  significantly from its international sales growth and
  the operation of its jacquard  greige goods facility in Canada  (Rayonese).  The
  company  completed a major expansion of wide weaving capacity at Rayonese during
  the third quarter.  Factors which adversely affected the company's profitability
  during  the  quarter  included:  (a) lower  demand  from U.S.  manufacturers  of
  residential  furniture,  which  affected all of the upholstery  fabric  business
  units;  and (b) lower  profitability  in the  Velvets/Prints  business unit that
  resulted  from  decreases in sales in certain  product  lines  (tufted and woven
  velvets,  and  heat-transfer  flock  prints).  The  expansion  projects  in  the
  Velvets/Prints  business unit (flock coating line, the new printing  facility in
  Lumberton,  N.C. and the integration of the Phillips velvet products into Culp's
  facilities)  contributed  positively during the quarter,  although manufacturing
  efficiencies have not reached the expected levels of performance.
  
       S,G&A EXPENSES - S,G&A expenses for the third quarter were essentially flat
  as a percentage  of sales  versus the same period of last year.  The increase in
  absolute dollars is principally due to incremental  S,G&A expenses for Phillips,
  higher  sales  commissions   related  to  international  sales  and  significant
  investments in additional design resources,  which were offset by lower accruals
  for incentive-based compensation plans.
  
       INTEREST  EXPENSE - The  increase  for the third  quarter of 77.5% over the
  same quarter of last year is due to higher average borrowings outstanding, which
  resulted from the company's  acquisition  of Phillips Mills that was made on the
  first day of the  second  quarter,  and from  capital  expenditure  and  working
  capital  investments that were made during the first nine months of this year.
  
       INTEREST INCOME - Interest income remained the same for the quarter.
  
       OTHER EXPENSE (INCOME),  NET - Other expense (income) increased to $492,000
  from $421,000 in the same quarter of last year, due primarily to the incremental
  goodwill amortization related to Phillips.
  
       INCOME  TAXES - The  effective  tax rate for the third  quarter  was 22.2%,
  compared  with  37.5%  for the same  quarter  of last  year.  The lower tax rate
  resulted from higher than  expected tax benefits (in the current  period as well
  as prior periods) related to the company's  foreign sales  corporation  ("FSC"),
  and higher  estimated income in Canada which has a lower effective tax rate. The
  company is estimating  the effective tax rate for the full fiscal year at 31.0%,
  which is down from the 35.0% estimate at the end of the second quarter.
  
       EBITDA - EBITDA for the quarter  increased 22.8% to $11.4 million from last
  year's third quarter and represented 9.6% of net sales compared with 9.5% of net
  sales for the same period of last year.
  
  
  <PAGE>
  
  
  
   
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
  for the three and nine month periods ended February 1, 1998 and January 26, 1997
                                      
  
  BALANCE SHEET COMMENTS
  
       WORKING  CAPITAL - Accounts  receivable  increased 45.8% from January 1997,
  due to the Phillips acquisition and increased sales for the second quarter. Days
  sales  outstanding  represented 52 days, up 11% from 47 days at January 26, 1997
  and 49 days at April 27, 1997.  Accounts  receivable  continued to increase at a
  faster rate than sales because of the increasing mix of international  sales and
  mattress  ticking sales,  which carry longer payment terms than U.S.  upholstery
  fabric  sales.  Inventories  increased  47.8% from January 26, 1997,  due to the
  Phillips  acquisition,  higher  overall sales and a higher mix of  international
  sales  which have  required  more  finished  goods  inventory.  Inventory  turns
  decreased  13% to 5.4 for the  quarter  versus 6.2 for the same  quarter of last
  year.  Working capital increased  significantly to $104.0 million at February 1,
  1998,  from $60.7  million at January  26,  1997 and $69.8  million at April 27,
  1997, for the reasons mentioned above.
   
       PROPERTY,  PLANT AND  EQUIPMENT - The company has  maintained a significant
  program of capital  expenditures  over the past several years designed to expand
  capacity to support sales growth, increase vertical integration to lower product
  costs and control more of its supply of raw materials, and enhance manufacturing
  efficiencies  through  modernization.  The company is currently planning capital
  spending of  approximately  $39 million during fiscal 1998, which includes about
  $13.5  million  for  expansion   projects  (35%);  $12.5  million  for  vertical
  integration projects (32%); and $13.0 million for modernization  projects (33%).
  The principal  expansion project involves completion of various items related to
  the Lumberton,  N.C. printing facility.  The key vertical  integration  projects
  include yarn extrusion  expansion and additional  weaving  capacity for jacquard
  greige  goods at  Rayonese.  The  modernization  projects  encompass a number of
  smaller projects throughout the company"s  operations.  Depreciation expense for
  fiscal 1998 is expected to be approximately $15.0 million.  For fiscal 1999, the
  company is planning to  significantly  reduce its capital spending to a range of
  $10 to $15 million,  and concentrate its efforts on improving the results of the
  investments  made during fiscal 1997 and fiscal 1998.  The two largest  projects
  that  are  currently  planned  for  fiscal  1999  are:  (a)  completion  of  the
  polypropylene  yarn extrusion  expansion,  which began in early fiscal 1998; and
  (b) building  expansions in the Culp Home Fashions  business unit to accommodate
  the significant  growth in the company"s sales of mattress ticking over the last
  several  years.  Depreciation  for  fiscal  1999 is  currently  estimated  to be
  approximately $19 million.
   
       LONG-TERM DEBT - The company"s  funded  debt-to-capital  ratio was 53.7% at
  February 1, 1998, up from 47.4% at January 26, 1997,  and up from 37.2% at April
  27,  1997.  Funded debt was $141.2  million at  February 1, 1998,  up from $80.6
  million  at  January  26,  1997 and up from $ 65.6  million  at April 27,  1997.
  (Funded  debt  equals  long-term  debt,   including  current  maturities,   less
  restricted  investments,  which  represent  unspent IRB funds.) The  increase in
  funded  debt  from  April 27,  1997  resulted  from the  Phillips  and  Wetumpka
  acquisitions ($37.2 million), capital expenditures ($28.2 million), an operating
  cash flow deficit ($6.6 million),  and a decrease in accounts payable related to
  capital  expenditures ($2.8 million).  During the fourth quarter of fiscal 1998,
  the company is expecting to significantly  strengthen its capital structure with
  the closing of a private  placement of $75 million of senior,  unsecured  notes.
  The notes are  expected to have a fixed coupon rate of 6.76% and an average term
  of 10 years.  Additionally,  the principal  financial covenants include a funded
  debt to total capital ratio of 60% and a minimum shareholders" equity level. The
  proceeds  will be used to repay  borrowings  under  the  company"s  bank  credit
  facility. (See Pro forma Capitalization Table on page 12 of 12.)
  
  
  
  
  
  
  
  
  
  <PAGE>
  
  
  
                      CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
     for the three and nine month periods ended February 1, 1998 and January 26,
                                        1997
  
  
  
       PHILLIPS MILLS  ACQUISITION - On August 5, 1997,  the company  acquired the
  business  and  certain  assets  relating  to the  upholstery  fabric  businesses
  operating as Phillips Mills. Based on the terms of the asset purchase agreement,
  the  transaction is valued at  approximately  $37 million,  which included cash,
  seller debt retired,  a note payable to the seller and  acquisition  costs.  The
  consideration  for the acquisition  also included stock options and an agreement
  for contingent  payments to the selling  companies  within three years following
  closing that could range from $0 to $5,500,000,  depending upon the future sales
  performance of the Phillips  jacquard  fabric product line. (See Form 8-K, dated
  April  30,  1997,  which  provides   additional   information   related  to  the
  acquisition.)
  
       ACQUISITION  OF WETUMPKA  YARN - On December 30, 1997,  Culp  completed the
  acquisition  of the business  and certain  assets  related to the Wetumpka  yarn
  division of Dan River Inc. The  transaction  value at closing was $1.5  million.
  (See  press  release,   dated  December  17,  1997,  which  provides  additional
  information about the acquisition.)
   
       ACQUISITION OF ARTEE  INDUSTRIES - On February 2, 1998,  Culp completed the
  acquisition of the business and  substantially  all assets and the assumption of
  certain  liabilities  of  Artee  Industries,   Incorporated  ("Artee"),  a  yarn
  manufacturer.  The transaction value at closing is estimated at $18 million, and
  included the issuance of 284,211 new shares of Culp common  stock,  $2.0 million
  in cash and a $1.6 million  note, as well as the repayment at closing of Artee's
  interest-bearing   debt.  Also,  there  is  an  "earn-out"  which  provides  the
  opportunity for additional consideration of up to $7.6 million (60% in stock and
  40% in cash),  based upon the  profitability  of Artee during Culp's fiscal year
  ending May 2, 1999.  The  acquisition  will be accounted for as a purchase,  and
  therefore  the results of Artee from the closing date will be included in Culp's
  results.  (See Form 8-K,  dated  October 15,  1997,  which  provides  additional
  information related to the acquisition.)
  
  
  
  <PAGE>
  
  
  
                     CULP, INC. FINANCIAL INFORMATION RELEASE
                          PRO FORMA CAPITALIZATION TABLE
                                 FEBRUARY 1, 1998
  
  (Dollars in thousands)
  <TABLE>
  <CAPTION>
                                                   February 1, 1998
                                      -------------------------------------------
  
                                        Actual       Adjustments     Pro Forma
                                      ------------   -------------  -------------
  
  FUNDED DEBT
         Industrial Revenue Bonds
  <S>                                    <C>             <C>            <C>   
         and other obligations             30,090                         30,090
         Syndicated $125 million          106,033           9,197 (a)     40,230
         credit facility                                  (75,000) (b)
  
         Notes payable                      5,100           1,600 (a)      6,700
         Senior unsecured                    ----          75,000 (b)     75,000
         notes
                                      ------------   -------------  -------------
  
                                          141,223          10,797        152,020
                                      ------------   -------------  -------------
  
  
  SHAREHOLDERS' EQUITY                    121,613           5,400 (a)    127,013
                                      ------------   -------------  -------------
  
  
  TOTAL CAPITAL                           262,836          16,197        279,033
                                      ============   =============  =============
  
  FUNDED DEBT TO TOTAL CAPITAL              53.7%                          54.5%
                                      ============                  =============
  
  </TABLE>
  
  
    (a) Reflects funding sources for Artee Industries acquisition which closed
        February 2, 1998. On the acquisition date, the company issued 284,211
        sharesof its common stock to the Artee Industries shareholders.
  
    (b) Reflects planned issuance of a private placement of senior unsecured notes
        with a coupon rate of 6.76% and average term of ten years. Estimated debt
        issuance costs are $500,000.
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "CULP, INC. 8-K", "secsgml_size_bytes": 65097}]
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": "98545025"}, "business-address": {"street1": "101 S MAIN ST", "street2": "101 S MAIN ST", "city": "HIGH POINT", "state": "NC", "zip": "27261-2686", "phone": "9108895161"}, "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 18, 1998
  
                                     CULP, INC.
  
              (Exact name of registrant as specified in its charter)
  
          North Carolina                  0-12781                56-1001967
  
   (State or other jurisdiction    (Commission File No.)       (IRS Employer
         of 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)
  
  --------------------------------------------------------------------------------
  -MORE-
  
  FOR IMMEDIATE RELEASE
  
                          CULP REPORTS THIRD QUARTER GAINS
                                       
                NET INCOME INCREASES 33% TO NEW THIRD-QUARTER RECORD
  
  HIGH  POINT,  N. C. (Feb.  18,  1998) - Culp,  Inc.  (NYSE:CFI)  today  reported
  higher sales and earnings for the third fiscal quarter ended February 1, 1998.
  
        For the three  months  ended  February  1, 1998,  Culp  reported  that net
  sales  increased 22% to $118.5  million  compared with $97.5 million a year ago.
  Net income for the quarter  increased  33% to $4.0  million  compared  with $3.0
  million.  Earnings  per share  increased  19% to $0.32 on 12.7  million  average
  shares  outstanding  versus $0.27 on 11.3 million average shares  outstanding in
  the year-earlier period.
  
        The gain for the third  quarter  brought  net  sales  for the  first  nine
  months to $340.9  million,  up 16% from $293.2  million in the first nine months
  of fiscal  1997.  Net income for the first nine  months  increased  27% to $11.4
  million  versus  $8.9  million.  Earnings  per share  increased  14% to $0.90 on
  12.7 million  average shares  outstanding  versus $0.79 on 11.3 million  average
  shares outstanding in the year-earlier period.
  
        The increase of 12% in the average  number of shares  outstanding  for the
  third  quarter  and first  nine  months  was due  principally  to the  Company's
  secondary stock offering completed in February 1997.
  
        The  Company  noted that $11.2  million of the  increase  in net sales for
  the third quarter was  attributable to the Phillips Mills  acquisition  that was
  completed  in  August  1997.  The  Company's  effective  tax rate for the  third
  quarter  was  22%  compared  with  38% a  year  ago.  The  lower  rate  was  due
  principally  to increased tax benefits  related to the  Company's  international
  sales.  The reduced  tax rate also  reflected  a higher  proportion  of earnings
  from the Company's Canadian subsidiary that is taxed at a lower effective rate.
  CULP Reports Third Quarter Gains
  Page 4
  Feb. 18, 1998
  
        "We have now achieved  record  earnings in 21 consecutive  quarters versus
  the comparable  year-earlier  period," said Robert G. Culp, III, chief executive
  officer.  "One  of the  strategic  initiatives  that  has  contributed  to  that
  consistency  is the use of Culp's strong  financial  position to complement  our
  ongoing  internal  progress with the  acquisition of  complementary  businesses.
  The gains in sales for the third  quarter  and first nine  months  were aided by
  the  contribution  of Phillips  Mills which we acquired  earlier  this year.  We
  also  completed  the  acquisition  of the Wetumpka  Yarn  operations  during the
  third  quarter  and  earlier  this  month  completed  the  previously  announced
  acquisition  of  Artee   Industries.   Transactions  such  as  the  purchase  of
  Phillips  Mills have enabled us to broaden our product  line and customer  base,
  while the  Wetumpka  and Artee  Industries  acquisitions  extended  our vertical
  integration  into the  manufacturing  and marketing of spun and chenille  yarns.
  The  trend  toward  consolidation  continues  at  all  levels  within  the  home
  furnishings  industry,  and our intent is to capitalize  on other  opportunities
  as they may occur over the longer term."
  
        Culp added,  "Industry-wide  demand for certain  categories  of upholstery
  fabrics  from   U.S.-based   residential   furniture   customers  has  not  been
  especially  strong in the current  fiscal  year.  We achieved  higher  sales for
  the third  quarter,  aided  principally  by the  incremental  contribution  from
  acquisitions,  further growth in  international  shipments and continuing  gains
  in sales of mattress  ticking.  The  positive  momentum in shipments of mattress
  ticking  by  our  Home   Fashions   business   unit   reflects  the   successful
  introduction  of  new  textures  and  patterns  as  well  as our  investment  in
  increased capacity to meet customers' needs.
   
       "We are continuing to realize strong growth in our international  business.
  Shipments  to  customers  outside  the United  States  were up 45% for the third
  quarter and are  expected  to set a new record for fiscal  1998 as a whole.  Our
  competitive  position  is  benefiting  from the  introduction  of more  patterns
  designed for the preferences of specific markets.  The addition of new customers
  is expanding our marketing coverage,  and we are also being aided by the capital
  investment made in printed flock fabrics that are especially popular in a number
  of international areas."
  
       Culp added,  "We have already begun  integrating  the resources of Wetumpka
  Yarn and Artee  Industries into the design  functions of our business units. Our
  entry into the spun and chenille yarn business offers an exciting opportunity to
  accelerate our design  activities.  Our staff of designers and support personnel
  has never been more experienced,  and we have the physical  resources to support
  their design and  development  of proprietary  patterns and styles.  We have now
  moved most of our design  personnel  into the new Design  Center in  Burlington,
  North  Carolina.  This facility will encourage the sharing of design ideas among
  business units and provide a unique  environment for customers to participate in
  the development of new patterns.  Our focus on design is directly related to our
  goal of superior customer service which includes the need to provide distinctive
  fabrics to our worldwide base of customers."
  Culp  concluded,   "During  the  fourth  fiscal  quarter,   we  expect  to
  strengthen  our capital  structure  with the closing of a private  placement  of
  $75 million of senior  unsecured  notes.  The notes are expected to have a fixed
  coupon  rate of 6.76% and an  average  term of 10 years.  The  proceeds  will be
  used to repay  borrowings  under the  Company's  bank credit  facility,  thereby
  enhancing our financial flexibility."
  
        Culp,   Inc.  is  the  world's  largest   manufacturer   and  marketer  of
  upholstery  fabrics for furniture and is a leading  producer of mattress ticking
  for bedding.  The  Company's  fabrics are used  primarily in the  production  of
  residential and commercial furniture and bedding products.
  
        This Release  contains  statements  that could be deemed  "forward-looking
  statements"   within  the  meaning  of  the  federal   securities   laws,  which
  statements are inherently  subject to risks and  uncertainties.  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  characterized  by  qualifying  words such as
  "expect,"  "believe,"  "estimate,"  "plan" and "project" and their  derivatives.
  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 adversely  affect the Company.  In addition,  the value of the
  U.S. dollar relative to other currencies can affect the  competitiveness  of the
  Company's products in international markets.
  CULP, INC.
                           Condensed Financial Highlights
                                     (Unaudited)
                                                       Three Months Ended     
                                                  February 1,       January 26,
                                                     1998             1997    
                                                 ------------      -----------
  Net sales                                      $118,457,000      $97,468,000
  Net income                                        4,002,000        3,010,000
  Earnings per share
    Basic                                        $       0.32      $      0.27
    Diluted                                      $       0.31      $      0.26
  Average shares outstanding
    Basic                                          12,692,000       11,342,000
    Diluted                                        12,986,000       11,653,000
  
                                                       Nine Months Ended      
                                                  February 1,      January 26,
                                                     1998              1997   
                                                 ------------     ------------
  Net sales                                      $340,881,000     $293,201,000
  Net income                                       11,357,000        8,930,000
  Earnings per share
     Basic                                       $       0.90     $      0.79
     Diluted                                     $       0.88     $      0.77
  Average shares outstanding
    Basic                                          12,663,000       11,317,000
    Diluted                                        12,964,000       11,618,000
  
                                        -END-
  Item 5. Other Events
  
  See  attached  Press  Release (4 pages) and  Financial  Information  Release (12
  pages),  both dated February 18, 1998,  related to the quarter ended February 1,
  1998.
  
  Forward  Looking  Information.  The  discussion  in this  Form  8-K may  contain
  statements  that  could  be  deemed   forward-looking   statements,   which  are
  inherently  subject  to risks  and  uncertainties.  These  statements  are often
  characterized  by  qualifying  words such as  "expect,"  "believe,"  "estimate,"
  "plan" and "project"  and their  derivatives.  Factors that could  influence the
  matters  discussed  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 adversely affect the company.
  SIGNATURES
  
  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                          
                                       Senior Vice President and
                                       Chief Financial Officer
  
                                By:    Stephen T. Hancock                         
                                       Stephen T. Hancock
                                       General Accounting Manager
  
  Dated:   February 18, 1998
  >
  
                        CULP, INC. FINANCIAL INFORMATION RELEASE
                             CONSOLIDATED INCOME STATEMENTS
      FOR THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
  
                    (Amounts in Thousands, Except for Per Share Data)
  THREE MONTHS ENDED (UNAUDITED)
                                 --------------------------------------------------------
  
                                       Amounts                         Percent of Sales
                                 ---------------------                --------------------
                                 February   January      % Over
                                    1,         26,
                                   1998       1997      (Under)        1998       1997
                                 ---------- ----------  ---------     ---------  ---------
  Net sales                    $   118,457     97,468     21.5 %        100.0 %    100.0 %
  Cost of sales                     97,554     80,317     21.5 %         82.4 %     82.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Gross profit                20,903     17,151     21.9 %         17.6 %     17.6 %
  
  Selling, general and
    administrative expenses         13,162     10,760     22.3 %         11.1 %     11.0 %
                                 ---------- ----------  ---------     ---------  ---------
        Income from operations       7,741      6,391     21.1 %          6.5 %      6.6 %
  
  Interest expense                   2,180      1,228     77.5 %          1.8 %      1.3 %
  Interest income                     (73)       (73)      0.0 %        (0.1) %    (0.1) %
  Other expense (income), net          492        421     16.9 %          0.4 %      0.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Income before income taxes   5,142      4,815      6.8 %          4.3 %      4.9 %
       
  Income taxes  *                    1,140      1,805   (36.8) %         22.2 %     37.5 %
                                 ---------- ----------  ---------     ---------  ---------
        Net income             $     4,002      3,010     33.0 %          3.4 %      3.1 %
                                 ========== ==========  =========     =========  =========
  
  Net income per share               $0.32      $0.27     18.5 %
  Net income per share               
    (assuming dilution)              $0.31      $0.26     19.2 %
  Dividends per share              $0.0350    $0.0325      7.7 %
  Average shares outstanding        12,692     11,342     11.9 %
  Average shares outstanding        
    (assuming dilution)             12,986     11,653     11.4 %
  
                                              NINE MONTHS ENDED (UNAUDITED)
                                 --------------------------------------------------------
  
                                       Amounts                         Percent of Sales
                                 ---------------------                --------------------
                                 February   January      % Over
                                    1,         26,
                                   1998       1997      (Under)        1998       1997
                                 ---------- ----------  ---------     ---------  ---------
  
  Net sales                    $   340,881    293,201     16.3 %        100.0 %    100.0 %
  Cost of sales                    280,510    241,008     16.4 %         82.3 %     82.2 %
                                 ---------- ----------  ---------     ---------  ---------
        Gross profit                60,371     52,193     15.7 %         17.7 %     17.8 %
  
  Selling, general and
    administrative expenses         37,710     33,328     13.1 %         11.1 %     11.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Income from operations      22,661     18,865     20.1 %          6.6 %      6.4 %
  
  Interest expense                   5,280      3,652     44.6 %          1.5 %      1.2 %
  Interest income                    (235)      (190)     23.7 %         (0.1) %    (0.1) %
  Other expense (income), net        1,159      1,117      3.8 %          0.3 %      0.4 %
                                 ---------- ----------  ---------     ---------  ---------
        Income before income taxes  16,457     14,286     15.2 %          4.8 %      4.9 %
  
  Income taxes  *                    5,100      5,356    (4.8) %         31.0 %     37.5 %
                                 ---------- ----------  ---------     ---------  ---------
        Net income             $    11,357      8,930     27.2 %          3.3 %      3.0 %
                                 ========== ==========  =========     =========  =========
  
  Net income per share               $0.90      $0.79     13.9 %
  Net income per share              
     (assuming dilution)             $0.88      $0.77     14.3 %
  Dividends per share              $0.1050    $0.0975      7.7 %
  Average shares outstanding        12,663     11,317     11.9 %
  Average shares outstanding        
     (assuming dilution)            12,964     11,618     11.6 %
  
   * Percent of sales column is calculated as a % of income before income taxes.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                CONSOLIDATED BALANCE SHEETS
                   FEBRUARY 1, 1998, JANUARY 26, 1997 AND APRIL 27, 1997
  
                             (Unaudited, Amounts in Thousands)
  Amounts              Increase
                                        -----------------------
                                        February 1,  January       (Decrease)       *
                                                       26,                          April
                                                                                     27,
                                                               --------------------
                                           1998        1997    Dollars     Percent   1997
                                        ------------ --------- ---------   -------- -------
  
  Current assets
  Cash and cash investments      $         348       406      (58)    (14.3)%      830
       Accounts receivable                   73,109    50,157    22,952     45.8 %   56,691
       Inventories                           75,032    50,755    24,277     47.8 %   53,463
       Other current assets                   7,202     3,701     3,501     94.6 %    5,450
                                        ------------ --------- ---------   -------- -------
              Total current assets          155,691   105,019    50,672     48.3 %  116,434
                                                                
  Restricted investments                      3,976    11,778   (7,802)    (66.2)%   11,018
  Property, plant & equipment, net          113,658    86,146    27,512     31.9 %   91,231
  Goodwill                                   48,558    22,413    26,145    116.7 %   22,262
  Other assets                                5,439     2,906     2,533     87.2 %    3,007
                                        ------------ --------- ---------   -------- -------
                                                                            
              Total assets            $     327,322   228,262    99,060     43.4 %  243,952
                                        ============ ========= =========   ======== =======
  
                                                                            
                                                                            
  Current liabilities
       Current maturities of          
          long-term debt              $       1,120     6,100   (4,980)    (81.6)%      100
       Accounts payable                      35,921    20,833    15,088     72.4 %   29,903
       Accrued expenses                      12,683    15,644   (2,961)    (18.9)%   15,074
       Income taxes payable                   1,941     1,753       188     10.7 %    1,580
                                        ------------ --------- ---------   -------- -------
              Total current liabilities      51,665    44,330     7,335     16.5 %   46,657
                                                                                       
  Long-term debt                            144,079    86,266    57,813     67.0 %   76,541
                                                                            
  Deferred income taxes                       9,965     8,088     1,877     23.2 %    9,965
                                        ------------ --------- ---------   -------- -------
              Total liabilities             205,709   138,684    67,025     48.3 %  133,163
                                                                            
  Shareholders' equity                      121,613    89,578    32,035     35.8 %  110,789
                                        ------------ --------- ---------   -------- -------
                                                                            
              Total liabilities and                                         
              shareholders' equity    $     327,322   228,262    99,060     43.4 %  243,952
                                        ============ ========= =========   ======== =======
                                                                            
  Shares outstanding                         12,700    11,352     1,348     11.9 %   12,609
                                        ============ ========= =========   ======== =======
  
  * Derived from audited financial statements.
  CULP, INC.
                            FINANCIAL INFORMATION RELEASE
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
                          (Unaudited, Amounts in Thousands)
  
                                                              NINE MONTHS ENDED
                                                            ----------------------
  Amounts
                                                            --------------------
                                                         February 1,   January 26,
                                                              1998       1997
                                                         -----------   -----------
  
  Cash flows from operating activities:
  Net income                                         $   11,357        8,930
      Adjustments to reconcile net income to net
        cash provided by (used in) operating
        activities:
          Depreciation                                       10,660        9,440
          Amortization of intangible assets                     883          634
          Changes in assets and liabilities, net of
          effects of businesses acquired:
             Accounts receivable                            (16,418)       1,881
             Inventories                                    (16,330)      (3,360)
             Other current assets                            (1,752)         466
             Other assets                                    (1,942)        (642)
             Accounts payable                                 8,783       (2,213)
             Accrued expenses                                (2,175)       3,080
             Income taxes payable                               361        1,556
                                                            ---------   ---------
               Net cash provided by (used in)               
               operating activities                          (6,573)      19,772
                                                            ---------   ---------
  Cash flows from investing activities:                                 
      Capital expenditures                                  (28,183)     (18,625)
      Purchases of restricted investments                    (8,724)      (9,681)
      Purchase of investments to fund deferred                 (581)           0
      compensation liability
      Sale of restricted investments                         15,766        3,177
      Businesses acquired                                   (37,156)           0
                                                            ---------   ---------
               Net cash used in investing activities        (58,878)     (25,129)
                                                            ---------   ---------
  Cash flows from financing activities:                                 
      Proceeds from issuance of long-term debt               77,600       15,900
      Principal payments on long-term debt                   (9,042)      (5,575)
      Change in accounts payable-capital expenditures        (2,765)      (4,262)
      Dividends paid                                         (1,333)      (1,103)
      Proceeds from common stock issued                         509          305
                                                            ---------   ---------
               Net cash provided by financing activities     64,969        5,265
                                                            ---------   ---------
                                                                        
  Decrease  in cash and cash investments                       (482)         (92)
                                                                        
  Cash and cash investments at beginning of period              830          498
                                                            ---------   ---------
                                                                        
  Cash and cash investments at end of period            $       348          406
                                                            =========   =========
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL ANALYSIS
                                  FEBRUARY 1, 1998
  FISCAL 97                            FISCAL 98
                                           -------------   ---------------------------------------------------------   ---------------
                                                Q3              Q1             Q2            Q3            Q4               LTM
                                           -------------   ---------------------------------------------------------   ---------------
  
  INVENTORIES
  Inventory turns                           6.2              5.8            6.1           5.4
  
  RECEIVABLES
          Days sales in receivables                47               50             55            52
          Percent current & less than 30
            days past due                         99.8%            95.0%          97.8%         94.1%
  
  WORKING CAPITAL
          Current ratio                             2.4              3.6            2.9           3.0
          Working capital turnover (4)              5.3              5.1            4.8           4.7
          Working capital                       $60,689          $88,969        $98,833      $104,026
          Working capital as a % of sales (4)      15.6%            23.8%          21.9%         23.7%
  
  PROPERTY, PLANT & EQUIPMENT
          Depreciation rate                        7.5%             7.1%           7.4%          7.4%
          Percent property, plant &
            equipment are depreciated             47.9%            46.8%          45.3%         44.8%
          Capital expenditures                  $26,958 (1)       $9,153        $10,063        $8,967
  
  PROFITABILITY
          Return on average total capital          7.5%             7.6%          10.0%          8.3%                            9.3%
          Return on average equity                14.1%            10.2%          15.6%         13.4%                           14.6%
          Net income per share                    $0.27            $0.23          $0.36         $0.32                           $1.28
          Net income per share (diluted)(7)       $0.26            $0.22          $0.35         $0.31                           $1.25
  
  LEVERAGE (3)
          Total liabilities/equity               154.8%           123.1%         172.0%        169.2%
          Funded debt/equity                      90.0%            77.4%         111.7%        116.1%
          Funded debt/capital employed            47.4%            43.6%          52.8%         53.7%
          Funded debt                           $80,588          $87,930       $131,833      $141,223
          Funded debt/EBITDA (LTM) (6)             2.09             2.18           2.83          2.95
          EBITDA/Interest expense, net (LTM)       8.8              9.1            8.5           7.5
  
  OTHER
          Book value per share                    $7.89            $8.98          $9.30         $9.58
          Employees at quarter end                3,143            3,180          3,554         3,771
          Sales per employee (annualized)      $125,000         $125,000       $146,000      $129,000                        $134,000
          Capital employed (3)                 $170,166         $201,467       $249,838      $262,836
          Effective income tax rate               37.5%            35.0%          35.0%         22.2%
          EBITDA (2)                             $9,279           $9,012        $12,643       $11,390                         $44,627
          EBITDA/net sales                         9.5%             9.1%          10.3%          9.6%                           10.0%
  
    (1) Expenditures for entire year
    (2) Earnings before interest, income taxes, and depreciation & amortization.
    (3) Long-term debt, funded debt and capital employed are all net of restricted
        investments.
    (4) Working capital for this calculation is accounts receivable, inventories 
        and accounts payable.
    (5) LTM represents "Latest Twelve Months"
    (6) EBITDA includes pro forma amounts for Phillips and Wetumpka acquisitions
        in Qtr 2 and Qtr 3 of fiscal 1998.
    (7) Net income per share (diluted) represents the potential dilution that 
        could occur if  securities  to issue  common stock were  exercised  or
        converted into common stock as required by Statement of Financial 
        Accounting Standards No.128 which was adopted during Qtr 3 of fiscal 1998.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                     SALES BY PRODUCT CATEGORY/BUSINESS UNIT
  FOR THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
  
                             (Amounts in thousands)
  THREE MONTHS ENDED (UNAUDITED)
                             ---------------------------------------------------
  
                                  Amounts                     Percent of Total
                                                                   Sales
                             ------------------              -------------------
                             February  January    % Over
                               1,        26,
  Product                     1998      1997      (Under)    1998      1997
  Category/Business Unit
  -------------------------  --------  --------  ----------  --------  ---------
  Upholstery Fabrics
  Culp Textures        $  21,059    20,389     3.3 %     17.8 %     20.9 %
      Rossville/Chromatex     21,120    18,953    11.4 %     17.8 %     19.4 %
                             --------  --------  ----------  --------  ---------
                              42,179    39,342     7.2 %     35.6 %     40.4 %
  
      Velvets/Prints          44,020    40,387     9.0 %     37.2 %     41.4 %
  
      Phillips                11,236         0   100.0 %      9.5 %      0.0 %
                             --------  --------  ----------  --------  ---------
                              97,435    79,729    22.2 %     82.3 %     81.8 %
  
  Mattress Ticking
      Culp Home Fashions      20,261    17,739    14.2 %     17.1 %     18.2 %
  
  Yarn
     Artee                       761         0   100.0 %      0.6 %      0.0 %
                             --------  --------  ----------  --------  ---------
  
                         * $ 118,457    97,468    21.5 %     100.0%    100.0 %
                             ========  ========  ==========  ========  =========
  
                                       NINE MONTHS ENDED (UNAUDITED)
                             ---------------------------------------------------
                                  Amounts                     Percent of Total
                                                                   Sales
                             ------------------              -------------------
                             February  January    % Over
                               1,        26,
  Product                     1998      1997      (Under)    1998      1997
  Category/Business Unit
  -------------------------  --------  --------  ----------  --------  ---------
  Upholstery Fabrics
      Culp Textures        $  67,206    65,191     3.1 %     19.7 %     22.2 %
      Rossville/Chromatex     60,843    58,840     3.4 %     17.8 %     20.1 %
                             --------  --------  ----------  --------  ---------
                             128,049   124,031     3.2 %     37.6 %     42.3 %
  
      Velvets/ Prints        126,345   115,487     9.4 %     37.1 %     39.4 %
  
      Phillips                21,961         0   100.0 %      6.4 %      0.0 %
                             --------  --------  ----------  --------  ---------
                             276,355   239,518    15.4 %     81.1 %     81.7 %
  
  Mattress Ticking
      Culp Home Fashions      63,765    53,683    18.8 %     18.7 %     18.3 %
  
  Yarn
     Artee                       761         0   100.0 %      0.2 %      0.0 %
                             --------  --------  ----------  --------  ---------
  
                         * $ 340,881   293,201    16.3 %     100.0%    100.0 %
                             ========  ========  ==========  ========  =========
  *U.S. sales were $ 79,873 and $70,931 for the current quarter of fiscal 1998 and
  fiscal  1997,  respectively;  and  $242,123 and $220,791 for the year to date of
  fiscal 1998 and fiscal 1997, respectively. The percentage increase in U.S. sales
  was 13% for the current quarter and an increase of 10% for the year to date.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                       INTERNATIONAL SALES BY GEOGRAPHIC AREA
    FOR THREE MONTHS AND NINE MONTHS ENDED FEBRUARY 1, 1998 AND JANUARY 26, 1997
  
                               (Amounts in thousands)
  THREE MONTHS ENDED (UNAUDITED)
                             -----------------------------------------------------
  
                                   Amounts                       Percent of Total
                                                                      Sales
                             ---------------------             -------------------
                             February    January     % Over
                                1,         26,
     Geographic Area           1998        1997     (Under)     1998       1997
  -----------------------    ----------  ---------  ---------  ---------   -------
  North America          $       7,562      6,482   16.7 %       19.6 %     24.4 %
  (Excluding USA)
  Europe                        11,581      7,213   60.6 %       30.0 %     27.2 %
  Middle East                    9,326      4,580   103.6%       24.2 %     17.3 %
  Far East & Asia                7,957      6,862   16.0 %       20.6 %     25.9 %
  South America                  1,230        855   43.9 %        3.2 %      3.2 %
  All other areas                  928        545   70.3 %        2.4 %      2.1 %
                             ----------  ---------  ---------  ---------   -------
  
                         $      38,584     26,537   45.4 %      100.0 %    100.0 %
                             ==========  =========  =========  =========   =======
  
                                         NINE MONTHS ENDED (UNAUDITED)
                             -----------------------------------------------------
  
                                   Amounts                       Percent of Total
                                                                      Sales
                             ---------------------             -------------------
                             February    January     % Over
                                1,         26,
     Geographic Area           1998        1997     (Under)     1998       1997
  -----------------------    ----------  ---------  ---------  ---------   -------
  North America          $      22,574     20,555    9.8 %       22.9 %     28.4 %
  (Excluding USA)
  Europe                        22,811     17,573   29.8 %       23.1 %     24.3 %
  Middle East                   23,452     13,736   70.7 %       23.7 %     19.0 %
  Far East & Asia               23,951     15,893   50.7 %       24.3 %     21.9 %
  South America                  3,487      2,464   41.5 %        3.5 %      3.4 %
  All other areas                2,483      2,189   13.4 %        2.5 %      3.0 %
                             ----------  ---------  ---------  ---------   -------
  
                         $      98,758     72,410   36.4 %      100.0 %    100.0 %
                             ==========  =========  =========  =========   =======
  International sales, and the percentage of total sales, for each of the last six
  years  follows:fiscal  1992-$ 34,094 (18%);  fiscal 1993-$ 40,729 (20%);  fiscal
  1994-$ 44,038 (18%);  fiscal 1995-$ 57,971 (19%);fiscal 1996-$ 77,397 (22%); and
  fiscal  1997-$  101,571  (25%).  International  sales  for the  current  quarter
  represented  33%  and  27%  for  1998  and  1997,   respectively.   Year-to-date
  international  sales  represented  29% and 25% of total sales for 1998 and 1997,
  respectively.
  
  Certain amounts for fiscal year 1997 have been  reclassified to conform with the
  fiscal year 1998 presentation.  Additionally,  certain amounts were reclassified
  from the fiscal year 1998 second quarter presentation.
  Culp, Inc.
                       SALES BY BUSINESS UNIT - TREND ANALYSIS
                                1996 vs 1997 vs 1998
  
                                                            (Amounts in thousands)
  Fiscal 1996                           Fiscal 1997                             Fiscal 1998
                          ------------------------------------  ------------------------------------- 
  Product                 Q1     Q2      Q3     Q4    TOTAL      Q1     Q2     Q3      Q4    TOTAL    
  Category/Business Units
  ------------------------
  Upholstery Fabrics
  Culp Textures       17,584 22,715 20,685  23,400  84,384    20,801 24,001  20,389  23,027  88,218  
      Rossville/Chromatex 15,358 17,960 18,567  22,318  74,203    18,165 21,722  18,953  20,672  79,512  
                          ------------------------------------  --------------------------------------- 
                          32,942 40,675 39,252  45,718 158,587    38,966 45,723  39,342  43,699 167,730 
  
      Velvets/Prints      23,523 32,081 31,836  38,261 125,701    34,867 40,233  40,387  40,980 156,467 
  
      Phillips               -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------  --------------------------------------- 
                          56,465 72,756 71,088  83,979 284,288    73,833 85,956  79,729  84,679 324,197 
  
  Mattress Ticking
      Culp Home Fashions  15,892 17,916 15,388  18,183  67,379    16,696 19,248  17,739  20,999 74,682  
  
  Yarn
      Artee                  -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------   -------------------------------------- 
  
                          72,357 90,672 86,476 102,162 351,667    90,529 105,204 97,468 105,678 398,879 
                          ====================================   ====================================== 
  
                     Percent increase(decrease) from prior year:
                           
  ----------------------------------------------------------------------------------------------------
          Product 
  Category/Business Units
  -----------------------
  Upholstery Fabrics
      Culp Textures       (10.3)  (0.5)  (1.2)     7.6  (0.9)      18.3   5.7   (1.4)   (1.6)    4.5  
      Rossville/Chromatex   1.4    14.0   13.2    35.5   16.4      18.3  20.9     2.1   (7.4)    7.2  
                          ------------------------------------  ------------------------------------- 
                          (5.2)     5.4    5.1    19.7    6.5      18.3  12.4     0.2   (4.4)    5.8  
  
      Velvets/Prints       13.9    21.3   12.5    21.8   17.7      48.2  25.4    26.9     7.1   24.5  
  
      Phillips              -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------  ------------------------------------- 
                            1.9    11.9    8.3    20.6   11.2      30.8  18.1    12.2     0.8   14.0  
  
  Mattress Ticking
      Culp Home Fashions   45.1    33.6   26.7    14.9   28.8       5.1   7.4    15.3    15.5   10.8  
  
  Yarn
      Artee                 -       -      -       -      -         -     -       -       -      -  
                          ------------------------------------  ------------------------------------- 
  
                            9.1    15.6   11.2    19.6   14.2      25.1  16.0    12.7     3.4   13.4  
                          ====================================  ===================================== 
  
   Overall Growth Rate
  
  Internal(without          6.4    13.0    8.7    19.6   12.3      25.1  16.0    12.7     3.4   13.4  
  acquistions)
  External                  2.7     2.6    2.5            1.9                                         
                                                     -                -     -       -       -      -  
                          ------------------------------------  ------------------------------------- 
                            9.1    15.6   11.2    19.6   14.2      25.1  16.0    12.7     3.4   13.4  
                          ====================================  =====================================
  Culp, Inc.
                       SALES BY BUSINESS UNIT - TREND ANALYSIS
                                1996 vs 1997 vs 1998
  
                                                            (Amounts in thousands)
  Fiscal 1998
                            --------------------------------------
  Product                    Q1       Q2      Q3      Q4   TOTAL
  Category/Business Units
  ------------------------
  Upholstery Fabrics
  Culp Textures          21,693   24,454  21,059        67,206
                             18,121   21,602  21,120        60,843
  Rossville/Chromatex
                            --------------------------------------
                             39,814   46,056  42,179       128,049
      Velvets/Prints         38,397   43,928  44,020       126,345
  
      Phillips                    -   10,725  11,236        21,961
                             
                            --------------------------------------
                             78,211  100,709  97,435       276,355
  
  Mattress Ticking
      Culp Home Fashions     21,287   22,217  20,261        63,765
  
  Yarn
      Artee                    -        -        761           761
                            --------------------------------------
  
                             99,498  122,926 118,457       340,881
                            ======================================
  
   
  Upholstery Fabrics
      Culp Textures            4.3      1.9      3.3          3.1
                              (0.2)    (0.6)    11.4          3.4
  Rossville/Chromatex
                            --------------------------------------
                                2.2      0.7     7.2          3.2
  
      Velvets/Prints           10.1      9.2     9.0          9.4
  
      Phillips                   -     100.0   100.0        100.0
                            --------------------------------------
                                5.9     17.2    22.2         15.4
  
  Mattress Ticking
      Culp Home Fashions       27.5     15.4    14.2         18.8
  
  Yarn
      Artee                     -        -     100.0        100.0
                            --------------------------------------
  
                                9.9     16.8    21.5         16.3
                            ======================================
  
   Overall Growth Rate
  
  Internal(without              9.9      6.6     9.2          8.5
  acquistions)
  External                                                    7.8
                                  -     10.2    12.3
                            ======================================
                                9.9     16.8    21.5         16.3
                            ======================================
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
  for the three and nine month periods ended February 1, 1998 and January 26, 1997
  
  INCOME STATEMENT COMMENTS
  
       GENERAL  - Net  sales  increased  21.5% to $118.5  million  and net  income
  increased 33.0% to $4.0 million for the third quarter, as compared with the same
  quarter of last year. This  performance  marks the 21st  consecutive  quarter of
  record  earnings  and the 19th  consecutive  quarter of record  sales  (based on
  comparable  year-earlier  periods).  Net sales  for the  quarter  excluding  the
  acquisitions  of Phillips Mills and Wetumpka Yarn increased 9.2% versus the same
  quarter of last year. The company's net profit margin increased slightly to 3.4%
  for the quarter from 3.1% a year ago. Also, the company has achieved a return on
  average  shareholders'  equity of 14.6% for the latest twelve month period.  The
  company acquired  Phillips Mills on August 5, 1997 and Wetumpka Yarn on December
  30, 1997;  the results of these  companies are included  since their  respective
  acquisition dates.
   
       The company  attributes  its consistent  record to several key  competitive
  strengths:
  
       Diverse  Global  Customer  Base -  penetrating  other  end-use  markets  in
  addition  to  U.S.  residential  furniture,  such  as  bedding,   international,
  commercial  furniture  and  juvenile  furniture;  sales to these  other  markets
  accounted  for  approximately  47%  of  net  sales  during  the  third  quarter;
  additionally,  no one  customer  accounted  for more than 7% of sales during the
  quarter;
  
       Design  Innovation - investing in the creative aspect of our business - the
  company  has   significantly   increased  the  resources   (both  designers  and
  computer-aided  design  (CAD)  systems)  dedicated  to the  design  and  product
  development areas in each business unit; the company's in-house design,  product
  development,  CAD and support staff now includes  over 90 people.  Additionally,
  the company  opened its  state-of-the-art  Design  Center in  Burlington,  North
  Carolina  during  January 1998.  This  facility now brings  together most of the
  company's design resources in one location and utilizes advanced CAD systems and
  technology;
  
       Vertical  Integration - realizing additional  manufacturing  integration by
  producing  various raw material  components  that are used in the manufacture of
  its products; and
  
       Ability to Identify and  Integrate  Acquisitions  - investing in selective,
  accretive acquisitions in complementary businesses which we know and understand,
  and that  strengthen  existing  marketing  positions or add  strategic  vertical
  manufacturing capabilities.
  
       NET SALES - Compared with the third quarter of last year, upholstery fabric
  sales  increased  22.2% to $97.4 million and mattress  ticking  sales  increased
  14.2% to $20.3  million for the quarter (See Sales by Business  Unit schedule on
  Page 5 and Sales by  Business  Unit - Trend  Analysis  on Page 7). The growth in
  upholstery  fabric sales for the third quarter  reflects the  incremental  sales
  from the Phillips  acquisition of $11.2 million and gains in Velvets/Prints - up
  9.0%; Rossville/Chromatex - up 11.4%; and Culp Textures - up 3.3%. The growth in
  demand for upholstery fabrics from U.S.  manufacturers of residential  furniture
  as a group began  slowing  during the second  half of fiscal 1997 and  continued
  through  calendar  1997.  The company  believes the  financial  difficulties  of
  several significant furniture retailers,  including the summer 1997 bankruptcies
  of Levitz and Montgomery Wards,  significantly contributed to the slower rate of
  growth. Sales to U.S.-based residential furniture customers excluding sales from
  Phillips Mills decreased 3% for the quarter.  Including Phillips,  sales to this
  customer segment  increased 9%. Sales of wet printed flock  upholstery  fabrics,
  which remain one of the company's faster growing product lines  internationally,
  increased 69% from the same quarter a year ago. The increased sales by Culp Home
  Fashions  during the third  quarter (up 14.2%)  reflect the  continued  positive
  response to new designs and fabric  constructions,  notably in printed  jacquard
  ticking.  The growth in Culp Home Fashions has been  significantly  aided by the
  company's investment in additional weaving capacity to manufacture wide jacquard
  greige, or unfinished, goods at the company's Rayonese facility in Canada. These
  greige goods are then further processed at other facilities by printing,  dyeing
  and other finishing steps to produce mattress ticking.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
  for the three and nine month periods ended February 1, 1998 and January 26, 1997
  
       International  sales were up 45.4% for the quarter  compared with the third
  quarter  of  fiscal  1997.  International  sales in all major  regions  and each
  upholstery fabric business unit were strong,  and accounted for 33% of net sales
  for the quarter  versus 27% for the same quarter of last year. The vast majority
  of the international  sales represent sales of upholstery fabrics to residential
  furniture distributors and manufacturers. (See International Sales by Geographic
  Area  schedule on page 6.) Almost all of the company's  international  sales are
  denominated in U.S. dollars.
  
       GROSS  PROFIT - The gross  profit  increase of 21.9% for the third  quarter
  versus the same  quarter of last year  reflects a  substantial  gain in the Culp
  Home Fashions  business  unit,  the  incremental  gross profit from the Phillips
  Mills  business  unit,  a moderate  increase in  Rossville/Chromatex,  and lower
  results in Velvets/Prints and Culp Textures.  The overall gross profit margin of
  17.6%  remained  the same for the quarter  versus the same quarter of last year.
  The company is benefiting  significantly from its international sales growth and
  the operation of its jacquard  greige goods facility in Canada  (Rayonese).  The
  company  completed a major expansion of wide weaving capacity at Rayonese during
  the third quarter.  Factors which adversely affected the company's profitability
  during  the  quarter  included:  (a) lower  demand  from U.S.  manufacturers  of
  residential  furniture,  which  affected all of the upholstery  fabric  business
  units;  and (b) lower  profitability  in the  Velvets/Prints  business unit that
  resulted  from  decreases in sales in certain  product  lines  (tufted and woven
  velvets,  and  heat-transfer  flock  prints).  The  expansion  projects  in  the
  Velvets/Prints  business unit (flock coating line, the new printing  facility in
  Lumberton,  N.C. and the integration of the Phillips velvet products into Culp's
  facilities)  contributed  positively during the quarter,  although manufacturing
  efficiencies have not reached the expected levels of performance.
  
       S,G&A EXPENSES - S,G&A expenses for the third quarter were essentially flat
  as a percentage  of sales  versus the same period of last year.  The increase in
  absolute dollars is principally due to incremental  S,G&A expenses for Phillips,
  higher  sales  commissions   related  to  international  sales  and  significant
  investments in additional design resources,  which were offset by lower accruals
  for incentive-based compensation plans.
  
       INTEREST  EXPENSE - The  increase  for the third  quarter of 77.5% over the
  same quarter of last year is due to higher average borrowings outstanding, which
  resulted from the company's  acquisition  of Phillips Mills that was made on the
  first day of the  second  quarter,  and from  capital  expenditure  and  working
  capital  investments that were made during the first nine months of this year.
  
       INTEREST INCOME - Interest income remained the same for the quarter.
  
       OTHER EXPENSE (INCOME),  NET - Other expense (income) increased to $492,000
  from $421,000 in the same quarter of last year, due primarily to the incremental
  goodwill amortization related to Phillips.
  
       INCOME  TAXES - The  effective  tax rate for the third  quarter  was 22.2%,
  compared  with  37.5%  for the same  quarter  of last  year.  The lower tax rate
  resulted from higher than  expected tax benefits (in the current  period as well
  as prior periods) related to the company's  foreign sales  corporation  ("FSC"),
  and higher  estimated income in Canada which has a lower effective tax rate. The
  company is estimating  the effective tax rate for the full fiscal year at 31.0%,
  which is down from the 35.0% estimate at the end of the second quarter.
  
       EBITDA - EBITDA for the quarter  increased 22.8% to $11.4 million from last
  year's third quarter and represented 9.6% of net sales compared with 9.5% of net
  sales for the same period of last year.
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
  for the three and nine month periods ended February 1, 1998 and January 26, 1997
                                      
  
  BALANCE SHEET COMMENTS
  
       WORKING  CAPITAL - Accounts  receivable  increased 45.8% from January 1997,
  due to the Phillips acquisition and increased sales for the second quarter. Days
  sales  outstanding  represented 52 days, up 11% from 47 days at January 26, 1997
  and 49 days at April 27, 1997.  Accounts  receivable  continued to increase at a
  faster rate than sales because of the increasing mix of international  sales and
  mattress  ticking sales,  which carry longer payment terms than U.S.  upholstery
  fabric  sales.  Inventories  increased  47.8% from January 26, 1997,  due to the
  Phillips  acquisition,  higher  overall sales and a higher mix of  international
  sales  which have  required  more  finished  goods  inventory.  Inventory  turns
  decreased  13% to 5.4 for the  quarter  versus 6.2 for the same  quarter of last
  year.  Working capital increased  significantly to $104.0 million at February 1,
  1998,  from $60.7  million at January  26,  1997 and $69.8  million at April 27,
  1997, for the reasons mentioned above.
   
       PROPERTY,  PLANT AND  EQUIPMENT - The company has  maintained a significant
  program of capital  expenditures  over the past several years designed to expand
  capacity to support sales growth, increase vertical integration to lower product
  costs and control more of its supply of raw materials, and enhance manufacturing
  efficiencies  through  modernization.  The company is currently planning capital
  spending of  approximately  $39 million during fiscal 1998, which includes about
  $13.5  million  for  expansion   projects  (35%);  $12.5  million  for  vertical
  integration projects (32%); and $13.0 million for modernization  projects (33%).
  The principal  expansion project involves completion of various items related to
  the Lumberton,  N.C. printing facility.  The key vertical  integration  projects
  include yarn extrusion  expansion and additional  weaving  capacity for jacquard
  greige  goods at  Rayonese.  The  modernization  projects  encompass a number of
  smaller projects throughout the company"s  operations.  Depreciation expense for
  fiscal 1998 is expected to be approximately $15.0 million.  For fiscal 1999, the
  company is planning to  significantly  reduce its capital spending to a range of
  $10 to $15 million,  and concentrate its efforts on improving the results of the
  investments  made during fiscal 1997 and fiscal 1998.  The two largest  projects
  that  are  currently  planned  for  fiscal  1999  are:  (a)  completion  of  the
  polypropylene  yarn extrusion  expansion,  which began in early fiscal 1998; and
  (b) building  expansions in the Culp Home Fashions  business unit to accommodate
  the significant  growth in the company"s sales of mattress ticking over the last
  several  years.  Depreciation  for  fiscal  1999 is  currently  estimated  to be
  approximately $19 million.
   
       LONG-TERM DEBT - The company"s  funded  debt-to-capital  ratio was 53.7% at
  February 1, 1998, up from 47.4% at January 26, 1997,  and up from 37.2% at April
  27,  1997.  Funded debt was $141.2  million at  February 1, 1998,  up from $80.6
  million  at  January  26,  1997 and up from $ 65.6  million  at April 27,  1997.
  (Funded  debt  equals  long-term  debt,   including  current  maturities,   less
  restricted  investments,  which  represent  unspent IRB funds.) The  increase in
  funded  debt  from  April 27,  1997  resulted  from the  Phillips  and  Wetumpka
  acquisitions ($37.2 million), capital expenditures ($28.2 million), an operating
  cash flow deficit ($6.6 million),  and a decrease in accounts payable related to
  capital  expenditures ($2.8 million).  During the fourth quarter of fiscal 1998,
  the company is expecting to significantly  strengthen its capital structure with
  the closing of a private  placement of $75 million of senior,  unsecured  notes.
  The notes are  expected to have a fixed coupon rate of 6.76% and an average term
  of 10 years.  Additionally,  the principal  financial covenants include a funded
  debt to total capital ratio of 60% and a minimum shareholders" equity level. The
  proceeds  will be used to repay  borrowings  under  the  company"s  bank  credit
  facility. (See Pro forma Capitalization Table on page 12 of 12.)
  CULP, INC. FINANCIAL INFORMATION RELEASE
                                 FINANCIAL NARRATIVE
     for the three and nine month periods ended February 1, 1998 and January 26,
                                        1997
  
       PHILLIPS MILLS  ACQUISITION - On August 5, 1997,  the company  acquired the
  business  and  certain  assets  relating  to the  upholstery  fabric  businesses
  operating as Phillips Mills. Based on the terms of the asset purchase agreement,
  the  transaction is valued at  approximately  $37 million,  which included cash,
  seller debt retired,  a note payable to the seller and  acquisition  costs.  The
  consideration  for the acquisition  also included stock options and an agreement
  for contingent  payments to the selling  companies  within three years following
  closing that could range from $0 to $5,500,000,  depending upon the future sales
  performance of the Phillips  jacquard  fabric product line. (See Form 8-K, dated
  April  30,  1997,  which  provides   additional   information   related  to  the
  acquisition.)
  
       ACQUISITION  OF WETUMPKA  YARN - On December 30, 1997,  Culp  completed the
  acquisition  of the business  and certain  assets  related to the Wetumpka  yarn
  division of Dan River Inc. The  transaction  value at closing was $1.5  million.
  (See  press  release,   dated  December  17,  1997,  which  provides  additional
  information about the acquisition.)
   
       ACQUISITION OF ARTEE  INDUSTRIES - On February 2, 1998,  Culp completed the
  acquisition of the business and  substantially  all assets and the assumption of
  certain  liabilities  of  Artee  Industries,   Incorporated  ("Artee"),  a  yarn
  manufacturer.  The transaction value at closing is estimated at $18 million, and
  included the issuance of 284,211 new shares of Culp common  stock,  $2.0 million
  in cash and a $1.6 million  note, as well as the repayment at closing of Artee's
  interest-bearing   debt.  Also,  there  is  an  "earn-out"  which  provides  the
  opportunity for additional consideration of up to $7.6 million (60% in stock and
  40% in cash),  based upon the  profitability  of Artee during Culp's fiscal year
  ending May 2, 1999.  The  acquisition  will be accounted for as a purchase,  and
  therefore  the results of Artee from the closing date will be included in Culp's
  results.  (See Form 8-K,  dated  October 15,  1997,  which  provides  additional
  information related to the acquisition.)
  CULP, INC. FINANCIAL INFORMATION RELEASE
                          PRO FORMA CAPITALIZATION TABLE
                                 FEBRUARY 1, 1998
  
  (Dollars in thousands)
  February 1, 1998
                                      -------------------------------------------
  
                                        Actual       Adjustments     Pro Forma
                                      ------------   -------------  -------------
  
  FUNDED DEBT
         Industrial Revenue Bonds
  and other obligations             30,090                         30,090
         Syndicated $125 million          106,033           9,197 (a)     40,230
         credit facility                                  (75,000) (b)
  
         Notes payable                      5,100           1,600 (a)      6,700
         Senior unsecured                    ----          75,000 (b)     75,000
         notes
                                      ------------   -------------  -------------
  
                                          141,223          10,797        152,020
                                      ------------   -------------  -------------
  
  SHAREHOLDERS' EQUITY                    121,613           5,400 (a)    127,013
                                      ------------   -------------  -------------
  
  TOTAL CAPITAL                           262,836          16,197        279,033
                                      ============   =============  =============
  
  FUNDED DEBT TO TOTAL CAPITAL              53.7%                          54.5%
                                      ============                  =============
  (a) Reflects funding sources for Artee Industries acquisition which closed
        February 2, 1998. On the acquisition date, the company issued 284,211
        sharesof its common stock to the Artee Industries shareholders.
  
    (b) Reflects planned issuance of a private placement of senior unsecured notes
        with a coupon rate of 6.76% and average term of ten years. Estimated debt
        issuance costs are $500,000.