Culp Announces Restructuring Initiative; Savings of More Than $3.5 Million Expected From Consolidation of Manufacturing Resources and Other Actions.

Business Editors

HIGH POINT, N.C.--(BUSINESS WIRE)--Jan. 10, 2001

Culp, Inc. (NYSE:CFI) today announced that it is undertaking a restructuring initiative to increase manufacturing efficiency, raise productivity and lower operating expenses. The company has identified restructuring actions, principally consolidating certain of its yarn and upholstery fabric operations, that are expected to result in a charge of approximately $3.0 million before taxes. The majority of the charge is expected to be reflected in the results for the company's third fiscal quarter that ends this month, and the balance should be included in results for the fourth fiscal quarter that ends in April. Non-cash items resulting from the write-off of equipment are expected to comprise more than half of the charge.

"The changes are involving some difficult personnel decisions," remarked Robert G. Culp, III, chief executive officer. "These moves are imperative, however, in order to adjust to the current level of demand for our products, both in the United States and internationally. Similar to many other companies in the home furnishings industry, we are experiencing sales that are below expectations. Although we had not expected to be profitable for the third fiscal quarter that ends this month, it appears at this time that the loss will be more than earlier anticipated. We are committed to taking whatever steps are necessary to restore our profitability and support Culp's longer term progress. We expect to realize annual savings of more than $3.5 million from the restructuring actions now underway which should be completed by the close of fiscal 2001.

"Acquiring manufacturing resources was an important component of our strategy in past years to become more vertically integrated and to expand our product line. We now have one of the broadest lines of upholstery fabrics available and are seeking to ensure that our resources are supporting our sales efforts as efficiently as possible. We are already realizing increased productivity from the consolidation earlier this fiscal year of two weaving facilities. We have decided to accelerate this program and consolidate certain other related operations, principally in yarn manufacturing. This will involve eliminating some yarns used by customers outside the home furnishings industry, but we will maintain substantially the same selection used to manufacture upholstery fabrics and mattress ticking.

Culp concluded, "Industry-wide conditions in home furnishings remain very difficult, and we are continuing to seek ways to address this challenging environment by lowering expenses. We believe that the initiative announced today will strengthen Culp's prospects for an improvement in our bottom-line performance."

Culp, Inc. is one of the world's largest marketers of upholstery fabrics for furniture and is a leading marketer of mattress ticking for bedding. The Company's fabrics are used principally in the production of residential and commercial furniture and bedding products.

This release contains statements that may be deemed "forward-looking statements" within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Such 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 affect the company adversely. Because of the significant percentage of the company's sales derived from international shipments, strengthening of the U.S. dollar against other currencies could make the company's products less competitive on the basis of price in markets outside the United States. Additionally, economic and political instability in international areas could affect the demand for the company's products.