| NORTH CAROLINA(State or other jurisdiction ofincorporation or other organization)                | 56-1001967(I.R.S. Employer Identification No.) |
|--------------------------------------------------------------------------------------------------|------------------------------------------------|
|  1823 Eastchester Drive, High Point, North Carolina(Address of principal executive offices) |  27265(zip code)                          |
|  (336) 889-5161(Registrant’s telephone number, including area code)              |

| Title of Each Class                 | Name of Each ExchangeOn Which Registered |
|-------------------------------------|------------------------------------------|
|                                |                                     |
| Common Stock, par value $.05/ Share | New York Stock Exchange                  |
|                                |                                     |

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| Large Accelerated Filer o | Accelerated Filer o         | Non-Accelerated Filer x |
|---------------------------|-----------------------------|-------------------------|
|                      |                        |                    |
|                      | Smaller Reporting Company o |                    |

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|  Item No. |                                                                                                                    |  Page                                 |
|----------------|-------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|
|           |
|  PART I   |
|           |                                                                                                                    |                                       |   |
| 1.             | Business                                                                                                                |                                       |
|           |                                                                                                                    | Overview                                   | 2 |
|           |                                                                                                                    | General Information                        | 3 |
|           |                                                                                                                    | Segments                                   | 4 |
|           |                                                                                                                    | Overview of Industry and Markets           | 6 |
|           |                                                                                                                    | Overview of Bedding Industry               | 6 |
|           |                                                                                                                    | Overview of Residential Furniture Industry | 7 |
|           |                                                                                                                    | Overview of Commercial Furniture Industry  | 8 |
|           |                                                                                                                    | Products                                   | 8 |
|           |                                                                                                                    | Manufacturing and Sourcing                 | 10 |
|           |                                                                                                                    | Product Design and Styling                 | 11 |
|           |                                                                                                                    | Distribution                               | 11 |
|           |                                                                                                                    | Sources and Availability of Raw Materials  | 12 |
|           |                                                                                                                    | Seasonality                                | 13 |
|           |                                                                                                                    | Competition                                | 13 |
|           |                                                                                                                    | Environmental and Other Regulations        | 14 |
|           |                                                                                                                    | Employees                                  | 15 |
|           |                                                                                                                    | Customers and Sales                        | 15 |
|           |                                                                                                                    | Net Sales by Geographic Area               | 16 |
|           |                                                                                                                    | Backlog                                    | 16 |
| 1A.            | Risk Factors                                                                                                            | 17                                         |
| 1B.            | Unresolved Staff Comments                                                                                               | 21                                         |
| 2.             | Properties                                                                                                              | 22                                         |
| 3.             | Legal Proceedings                                                                                                       | 23                                         |
| 4.             | Removed and Reserved                                                                                                    | 23                                         |
|           |                                                                                                                    |                                       |   |
| PART II        |
|           |                                                                                                                    |                                       |   |
| 5.             | Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities | 24                                         |
| 6.             | Selected Financial Data                                                                                                 | 26                                         |
| 7.             | Management’s Discussion and Analysis of Financial Condition and Results of Operations                             | 27                                         |
| 7A.            | Quantitative and Qualitative Disclosures About Market Risk                                                              | 59                                         |
| 8.             | Consolidated Financial Statements and Supplementary Data                                                                | 60                                         |
| 9.             | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                    | 107                                        |
| 9A(T).         | Controls and Procedures                                                                                                 | 107                                        |
| 9B.            | Other Information                                                                                                       | 108                                        |

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| Item No. |                                                                                           | Page   |
|----------|------------------------------------------------------------------------------------------------|--------|
|     |                                                                                           |   |
| PART III |
|     |                                                                                           |   |
| 10.      | Directors, Executive Officers, and Corporate Governance                                        | 109    |
|     |                                                                                           |   |
| 11.      | Executive Compensation                                                                         | 109    |
|     |                                                                                           |   |
| 12.      | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 109    |
|     |                                                                                           |   |
| 13.      | Certain Relationships, Related Transactions, and Director Independence                         | 110    |
|     |                                                                                           |   |
| 14.      | Principal Accountant Fees and Services                                                         | 110    |
|     |                                                                                           |   |
| PART IV  |
|     |                                                                                           |   |
| 15.      | Exhibits and Financial Statement Schedules                                                     | 111    |
|     |                                                                                           |   |
|     | Documents Filed as Part of this Report                                                         | 111    |
|     |                                                                                           |   |
|     | Exhibits                                                                                       | 114    |
|     |                                                                                           |   |
|     | Financial Statement Schedules                                                                  | 114    |
|     |                                                                                           |   |
|     | Signatures                                                                                     | 115    |
|     |                                                                                           |   |
|     | Exhibit Index                                                                                  | 116    |

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PART 1

ITEM 1.  BUSINESS

Overview

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General Information

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Segments

|               | Sales by Fiscal Year ($ in Millions) andPercentage of Total Company Sales |   |   |
|--------------------|---------------------------------------------------------------------------|--------|--------|
| Segment            | Fiscal 2010                                                               |   |   | Fiscal 2009 |   |   | Fiscal 2008 |   |   |
| Mattress Fabrics   | $114.8                                                                    |   | (56%)  |   |   | $115.4 |   | (57%) |   |   | $138.1 |   | (54%) |   |   |
| Upholstery Fabrics |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-U.S.-Produced  | $77.3                                                                     |   | (37%)  |   |   | $68.1 |   | (33%) |   |   | $75.9 |   | (30%) |   |   |
| U.S.-Produced      | $14.3                                                                     |   | (7%)   |   |   | $20.4 |   | (10%) |   |   | $40.0 |   | (16%) |   |   |
| Total Upholstery   | $91.6                                                                     |   | (44%)  |   |   | $88.5 |   | (43%) |   |   | $115.9 |   | (46%) |   |   |
| Total company      | $206.4                                                                    |   | (100%) |   |   | $203.9 |   | (100%) |   |   | $254.0 |   | (100%) |   |   |

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Overview of Industry and Markets

Overview of Bedding Industry

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| ·      | Consumers have become increasingly aware of and are concerned with the health benefits of better sleep.  This has caused an increased focus on the quality of bedding products and an apparent willingness on the part of consumers to pay more for bedding. |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | While mattress fabrics serve the functional purpose of providing a soft and durable cover, there is a growing emphasis on the design knitted or woven into the fabrics to appeal to the customer’s visual attraction and perceived value of the mattress on the retail floor. Mattress fabric design efforts are based on current trends in home décor and fashion. |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | Growth in non-traditional sources for retail mattress sales is now an important factor in home furnishings forecasts.  These sales outlets, such as wholesale warehouse clubs and the internet, have the potential to increase overall consumption of goods due to convenience and high traffic volume which in turn result in higher turnover of product. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | Increased popularity of knitted mattress fabric has continued. Knitted fabric was initially used primarily on premium mattresses, but these products are now being placed increasingly on mattresses at mid-range retail price points. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Overview of Residential Furniture Industry

| ·      | The sourcing of components and fully assembled furniture from overseas continues to play a major role in the residential furniture industry, although in 2008 and to a greater extent in 2009, the import rate declined.  According to Furniture/Today, an industry trade publication, imports of residential furniture into the U.S. fell by 21% in 2009, following a decrease of 6% in 2008.  By far, the largest source for these imports continues to be China, which now accounts for approximately 57% of total U.S. furniture imports.  In past years, a large majority of furniture imports from China were wooden “casegoods,” but there has been significant recent growth in imports of upholstered furniture components, including upholstery fabric and “cut and sewn kits” for furniture covers.  This trend has been especially strong for leather furniture, and it now extends to other coverings, including microdenier suedes and the more traditional types of fabrics manufactured by the company.  The shift to offshore sourcing has led to significant deflation in retail furniture prices. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·      | Imports of upholstery fabric, both in roll and in “kit” form, have increased in recent years.  Fabrics entering the U.S. from China and other low labor cost countries are resulting in increased price competition in the upholstery fabric and upholstered furniture markets. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | Leather and suede upholstered furniture has been gaining market share over the last ten years.  This trend has increased over the last six years in large part because selling prices of leather furniture have been declining significantly over this time period. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | The residential furniture industry has been consolidating at the manufacturing level for several years.  The result of this trend is fewer, but larger, customers for marketers of upholstery fabrics. |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Overview of Commercial Furniture Industry

Products

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| Woven jacquards       | Florals and other intricate designs.  Woven on complex looms using a variety of synthetic and natural yarns.                                                                                                                                                               |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                                 |
| Specialty   | Suedes, velours, and other specialty type products are sourced to offer diversity for higher end mattresses.                                                                                                                                                                         |
|                  |                                                                                                                                                                                                                                                                                 |
| Knitted Fabric        | Floral and other intricate designs produced on special-width circular knit machines utilizing a variety of synthetic and natural yarns.  Knitted mattress fabrics have inherent stretching properties and spongy softness, which conforms well with layered foam packages. |

| Woven jacquards | Elaborate, complex designs such as florals and tapestries in traditional, transitional and contemporary styles.  Woven on intricate looms using a wide variety of synthetic and natural yarns.                                                                                                                             |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                                                                                                                                                                                 |
| Woven dobbies   | Fabrics that use straight lines to produce geometric designs such as plaids, stripes and solids in traditional and country styles.  Woven on less complicated looms using a variety of weaving constructions and primarily synthetic yarns.                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                 |
| Velvets         | Soft fabrics with a plush feel.  Produced with synthetic yarns, either by weaving or by “tufting” yarn into a base fabric.  Basic designs such as plaids in both traditional and contemporary styles.                                                                                           |
|            |                                                                                                                                                                                                                                                                                                                                 |
| Suede fabrics   | Fabrics woven or knitted using microdenier polyester yarns, which are piece dyed and finished, usually by sanding.  The fabrics are typically plain or small jacquard designs, with some being printed.  These are sometimes referred to as microdenier suedes, and some are “leather look” fabrics. |

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Manufacturing and Sourcing

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Product Design and Styling

Distribution

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Sources and Availability of Raw Materials

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Seasonality

Competition

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Environmental and Other Regulations

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Employees

|                             |   | Number of Employees |   |   |
|----------------------------------|--------|---------------------|--------|--------|
|                             |   | Fiscal 2010         |   |   | Fiscal 2009 |   |   | Fiscal 2008 |   |   | Fiscal 2007 |   |   | Fiscal 2006 |   |   |
| Mattress Fabrics Segment         |   |                | 430    |   |   |   | 420 |   |   |   | 373 |   |   |   | 361 |   |   |   | 351 |   |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Upholstery Fabrics Segment       |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States                    |   |                | 123    |   |   |   | 119 |   |   |   | 230 |   |   |   | 297 |   |   |   | 659 |   |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| China                            |   |                | 528    |   |   |   | 504 |   |   |   | 481 |   |   |   | 479 |   |   |   | 270 |   |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Upholstery Fabrics Segment |   |                | 651    |   |   |   | 623 |   |   |   | 711 |   |   |   | 776 |   |   |   | 929 |   |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unallocated corporate            |   |                | 4      |   |   |   | 4 |   |   |   | 3 |   |   |   | 3 |   |   |   | 3 |   |   |
|                             |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                            |   |                | 1,085  |   |   |   | 1,047 |   |   |   | 1,087 |   |   |   | 1,140 |   |   |   | 1,283 |   |   |

Customers and Sales

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Net Sales by Geographic Area

|                         |   | Fiscal 2010 |    |   | Fiscal 2009 |   |   | Fiscal 2008 |   |
|------------------------------|--------|-------------|---------|--------|-------------|--------|--------|-------------|--------|
| United States                |   |        | 160,360 |   |        |   | 77.7   | %           |   | $ | 160,290 |   |   |   | 78.6 | % |   | $ | 202,701 |   |   |   | 79.8 | % |
| North America(Excluding USA) |   |        | 11,654  |   |        |   | 5.6    |        |   |   | 14,440 |   |   |   | 7.1 |   |   |   | 18,880 |   |   |   | 7.4 |   |
| Far East and Asia            |   |        | 31,856  |   |        |   | 15.4   |        |   |   | 27,509 |   |   |   | 13.5 |   |   |   | 28,465 |   |   |   | 11.2 |   |
| All other areas              |   |        | 2,546   |   |        |   | 1.2    |        |   |   | 1,699 |   |   |   | 0.8 |   |   |   | 4,000 |   |   |   | 1.6 |   |
| Subtotal (International)     |   |        | 46,056  |   |        |   | 22.3   |        |   |   | 43,648 |   |   |   | 21.4 |   |   |   | 51,435 |   |   |   | 20.2 |   |
| Total                        |   |        | 206,416 |   |        |   | 100    | %           |   | $ | 203,938 |   |   |   | 100.0 | % |   | $ | 254,046 |   |   |   | 100.0 | % |

Backlog

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ITEM 1A.  RISK FACTORS

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ITEM 1B.  UNRESOLVED STAFF COMMENTS

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ITEM 2.  PROPERTIES

|                            |                                                         | Approx.    |         |   |
|---------------------------------|--------------------------------------------------------------|------------|--------------|--------|
|                            |                                                         | Total Area | Expiration   |
| Location                        | Principal Use                                                | (Sq. Ft.)  | of Lease (1) |
|                            |                                                         |       |         |   |   |
| · Administrative:     |                                                         |       |         |   |   |
| High Point, North Carolina (2)  | Upholstery fabric divisionoffices and corporate headquarters | 56,880     |         | 2019   |   |
| · Mattress Fabrics:   |                                                         |       |         |   |   |
| Stokesdale, North Carolina      | Manufacturing, distribution,and division offices             | 230,000    |         | Owned  |   |
| High Point, North Carolina      | Manufacturing                                                | 63,522     |         | 2010   |   |
| St. Jerome, Quebec, Canada      | Manufacturing                                                | 202,500    |         | Owned  |   |
| · Upholstery Fabrics: |                                                         |       |         |   |   |
| Anderson, South Carolina        | Manufacturing                                                | 99,000     |         | Owned  |   |
| Burlington, North Carolina      | Finished goods distribution                                  | 67,330     |         | 2010   |   |
| Shanghai, China                 | Manufacturing and offices                                    | 69,000     |         | 2012   |   |
| Shanghai, China                 | Manufacturing and warehousing                                | 90,000     |         | 2012   |   |
| Shanghai, China                 | Manufacturing and warehousing                                | 101,632    |         | 2013   |   |

| (1)   | Includes all options to renew. |
|-----------------|--------------------------------|

| (2)   | We are currently occupying the entire building. In the event we elect to renew the lease on April 1, 2012, the leased premises during any renewal period (see note 4 to the consolidated financial statements) will be 1/3 of the current occupied space of 56,880 square feet. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 3.  LEGAL PROCEEDINGS

ITEM 4.  REMOVED AND RESERVED

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PART II

ITEM 5.  MARKET FOR THE REGISTRANT’S COMMON

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ITEM 6.  SELECTED FINANCIAL DATA

|                                                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   | percent   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|-----------|--------|
|                                                                                                                                                                                                    |   | fiscal |    |   | fiscal |   |    | fiscal |   |   | fiscal  |   |   | fiscal |    |   | change    |   |
| (amounts in thousands)                                                                                                                                                                                  |   | 2010   |    |   | 2009   |   |    | 2008   |   |   | 2007    |   |   | 2006   |    |   | 2010/2009 |   |
| INCOME (LOSS) STATEMENT DATA                                                                                                                                                                            |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |
|    net sales                                                                                                                                                                                  |   | $      | 206,416 |   |   |   | 203,938 |   |   |   | 254,046 |   |   |   | 250,533 |   |      |   | 261,101 |   |   | 1.2 |   |
| cost of sales (6)                                                                                                                                                                                       |   |   | 167,639 |   |   |   | 179,286 |   |   |   | 220,887 |   |   |   | 219,328 |   |      |   | 237,233 |   |   | (6.5 | ) |
| gross profit                                                                                                                                                                                            |   |   | 38,777  |   |   |   | 24,652  |   |   |   | 33,159  |   |   |   | 31,205  |   |      |   | 23,868 |   |   | 57.3 |   |
| selling, general, and administrative expenses (6)                                                                                                                                                       |   |   | 22,805  |   |   |   | 19,751  |   |   |   | 23,973  |   |   |   | 27,030  |   |      |   | 28,954 |   |   | 15.5 |   |
| restructuring (credit) expense (6)                                                                                                                                                                      |   |   | (370    | )      |   |   | 9,471   |   |   |   | 886     |   |   |   | 3,534   |   |      |   | 10,273 |   |   | N.M. |   |
|   income (loss) from operations                                                                                                                                                                    |   |   | 16,342  |   |   |   | (4,570  | )      |   |   | 8,300   |   |   |   | 641     |   |      |   | (15,359 | ) |   | N.M. |   |
| interest expense                                                                                                                                                                                        |   |   | 1,314   |   |   |   | 2,359   |   |   |   | 2,975   |   |   |   | 3,781   |   |      |   | 4,010 |   |   | (44.3 | ) |
| interest income                                                                                                                                                                                         |   |   | (116    | )      |   |   | (89     | )      |   |   | (254    | )      |   |   | (207    | )      |      |   | (126 | ) |   | 30.3 |   |
| other expense                                                                                                                                                                                           |   |   | 828     |   |   |   | 43      |   |   |   | 736     |   |   |   | 68      |   |      |   | 634 |   |   | N.M. |   |
|   income (loss) before income taxes                                                                                                                                                                |   |   | 14,316  |   |   |   | (6,883  | )      |   |   | 4,843   |   |   |   | (3,001  | )      |      |   | (19,877 | ) |   | (308.0 | ) |
|  income taxes                                                                                                                                                                                      |   |   | 1,128   |   |   |   | 31,959  |   |   |   | (542    | )      |   |   | (1,685  | )      |      |   | (8,081 | ) |   | N.M. |   |
|  net income (loss)                                                                                                                                                                                 |   | $      | 13,188  |   |   |   | (38,842 | )      |   |   | 5,385   |   |   |   | (1,316  | )      |      |   | (11,796 | ) |   | (134.0 | ) |
|  depreciation (7)                                                                                                                                                                                  |   | $      | 4,010   |   |   |   | 6,712   |   |   |   | 5,548   |   |   |   | 7,849   |   |      |   | 14,362 |   |   | (40.3 | ) |
| weighted average shares outstanding                                                                                                                                                                     |   |   | 12,709  |   |   |   | 12,651  |   |   |   | 12,624  |   |   |   | 11,922  |   |      |   | 11,567 |   |   | 0.5 |   |
| weighted average shares outstanding, assuming dilution                                                                                                                                                  |   |   | 13,057  |   |   |   | 12,651  |   |   |   | 12,765  |   |   |   | 11,922  |   |      |   | 11,567 |   |   | 3.2 |   |
| PER SHARE DATA                                                                                                                                                                                          |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
|  net income (loss) per share - basic                                                                                                                                                               |   | $      | 1.04    |   |   |   | (3.07   | )      |   |   | 0.43    |   |   |   | (0.11   | )      |      |   | (1.02 | ) |   | (133.8 | ) |
| net income (loss) per share - diluted                                                                                                                                                                   |   |   | 1.01    |   |   |   | (3.07   | )      |   |   | 0.42    |   |   |   | (0.11   | )      |      |   | (1.02 | ) |   | (132.9 | ) |
|                                                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
|   book value                                                                                                                                                                                       |   | $      | 4.83    |   |   |   | 3.76    |   |   |   | 6.83    |   |   |   | 6.29    |   |      |   | 6.39 |   |   | 28.5 |   |
| BALANCE SHEET DATA                                                                                                                                                                                      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
|   operating working capital (5)                                                                                                                                                                    |   | $      | 22,979  |   |   |   | 23,503  |   |   |   | 38,368  |   |   |   | 46,335  |   |      |   | 44,907 |   |   | (2.2 | ) |
| property, plant and equipment, net                                                                                                                                                                      |   |   | 28,403  |   |   |   | 24,253  |   |   |   | 32,939  |   |   |   | 37,773  |   |      |   | 44,639 |   |   | 17.1 |   |
|   total assets                                                                                                                                                                                     |   |   | 112,598 |   |   |   | 95,294  |   |   |   | 148,029 |   |   |   | 159,946 |   |      |   | 157,467 |   |   | 18.2 |   |
| capital expenditures                                                                                                                                                                                    |   |   | 7,397   |   |   |   | 3,160   |   |   |   | 6,928   |   |   |   | 4,227   |   |      |   | 6,470 |   |   | 134.1 |   |
| long-term debt and lines of credit (1)                                                                                                                                                                  |   |   | 11,687  |   |   |   | 16,368  |   |   |   | 21,423  |   |   |   | 40,753  |   |      |   | 47,722 |   |   | (28.6 | ) |
| shareholders' equity                                                                                                                                                                                    |   |   | 63,047  |   |   |   | 48,031  |   |   |   | 86,359  |   |   |   | 79,077  |   |      |   | 74,523 |   |   | 31.3 |   |
| capital employed (3)                                                                                                                                                                                    |   |   | 53,416  |   |   |   | 52,602  |   |   |   | 102,868 |   |   |   | 109,661 |   |      |   | 112,531 |   |   | 1.5 |   |
| RATIOS & OTHER DATA                                                                                                                                                                                 |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
| gross profit margin                                                                                                                                                                                     |   |   | 18.8    | %      |   |   | 12.1    | %      |   |   | 13.1    | %      |   |   | 12.5    | %      |      |   | 9.1 | % |   |   |   |
| operating income (loss) margin                                                                                                                                                                          |   |   | 7.9     | %      |   |   | (2.2    | )%     |   |   | 3.3     | %      |   |   | 0.3     | %      |      |   | (5.9 | )% |   |   |   |
| net income (loss) margin                                                                                                                                                                                |   |   | 6.4     | %      |   |   | (19.0   | )%     |   |   | 2.1     | %      |   |   | (0.5    | )%     |      |   | (4.5 | )% |   |   |   |
| effective income tax rate                                                                                                                                                                               |   |   | 7.9     | %      |   |   | (464.3  | )%     |   |   | (11.2   | )%     |   |   | 56.1    | %      |      |   | 40.7 | % |   |   |   |
| long-term debt to total capital employed ratio (1)                                                                                                                                                      |   |   | 21.9    | %      |   |   | 31.1    | %      |   |   | 20.8    | %      |   |   | 37.2    | %      |      |   | 42.4 | % |   |   |   |
| operating working capital turnover (5)                                                                                                                                                                  |   |   | 9.0     |   |   |   | 6.4     |   |   |   | 5.8     |   |   |   | 5.3     |   |      |   | 5.0 |   |   |   |   |
| days sales in receivables                                                                                                                                                                               |   |   | 35      |   |   |   | 32      |   |   |   | 37      |   |   |   | 41      |   |      |   | 39 |   |   |   |   |
| inventory turnover                                                                                                                                                                                      |   |   | 6.7     |   |   |   | 6.0     |   |   |   | 5.8     |   |   |   | 5.7     |   |      |   | 5.4 |   |   |   |   |
| STOCK DATA                                                                                                                                                                                              |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
|   stock price                                                                                                                                                                                      |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
| high                                                                                                                                                                                                    |   | $      | 16.98   |   |   |   | 7.91    |   |   |   | 12.30   |   |   |   | 8.52    |   |      |   | 5.23 |   |   |   |   |
| low                                                                                                                                                                                                     |   |   | 3.50    |   |   |   | 1.30    |   |   |   | 6.12    |   |   |   | 4.24    |   |      |   | 3.83 |   |   |   |   |
| close                                                                                                                                                                                                   |   |   | 11.94   |   |   |   | 4.40    |   |   |   | 7.53    |   |   |   | 8.50    |   |      |   | 4.64 |   |   |   |   |
|   P/E ratio (2)                                                                                                                                                                                    |   |   |    |   |   |   |    |   |   |   |    |   |   |   |    |   |      |   |   |   |   |   |   |
| high (4)                                                                                                                                                                                                |   |   | 17      |   |   | N.M.   |    |   |   | 29     |    |   | N.M.   |   |    | N.M.   |      |   |   |   |
| low (4)                                                                                                                                                                                                 |   |   | 3       |   |   | N.M.   |    |   |   | 15     |    |   | N.M.   |   |    | N.M.   |      |   |   |   |
| daily average trading volume (shares)                                                                                                                                                                   |   |   | 80.1    |   |   |   | 19.2    |   |   |   | 38.3    |   |   |   | 17.8    |   |      |   | 12.5 |   |   |   |   |
| (1) Long-term debt includes long-term and current maturities of long-term debt and lines of credit.                                                                                                |   |
| (2) P/E ratios based on trailing 12-month net income per share.                                                                                                                                    |   |
| (3) Capital employed includes long-term and current maturities of long-term debt, lines of credit, and shareholders’ equity, offset by cash and cash equivalents and short-term investments. |   |
| (4) N.M – Not meaningful                                                                                                                                                                     |   |   |    |
| (5) Operating working capital for this calculation is accounts receivable and inventories, offset by accounts payable.                                                                             |   |
| (6) The company incurred restructuring and related charges (credits) in fiscal 2006 through 2010. See note 3 of the company's consolidated financial statements.                         |   |
| (7) Includes accelerated depreciation of $2.1 $1.2, $5.0 and $6.0 million for fiscal 2009, 2007, and 2006, respectively.                                                                           |   |
|   No accelerated depreciation was recorded in fiscal 2010 and 2008.                                                                                                                                |   |   |    |

----

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF

----

----

|                                                            |   | Fiscal |   |   | Fiscal |   |   | Fiscal |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                            |   | 2010   |   |   | 2009   |   |   | 2008   |   |
| Net sales                                                       |   |   | 100.0  | %      |   |   | 100.0  | %      |   |   | 100.0 | % |
| Cost of sales                                                   |   |   | 81.2   |   |   |   | 87.9   |   |   |   | 86.9 |   |
|      Gross profit                      |   |   | 18.8   |   |   |   | 12.1   |   |   |   | 13.1 |   |
| Selling, general and administrative expenses                    |   |   | 11.0   |   |   |   | 9.7    |   |   |   | 9.4 |   |
| Restructuring (credit) expense                                  |   |   | (0.2   | )      |   |   | 4.6    |   |   |   | 0.3 |   |
|      Income (loss) from operations     |   |   | 7.9    |   |   |   | (2.2   | )      |   |   | 3.3 |   |
| Interest expense, net                                           |   |   | 0.5    |   |   |   | 1.2    |   |   |   | 1.1 |   |
| Other expense                                                   |   |   | 0.4    |   |   |   | 0.0    |   |   |   | 0.3 |   |
|      Income (loss) before income taxes |   |   | 6.9    |   |   |   | (3.4   | )      |   |   | 1.9 |   |
| Income taxes *                                                  |   |   | 7.9    |   |   |   | (464.3 | )      |   |   | (11.2 | ) |
|      Net income (loss)                 |   |   | 6.4    | %      |   |   | (19.0  | )%     |   |   | 2.1 | % |

----

| CULP, INC.                                                                                                                                           |
|------------------------------------------------------------------------------------------------------------------------------------------------------|
| STATEMENTS OF OPERATIONS BY SEGMENT                                                                                                                  |
| FOR THE TWELVE MONTHS ENDED MAY 2, 2010 AND MAY 3, 2009                                                                                              |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Amounts in thousands)                                                                                                                               |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   | TWELVE MONTHS ENDED (UNAUDITED) |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   | Amounts |   |   |   |   |   |   |   |   |   |   |   | Percent of Total Sales |
|                                                                                                                                                 |   | May 2, |   |   |   |   |   | May 3, |   |   |   |   |   | % Over |   |   |   |   |   | May 2, |   |   | May 3, |   |
| Net Sales by Segment                                                                                                                                 |   | 2010 |   |   |   |   |   | 2009 |   |   |   |   |   | (Under) |   |   |   |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                     |   | $ | 114,848 |   |   |   |   |   |   | 115,396 |   |   |   |   |   |   | (0.5 | ) % |   |   |   |   |   | 55.6 | % |   |   | 56.6 | % |
| Upholstery Fabrics                                                                                                                                   |   |   | 91,568 |   |   |   |   |   |   | 88,542 |   |   |   |   |   |   | 3.4 | % |   |   |   |   |   | 44.4 | % |   |   | 43.4 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Net Sales                                                                                                              |   | $ | 206,416 |   |   |   |   |   |   | 203,938 |   |   |   |   |   |   | 1.2 | % |   |   |   |   |   | 100.0 | % |   |   | 100.0 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit by Segment                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Gross Profit Margin |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                     |   | $ | 23,652 |   |   |   |   |   |   | 20,996 |   |   |   |   |   |   | 12.7 | % |   |   |   |   |   | 20.6 | % |   |   | 18.2 | % |
| Upholstery Fabrics                                                                                                                                   |   |   | 15,183 |   |   |   |   |   |   | 7,253 |   |   |   |   |   |   | 109.3 | % |   |   |   |   |   | 16.6 | % |   |   | 8.2 | % |
|      Subtotal                                                                                                               |   |   | 38,835 |   |   |   |   |   |   | 28,249 |   |   |   |   |   |   | 37.5 | % |   |   |   |   |   | 18.8 | % |   |   | 13.9 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restructuring related charges                                                                                                                        |   |   | (58 | ) |   |   | (1 | ) |   |   | (3,597 | ) |   |   | (1 | ) |   | N.M. |   |   |   | (2 | ) |   |   | (0.0 | ) % |   |   | (1.8 | ) % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Gross Profit                                                                                                           |   | $ | 38,777 |   |   |   |   |   |   |   | 24,652 |   |   |   |   |   |   |   | 57.3 | % |   |   |   |   |   |   | 18.8 | % |   |   | 12.1 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative expenses  by Segment                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Percent of Sales |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                     |   | $ | 8,178 |   |   |   |   |   |   |   | 7,749 |   |   |   |   |   |   |   | 5.5 | % |   |   |   |   |   |   | 7.1 | % |   |   | 6.7 | % |
| Upholstery Fabrics                                                                                                                                   |   |   | 9,227 |   |   |   |   |   |   |   | 8,756 |   |   |   |   |   |   |   | 5.4 | % |   |   |   |   |   |   | 10.1 | % |   |   | 9.9 | % |
| Unallocated Corporate                                                                                                                                |   |   | 5,400 |   |   |   |   |   |   |   | 3,225 |   |   |   |   |   |   |   | 67.4 | % |   |   |   |   |   |   | 2.6 | % |   |   | 1.6 | % |
|      Subtotal                                                                                                               |   |   | 22,805 |   |   |   |   |   |   |   | 19,730 |   |   |   |   |   |   |   | 15.6 | % |   |   |   |   |   |   | 11.0 | % |   |   | 9.7 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restructuring related charges                                                                                                                        |   |   | - |   |   |   | (1 | ) |   |   | 21 |   |   |   | (1 | ) |   | N.M. |   |   |   | (2 | ) |   |   | 0.0 | % |   |   | 0.0 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Selling, General and Administrative expenses                                                                                 |   | $ | 22,805 |   |   |   |   |   |   |   | 19,751 |   |   |   |   |   |   |   | 15.5 | % |   |   |   |   |   |   | 11.0 | % |   |   | 9.7 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Income (loss)  by Segment                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Operating Income (Loss) Margin |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                     |   | $ | 15,474 |   |   |   |   |   |   |   | 13,247 |   |   |   |   |   |   |   | 16.8 | % |   |   |   |   |   |   | 13.5 | % |   |   | 11.5 | % |
| Upholstery Fabrics                                                                                                                                   |   |   | 5,956 |   |   |   |   |   |   |   | (1,503 | ) |   |   |   |   |   | N.M. |   |   |   | (2 | ) |   |   | 6.5 | % |   |   | (1.7 | ) % |
| Unallocated Corporate                                                                                                                                |   |   | (5,400 | ) |   |   |   |   |   |   | (3,225 | ) |   |   |   |   |   |   | 67.4 | % |   |   |   |   |   |   | (2.6 | ) % |   |   | (1.6 | ) % |
|         Subtotal                                                                                             |   |   | 16,030 |   |   |   |   |   |   |   | 8,519 |   |   |   |   |   |   |   | 88.2 | % |   |   |   |   |   |   | 7.8 | % |   |   | 4.2 | % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restructuring credit (expense) and restructuring related charges                                                                                     |   |   | 312 |   |   |   | (1 | ) |   |   | (13,089 | ) |   |   | (1 | ) |   | N.M. |   |   |   | (2 | ) |   |   | 0.2 | % |   |   | (6.4 | ) % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Operating income (loss)                                                                                                |   | $ | 16,342 |   |   |   |   |   |   |   | (4,570 | ) |   |   |   |   |   | N.M. |   |   |   | (2 | ) |   |   | 7.9 | % |   |   | (2.2 | ) % |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation by Segment                                                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                     |   | $ | 3,458 |   |   |   |   |   |   |   | 3,542 |   |   |   |   |   |   |   | (2.4 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
| Upholstery Fabrics                                                                                                                                   |   |   | 552 |   |   |   |   |   |   |   | 1,080 |   |   |   |   |   |   |   | (48.9 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
|      Subtotal                                                                                                               |   |   | 4,010 |   |   |   |   |   |   |   | 4,622 |   |   |   |   |   |   |   | (13.2 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
| Accelerated Depreciation                                                                                                                             |   |   | - |   |   |   |   |   |   |   | 2,090 |   |   |   |   |   |   |   | (100.0 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Depreciation                                                                                                                                   |   | $ | 4,010 |   |   |   |   |   |   |   | 6,712 |   |   |   |   |   |   |   | (40.3 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes:                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) See restructuring and related (credits) charges section of Management's Discussion and Analysis for detailed explanation of charges and credits. |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (2)  N.M. - Not Meaningful                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| CULP, INC.                                                                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| STATEMENTS OF OPERATIONS BY SEGMENT                                                                                                                                                                     |
| FOR THE TWELVE MONTHS ENDED MAY 3, 2009 AND APRIL 27, 2008                                                                                                                                              |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Amounts in thousands)                                                                                                                                                                                  |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   | YEARS ENDED |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   | Amounts |   |   |   |   |   |   |   |   |   |   |   | Percent of Total Sales |
|                                                                                                                                                                                                    |   | May 3, |   |   |   |   |   | April 27, |   |   |   |   |   | % Over |   |   |   |   |   | May 3, |   |   | April 27, |   |
| Net Sales by Segment                                                                                                                                                                                    |   | 2009 |   |   |   |   |   | 2008 |   |   |   |   |   | (Under) |   |   |   |   |   | 2009 |   |   | 2008 |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                                                                        |   | $ | 115,396 |   |   |   |   |   |   | 138,064 |   |   |   |   |   |   | (16.4 | ) % |   |   |   |   |   | 56.6 | % |   |   | 54.3 | % |
| Upholstery Fabrics                                                                                                                                                                                      |   |   | 88,542 |   |   |   |   |   |   | 115,982 |   |   |   |   |   |   | (23.7 | ) % |   |   |   |   |   | 43.4 | % |   |   | 45.7 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Net Sales                                                                                                                                                                 |   | $ | 203,938 |   |   |   |   |   |   | 254,046 |   |   |   |   |   |   | (19.7 | ) % |   |   |   |   |   | 100.0 | % |   |   | 100.0 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit by Segment                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Gross Profit Margin |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                                                                        |   | $ | 20,996 |   |   |   |   |   |   | 22,576 |   |   |   |   |   |   | (7.0 | ) % |   |   |   |   |   | 18.2 | % |   |   | 16.4 | % |
| Upholstery Fabrics                                                                                                                                                                                      |   |   | 7,253 |   |   |   |   |   |   | 12,829 |   |   |   |   |   |   | (43.5 | ) % |   |   |   |   |   | 8.2 | % |   |   | 11.1 | % |
|      Subtotal                                                                                                                                                                  |   |   | 28,249 |   |   |   |   |   |   | 35,405 |   |   |   |   |   |   | (20.2 | ) % |   |   |   |   |   | 13.9 | % |   |   | 13.9 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss on impairment of equipment                                                                                                                                                                         |   |   | - |   |   |   |   |   |   | (289 | ) |   |   | (2 | ) |   |   | (100.0 | ) % |   |   |   |   |   | 0.0 | % |   |   | (0.1 | ) % |
| Restructuring related charges                                                                                                                                                                           |   |   | (3,597 | ) |   |   | (1 | ) |   |   | (1,957 | ) |   |   | (1 | ) |   |   | 83.8 | % |   |   |   |   |   | (1.8 | ) % |   |   | (0.8 | ) % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Gross Profit                                                                                                                                                              |   | $ | 24,652 |   |   |   |   |   |   |   | 33,159 |   |   |   |   |   |   |   | (25.7 | ) % |   |   |   |   |   | 12.1 | % |   |   | 13.1 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative expenses  by Segment                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Percent of Sales |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                                                                        |   | $ | 7,749 |   |   |   |   |   |   |   | 8,457 |   |   |   |   |   |   |   | (8.4 | ) % |   |   |   |   |   | 6.7 | % |   |   | 6.1 | % |
| Upholstery Fabrics                                                                                                                                                                                      |   |   | 8,756 |   |   |   |   |   |   |   | 11,650 |   |   |   |   |   |   |   | (24.8 | ) % |   |   |   |   |   | 9.9 | % |   |   | 10.0 | % |
| Unallocated Corporate                                                                                                                                                                                   |   |   | 3,225 |   |   |   |   |   |   |   | 3,797 |   |   |   |   |   |   |   | (15.1 | ) % |   |   |   |   |   | 1.6 | % |   |   | 1.5 | % |
|      Subtotal                                                                                                                                                                  |   |   | 19,730 |   |   |   |   |   |   |   | 23,904 |   |   |   |   |   |   |   | (17.5 | ) % |   |   |   |   |   | 9.7 | % |   |   | 9.4 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Restructuring related charges                                                                                                                                                                           |   |   | 21 |   |   |   | (1 | ) |   |   | 69 |   |   |   | (1 | ) |   |   | (69.6 | ) % |   |   |   |   |   | 0.0 | % |   |   | 0.0 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Selling, General and Administrative expenses                                                                                                                                    |   | $ | 19,751 |   |   |   |   |   |   |   | 23,973 |   |   |   |   |   |   |   | (17.6 | ) % |   |   |   |   |   | 9.7 | % |   |   | 9.4 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Income (loss)  by Segment                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Operating Income (Loss) Margin |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                                                                        |   | $ | 13,247 |   |   |   |   |   |   |   | 14,118 |   |   |   |   |   |   |   | (6.2 | ) % |   |   |   |   |   | 11.5 | % |   |   | 10.2 | % |
| Upholstery Fabrics                                                                                                                                                                                      |   |   | (1,503 | ) |   |   |   |   |   |   | 1,180 |   |   |   |   |   |   | N.M. |   |   |   | (3 | ) |   |   | (1.7 | ) % |   |   | 1.0 | % |
| Unallocated Corporate                                                                                                                                                                                   |   |   | (3,225 | ) |   |   |   |   |   |   | (3,797 | ) |   |   |   |   |   |   | (15.1 | ) % |   |   |   |   |   |   | (1.6 | ) % |   |   | (1.5 | ) % |
|         Subtotal                                                                                                                                                |   |   | 8,519 |   |   |   |   |   |   |   | 11,501 |   |   |   |   |   |   |   | (25.9 | ) % |   |   |   |   |   |   | 4.2 | % |   |   | 4.5 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss on impairment of equipment                                                                                                                                                                         |   |   | - |   |   |   |   |   |   |   | (289 | ) |   |   | (2 | ) |   |   | (100.0 | ) % |   |   |   |   |   |   | 0.0 | % |   |   | (0.1 | ) % |
| Restructuring expense and restructuring related charges                                                                                                                                                 |   |   | (13,089 | ) |   |   | (1 | ) |   |   | (2,912 | ) |   |   | (1 | ) |   | N.M. |   |   |   | (3 | ) |   |   | (6.4 | ) % |   |   | (1.1 | ) % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Operating (loss) income                                                                                                                                                   |   | $ | (4,570 | ) |   |   |   |   |   |   | 8,300 |   |   |   |   |   |   | N.M. |   |   |   | (3 | ) |   |   | (2.2 | ) % |   |   | 3.3 | % |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation by Segment                                                                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mattress Fabrics                                                                                                                                                                                        |   | $ | 3,542 |   |   |   |   |   |   |   | 3,443 |   |   |   |   |   |   |   | 2.9 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Upholstery Fabrics                                                                                                                                                                                      |   |   | 1,080 |   |   |   |   |   |   |   | 2,105 |   |   |   |   |   |   |   | (48.7 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
|      Subtotal                                                                                                                                                                  |   |   | 4,622 |   |   |   |   |   |   |   | 5,548 |   |   |   |   |   |   |   | (16.7 | ) % |   |   |   |   |   |   |   |   |   |   |   |   |
| Accelerated Depreciation                                                                                                                                                                                |   |   | 2,090 |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   | 100.0 | % |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Depreciation                                                                                                                                                                                      |   | $ | 6,712 |   |   |   |   |   |   |   | 5,548 |   |   |   |   |   |   |   | 21.0 | % |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes:                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1) See restructuring and related charges (credits) section of Management's Discussion and Analysis for detailed explanation of charges and credits.                                                    |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (2) The $289 represents an impairment loss on older and existing equipment that is being replaced by newer and more efficient equipment. This impairment loss pertains to the mattress fabrics segment. |
|                                                                                                                                                                                                    |   |   |   |   |   |
| (3)  N.M. - Not Meaningful                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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| ·   | The income tax rate decreased 33% for the reduction in the valuation allowance recorded against substantially all of our net deferred tax assets associated with our U.S. and China operations. This reduction in our valuation allowance is primarily due to U.S. taxable income generated by the repatriation of undistributed earnings from our subsidiaries located in China and the resulting usage of U.S. net operating loss carryforwards. Also, this reduction pertains to the realization on and projected realization of deferred tax assets created from tax versus book depreciation associated with the company’s China operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate decreased 12% for the tax effects of foreign exchange losses on U.S. denominated account balances in which income taxes are paid in Canadian dollars. In fiscal 2009, the income tax rate increased 26% for the tax effects of foreign exchange gains on U.S. denominated account balances in which income taxes are paid in Canadian dollars. In fiscal 2010 and 2009, the Canadian foreign exchange rate in relation to the U.S. dollar was very volatile due to changes in oil prices and global economic conditions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate decreased 6% for taxable income subject to lower statutory income rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 12% for the recording of a deferred tax liability for estimated U.S. income taxes that were paid upon repatriation of undistributed earnings from the company’s subsidiaries located in China. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 10% for an increase in unrecognized tax benefits. |
|--------------------|---------------------------------------------------------------------------------|

| ·   | The income tax rate increased 3% for non-deductible stock-based compensation expense and other miscellaneous items. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

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| ·   | The income tax rate increased 395% for a $27.2 million non-cash charge for the establishment of a valuation allowance against substantially all of the company’s net deferred tax assets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 50% for an increase in unrecognized tax benefits. |
|--------------------|---------------------------------------------------------------------------------|

| ·   | The income tax rate increased 26% for the tax effects of foreign exchange gains on U.S. denominated account balances in which income taxes are paid in Canadian dollars. In fiscal 2009, the Canadian foreign exchange rate in relation to the U.S. dollar was very volatile due to changes in oil prices and global economic conditions. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 23% for the recording of a deferred tax liability for estimated U.S. income taxes that were paid upon repatriation of undistributed earnings from the company’s subsidiaries located in China. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 4% for non-deductible stock-based compensation expense and other miscellaneous items. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

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| (dollars in thousands)         |   | Fair Value |   |
|--------------------------------|--------|------------|--------|
| Inventories                    |   | $          | 1,439  |   |
| Other current assets           |   |       | 17     |   |
| Property, plant, and equipment |   |       | 3,000  |   |
| Non-compete agreement          |   |       | 887    |   |
| Goodwill                       |   |       | 7,348  |   |
| Accounts payable               |   |       | (1,291 | ) |
|                           |   | $          | 11,400 |   |

|                                          |   |        |    |   |           |   |
|-----------------------------------------------|--------|-------------|---------|--------|----------------|--------|
|                                          |   | Years ended |    |
| (dollars in thousands, except per share data) |   | May 3, 2009 |    |   | April 27, 2008 |   |
| Net Sales                                     |   | $           | 203,938 |   |           | $      | 254,046 |   |
|                                          |   |        |    |   |           |   |   |   |
| (Loss) income from operations                 |   |        | (3,625  | )      |           |   | 11,703 |   |
|                                          |   |        |    |   |           |   |   |   |
| Net (loss) income                             |   |        | (38,388 | )      |           |   | 6,968 |   |
|                                          |   |        |    |   |           |   |   |   |
| Net (loss) income per share, basic            |   |        | (3.03   | )      |           |   | 0.55 |   |
|                                          |   |        |    |   |           |   |   |   |
| Net (loss) income per share, diluted          |   |        | (3.03   | )      |           |   | 0.55 |   |
|                                          |   |        |    |   |           |   |   |   |

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| ·   | Consolidated our China operations into fewer facilities and reduced excess manufacturing capacity. (See Restructuring and Related Charges section for further details). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Significantly reduced the cost structure of our U.S. velvet operations located in Anderson, SC. |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | Implemented a modest price increase on certain upholstery fabrics; and wherever possible, obtained price concessions from suppliers on certain high volume items where we could not increase our selling prices |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Continued focus on improved inventory management. Inventory was $9.1 million at May 3, 2009, a decrease of 56% from $20.8 million at April 27, 2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

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| ·   | The income tax rate increased 395% for a $27.2 million non-cash charge for the establishment of a valuation allowance against substantially all of the company’s net deferred tax assets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 50% for an increase in unrecognized tax benefits. |
|--------------------|---------------------------------------------------------------------------------|

| ·   | The income tax rate increased 26% for the tax effects of foreign exchange gains on U.S. denominated account balances in which income taxes are paid in Canadian dollars. In fiscal 2008, the income tax rate decreased 23% for the tax effects of foreign exchange losses on U.S. denominated account balances in which income taxes are paid in Canadian dollars. In fiscal 2009 and 2008, the Canadian foreign exchange rate in relation to the U.S. dollar was very volatile due to changes in oil prices and global economic conditions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 23% for the recording of a deferred tax liability for estimated U.S. income taxes that were paid upon repatriation of undistributed earnings from the company’s subsidiaries located in China. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 4% for non-deductible stock-based compensation and other miscellaneous items. |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate was reduced by 23% for the tax effects of foreign exchange losses on U.S. denominated account balances in which income taxes are paid in Canadian dollars. In fiscal 2008, the Canadian foreign exchange rate in relation to the U.S. dollar was very volatile due to changes in oil prices and global economic conditions. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate was reduced by 19% for the tax effects of a tax holiday for our subsidiaries located in China. Under a tax holiday in the People’s Republic of China, the company was granted an exemption from income taxes for two years commencing from the first profit-making year on a calendar year basis and a 50% reduction in income tax rates for the following three years. Calendar year 2004 was the first profit-making year. We were entitled to a 50% income tax reduction through December 31, 2008. The income tax rate was reduced by 0.4% for the tax effects of the tax holiday in China in fiscal 2009.  This decrease compared with fiscal 2008 is due to lower pre-tax income in fiscal 2009 for our China operations. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | The income tax rate was reduced by 12% for research and development credits taken on our Canadian income tax returns for fiscal years 2006 through 2008. We engaged a consultant in fiscal 2008 to assist management in documenting and determining the amount of these credits that could be deducted on the company’s Canadian tax returns. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate was reduced by 12% for income tax incentives granted by the Chinese government for the start up of a cut and sew operation located in China in fiscal 2008. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate decreased 10% for taxable income subject to lower statutory income tax rates in foreign jurisdictions (Canada and China) compared with the statutory income tax rate of 34% for the United States. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The income tax rate increased by 27% for an increase in unrecognized tax benefits. |
|--------------------|------------------------------------------------------------------------------------|

| ·   | The income tax rate increased 4% for non-deductible stock-based compensation expense and other miscellaneous items. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

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|                                                           |   | 2011   |   |   | 2012   |   |   | 2013   |   |   | 2014  |   |   | 2015   |   |   | Thereafter |   |   | Total  |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|--------|--------|------------|--------|--------|--------|--------|
|  Capital expenditures                                     |   |   | 3,837  |   |   |   | -      |   |   |   | -     |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 3,837 |   |
| Accounts payable –   capital expenditures |   |   | 567    |   |   |   | -      |   |   |   | -     |   |   |   | -      |   |       |   | -      |   |   |   | - |   |   |   | 567 |   |
| Operating leases                                               |   |   | 1,559  |   |   |   | 1,178  |   |   |   | 484   |   |   |   | 100    |   |       |   | 13     |   |   |   | - |   |   |   | 3,334 |   |
| Interest Expense (1)                                           |   |   | 894    |   |   |   | 754    |   |   |   | 578   |   |   |   | 402    |   |       |   | 226    |   |   |   | 49 |   |   |   | 2,903 |   |
| Long-term debt – principal                               |   |   | 196    |   |   |   | 2,397  |   |   |   | 2,397 |   |   |   | 2,297  |   |       |   | 2,200  |   |   |   | 2,200 |   |   |   | 11,687 |   |
| Total (2)                                                      |   |   | 7,053  |   |   |   | 4,329  |   |   |   | 3,459 |   |   |   | 2,799  |   |       |   | 2,439  |   |   |   | 2,249 |   |   |   | 22,328 |   |

| (1) | Interest expense includes interest incurred on accounts payable-capital expenditures, and long-term debt. |
|-----|-----------------------------------------------------------------------------------------------------------|

| (2) | As more fully disclosed in Notes 1 and 11 of the Notes to the Consolidated Financial Statements, the company adopted  certain provisions of ASC Topic 740, “Income Taxes” (formerly known as Financial Accounting Standards Board Interpretation No.48 “Accounting for Uncertainty In Income Taxes” which supplements SFAS No. 109, “Accounting for Income Taxes”). At May 2, 2010, the company had $10.1 million of total gross unrecognized tax benefits, of which $6.3 million and $3.8 million were classified as net non-current deferred income taxes and income taxes payable – long-term. The final outcome of these tax uncertainties is dependent upon various matters including tax examinations, legal proceedings, competent authority proceedings, changes in regulatory tax laws, or interpretations of those tax laws, or expiration of statutes of limitation. As a result of these inherent uncertainties, the company cannot reasonably estimate the timing of payment of these amounts. Of the $10.1 million in total gross unrecognized tax benefits, $6.3 million would not be subject to cash payments due to the company’s U.S. federal and state net operating loss carryforwards. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES

----

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS

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| CONSOLIDATED BALANCE SHEETS                                                             |   |   |    |   |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
|                                                                                    |   |   |    |   |   |   |
|                                                                                    |   |   |    |   |   |   |
|                                                                                    |   |   |    |   |   |   |
| May 2, 2010 and May 3, 2009 (dollars in thousands)                                      |   | 2010   |    |   | 2009   |   |
| ASSETS                                                                                  |   |   |    |   |   |   |
| current assets:                                                                         |   |   |    |   |   |   |
| cash and cash equivalents                                                               |   | $      | 18,295  |   |   | $      | 11,797 |   |
| short-term investments                                                                  |   |   | 3,023   |   |   |   | - |   |
| accounts receivable, net                                                                |   |   | 19,822  |   |   |   | 18,116 |   |
| inventories                                                                             |   |   | 26,002  |   |   |   | 23,978 |   |
| deferred income taxes                                                                   |   |   | 150     |   |   |   | 54 |   |
|     assets held for sale                                            |   |   | 123     |   |   |   | 1,209 |   |
|     income taxes receivable                                         |   |   | 728     |   |   |   | 210 |   |
| other current assets                                                                    |   |   | 1,698   |   |   |   | 1,264 |   |
| total current assets                                                                    |   |   | 69,841  |   |   |   | 56,628 |   |
|                                                                                    |   |   |    |   |   |   |   |   |
| property, plant and equipment, net                                                      |   |   | 28,403  |   |   |   | 24,253 |   |
| goodwill                                                                                |   |   | 11,462  |   |   |   | 11,593 |   |
| deferred income taxes                                                                   |   |   | 324     |   |   |   | - |   |
| other assets                                                                            |   |   | 2,568   |   |   |   | 2,820 |   |
| total assets                                                                            |   | $      | 112,598 |   |   | $      | 95,294 |   |
|                                                                                    |   |   |    |   |   |   |   |   |
|                                                                                    |   |   |    |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                    |   |   |    |   |   |   |   |   |
| current liabilities:                                                                    |   |   |    |   |   |   |   |   |
| current maturities of long-term debt                                                    |   | $      | 196     |   |   | $      | 4,764 |   |
| current portion of obligation under capital lease                                       |   |   | -       |   |   |   | 626 |   |
| accounts payable - trade                                                                |   |   | 22,278  |   |   |   | 17,030 |   |
| accounts payable - capital expenditures                                                 |   |   | 567     |   |   |   | 923 |   |
| accrued expenses                                                                        |   |   | 9,613   |   |   |   | 6,504 |   |
| accrued restructuring costs                                                             |   |   | 324     |   |   |   | 853 |   |
| income taxes payable                                                                    |   |   | 224     |   |   |   | 83 |   |
| total current liabilities                                                               |   |   | 33,202  |   |   |   | 30,783 |   |
|                                                                                    |   |   |    |   |   |   |   |   |
| accounts payable - capital expenditures                                                 |   |   | -       |   |   |   | 638 |   |
| income taxes payable - long-term                                                        |   |   | 3,876   |   |   |   | 3,264 |   |
| deferred income taxes                                                                   |   |   | 982     |   |   |   | 974 |   |
| long-term debt, less current maturities                                                 |   |   | 11,491  |   |   |   | 11,604 |   |
| total liabilities                                                                       |   |   | 49,551  |   |   |   | 47,263 |   |
|                                                                                    |   |   |    |   |   |   |   |   |
| commitments and contingencies (notes 7, 12, 13, and 14)                                 |   |   |    |   |   |   |   |   |
|                                                                                    |   |   |    |   |   |   |   |   |
| shareholders' equity:                                                                   |   |   |    |   |   |   |   |   |
| preferred stock, $.05 par value, authorized 10,000,000                                  |   |   |    |   |   |   |   |   |
|       shares                                              |   |   | -       |   |   |   | - |   |
| common stock, $.05 par value, authorized 40,000,000                                     |   |   |    |   |   |   |   |   |
|       shares, issued and outstanding 13,051,785 at        |   |   |    |   |   |   |   |   |
|       May 2, 2010 and 12,767,527 at May 3, 2009           |   |   | 652     |   |   |   | 638 |   |
| capital contributed in excess of par value                                              |   |   | 49,459  |   |   |   | 47,728 |   |
| accumulated earnings (deficit)                                                          |   |   | 12,833  |   |   |   | (355 | ) |
| accumulated other comprehensive income                                                  |   |   | 103     |   |   |   | 20 |   |
| total shareholders' equity                                                              |   |   | 63,047  |   |   |   | 48,031 |   |
| total liabilities and shareholders' equity                                              |   | $      | 112,598 |   |   | $      | 95,294 |   |
|                                                                                    |   |   |    |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |   |    |   |   |   |   |   |
|                                                                                    |   |   |    |   |   |   |   |   |

----

| CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                     |   |   |    |   |   |   |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |
| For the years ended May 2, 2010, May 3, 2009 and April 27, 2008                                                                                           |   |   |    |   |   |   |    |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |
| (dollars in thousands, except per share data)                                                                                                             |   | 2010   |    |   | 2009   |   |    | 2008 |   |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |
| net sales                                                                                                                                                 |   | $      | 206,416 |   |   | $      | 203,938 |   |   | $ | 254,046 |   |
| cost of sales                                                                                                                                             |   |   | 167,639 |   |   |   | 179,286 |   |   |   | 220,887 |   |
| gross profit                                                                                                                                              |   |   | 38,777  |   |   |   | 24,652  |   |   |   | 33,159 |   |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |   |   |   |
| selling, general and administrative expenses                                                                                                              |   |   | 22,805  |   |   |   | 19,751  |   |   |   | 23,973 |   |
| restructuring (credit) expense (note 3)                                                                                                                   |   |   | (370    | )      |   |   | 9,471   |   |   |   | 886 |   |
| income (loss) from operations                                                                                                                             |   |   | 16,342  |   |   |   | (4,570  | ) |   |   | 8,300 |   |
| interest expense                                                                                                                                          |   |   | 1,314   |   |   |   | 2,359   |   |   |   | 2,975 |   |
| interest income                                                                                                                                           |   |   | (116    | )      |   |   | (89     | ) |   |   | (254 | ) |
| other expense, net                                                                                                                                        |   |   | 828     |   |   |   | 43      |   |   |   | 736 |   |
|                     income (loss) before income taxes |   |   | 14,316  |   |   |   | (6,883  | ) |   |   | 4,843 |   |
| income tax expense (benefit) (note 11)                                                                                                                    |   |   | 1,128   |   |   |   | 31,959  |   |   |   | (542 | ) |
| net income (loss)                                                                                                                                         |   | $      | 13,188  |   |   | $      | (38,842 | ) |   | $ | 5,385 |   |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |   |   |   |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |   |   |   |
| net income (loss) per share-basic                                                                                                                         |   | $      | 1.04    |   |   | $      | (3.07   | ) |   | $ | 0.43 |   |
| net income (loss) per share-diluted                                                                                                                       |   | $      | 1.01    |   |   | $      | (3.07   | ) |   | $ | 0.42 |   |
|                                                                                                                                                      |   |   |    |   |   |   |    |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements.                                                                   |   |   |    |   |   |

----

| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                                         |   |   |       |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (dollars in thousands, except common stock shares)                                      |   |   |       |   |   |   |   |   |   |   |
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |       |   |   |   |   | capital |   |   |   |   |   | accumulated |   |   |   |   |
|                                                                                    |   | common |       |   | common |   |   | contributed |   |   |   |   |   | other |   |   | total |   |
| For the years ended May 2, 2010                                                         |   | stock  |       |   | stock  |   |   | in excess of |   |   | Accumulated |   |   | comprehensive |   |   | shareholders' |   |
|  May 3, 2009 and April 27, 2008                                                    |   | shares |       |   | amount |   |   | par value |   |   | earnings (deficit) |   |   | (loss) income |   |   | equity |   |
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| balance, April 29, 2007                                                                 |   |   | 12,569,291 |   |   | $      | 629    |   |   | $ | 46,197 |   |   | $ | 32,255 |   |   | $ | (4 | ) |   | $ | 79,077 |   |
| cumulative effect of adopting FASB                                                      |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         interpretation No. 48                   |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | 847 |   |   |   | - |   |   |   | 847 |   |
| net income                                                                              |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | 5,385 |   |   |   | - |   |   |   | 5,385 |   |
| stock-based compensation                                                                |   |   | -          |   |   |   | -      |   |   |   | 618 |   |   |   | - |   |   |   | - |   |   |   | 618 |   |
| loss on cash flow hedge, net of taxes                                                   |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | (44 | ) |   |   | (44 | ) |
| excess tax benefit related to stock options                                             |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     exercised                                                       |   |   | -          |   |   |   | -      |   |   |   | 17 |   |   |   | - |   |   |   | - |   |   |   | 17 |   |
| common stock issued in connection                                                       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       with stock option plans                             |   |   | 78,736     |   |   |   | 3      |   |   |   | 456 |   |   |   | - |   |   |   | - |   |   |   | 459 |   |
| balance, April 27, 2008                                                                 |   |   | 12,648,027 |   |   |   | 632    |   |   |   | 47,288 |   |   |   | 38,487 |   |   |   | (48 | ) |   |   | 86,359 |   |
| net loss                                                                                |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | (38,842 | ) |   |   | - |   |   |   | (38,842 | ) |
| stock-based compensation                                                                |   |   | -          |   |   |   | -      |   |   |   | 425 |   |   |   | - |   |   |   | - |   |   |   | 425 |   |
| gain on cash flow hedge, net of taxes                                                   |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 68 |   |   |   | 68 |   |
|  restricted stock granted                                                          |   |   | 115,000    |   |   |   | 5      |   |   |   | (5 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| common stock issued in connection                                                       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       with stock option plans                             |   |   | 4,500      |   |   |   | 1      |   |   |   | 20 |   |   |   | - |   |   |   | - |   |   |   | 21 |   |
| balance, May 3, 2009                                                                    |   |   | 12,767,527 |   |   |   | 638    |   |   |   | 47,728 |   |   |   | (355 | ) |   |   | 20 |   |   |   | 48,031 |   |
| net income                                                                              |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | 13,188 |   |   |   | - |   |   |   | 13,188 |   |
| stock-based compensation                                                                |   |   | -          |   |   |   | -      |   |   |   | 834 |   |   |   | - |   |   |   | - |   |   |   | 834 |   |
| gain on cash flow hedges, net of taxes                                                  |   |   | -          |   |   |   | -      |   |   |   | - |   |   |   | - |   |   |   | 83 |   |   |   | 83 |   |
| restricted stock granted                                                                |   |   | 80,000     |   |   |   | 4      |   |   |   | (4 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| common stock issued in connection                                                       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        with performance based units                  |   |   | 80,000     |   |   |   | 4      |   |   |   | (4 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| common stock surrendered for                                                            |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        withholding taxes payable                     |   |   | (20,658    | )      |   |   | (1     | ) |   |   | (190 | ) |   |   | - |   |   |   | - |   |   |   | (191 | ) |
| excess tax benefit related to stock options                                             |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     exercised                                                       |   |   |       |   |   |   |   |   |   |   | 429 |   |   |   | - |   |   |   | - |   |   |   | 429 |   |
| common stock issued in connection                                                       |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       with stock option plans                             |   |   | 144,916    |   |   |   | 7      |   |   |   | 666 |   |   |   | - |   |   |   | - |   |   |   | 673 |   |
| balance, May 2, 2010                                                                    |   |   | 13,051,785 |   |   | $      | 652    |   |   | $ | 49,459 |   |   | $ | 12,833 |   |   | $ | 103 |   |   | $ | 63,047 |   |
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |   |       |   |   |   |   |   |   |
|                                                                                    |   |   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                   |   |   |   |   |   |   |    |   |   |
|-----------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
|                                                                                    |   |   |   |   |   |   |    |   |   |
|                                                                                    |   |   |   |   |   |   |    |   |   |
| For the years ended May 2, 2010, May 3, 2009 and April 27, 2008                         |   |   |   |   |   |   |    |
| (dollars in thousands)                                                                  |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|                                                                                    |   |   |   |   |   |   |    |   |   |
| cash flows from operating activities:                                                   |   |   |   |   |   |   |    |   |   |
| net income (loss)                                                                       |   | $      | 13,188 |   |   |   | (38,842 | )      |   |   | 5,385 |   |
| adjustments to reconcile net income (loss) to net cash                                  |   |   |   |   |   |   |    |   |   |   |   |   |
|  provided by operating activities:                                                 |   |   |   |   |   |   |    |   |   |   |   |   |
| depreciation                                                                            |   |   | 4,010  |   |   |   | 6,712   |   |   |   | 5,548 |   |
| amortization of other assets                                                            |   |   | 548    |   |   |   | 488     |   |   |   | 373 |   |
| stock-based compensation                                                                |   |   | 834    |   |   |   | 425     |   |   |   | 618 |   |
| excess tax benefit related to stock options exercised                                   |   |   | (429   | )      |   |   | -       |   |   |   | (17 | ) |
| deferred income taxes                                                                   |   |   | (148   | )      |   |   | 33,430  |   |   |   | (1,110 | ) |
| (gain) loss on impairment of equipment                                                  |   |   | (65    | )      |   |   | (32     | )      |   |   | 289 |   |
| restructuring expenses, net of gain on sale of related assets                           |   |   | (170   | )      |   |   | 7,960   |   |   |   | 140 |   |
| foreign currency exchange losses (gains)                                                |   |   | 688    |   |   |   | (88     | )      |   |   | 393 |   |
| changes in assets and liabilities, net of effects of acquisition of assets:             |   |   |   |   |   |   |    |   |   |   |   |   |
| accounts receivable                                                                     |   |   | (1,684 | )      |   |   | 8,924   |   |   |   | 2,274 |   |
| inventories                                                                             |   |   | (2,020 | )      |   |   | 12,850  |   |   |   | 5,241 |   |
| other current assets                                                                    |   |   | (418   | )      |   |   | 28      |   |   |   | 531 |   |
| other assets                                                                            |   |   | (67    | )      |   |   | 10      |   |   |   | (188 | ) |
| accounts payable-trade                                                                  |   |   | 5,157  |   |   |   | (5,278  | )      |   |   | (989 | ) |
| accrued expenses                                                                        |   |   | 2,853  |   |   |   | (1,667  | )      |   |   | (511 | ) |
| accrued restructuring                                                                   |   |   | (529   | )      |   |   | (579    | )      |   |   | (1,926 | ) |
| income taxes                                                                            |   |   | (171   | )      |   |   | (1,504  | )      |   |   | 401 |   |
| net cash provided by operating activities                                               |   |   | 21,577 |   |   |   | 22,837  |   |   |   | 16,452 |   |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| cash flows from investing activities:                                                   |   |   |   |   |   |   |    |   |   |   |   |   |
| capital expenditures                                                                    |   |   | (7,431 | )      |   |   | (1,970  | )      |   |   | (4,846 | ) |
| purchase of short-term investments                                                      |   |   | (3,023 | )      |   |   | -       |   |   |   | - |   |
| net cash paid for acquistion of assets (note 2)                                         |   |   | -      |   |   |   | (11,365 | )      |   |   | - |   |
| proceeds from the sale of buildings and equipment                                       |   |   | 583    |   |   |   | 4,607   |   |   |   | 2,723 |   |
| net cash used in investing activities                                                   |   |   | (9,871 | )      |   |   | (8,728  | )      |   |   | (2,123 | ) |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| cash flows from financing activities:                                                   |   |   |   |   |   |   |    |   |   |   |   |   |
| proceeds from lines of credit                                                           |   |   | -      |   |   |   | -       |   |   |   | 1,339 |   |
| payments on lines of credit                                                             |   |   | -      |   |   |   | -       |   |   |   | (3,932 | ) |
| payments on vendor-financed capital expenditures                                        |   |   | (985   | )      |   |   | (1,236  | )      |   |   | (642 | ) |
| payments on a capital lease obligation                                                  |   |   | (626   | )      |   |   | (754    | )      |   |   | - |   |
| payments on long-term debt                                                              |   |   | (4,789 | )      |   |   | (16,055 | )      |   |   | (16,737 | ) |
| proceeds from the issuance of long-term debt (note 12)                                  |   |   | -      |   |   |   | 11,000  |   |   |   | - |   |
| debt issuance costs                                                                     |   |   | (15    | )      |   |   | (133    | )      |   |   | - |   |
| proceeds from common stock issued                                                       |   |   | 673    |   |   |   | 21      |   |   |   | 459 |   |
| excess tax benefit related to stock options exercised                                   |   |   | 429    |   |   |   | -       |   |   |   | 17 |   |
| net cash used in financing activities                                                   |   |   | (5,313 | )      |   |   | (7,157  | )      |   |   | (19,496 | ) |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| effect of exchange rate changes on cash and cash equivalents                            |   |   | 105    |   |   |   | (69     | )      |   |   | (88 | ) |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| increase (decrease) in cash and cash equivalents                                        |   |   | 6,498  |   |   |   | 6,883   |   |   |   | (5,255 | ) |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| cash and cash equivalents at beginning of year                                          |   |   | 11,797 |   |   |   | 4,914   |   |   |   | 10,169 |   |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| cash and cash equivalents at end of year                                                |   | $      | 18,295 |   |   |   | 11,797  |   |   |   | 4,914 |   |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |   |   |   |   |   |   |    |   |   |
|                                                                                    |   |   |   |   |   |   |    |   |   |   |   |   |

----

| 1. | GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|--------------------------------------------------------|

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----

| 2. | ASSET ACQUISITIONS |
|----|--------------------|

|   | Bodet & Horst |
|--------|-------------------|

----

| (dollars in thousands)         |   | Fair Value |   |
|--------------------------------|--------|------------|--------|
| Inventories                    |   | $          | 1,439  |   |
| Other current assets           |   |       | 17     |   |
| Property, plant, and equipment |   |       | 3,000  |   |
| Non-compete agreement (Note 9) |   |       | 887    |   |
| Goodwill                       |   |       | 7,348  |   |
| Accounts payable               |   |       | (1,291 | ) |
|                           |   | $          | 11,400 |   |

|                                          | Years ended |   |
|-----------------------------------------------|-------------|--------|
| (dollars in thousands, except per share data) | May 3, 2009 |   | April 27, 2008 |   |
| Net Sales                                     |        | $      | 203,938 |   |   | $ | 254,046 |   |
|                                          |        |
| (Loss) income from operations                 |        |   | (3,625 | ) |   |   | 11,703 |   |
|                                          |        |
| Net (loss) income                             |        |   | (38,388 | ) |   |   | 6,968 |   |
|                                          |        |
| Net (loss) income per share, basic            |        |   | (3.03 | ) |   |   | 0.55 |   |
|                                          |        |
| Net (loss) income per share, diluted          |        |   | (3.03 | ) |   |   | 0.55 |   |

| 3. | RESTRUCTURING AND ASSET IMPAIRMENTS |
|----|-------------------------------------|

| (dollars in thousands)              |   | May 2, 2010 |   |   | May 3, 2009 |   |
|-------------------------------------|--------|-------------|--------|--------|-------------|--------|
|                                |   |
| September 2008 Upholstery Fabrics   |   | $           | -      |   |        | $      | 43 |   |
| December 2006 Upholstery Fabrics    |   |        | 86     |   |        |   | 494 |   |
| Fiscal 2003 Culp Decorative Fabrics |   |        | 238    |   |        |   | 235 |   |
| Other Upholstery Fabrics            |   |        | -      |   |        |   | 81 |   |
|                                |   | $           | 324    |   |        | $      | 853 |   |

----

|                               |   | EmployeeTerminationBenefits |   |   | LeaseTerminationand Other ExitCosts |   |   | Total  |   |
|------------------------------------|--------|-----------------------------|--------|--------|-------------------------------------|--------|--------|--------|--------|
| accrual established in fiscal 2009 |   | $                           | 35     |   |                                |   | 425    |   |   |   | 460 |   |
| adjustments in fiscal 2009         |   |                        | (25    | )      |                                |   | 18     |   |   |   | (7 | ) |
| paid in fiscal 2009                |   |                        | (10    | )      |                                |   | (400   | )      |   |   | (410 | ) |
| balance, May 3, 2009               |   | $                           | -      |   |                                |   | 43     |   |   |   | 43 |   |
| adjustments in fiscal 2010         |   |                        | -      |   |                                |   | (101   | )      |   |   | (101 | ) |
| cash receipts in fiscal 2010       |   |                        | -      |   |                                |   | 58     |   |   |   | 58 |   |
| balance, May 2, 2010               |   | $                           | -      |   |                                |   | -      |   |   |   | - |   |

----

|                       |   | Employee Termination Benefits (1) |   |   | LeaseTerminationand Other Exit Costs |   |   | Total  |   |
|----------------------------|--------|-----------------------------------|--------|--------|--------------------------------------|--------|--------|--------|--------|
| balance, April 29, 2007    |   | $                                 | 1,304  |   |                                 |   | 241    |   |   |   | 1,545 |   |
| adjustments in fiscal 2008 |   |                              | 171    |   |                                 |   | 467    |   |   |   | 638 |   |
| paid in fiscal 2008        |   |                              | (796   | )      |                                 |   | (397   | )      |   |   | (1,193 | ) |
| balance, April 27, 2008    |   | $                                 | 679    |   |                                 |   | 311    |   |   |   | 990 |   |
| adjustments in fiscal 2009 |   |                              | 798    |   |                                 |   | 271    |   |   |   | 1,069 |   |
| paid in fiscal 2009        |   |                              | (1,088 | )      |                                 |   | (477   | )      |   |   | (1,565 | ) |
| balance, May 3, 2009       |   | $                                 | 389    |   |                                 |   | 105    |   |   |   | 494 |   |
| adjustments in fiscal 2010 |   |                              | (186   | )      |                                 |   | 13     |   |   |   | (173 | ) |
| paid in fiscal 2010        |   |                              | (190   | )      |                                 |   | (45    | )      |   |   | (235 | ) |
| balance, May 2, 2010       |   | $                                 | 13     |   |                                 |   | 73     |   |   |   | 86 |   |

| (1)   | Employee termination benefit payments are net of cobra premiums received from participants. |
|-----------------|---------------------------------------------------------------------------------------------|

----

|                       |   | Employee Termination Benefits (1) |   |   | LeaseTerminationand Other ExitCosts |   |   | Total  |   |
|----------------------------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|--------|--------|--------|
| balance, April 29, 2007    |   | $                                 | 43     |   |                                |   | 1,264  |   |   |   | 1,307 |   |
| adjustments in fiscal 2008 |   |                              | (13    | )      |                                |   | (66    | )      |   |   | (79 | ) |
| paid in fiscal 2008        |   |                              | (30    | )      |                                |   | (963   | )      |   |   | (993 | ) |
| balance, April 27, 2008    |   | $                                 | -      |   |                                |   | 235    |   |   |   | 235 |   |
| adjustments in fiscal 2009 |   |                              | -      |   |                                |   | 14     |   |   |   | 14 |   |
| paid in fiscal 2009        |   |                              | -      |   |                                |   | (14    | )      |   |   | (14 | ) |
| balance, May 3, ,2009      |   | $                                 | -      |   |                                |   | 235    |   |   |   | 235 |   |
| adjustments in fiscal 2010 |   |                              | -      |   |                                |   | 74     |   |   |   | 74 |   |
| paid in fiscal 2010        |   |                              | -      |   |                                |   | (71    | )      |   |   | (71 | ) |
| balance, May 2, 2010       |   | $                                 | -      |   |                                |   | 238    |   |   |   | 238 |   |

| (1)   | Employee termination benefit payments are net of cobra premiums received from participants. |
|-----------------|---------------------------------------------------------------------------------------------|

----

|                       |   | Employee Termination Benefits (1) |   |   | LeaseTerminationand Other ExitCosts |   |   | Total  |   |
|----------------------------|--------|-----------------------------------|--------|--------|-------------------------------------|--------|--------|--------|--------|
| balance, April 29, 2007    |   | $                                 | 149    |   |                                |   | 281    |   |   |   | 430 |   |
| adjustments in fiscal 2008 |   |                              | (134   | )      |                                |   | 132    |   |   |   | (2 | ) |
| paid in fiscal 2008        |   |                              | 14     |   |                                |   | (235   | )      |   |   | (221 | ) |
| balance, April 27, 2008    |   | $                                 | 29     |   |                                |   | 178    |   |   |   | 207 |   |
| adjustments in fiscal 2009 |   |                              | (22    | )      |                                |   | -      |   |   |   | (22 | ) |
| paid in fiscal 2009        |   |                              | (7     | )      |                                |   | (97    | )      |   |   | (104 | ) |
| balance, May 3, 2009       |   | $                                 | -      |   |                                |   | 81     |   |   |   | 81 |   |
| paid in fiscal 2010        |   |                              | -      |   |                                |   | (81    | )      |   |   | (81 | ) |
| balance, May 2, 2010       |   | $                                 | -      |   |                                |   | -      |   |   |   | - |   |
|                       |   |                              |   |   |                                |   |   |   |   |   |   |   |

| (1)   | Employee termination benefit payments are net of cobra premiums received from participants. |
|-----------------|---------------------------------------------------------------------------------------------|

|   | Long-Lived Asset Impairments - Upholstery Fabrics |
|--------|---------------------------------------------------|

|   | During fiscal 2010, the company did not incur any impairment charges regarding its upholstery fabric property, plant, and equipment. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | During fiscal 2009, the company incurred impairment charges on property, plant, and equipment in connection with its restructuring activities. These impairment charges totaled $8.0 million and were recorded in restructuring expense in the 2009 Consolidated Statement of Operations. This $8.0 million impairment charge includes $2.2 million for fixed assets that were abandoned in connection with the consolidation of certain plant facilities in China and $774,000 to reflect the selling price of the company’s corporate headquarters of $4.0 million (Note 4). Also, during the course of the company’s strategic review in the second quarter of fiscal 2009 of its upholstery fabrics business, the company assessed the recoverability of the carrying value of its upholstery fabric fixed assets that are being held and used in operations. This strategic review resulted in impairment losses of $4.4 million and $543,000 for fixed assets located in China and the U.S., respectively. In addition, the company incurred impairment losses totaling $115,000 for assets held for sale associated with its U.S. upholstery fabric operations. These losses reflect the amounts by which the carrying values of these fixed assets exceeded their estimated fair values determined by their estimated future discounted cash flows and quoted market prices. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | During fiscal 2008, the company incurred impairment charges totaling $503,000 in connection with its restructuring activities. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|

----

| 4. | ASSETS HELD FOR SALE AND RELATED IMPAIRMENTS |
|----|----------------------------------------------|

|   | (dollars in thousands)  |   | May 2, 2010 |   |   | May 3, 2009 |   |
|--------|-------------------------|--------|-------------|--------|--------|-------------|--------|
|   | U.S. upholstery fabrics |   | $           | 89     |   |        | $      | 1,189 |   |
|   | Mattress fabrics        |   |        | 34     |   |        |   | 20 |   |
|   |                    |   | $           | 123    |   |        | $      | 1,209 |   |

----

| 5. | ACCOUNTS RECEIVABLE |
|----|---------------------|

|   |                                             |   | May 2, |   |   | May 3, |   |
|--------|--------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   | (dollars in thousands)                           |   | 2010   |   |   | 2009   |   |
|   | customers                                        |   | $      | 21,678 |   |   |   | 20,093 |   |
|   | allowance for doubtful accounts                  |   |   | (1,322 | )      |   |   | (1,535 | ) |
|   | reserve for returns and allowances and discounts |   |   | (534   | )      |   |   | (442 | ) |
|   |                                             |   | $      | 19,822 |   |   |   | 18,116 |   |

|   | (dollars in thousands)        |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|-------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | beginning balance             |   | $      | (1,535 | )      |   |   | (1,350 | )      |   |   | (1,332 | ) |
|   | provision for bad debts       |   |   | (292   | )      |   |   | (538   | )      |   |   | (180 | ) |
|   | write-offs, net of recoveries |   |   | 505    |   |   |   | 353    |   |   |   | 162 |   |
|   | ending balance                |   | $      | (1,322 | )      |   |   | (1,535 | )      |   |   | (1,350 | ) |

|   | (dollars in thousands)               |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|--------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | beginning balance                    |   | $      | (442   | )      |   |   | (407   | )      |   |   | (570 | ) |
|   | provision for returns and allowances |   |   | (2,987 | )      |   |   | (1,999 | )      |   |   | (2,512 | ) |
|   | discounts                            |   |   |   |   |   |   |   |   |   |   |   |   |
|   | cash discounts taken                 |   |   | 2,895  |   |   |   | 1,964  |   |   |   | 2,675 |   |
|   | ending balance                       |   | $      | (534   | )      |   |   | (442   | )      |   |   | (407 | ) |

----

| 6. | INVENTORIES |
|----|-------------|

|   |                   |   | May 2, |   |   | May 3, |   |
|--------|------------------------|--------|--------|--------|--------|--------|--------|
|   | (dollars in thousands) |   | 2010   |   |   | 2009   |   |
|   | raw materials          |   | $      | 5,639  |   |   |   | 5,987 |   |
|   | work-in-process        |   |   | 2,160  |   |   |   | 1,254 |   |
|   | finished goods         |   |   | 18,203 |   |   |   | 16,737 |   |
|   |                   |   | $      | 26,002 |   |   |   | 23,978 |   |

| 7. | PROPERTY, PLANT AND EQUIPMENT |
|----|-------------------------------|

|   |                                      |   | depreciable lives |   |   | May 2, |   |    | May 3, |   |
|--------|-------------------------------------------|--------|-------------------|--------|--------|--------|--------|---------|--------|--------|
|   | (dollars in thousands)                    |   | (in years)        |   |   | 2010   |   |    | 2009   |   |
|   | land and improvements                     |   |              | 10     |   |   | $      | 741     |   |   |   | 652 |   |
|   | buildings and improvements                |   |              | 7-40   |   |   |   | 10,727  |   |   |   | 10,292 |   |
|   | leasehold improvements                    |   |              | **     |   |   |   | 42      |   |   |   | 92 |   |
|   | machinery and equipment                   |   |              | 3-12   |   |   |   | 44,576  |   |   |   | 46,336 |   |
|   | office furniture and equipment            |   |              | 3-10   |   |   |   | 5,007   |   |   |   | 4,656 |   |
|   | capital projects in progress              |   |              |   |   |   |   | 2,885   |   |   |   | 333 |   |
|   |                                      |   |              |   |   |   |   | 63,978  |   |   |   | 62,361 |   |
|   | accumulated depreciation and amortization |   |              |   |   |   |   | (35,575 | )      |   |   | (38,108 | ) |
|   |                                      |   |              |   |   |   | $      | 28,403  |   |   |   | 24,253 |   |

----

| 8. | GOODWILL |
|----|----------|

|   | (dollars in thousands)                 |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|----------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | beginning balance                      |   | $      | 11,593 |   |   |   | 4,114  |   |   |   | 4,114 |   |
|   | Bodet & Horst acquisition (Note 2) |   |   | (131   | )      |   |   | 7,479  |   |   |   | - |   |
|   | ending balance                         |   | $      | 11,462 |   |   |   | 11,593 |   |   |   | 4,114 |   |

| 9. | OTHER ASSETS |
|----|--------------|

|   |                                  |   | May 2, |   |   | May 3, |   |
|--------|---------------------------------------|--------|--------|--------|--------|--------|--------|
|   | (dollars in thousands)                |   | 2010   |   |   | 2009   |   |
|   | cash surrender value - life insurance |   | $      | 1,312  |   |   |   | 1,294 |   |
|   | non-compete agreements, net (note 2)  |   |   | 843    |   |   |   | 1,164 |   |
|   | other                                 |   |   | 413    |   |   |   | 362 |   |
|   |                                  |   | $      | 2,568  |   |   |   | 2,820 |   |

|   | The company recorded non-compete agreements in connection with the company’s asset purchase agreements with International Textile Group, Inc. (ITG) and Bodet & Horst at their fair values based on valuation techniques. These non-compete agreements pertain to the company’s mattress fabrics segment. The non-compete agreement associated with ITG is amortized on a straight line basis over the four year life of the agreement. The non-compete agreement associated with Bodet & Horst is amortized on a straight-line basis over the six year life of the agreement and requires quarterly payments of $12,500 over the life of the agreement (Note 2). As of May 2, 2010, the total remaining non-compete payments were $212,500. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | At May 2, 2010 and May 3, 2009, the gross carrying amount of these non-compete agreements was $2.1 million and $1.9 million, respectively. At May 2, 2010 and May 3, 2009, accumulated amortization for these non-compete agreements was $1.3 million and $777,000, respectively. Amortization expense for these non-compete agreements was $501,000 and $419,000 in fiscal 2010 and 2009, respectively. Amortization expense for the ITG non-compete agreement was $287,000 for fiscal 2008. No amortization expense was recorded for the Bodet & Horst non-compete agreement in fiscal 2008 as the asset purchase agreement was effective August 11, 2008. The remaining amortization expense (which includes the total remaining Bodet & Horst non-compete payments of $212,500) for the next five fiscal years follows: FY 2011 - $413,000; FY 2012 - $198,000; FY 2013 – $198,000; FY 2014 – $198,000; and FY 2015 - $49,000. The weighted average amortization period for these non-compete agreements is 4.3 years as of May 2, 2010. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 10. | ACCRUED EXPENSES |
|-----|------------------|

|   |                                           |   | May 2, |   |   | May 3, |   |
|--------|------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   | (dollars in thousands)                         |   | 2010   |   |   | 2009   |   |
|   | compensation, commissions and related benefits |   | $      | 7,460  |   |   |   | 4,770 |   |
|   | interest                                       |   |   | 187    |   |   |   | 243 |   |
|   | other                                          |   |   | 1,966  |   |   |   | 1,491 |   |
|   |                                           |   | $      | 9,613  |   |   |   | 6,504 |   |

| 11. | INCOME TAXES |
|-----|--------------|

|   | (dollars in thousands)                      |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | income (loss) from operations               |   | $      | 1,128  |   |   |   | 31,959 |   |   |   | (542 | ) |
|   | shareholders' equity, related to            |   |   |   |   |   |   |   |   |   |   |   |   |
|   | the tax benefit arising from the            |   |   |   |   |   |   |   |   |   |   |   |   |
|   | exercise of stock options                   |   |   | (429   | )      |   |   | -      |   |   |   | (17 | ) |
|   | shareholders' equity, related to tax effect |   |   |   |   |   |   |   |   |   |   |   |   |
|   | of cash flow hedges                         |   |   | -      |   |   |   | 27     |   |   |   | (25 | ) |
|   |                                        |   | $      | 699    |   |   |   | 31,986 |   |   |   | (584 | ) |

|   | (dollars in thousands)            |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|-----------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | current                           |   |   |   |   |   |   |   |   |   |
|   | federal                           |   | $      | (83    | )      |   |   | 83     |   |   |   | - |   |
|   | state                             |   |   | -      |   |   |   | -      |   |   |   | - |   |
|   | foreign (1)                       |   |   | 1,359  |   |   |   | (1,554 | )      |   |   | 568 |   |
|   |                              |   |   | 1,276  |   |   |   | (1,471 | )      |   |   | 568 |   |
|   | deferred                          |   |   |   |   |   |   |   |   |   |   |   |   |
|   | federal                           |   |   | 1,625  |   |   |   | 1,581  |   |   |   | 944 |   |
|   | state                             |   |   | 129    |   |   |   | 113    |   |   |   | 78 |   |
|   | U.S. operating loss carryforwards |   |   | 2,722  |   |   |   | 1,517  |   |   |   | (1,466 | ) |
|   | foreign (1)                       |   |   | 138    |   |   |   | 3,040  |   |   |   | (666 | ) |
|   | valuation allowance               |   |   | (4,762 | )      |   |   | 27,179 |   |   |   | - |   |
|   |                              |   |   | (148   | )      |   |   | 33,430 |   |   |   | (1,110 | ) |
|   |                              |   | $      | 1,128  |   |   |   | 31,959 |   |   |   | (542 | ) |

| (1)   | Foreign current income tax expense includes a U.S. income tax (benefit) expense on income tax reserves pertaining to foreign sources of taxable income of $(5.0) million and  $1.2 million  in fiscal 2009 and 2008, respectively. Foreign deferred income tax expense includes U.S. income tax expense on income tax reserves pertaining to foreign sources of taxable income of $1.3 million and $5.0 million in fiscal 2010 and 2009, respectively. Also, foreign income tax expense in 2008 includes research and development credits with regard to the company’s Canadian subsidiary of $593,000 and income tax incentives granted by the Chinese government of $592,000. No income tax incentives from the Chinese government were obtained in fiscal 2010 and 2009. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |                                             |   | 2010   |   |    | 2009   |   |   | 2008   |   |
|--------|--------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
|   | federal income tax rate                          |   |   | 34.0   | %       |   |   | (34.0  | )%     |   |   | 34.0 | % |
|   | state income taxes, net of federal               |   |   |   |    |   |   |   |   |   |   |   |   |
|   | income tax benefit                               |   |   | -      |    |   |   | -      |   |   |   | (1.5 | ) |
|   | foreign tax rate differential                    |   |   | (6.4   | )       |   |   | 2.2    |   |   |   | (10.3 | ) |
|   | increase in tax reserves                         |   |   | 9.7    |    |   |   | 50.0   |   |   |   | 26.9 |   |
|   | tax effects of Canadian fx gain (loss)           |   |   | (11.6  | )       |   |   | 25.7   |   |   |   | (23.2 | ) |
|   | undistributed earnings from foreign subsidiaries |   |   | 12.3   |    |   |   | 22.8   |   |   |   | - |   |
|   | tax effects of China tax holiday                 |   |   | -      |    |   |   | (0.4   | )      |   |   | (18.8 | ) |
|   | Canadian research and development credits        |   |   | -      |    |   |   | (1.4   | )      |   |   | (12.2 | ) |
|   | China income tax incentives                      |   |   | -      |    |   |   | -      |   |   |   | (12.2 | ) |
|   | non-deductible stock option expense              |   |   | 0.9    |    |   |   | 3.0    |   |   |   | 1.7 |   |
|   | non-deductible expenses                          |   |   | 0.5    |    |   |   | 0.2    |   |   |   | 1.6 |   |
|   | valuation allowance on net deferred tax assets   |   |   | (33.3  | )  |   |   | 394.8  |   |   |   | - |   |
|   | other                                            |   |   | 1.8    |    |   |   | 1.4    |   |   |   | 2.8 |   |
|   |                                             |   |   | 7.9    | %       |   |   | 464.3  | %      |   |   | (11.2 | )% |

----

|   | (dollars in thousands)                           |   | 2010   |    |   | 2009   |   |
|--------|--------------------------------------------------|--------|--------|---------|--------|--------|--------|
|   | deferred tax assets:                             |   |   |    |   |   |   |
|   | accounts receivable                              |   | $      | 623     |   |   |   | 676 |   |
|   | inventories                                      |   |   | 1,525   |   |   |   | 2,044 |   |
|   | compensation                                     |   |   | 980     |   |   |   | 703 |   |
|   | liabilities and other                            |   |   | 531     |   |   |   | 599 |   |
|   | alternative minimum tax credit                   |   |   | 1,320   |   |   |   | 1,403 |   |
|   | property, plant and equipment (1)                |   |   | 1,522   |   |   |   | 1,847 |   |
|   | loss carryforwards - U.S.                        |   |   | 24,511  |   |   |   | 27,316 |   |
|   | loss carryforwards - foreign                     |   |   | 10      |   |   |   | 19 |   |
|   | valuation allowances                             |   |   | (22,553 | )      |   |   | (27,170 | ) |
|   | total deferred tax assets                        |   |   | 8,469   |   |   |   | 7,437 |   |
|   | deferred tax liabilities:                        |   |   |    |   |   |   |   |   |
|   | property, plant and equipment (2)                |   |   | (2,280  | )      |   |   | (1,922 | ) |
|   | undistributed earnings from foreign subsidiaries |   |   | -       |   |   |   | (1,332 | ) |
|   | unrecognized tax benefits - U.S.                 |   |   | (6,259  | )      |   |   | (4,990 | ) |
|   | other                                            |   |   | (438    | )      |   |   | (113 | ) |
|   | total deferred tax liabilities                   |   |   | (8,977  | )      |   |   | (8,357 | ) |
|   | Net deferred tax liability                       |   | $      | (508    | )      |   |   | (920 | ) |

| (1)     | Pertains to the company’s operations located in China. |
|-----------------------------|--------------------------------------------------------------|

| (2)     | Pertains to the company’s operations located in the U.S. and Canada. |
|-----------------------------|----------------------------------------------------------------------------|

----

----

|   | (dollars in thousands)                      |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|---------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | beginning balance                           |   | $      | 8,254  |   |   |   | 4,802  |   |   |   | 3,409 |   |
|   | increases from prior period tax positions   |   |   | 1,940  |   |   |   | 1,119  |   |   |   | 1,329 |   |
|   | decreases from prior period tax positions   |   |   | (59    | )      |   |   | (210   | )      |   |   | (92 | ) |
|   | increases from current period tax positions |   |   | -      |   |   |   | 2,543  |   |   |   | 156 |   |
|   | ending balance                              |   | $      | 10,135 |   |   |   | 8,254  |   |   |   | 4,802 |   |

| 12. | LONG-TERM DEBT AND LINES OF CREDIT |
|-----|------------------------------------|

|   |                                            |   | May 2, |   |   | May 3, |   |
|--------|-------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   | (dollars in thousands)                          |   | 2010   |   |   | 2009   |   |
|   | unsecured senior term notes - Bodet & Horst |   | $      | 11,000 |   |   |   | 11,000 |   |
|   | unsecured term notes - prior                    |   |   | -      |   |   |   | 4,694 |   |
|   | canadian government loan                        |   |   | 687    |   |   |   | 674 |   |
|   |                                            |   |   | 11,687 |   |   |   | 16,368 |   |
|   | current maturities of long-term debt            |   |   | (196   | )      |   |   | (4,764 | ) |
|   | long-term debt, less current maturities         |   | $      | 11,491 |   |   |   | 11,604 |   |

----

----

| 13. | CAPITAL LEASE OBLIGATION |
|-----|--------------------------|

| 14. | COMMITMENTS AND CONTINGENCIES |
|-----|-------------------------------|

----

----

| 15. | STOCK-BASED COMPENSATION |
|-----|--------------------------|

|   |                     |   | 2010   |   |   | 2009   |   |           | 2008   |   |
|--------|--------------------------|--------|--------|--------|--------|--------|--------|----------------|--------|--------|
|   | Risk-free interest rate  |   |   | -      |   |   |   | 2.52% - 4.23   | %      |   |   | 4.92% -5.09 | % |
|   | Dividend yield           |   |   | -      |   |   |   | 0.00           | %      |   |   | 0.00 | % |
|   | Expected volatility      |   |   | -      |   |   |   | 66.18% - 68.71 | %      |   |   | 38.59% - 65.74 | % |
|   | Expected term (in years) |   |   | -      |   |   |   | 8              |   |   |   | 2 - 8 |   |

----

|   |                     |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   | Risk-free interest rate  |   |   | 3.21   | %      |   |   | 3.77   | %      |   |   | 4.56 | % |
|   | Dividend yield           |   |   | 0.00   | %      |   |   | 0.00   | %      |   |   | 0.00 | % |
|   | Expected volatility      |   |   | 69.06  | %      |   |   | 64.12  | %      |   |   | 66.28 | % |
|   | Expected term (in years) |   |   | 10     |   |   |   | 10     |   |   |   | 8 |   |

|   |                       |   |   |     |   | 2010      |   |   |   |   |   | 2009      |   |   |   |   |   | 2008      |   |
|--------|----------------------------|--------|--------|----------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|
|   |                       |   |   |     |   | Weighted- |   |   |   |   |   | Weighted- |   |   |   |   |   | Weighted- |   |
|   |                       |   |   |     |   | Average   |   |   |   |   |   | Average   |   |   |   |   |   | Average   |   |
|   |                       |   |   |     |   | Exercise  |   |   |   |   |   | Exercise  |   |   |   |   |   | Exercise  |   |
|   |                       |   | Shares |     |   | Price     |   |   | Shares |   |   | Price     |   |   | Shares |   |   | Price     |   |
|   | outstanding at beginning   |   |   |     |   |      |   |   |   |   |   |      |   |   |   |   |   |      |   |
|   | of year                    |   |   | 735,765  |   |      | $      | 5.85   |   |   |   | 792,765   |   |   | $      | 6.19   |   |      |   | 926,000 |   |   | $ | 7.22 |   |
|   | granted                    |   |   | 6,000    |   |      |   | 5.79   |   |   |   | 71,000    |   |   |   | 4.02   |   |      |   | 145,500 |   |   |   | 8.81 |   |
|   | exercised                  |   |   | (144,916 | )      |      |   | 4.64   |   |   |   | (4,500    | )      |   |   | 4.56   |   |      |   | (78,736 | ) |   |   | 5.84 |   |
|   | canceled/expired           |   |   | (98,000  | )      |      |   | 7.56   |   |   |   | (123,500  | )      |   |   | 6.99   |   |      |   | (199,999 | ) |   |   | 13.04 |   |
|   | outstanding at end of year |   |   | 498,849  |   |      |   | 5.87   |   |   |   | 735,765   |   |   |   | 5.85   |   |      |   | 792,765 |   |   |   | 6.19 |   |

|   |   Options Outstanding |   | Options Exercisable |
|--------|---------------------------------|--------|---------------------|
|   | Range ofExercise Prices         |   |                | NumberOutstandingat 5/02/10 |   |   | Weighted-Avg.RemainingContractual Life |   | Weighted-Avg.Exercise Price |   |   | NumberExercisableat 5/02/10 |   |   | Weighted-Avg.Exercise Price |   |
|   | $ 1.88 - $ 1.88       |   |                |   | 40,000 |   |   | 8.7 |  years |   |   | $1.88 |   |   |   | 8,000 |   |   |   | $1.88 |   |
|   | $ 3.05 - $ 5.79       |   |                |   | 272,499 |   |   |   | 1.6 |   |   |   | $4.61 |   |   |   | 225,501 |   |   |   | $4.63 |   |
|   | $ 7.08 - $ 7.27       |   |                |   | 36,250 |   |   |   | 7.0 |   |   |   | $7.14 |   |   |   | 16,250 |   |   |   | $7.21 |   |
|   | $ 8.75 - $ 10.11      |   |                |   | 150,100 |   |   |   | 6.5 |   |   |   | $8.91 |   |   |   | 74,500 |   |   |   | $9.08 |   |
|   |                            |   |                |   | 498,849 |   |   |   | 4.0 |   |   |   | $5.87 |   |   |   | 324,251 |   |   |   | $5.71 |   |

----

----

----

|                         |   | Fair value measurements at May 2, 2010 using:                       |   |
|------------------------------|--------|---------------------------------------------------------------------|--------|
|                         |   |                                                                |   |
|                         |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |   |   |   |
|                         |   |                                                                |   |   |   |   |   |   |   |   |   |   |
| (amounts in thousands)  |   | Level 1                                                             |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                         |   |                                                                |   |   |   |   |   |   |   |   |   |   |
| Assets:                      |   |                                                                |   |   |   |   |   |   |   |   |   |   |
| Canadian Dollar Fx Contract  |   | N/A                                                                 |   |   | $ | 103 |   |   | N/A |   |   | $ | 103 |   |
| Liabilities:                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| None                         |   | N/A                                                                 |   |   | N/A |   |   | N/A |   |   | N/A |   |

----

|                         |   | Fair value measurements at May 3, 2009 using:                       |   |
|------------------------------|--------|---------------------------------------------------------------------|--------|
|                         |   |                                                                |   |
|                         |   | Quoted prices in active markets for identical assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |   |   |   |
|                         |   |                                                                |   |   |   |   |   |   |   |   |   |   |
| (amounts in thousands)  |   | Level 1                                                             |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|                         |   |                                                                |   |   |   |   |   |   |   |   |   |   |
| Assets:                      |   |                                                                |   |   |   |   |   |   |   |   |   |   |
| Canadian Dollar              |   | N/A                                                                 |   |   | $ | 20 |   |   | N/A |   |   | $ | 20 |   |
| Liabilities:                 |   |                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| None                         |   | N/A                                                                 |   |   | N/A |   |   | N/A |   |   | N/A |   |

| 17. | DERIVATIVES |
|-----|-------------|

|                                                              | (Amounts in Thousands)                       |   |
|-------------------------------------------------------------------|----------------------------------------------|--------|
|                                                              | Fair Values of Derivative Instruments As of, |   |
|                                                              | May 2, 2010                                  |   | May 3, 2009 |   |
|                                                              |                                         |   |   |   |
| Derivatives designated as hedging instruments under ASC Topic 815 | Balance Sheet Location             |   | Fair Value |   | Balance Sheet Location |   | Fair Value |   |
|                                                              |                                         |   |   |   |   |   |   |   |
| Canadian dollar foreign exchange contract                         | Other Assets                                 |   | $ | 103 |   | Other Assets |   | $ | 20 |   |

----

| Derivatives in ASC Topic 815 Net Investment Hedging Relationships |   | Amt of Gain (Loss) (net of tax) Recognized in OCI on Derivative (Effective Portion) and recorded in Other assets and Accrued Expenses  at Fair Value |   | Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |   | Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) |   | Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   | Amount of Gain (net of tax) or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) |   |
|--------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                       |   |                                                                                                                                                                                         |   |                                                                                                                                 |   |                                                                                                           |   |                                                                                                                                                                                 |   |                                                                                                                                                                             |   |
|                                                                                       |   |   2010                                                                                                                                                                             |   |  2009                                                                                                                           |   |                                                                                                           |   |   2010                                                                                                                                                                     |   |  2009                                                                                                                                                                       |   |   |   |  2010 |   |  2009 |   |
|                                                                                       |   |                                                                                                                                                                                         |   |                                                                                                                                 |   |                                                                                                           |   |                                                                                                                                                                                 |   |                                                                                                                                                                             |   |   |   |   |   |   |   |
| Canadian Dollar Foreign Exchange Contract                                             |   | $83                                                                                                                                                                                          |   | $20                                                                                                                                  |   | Other Exp                                                                                                      |   | $15                                                                                                                                                                                  |   | -                                                                                                                                                                                |   | N/A |   | - |   | - |   |
| Interest Rate Swap Agreement                                                               |   | -                                                                                                                                                                                            |   | $48                                                                                                                                  |   | Interest Exp                                                                                                   |   | -                                                                                                                                                                                    |   | $(52)                                                                                                                                                                            |   | Interest Exp |   | - |   | $(123) |   |

| 18. | NET INCOME (LOSS) PER SHARE |
|-----|-----------------------------|

| (in thousands)                                |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| weighted-average common                       |   |   |   |   |   |   |   |   |   |
|    shares outstanding, basic   |   |   | 12,709 |   |   |   | 12,651 |   |   |   | 12,624 |   |
| dilutive effect of stock-based compensation   |   |   | 348    |   |   |   | -      |   |   |   | 141 |   |
| weighted-average common                       |   |   |   |   |   |   |   |   |   |   |   |   |
|    shares outstanding, diluted |   |   | 13,057 |   |   |   | 12,651 |   |   |   | 12,765 |   |

----

| 19. | BENEFIT PLANS |
|-----|---------------|

| 20. | SEGMENT INFORMATION |
|-----|---------------------|

| (dollars in thousands)        |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| north america (excluding USA) |   | $      | 11,654 |   |   |   | 14,440 |   |   |   | 18,880 |   |
| far east and asia             |   |   | 31,856 |   |   |   | 27,509 |   |   |   | 28,465 |   |
| all other areas               |   |   | 2,546  |   |   |   | 1,699  |   |   |   | 4,000 |   |
|                          |   | $      | 46,056 |   |   |   | 43,648 |   |   |   | 51,435 |   |

----

|   | Statements of operations for the company’s operating segments are as follows: |
|--------|-------------------------------------------------------------------------------------|

| (dollars in thousands)                                                                                                       |   | 2010   |    |      | 2009   |   |    | 2008      |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|-----------|--------|--------|---------|-----------|--------|
| net sales:                                                                                                                   |   |   |    |      |   |   |    |      |   |
|     upholstery fabrics                                                                                   |   | $      | 91,568  |      |   |   | 88,542  |      |   |   | 115,982 |   |
|     mattress fabrics                                                                                     |   |   | 114,848 |      |   |   | 115,396 |      |   |   | 138,064 |   |
|                                                                                                                         |   | $      | 206,416 |      |   |   | 203,938 |      |   |   | 254,046 |   |
|                                                                                                                         |   |   |    |      |   |   |    |      |   |   |   |   |
| gross profit:                                                                                                                |   |   |    |      |   |   |    |      |   |   |   |   |
|     upholstery fabrics                                                                                   |   | $      | 15,183  |      |   |   | 7,253   |      |   |   | 12,829 |   |
|     mattress fabrics                                                                                     |   |   | 23,652  |      |   |   | 20,996  |      |   |   | 22,576 |   |
|           total segment gross profit                                       |   |   | 38,835  |      |   |   | 28,249  |      |   |   | 35,405 |   |
|     loss on impairment of equipment                                                                      |   |   | -       |      |   |   | -       |      |   |   | (289 | ) (5) |
|     restructuring related charges                                                                        |   |   | (58     | ) (1)     |   |   | (3,597  | ) (3)     |   |   | (1,957 | ) (6) |
|                                                                                                                         |   | $      | 38,777  |      |   |   | 24,652  |      |   |   | 33,159 |   |
|                                                                                                                         |   |   |    |      |   |   |    |      |   |   |   |   |
| (dollars in thousands)                                                                                                       |   |   | 2010    |      |   |   | 2009    |      |   |   | 2008 |   |
| selling, general, and administrative expenses:                                                                               |   |   |    |      |   |   |    |      |   |   |   |   |
|     upholstery fabrics                                                                                   |   | $      | 9,227   |      |   |   | 8,756   |      |   |   | 11,650 |   |
|     mattress fabrics                                                                                     |   |   | 8,178   |      |   |   | 7,749   |      |   |   | 8,457 |   |
|     unallocated corporate                                                                                |   |   | 5,400   |      |   |   | 3,225   |      |   |   | 3,797 |   |
|           total segment selling, general, and administrative               |   |   |    |      |   |   |    |      |   |   |   |   |
|            expenses                                                   |   |   | 22,805  |      |   |   | 19,730  |      |   |   | 23,904 |   |
|     restructuring related charges                                                                        |   |   | -       |      |   |   | 21      |  (3) |   |   | 69 |  (6) |
|                                                                                                                         |   | $      | 22,805  |      |   |   | 19,751  |      |   |   | 23,973 |   |
|                                                                                                                         |   |   |    |      |   |   |    |      |   |   |   |   |
| Income (loss) from operations:                                                                                               |   |   |    |      |   |   |    |      |   |   |   |   |
|     upholstery fabrics                                                                                   |   | $      | 5,956   |      |   |   | (1,503  | )         |   |   | 1,180 |   |
|     mattress fabrics                                                                                     |   |   | 15,474  |      |   |   | 13,247  |      |   |   | 14,118 |   |
|           total segment income from operations                             |   |   | 21,430  |      |   |   | 11,744  |      |   |   | 15,298 |   |
|     unallocated corporate expenses                                                                       |   |   | (5,400  | )         |   |   | (3,225  | )         |   |   | (3,797 | ) |
|     loss on impairment of equipment                                                                      |   |   | -       |      |   |   | -       |      |   |   | (289 | ) (5) |
|     restructuring credit (expense) and related charges                                                   |   |   | 312     |  (2) |   |   | (13,089 | ) (4)     |   |   | (2,912 | ) (7) |
|           total income (loss) from operations                              |   |   | 16,342  |      |   |   | (4,570  | )         |   |   | 8,300 |   |
|                   interest expense |   |   | (1,314  | )         |   |   | (2,359  | )         |   |   | (2,975 | ) |
|                   interest income  |   |   | 116     |      |   |   | 89      |      |   |   | 254 |   |
|                   other expense    |   |   | (828    | )         |   |   | (43     | )         |   |   | (736 | ) |
|          income (loss) before income taxes                                      |   | $      | 14,316  |      |   |   | (6,883  | )         |   |   | 4,843 |   |

| (1) | The $58 restructuring related charge represents $108 for other operating costs associated with closed plant facilities, offset by a credit of $50 for inventory markdowns. These charges relate to the upholstery fabrics segment. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The $312 restructuring credit and related charges represent a credit of $186 for employee termination benefits, a credit of $170 for sales proceeds received on equipment with no carrying value, a credit of $50 for inventory markdowns, a credit of $14 for lease termination and other exit costs, offset by a charge of $108 for other operating costs associated with closed plant facilities.  Of this total credit, a charge of $58 was recorded to cost of sales and a credit of $370 was recorded to restructuring credit in the 2010 Consolidated Statement of Operations. These charges relate to the upholstery fabrics segment. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | The $3.6 million restructuring related charge represents $3.5 million for inventory markdowns and $119 for other operating costs associated with closed plant facilities. The $21 restructuring related charge represents other operating costs associated with closed plant facilities. These charges relate to the upholstery fabrics segment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The $13.1 million represents $8.0 million for write-downs of equipment and buildings, $3.5 million for inventory markdowns, $786 for employee termination benefits, $728 for lease termination and other exit costs, and $140 for other operating costs associated with closed plant facilities. Of this total charge, $3.6 million was recorded in cost of sales, $21 was recorded in selling, general, and administrative expenses, and $9.5 million was recorded in restructuring expense in the 2009 Consolidated Statement of Operations. These charges relate to the upholstery fabrics segment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | The $289 represents impairment losses on older and existing equipment that is being replaced by newer and more efficient equipment. This impairment loss pertains to the mattress fabrics segment. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The $1.9 million restructuring related charge represents $1.0 million for inventory markdowns and $954 for other operating costs associated with closed plant facilities. The $69 restructuring related charge represents other operating costs associated with closed plant facilities. These charges relate to the upholstery fabrics segment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | The $2.9 million represents $1.0 million for inventory markdowns, $1.0 million for other operating costs associated with closed plant facilities, $533 for lease termination and other exit costs, $503 for write-downs of buildings and equipment, $189 for asset movement costs, $23 for employee termination benefits, and a credit of $362 for sales proceeds received on equipment with no carrying value. Of this total charge $1.9 million was recorded in cost of sales, $69 was recorded in selling, general, and administrative expenses, and $886 was recorded in restructuring expense in the 2008 Consolidated Statement of Operations. These charges relate to the upholstery fabrics segment. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (dollars in thousands)                                                                                     |   | 2010   |    |       | 2009   |   |   | 2008       |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|---------|------------|--------|--------|--------|------------|--------|
| segment assets                                                                                             |   |   |    |       |   |   |   |       |   |
|    mattress fabrics                                                                         |   |   |    |       |   |   |   |       |   |
|        current assets (8)                                               |   | $      | 22,307  |       |   |   | 21,823 |       |   |   | 27,572 |   |
|        assets held for sale                                             |   |   | 34      |       |   |   | 20     |       |   |   | 35 |   |
|        non-compete agreements, net                                      |   |   | 843     |       |   |   | 1,164  |       |   |   | 789 |   |
|        goodwill                                                         |   |   | 11,462  |       |   |   | 11,593 |       |   |   | 4,114 |   |
|        property, plant, and equipment                                   |   |   | 26,720  |  (9)  |   |   | 23,674 |  (10) |   |   | 21,687 |  (11) |
|             total mattress fabrics assets      |   | $      | 61,366  |       |   |   | 58,274 |       |   |   | 54,197 |   |
|                                                                                                       |   |   |    |       |   |   |   |       |   |   |   |   |
|    upholstery fabrics                                                                       |   |   |    |       |   |   |   |       |   |   |   |   |
|        current assets (8)                                               |   | $      | 23,517  |       |   |   | 20,271 |       |   |   | 34,895 |   |
|        assets held for sale                                             |   |   | 89      |       |   |   | 1,189  |       |   |   | 792 |   |
|        property, plant, and equipment                                   |   |   | 989     |  (12) |   |   | -      |  (13) |   |   | 11,214 |  (14) |
|             total upholstery fabrics assets    |   | $      | 24,595  |       |   |   | 21,460 |       |   |   | 46,901 |   |
|             total segment assets               |   |   | 85,961  |       |   |   | 79,734 |       |   |   | 101,098 |   |
|                                                                                                       |   |   |    |       |   |   |   |       |   |   |   |   |
| non-segment assets                                                                                         |   |   |    |       |   |   |   |       |   |   |   |   |
|      cash and cash equivalents                                                    |   |   | 18,295  |       |   |   | 11,797 |       |   |   | 4,914 |   |
|      short-term investments                                                       |   |   | 3,023   |       |   |   | -      |       |   |   | - |   |
|      assets held for sale                                                         |   |   | -       |       |   |   | -      |       |   |   | 4,783 |   |
|      income taxes receivable                                                      |   |   | 728     |       |   |   | 210    |       |   |   | 438 |   |
|      deferred income taxes                                                        |   |   | 474     |       |   |   | 54     |       |   |   | 33,810 |   |
|      other current assets                                                         |   |   | 1,698   |       |   |   | 1,264  |       |   |   | 1,328 |   |
|      property, plant, and equipment                                               |   |   | 694     |  (15) |   |   | 579    |  (15) |   |   | 38 |  (15) |
|      other assets                                                                 |   |   | 1,725   |       |   |   | 1,656  |       |   |   | 1,620 |   |
|             total assets                       |   | $      | 112,598 |       |   |   | 95,294 |       |   |   | 148,029 |   |
|                                                                                                       |   |   |    |       |   |   |   |       |   |   |   |   |
| capital expenditures (16):                                                                                 |   |   |    |       |   |   |   |       |   |   |   |   |
|     mattress fabrics                                                                   |   | $      | 6,600   |       |   |   | 2,747  |       |   |   | 4,425 |   |
|     upholstery fabrics                                                                 |   |   | 481     |       |   |   | 400    |       |   |   | 2,458 |   |
|     unallocated corporate                                                              |   |   | 316     |       |   |   | 13     |       |   |   | 45 |   |
|                                                                                                       |   | $      | 7,397   |       |   |   | 3,160  |       |   |   | 6,928 |   |
|                                                                                                       |   |   |    |       |   |   |   |       |   |   |   |   |
| depreciation expense                                                                                       |   |   |    |       |   |   |   |       |   |   |   |   |
|     mattress fabrics                                                                   |   | $      | 3,458   |       |   |   | 3,542  |       |   |   | 3,443 |   |
|     upholstery fabrics                                                                 |   |   | 552     |       |   |   | 1,080  |       |   |   | 2,105 |   |
|             total segment depreciation expense |   |   | 4,010   |       |   |   | 4,622  |       |   |   | 5,548 |   |
|     accelerated depreciation – upholstery fabrics                                |   |   | -       |       |   |   | 2,090  |       |   |   | - |   |
|                                                                                                       |   | $      | 4,010   |       |   |   | 6,712  |       |   |   | 5,548 |   |

|   | 8) | Current assets represent accounts receivable and inventory. |
|--------|----|-------------------------------------------------------------|

|   | 9) | The $26.7 million at May 2, 2010, represents property plant, and equipment located in the U.S. of $18.8 million and located in Canada of $7.9 million. The increase in this segment’s property plant, plant, and equipment balance at May 2, 2010 compared with May 3, 2009 is primarily due to fiscal 2010 capital spending of $6.6 million, offset by depreciation expense of $3.5 million. The $26.7 million does not include corporate allocations of property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabric segments are included in the corporate property, plant and equipment balance of $694. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10) | The $23.7 million at May 3, 2009, represents property plant, and equipment located in the U.S. of $16.4 million and located in Canada of $7.3 million. The increase in this segment’s property, plant, and equipment balance at May 3, 2009 compared with April 27, 2008 is primarily due to the acquisition of the knitted mattress fabrics operation of Bodet & Horst (note 2) and equipment purchased under a capital lease (note 13). The $23.7 million does not include corporate allocations of property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabric segments are included in the corporate property, plant, and equipment balance of $579. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 11) | The $21.7 million at April 27, 2008, represents property, plant, and equipment located in the U.S. of $13.1 million, located in Canada of $8.4 million, and corporate allocations of $168. The corporate allocations of $168 at April 27, 2008 represent property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabric segments. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12) | The $989 at May 2, 2010 represents property, plant, and equipment located in the U.S. of $887 and China of $102. The increase in this segment’s property plant, plant, and equipment balance at May 2, 2010 compared with May 3, 2009 is primarily due to the reclassification of assets with a carrying value of $699 from assets held for sale to held and used (note 4) |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 13) | The upholstery fabrics segment does not have a property, plant, and equipment balance as of May 3, 2009 due to impairment charges incurred in fiscal 2009 (note 3) and classification of property, plant, and equipment to assets held for sale. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 14) | The $11.2 million at April 27, 2008 represents property, plant, and equipment located in China of $9.0 million, located in the U.S. of $1.7 million, and corporate allocations of $501. The corporate allocations of $501 at April 27, 2008 represent property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabric segments. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 15) | The $694 and $579 balance at May 2, 2010 and May 3, 2009, represents property, plant, and equipment associated with unallocated corporate departments and corporate departments shared by both the mattress and upholstery fabric segments. Property, plant, and equipment associated with corporate departments shared by both the mattress and upholstery fabrics segments were not allocated due to explanation at 13) above. The $38 at April 27, 2008, represents property, plant, and equipment associated with unallocated corporate departments. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 16) | Capital expenditure amounts are stated on an accrual basis. See Consolidated Statement of Cash Flows for capital expenditure amounts on a cash basis. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21. | STATUTORY RESERVES |
|-----|--------------------|

----

| 22. | COMPREHENSIVE INCOME (LOSS) |
|-----|-----------------------------|

| (dollars in thousands)                              |   | 2010   |   |   | 2009   |   |    | 2008   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|
| net income (loss)                                   |   | $      | 13,188 |   |   |   | (38,842 | )      |   |   | 5,385 |   |
|                                                |   |   |   |   |   |   |    |   |   |   |   |   |
|  gain (loss) on cash flow hedges, net of taxes |   |   | 83     |   |   |   | 68      |   |   |   | (44 | ) |
|                                                |   | $      | 13,271 |   |   |   | (37,774 | )      |   |   | 5,341 |   |

----

----

| SELECTED QUARTERLY DATA (UNAUDITED) |   |        |        |        |        |        |        |        |        |
|-------------------------------------|--------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|-------------|
|                                |   |        |        |        |        |        |        |        |        |   |
|                                |   |        | fiscal      | fiscal      | fiscal      | fiscal      | fiscal      | fiscal      | fiscal      | fiscal |
|                                |   |        | 2010        | 2010        | 2010        | 2010        | 2009        | 2009        | 2009        | 2009 |
| (amounts in thousands)              |   | 4th quarter | 3rd quarter | 2nd quarter | 1st quarter | 4th quarter | 3rd quarter | 2nd quarter | 1st quarter |
| INCOME (LOSS) STATEMENT DATA        |   |        |        |        |        |        |
|                    | net sales                                          | $      |           57,243                                       |           53,980                                       |           49,716                                       |           45,478                                       |           47,762                                       |           44,592                                       |           52,263                                       |           59,321                                       |
|-------------------------|----------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                    | cost of sales                                      |   |           45,843                                       |           43,323                                       |           40,582                                       |           37,891                                       |           39,408                                       |           38,843                                       |           49,115                                       |           51,919                                       |
|                    | gross profit                                       |   |           11,400                                       |           10,657                                       |             9,134                            |             7,587                            |             8,354                            |             5,749                            |             3,148                            |             7,402                            |
|                    | selling, general and administrative expenses       |   |             6,090                            |             6,435                            |             5,385                            |             4,895                            |             5,252                            |             4,676                            |             4,439                            |             5,384                            |
|                    | restructuring (credit) expense                     |   |                (52)           | 26                                                                                                       | (184)                                                                                                    | (158)                                                                                                    |                  33 | 402                                                                                                      | 8,634                                                                                                    | 402                                                                                                      |
|                    | income (loss) from operations                      |   |             5,362                            |             4,196                            |             3,933                            |             2,850                            |             3,069                            |                671            |           (9,925)                                      |             1,616                            |
|                    | interest expense                                   |   |                288            |                327            |                342            |                357            |                620            |                646            |                663            |                431            |
|                    | interest income                                    |   |                (36)           |                (52)           |                (16)           |                (12)           |                (14)           |                (20)           |                (21)           |                (34)           |
|                    | other expense (income)                             |   |                114            |                  96 |                103            |                514            |                251            |                  28 |              (250)                      |                  14 |
|                    | income (loss) before income taxes                  |   |             4,996                            |             3,825                            |             3,504                            |             1,991                            |             2,212                            |                  17 |         (10,317)                                                 |             1,205                            |
|                    | income taxes                                       |   |              (436)                      |                825            |                625            |                115            |                517            |                467            |           30,551                                       |                424            |
|                    | net income (loss)                                  | $      |             5,432                            |             3,000                            |             2,879                            |             1,876                            |             1,695                            |              (450)                      |         (40,868)                                                 |                781            |
|                    | depreciation                                       | $      |                968            |                990            |             1,119                            |                933            |                957            |             1,033                            |             3,465                            |             1,258                            |
|                    | weighted average shares outstanding                |   |           12,801                                       |           12,713                                       |           12,671                                       |           12,653                                       |           12,653                                       |           12,653                                       |           12,650                                       |           12,648                                       |
|                    | weighted average shares outstanding,               |   |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |
|                    |     assuming dilution          |   |           13,200                                       |           13,074                                       |           12,852                                       |           12,751                                       |           12,694                                       |           12,653                                       |           12,650                                       |           12,736                                       |
| PER SHARE DATA          |                                               |   |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |
|                    | net income (loss) per share - basic                | $      |               0.42                 |               0.24                 |               0.23                 |               0.15                 |               0.13                 |             (0.04)                           |             (3.23)                           |               0.06                 |
|                    | net income (loss) per share - diluted              |   |               0.41                 |               0.23                 |               0.22                 |               0.15                 |               0.13                 |             (0.04)                           |             (3.23)                           |               0.06                 |
|                    | book value                                         |   |               4.83                 |               4.40                 |               4.13                 |               3.91                 |               3.76                 |               3.61                 |               3.68                 |               6.90                 |
| BALANCE SHEET DATA      |                                               |   |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |
|                    | operating working capital (3)                      | $      |           22,979                                       |           25,610                                       |           21,624                                       |           20,687                                       |           23,503                                       |           27,011                                       |           33,896                                       |           35,482                                       |
|                    | property, plant and equipment, net                 |   |           28,403                                       |           26,431                                       |           24,795                                       |           24,013                                       |           24,253                                       |           24,763                                       |           26,802                                       |           33,950                                       |
|                    | total assets                                       |   |         112,598                                                  |         106,508                                                  |           98,780                                       |           92,411                                       |           95,294                                       |           97,856                                       |         110,927                                                  |         142,790                                                  |
|                    | capital expenditures                               |   |             2,966                            |             2,655                            |             1,076                            |                700            |                463            |                  53 |                372            |             2,272                            |
|                    | long-term debt and lines of credit (1)             |   |           11,687                                       |           16,409                                       |           16,431                                       |           16,435                                       |           16,368                                       |           28,113                                       |           32,186                                       |           21,358                                       |
|                    | shareholders' equity                               |   |           63,047                                       |           56,924                                       |           53,278                                       |           50,176                                       |           48,031                                       |           46,124                                       |           46,507                                       |           87,244                                       |
|                    | capital employed (2)                               |   |           53,416                                       |           54,318                                       |           50,134                                       |           51,130                                       |           52,602                                       |           58,428                                       |           70,171                                       |         102,250                                                  |
| RATIOS & OTHER DATA |                                               |   |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |
|                    | gross profit margin                                |   | 19.9%                                                                                                    | 19.7%                                                                                                    | 18.4%                                                                                                    | 16.7%                                                                                                    | 17.5%                                                                                                    | 12.9%                                                                                                    | 6.0%                                                                                                     | 12.5%                                                                                                    |
|                    | operating income (loss) margin                     |   |                 9.4      |                 7.8      |                 7.9      |                 6.3      |                 6.4      |                 1.5      |             (19.0)                           |                 2.7      |
|                    | net income (loss) margin                           |   |                 9.5      |                 5.6      |                 5.8      |                 4.1      |                 3.5      |               (1.0)                |             (78.2)                           |                 1.3      |
|                    | effective income tax rate                          |   |               (8.7)                |               21.6                 |               17.8                 |                 5.8      |               23.4                 |  N.M.                                                                                               |           (296.1)                                      |               35.2                 |
|                    | long-term debt-to-total capital employed ratio (1) |   | 21.9                                                                                                     | 30.2                                                                                                     | 32.8                                                                                                     | 32.1                                                                                                     | 31.1                                                                                                     | 48.1                                                                                                     | 45.9                                                                                                     | 20.9                                                                                                     |
|                    | operating working capital turnover (3)             |   |                 9.0      |                 8.3      |                 7.4      |                 6.8      |                 6.4      |                 6.2      |                 6.1      |                 6.0      |
|                    | days sales in receivables                          |   |                  31 |                  33 |                  31 |                  26 |                  34 |                  27 |                  33 |                  31 |
|                    | inventory turnover                                 |   |                 7.5      |                 7.0      |                 7.5      |                 6.7      |                 6.4      |                 6.0      |                 5.1      |                 5.9      |
| STOCK DATA              |                                               |   |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |
|                    | stock price                                        |   |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |                                                                                                     |
|                    | high                                               | $      |             16.98                            |             13.01                            |               6.98                 |               6.64                 |               4.85                 |               3.57                 |               7.57                 |               7.91                 |
|                    | low                                                |   |             11.13                            |               5.78                 |               5.25                 |               3.50                 |               1.85                 |               1.30                 |               2.84                 |               6.10                 |
|                    | close                                              |   |             11.94                            |             13.01                            |               5.75                 |               6.59                 |               4.40                 |               1.88                 |               2.88                 |               6.15                 |
|   | daily average trading volume (shares) |   |             232.2 |               56.8 |               17.4 |               14.1 |               12.5 |               27.5 |               20.4 |               16.8 |
|--------|---------------------------------------|--------|-------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|
| (1) | Long-term debt includes long-term and current maturities of long-term debt and lines of credit.                                                                                          |   |   |   |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| (2) | Capital employed includes long-term and current maturities of long-term debt, lines of credit, and shareholders' equity, offset by cash and cash equivalents and short-term investments. |
| (3) | Operating working capital for this calculation is accounts receivable and inventories, offset by accounts payable                                                                        |   |

----

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A(T).  CONTROLS AND PROCEDURES

----

ITEM 9B.  OTHER INFORMATION

----

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

ITEM 11.  EXECUTIVE COMPENSATION

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

----

| Plan Category                                        | Number of securities to be issued upon exercise of outstanding options, warrants and rights  | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a))  |
|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                      | (a)                                                                                               | (b)                                                                         | (c)                                                                                                                                              |
| Equity compensationplans approved by security holders     | 538,849                                                                                           | $5.87                                                                       | 802,000                                                                                                                                          |
| Equity compensationplans not approved by security holders | -                                                                                                 | -                                                                           | -                                                                                                                                                |
| Total                                                     | 538,849                                                                                           | $5.87                                                                       | 802,000                                                                                                                                          |

ITEM 13.  CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

----

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

DOCUMENTS FILED AS PART OF THIS REPORT

|                                                      | Page of Annual |
|-----------------------------------------------------------|----------------|
|                                                      | Report on      |
| Item                                                      | Form 10-K      |
|                                                      |           |
| Reports of Independent Registered Public Accounting Firms | 60             |
|                                                      |           |
| Consolidated Balance Sheets – May 2, 2010 and       |           |
|    May 3, 2009                             | 61             |
|                                                      |           |
| Consolidated Statements of Operations -                   |           |
|    for the years ended May 2, 2010,        |           |
|    May 3, 2009 and April 27, 2008          | 62             |
|                                                      |           |
| Consolidated Statements of Shareholders’ Equity -   |           |
|    for the years ended May 2, 2010,        |           |
|    May 3, 2009 and April 27, 2008          | 63             |
|                                                      |           |
| Consolidated Statements of Cash Flows -                   |           |
|    for the years ended May 2, 2010,        |           |
|    May 3, 2009 and April 27, 2008          | 64             |
|                                                      |           |
| Notes to Consolidated Financial Statements                | 65             |

Exhibits

|   | 3(i) | Articles of Incorporation of the company, as amended, were filed as Exhibit 3(i) to the company’s Form 10-Q for the quarter ended July 28, 2002, filed September 11, 2002 (Commission File No. 001-12597), and are incorporated herein by reference. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3(ii) | Restated and Amended Bylaws of the company, as amended November 12, 2007, were filed as Exhibit 3.1 to the company’s Form 8-K dated November 12, 2007, and are incorporated herein by reference. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.1 | 1993 Stock Option Plan was filed as Exhibit 10(o) to the company’s Form 10-K for the year ended May 2, 1993 (Commission File No. 000-12781), filed on July 29, 1993, and is incorporated herein by reference.  (*) |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.2 | Amendments to 1993 Stock Option Plan dated September 26, 2000.  These amendments were filed as Exhibit 10(rr) to the company’s Form 10-Q for the quarter ended October 29, 2000 (Commission File No. 001-12597), and are incorporated herein by reference.  (*) |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.3 | 2002 Stock Option Plan was filed as Exhibit 10(a) to the company’s Form 10-Q for the quarter ended January 26, 2003 (Commission File No. 001-12597), filed on March 12, 2003, and is incorporated herein by reference.  (*) |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.4 | Amended and Restated Credit Agreement dated as of August 23, 2002 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10(a) to the company’s Form10-Q for the quarter ended July 28, 2002, filed September 11, 2002 (Commission File No. 001-12597), and is incorporated herein by reference. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.5 | First Amendment to Amended and Restated Credit Agreement dated as of March 17, 2003 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as exhibit 10(p) to the company’s Form 10-K for the year ended April 27, 2003, filed on July 28, 2003 (Commission File No. 001-12597), and is incorporated here by reference. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.6 | Second Amendment to Amended and Restated Credit Agreement dated as of June 3, 2003 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as exhibit 10(q) to the company’s Form 10-K for the year ended April 27, 2003, filed on July 28, 2003 (Commission File No. 001-12597), and is incorporated here by reference. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.7 | Third Amendment to Amended and Restated Credit Agreement dated as of August 23, 2004 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10 to the Current Report on Form 8-K dated August 26, 2004 (Commission File No. 001-12597), and is incorporated herein by reference. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.8 | Fourth Amendment to Amended and Restated Credit Agreement dated as of December 7, 2004 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10(b) to the company’s Form 10-Q for the quarter ended October 31, 2004 (Commission File No. 001-12597), filed on December 9, 2004, and is incorporated here by reference. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.9 | Fifth Amendment to Amended and Restated Credit Agreement dated as of February 18, 2005 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 99(c) to Current Report on Form 8-K dated February 18, 2005 (Commission File No. 001-12597), and is incorporated herein by reference. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.10 | Sixth Amendment to Amended and Restated Credit Agreement dated as of August 30, 2005 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 99(c) to Current Report on Form 8-K dated August 30, 2005, and is incorporated herein by reference. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.11 | Seventh Amendment to Amended and Restated Credit Agreement dated as of December 7, 2005 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10(c) to the company’s Form 10-Q for the quarter ended October 30, 2005, filed December 9, 2005, and is incorporated herein by reference. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.12 | Eighth Amendment to Amended and Restated Credit Agreement dated as of January 29, 2006 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10(a) to the company’s Form 10-Q for the quarter ended January 29, 2006, filed March 10, 2006, and is incorporated herein by reference. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.13 | Ninth Amendment to Amended and Restated Credit Agreement dated as of July 20, 2006 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10.1 to the company’s Form 8-K filed July 25, 2006, and is incorporated herein by reference. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.14 | Tenth Amendment to Amended and Restated Credit Agreement dated as of January 22, 2007 among Culp, Inc. and Wachovia Bank, National Association, as Agent and as Bank, was filed as Exhibit 10.3 to the company’s Form 8-K filed January 26, 2007, and is incorporated herein by reference. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.15 | Written description of compensation arrangement for non-employee directors. (*) |
|--------|-------|---------------------------------------------------------------------------------|

|   | 10.16 | Form of stock option agreement for options granted to executive officers pursuant to 2002 Stock Option Plan. This agreement was filed as Exhibit 10.1 to the company’s Form 10-Q for the quarter ended July 29, 2007, and is incorporated herein by reference. (*) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.17 | 2007 Equity Incentive Plan was filed as Annex A to the company’s 2007 Proxy Statement, filed on August 14, 2007, and is incorporated herein by reference.  (*) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.18 | Form of stock option agreement for options granted to non-employee directors pursuant to the 2007 Equity Incentive Plan. This agreement was filed as Exhibit 10.2 to the company’s Form 10-Q for the quarter ended October 28, 2007, and incorporated herein by reference. (*) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.19 | Form of change in control and noncompetition agreement. This agreement was filed as Exhibit 10.3 to the company’s Form 10-Q for the quarter ended October 28, 2007, and incorporated herein by reference. (*) |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.20 | Twelfth Amendment to Amended and Restated Credit Agreement dated as of December 27, 2007 among Culp, Inc. and Wachovia Bank, National Association as Agent and as Bank, filed as Exhibit 10.1 to the company’s Form 8-K dated December 27, 2007, and incorporated herein by reference. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.21 | Form of stock option agreement for options granted to executive officers pursuant to the 2007 Equity Incentive Plan, filed as Exhibit 10.1 to the company’s Form 10-Q dated September 10, 2008, and incorporated herein by reference. (*) |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.22 | Written Summary of Culp Home Fashions Division Management Incentive Plan, filed as Exhibit 10.2 to the company’s Form 10-Q dated September 10, 2008, and incorporated herein by reference. (*) |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.23 | Written Summary of Culp Inc. Corporate Management Incentive Plan, filed as Exhibit 10.3 to the company’s Form 10-Q dated September 10, 2008, and incorporated herein by reference. (*) |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.24 | Note Purchase Agreement among Culp, Inc., Mutual of Omaha Insurance Company and United Omaha Insurance Company dated August 11, 2008, filed as Exhibit 10.2 to the company’s Form 8-K dated August 11, 2008, and incorporated herein by reference. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.25 | Thirteenth Amendment to Amended and Restated Credit Agreement dated as of November 3, 2008 among Culp, Inc. and Wachovia Bank, National Association as Agent and as Bank, filed as Exhibit 10.1 to the company’s Form 8-K dated November 6, 2008, and incorporated herein by reference. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.26 | Restricted Stock Agreement between the company and Franklin N. Saxon on January 7, 2009 pursuant to the 2007 Equity Incentive Plan, filed as Exhibit 10.6 to the company’s Form 10-Q dated March 13, 2009, and incorporated herein by reference. (*) |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.27 | Restricted Stock Agreement between the company and Robert G. Culp, IV on January 7, 2009 pursuant to the 2007 Equity Incentive Plan, filed as Exhibit 10.7 to the company’s Form 10-Q dated March 13, 2009, and incorporated herein by reference. (*) |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 10.28 | Restricted Stock Agreement between the company and Kenneth R. Bowling on January 7, 2009 pursuant to the 2007 Equity Incentive Plan, filed as Exhibit 10.8 to the company’s Form 10-Q dated March 13, 2009, and incorporated herein by reference. (*) |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.29 | Form of restricted stock unit agreement for restricted stock units granted pursuant to the 2007 Equity Incentive Plan, filed as Exhibit 10.10 to the company’s Form 10-Q dated March 13, 2009, and incorporated herein by reference. (*) |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.30 | Culp, Inc. Deferred Compensation Plan Scheduled for Selected Key Employees, filed as Exhibit 10.36 to the company’s Form 10-K dated July 16, 2009, and incorporated herein by reference. (*) |   |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

|   | 10.31 | Fourteenth Amendment to Amended and Restated Credit Agreement dated as of July 15, 2009 among Culp, Inc. and Wachovia Bank, National Association as Agent and as Bank, filed as Exhibit 10.37 to the company’s Form 10-K dated July 16, 2009, and incorporated herein by reference. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21 | List of subsidiaries of the company |
|--------|----|-------------------------------------|

|   | 23 | Consent of Independent Registered Public Accounting Firm in connection with the registration statements of Culp, Inc. on Form S-8 (File Nos. 33-13310, 33-37027, 33-80206, 33-62843, 333-27519, 333-59512, 333-59514, 333-101805, 333-147663), dated March 20, 1987, September 18, 1990, June 13, 1994, September 22, 1995, May 21, 1997, April 26, 2001, April 25, 2001, December 12, 2002, and November 27, 2007 and on Form S-3 and S-3/A (File No. 333-141346). |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 24(a) | Power of Attorney of Patrick B. Flavin, dated July 15, 2010 |
|--------|-------|-------------------------------------------------------------|

|   | 24(b) | Power of Attorney of Kenneth R. Larson, dated July 15, 2010 |
|--------|-------|-------------------------------------------------------------|

|   | 24(c) | Power of Attorney of Kenneth W. McAllister, dated July15, 2010 |
|--------|-------|----------------------------------------------------------------|

|   | 31(a) | Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-----------------------------------------------------------------------------------------------------|

|   | 31(b) | Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-----------------------------------------------------------------------------------------------------|

|   | 32(a) | Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-------------------------------------------------------------------------------------------------|

|   | 32(b) | Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-------------------------------------------------------------------------------------------------|

Financial Statement Schedules:

----

SIGNATURES

|   | CULP, INC. |                          |
|--------|------------|-------------------------------|
|   | By: /s/    | Franklin N. Saxon             |   |
|   |       | Franklin N. Saxon             |   |
|   |       | Chief Executive Officer       |   |
|   |       | (principal executive officer) |   |

| /s/    | Robert G. Culp, III                  | /s/    | Kenneth R. Larson *           |
|--------|--------------------------------------|--------|-------------------------------|
|   | Robert G. Culp, III                  |   | Kenneth R. Larson             |
|   | (Chairman of the Board of Directors) |   | (Director)                    |
|   |                                 |   |                          |
| /s/    | Franklin N. Saxon                    | /s/    | Kenneth R. Bowling            |
|   | Franklin N. Saxon                    |   | Kenneth R. Bowling            |
|   | Chief Executive Officer              |   | Chief Financial Officer       |
|   | (principal executive officer)        |   | (principal financial officer) |
|   | (Director)                           |   |                          |
|   |                                 |   |                          |
| /s/    | Patrick B. Flavin*                   | /s/    | Thomas B. Gallagher, Jr.      |
|   | Patrick B. Flavin                    |   | Thomas B. Gallagher, Jr.      |
|   | (Director)                           |   | Corporate Controller          |
|   | (principal accounting officer)       |   |                          |
|   |                                 |   |                          |
| /s/    | Kenneth W. McAllister*               |   |                          |
|   | Kenneth W. McAllister                |   |                          |
|   | (Director)                           |   |                          |

| * | By Kenneth R. Bowling, Attorney-in-Fact, pursuant to Powers of Attorney filed with the Securities and Exchange Commission. |
|---|----------------------------------------------------------------------------------------------------------------------------|

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EXHIBIT INDEX

|   | 10.15 | Written description of compensation arrangement for non-employee directors. |
|--------|-------|-----------------------------------------------------------------------------|

|   | 21 | List of subsidiaries of the company |
|--------|----|-------------------------------------|

|   | 23 | Consent of Independent Registered Public Accounting Firm in connection with the registration statements of Culp, Inc. on Form S-8 (File Nos. 33-13310, 33-37027, 33-80206, 33-62843, 333-27519, 333-59512, 333-59514,  333-101805, 333-147663), dated March 20, 1987, September 18, 1990, June 13, 1994, September 22, 1995, May 21, 1997, April 26, 2001, April 25, 2001,  December 12, 2002, and November 27, 2007 and on Form S-3 and S-3/A (File No. 333-141346). |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 24(a) | Power of Attorney of Patrick B. Flavin, dated July 15, 2010 |
|--------|-------|-------------------------------------------------------------|

|   | 24(b) | Power of Attorney of Kenneth R. Larson, dated July 15, 2010 |
|--------|-------|-------------------------------------------------------------|

|   | 24(c) | Power of Attorney of Kenneth W. McAllister, dated July 15, 2010 |
|--------|-------|-----------------------------------------------------------------|

|   | 31(a) | Certification of Principal Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-----------------------------------------------------------------------------------------------------|

|   | 31(b) | Certification of Principal Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-----------------------------------------------------------------------------------------------------|

|   | 32(a) | Certification of Chief Executive Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-------------------------------------------------------------------------------------------------|

|   | 32(b) | Certification of Chief Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |
|--------|-------|-------------------------------------------------------------------------------------------------|

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