Culp Considering Strategic Options for Wet Printed Flock Upholstery Capacity.

Business Editors

HIGH POINT, N.C.--(BUSINESS WIRE)--March 18, 2002

Culp, Inc. (NYSE: CFI) today announced it is evaluating strategic alternatives for the capital invested in manufacturing and marketing wet printed flock upholstery fabrics. The company is taking this action because of the prolonged strength of the U.S. dollar relative to foreign currencies and the shift in consumer preferences for other styles of upholstery fabrics. Culp's wet printed flock operations include a printing facility in Lumberton, N.C., as well as some related operations in Burlington, N.C.

Culp is actively seeking to sell this part of its business. If an agreement for the sale is not reached by the close of the current fiscal year ending April 28, 2002, the company has decided to idle these operations at that time until market conditions improve. Sales of wet printed flocks contributed $17.6 million to the company's sales of $374.6 million for the 12-month period ended January 27, 2002. In the same period, these assets resulted in an after-tax loss of $1.3 million, or $0.12 per share.

The Lumberton plant employs approximately 76 people, and approximately 25 people will be affected in the company's related operations in Burlington. The company expects an after-tax charge from selling or idling the wet printed flock operations of $3.0 to $6.0 million, of which $2.5 to $5.0 million would be a non-cash item representing the write-down of manufacturing equipment. The charge will be reflected in the results for the fourth quarter of fiscal 2002. Culp has capital invested in the wet printed flock operations of approximately $14.0 million, including fixed assets with a net book value of approximately $9.5 million. Depreciation on these assets for the twelve-month period ended January 27, 2002 totaled $1.6 million. The company estimates that if the wet printed flock business is not sold, the annual after-tax carrying costs on the idled assets will be approximately $250,000, or $.02 per share.

"At this point, we are pursuing both alternatives," remarked Robert G. Culp, III, chief executive officer. "Our goal is to find a course that not only meets the company's needs but also respects the contributions of the employees who are involved in this portion of our business. We are continuing to manufacture and market wet printed flock fabrics as we evaluate our alternatives. As we have previously indicated, however, our sales of wet printed flocks have declined significantly in recent years due principally to the strength of the U.S. dollar relative to foreign currencies. International markets have historically been an important source of demand for our wet printed flocks, and the prolonged currency shifts have made it increasingly difficult to compete against marketers with foreign-based manufacturing resources. We also are experiencing a broad shift in consumer preferences toward other upholstery fabrics, especially textured fabrics, which we are unable to manufacture on the same equipment used to produce wet printed flocks. We recognize that changes involving fashion and consumer preferences are difficult to predict, but current market trends still appear to be favoring product categories other than wet printed flocks."

Culp concluded, "We regret the necessity of reviewing these alternatives for our wet printed flock operations. This action, however, will enable us to devote our full capital and managerial resources toward other product categories which are yielding a profitable return and helping to enhance Culp's overall leadership position in our industry."

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 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.