a6336777.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549

FORM 11-K

Annual Report pursuant to Section 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2009

COMMISSION FILE NO. 1-12597

A.           Full title of the plan and the address of the plan, if different from that of the issuer named below:
 
CULP, INC.   EMPLOYEES’ RETIREMENT BUILDER PLAN
 
B.           Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

CULP, INC.
1823 EASTCHESTER DRIVE
HIGH POINT, NORTH CAROLINA 27265

There were no material changes in the Plan or the Investment Policy of the Plan.  Culp, Inc. has made no profit sharing contributions during the past five years.  The number of participants in the Plan at December 31, 2009 was 577. The Retirement Committee administers the Plan, and its members are Franklin N. Saxon, Kenneth R. Bowling, and Teresa A. Huffman, all employees of Culp, Inc.
 
 
  Financial Statements and Exhibits.  
     
  (a)  Financial Statements.  A list of all financial statements filed as part of this
 report, beginning on page 1, is set forth below:
     
  Financial Statements     Page of Report
     
  Report of Independent Registered Public Accounting Firm 1
  Statements of Net Assets Available for Benefits  2
  Statements of Changes in Net Assets Available for Benefits 3
  Notes to Financial Statements Schedule of Assets (Held at End of Year) 4
    10
  (b)  Exhibit  
     
  Exhibit 23 – Consent of Independent Registered Public 
    Accounting Firm
 
 

 
 
 

 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the plan administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
  CULP, INC. EMPLOYEES' RETIREMENT BUILDER PLAN  
     
  By:  Culp, Inc., Plan Administrator  
     
  By:  The Culp, Inc. Retirement Committee  
     
Date:  June 25, 2010    
     
    /s/ Franklin N. Saxon  
    Franklin N. Saxon  
       
    /s/ Kenneth R. Bowling  
    Kenneth R. Bowling  
       
 
  /s/ Teresa A. Huffman  
    Teresa A. Huffman  

 
 
 
 
 

 
Culp, Inc. Employees’ Retirement Builder Plan




TABLE OF CONTENTS
 

 
  Page No.
   
Report of Independent Registered Public Accounting Firm 1
   
Financial Statements  
   
2
   
3
   
4-9
   
Supplemental Schedule  
   
10
 
 
 
 

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 

To the Retirement Committee of the
Culp, Inc. Employees’ Retirement Builder Plan
High Point, North Carolina

We have audited the accompanying statements of net assets available for benefits of the Culp, Inc. Employees’ Retirement Builder Plan as of December 31, 2009 and 2008 and the related statements of changes in net assets available for benefits for the years ended December 31, 2009, 2008, and 2007.  These financial statements are the responsibility of the Plan’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  We were not engaged to perform an audit of the Plan’s internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Culp, Inc. Employees’ Retirement Builder Plan as of December 31, 2009 and 2008 and the changes in its net assets available for plan benefits for each the years ended December 31, 2009, 2008, and 2007 in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole.  The supplemental schedule of assets (held at end of year) at December 31, 2009 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974.  This supplemental schedule is the responsibility of the Plan’s management.  The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s/ Dixon Hughes PLLC

June 25, 2010
High Point, NC

 
Page 1

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2009 and 2008

 
             
ASSETS
 
2009
   
2008
 
             
Investments, at fair value (Notes C and D)
           
Registered investment companies
  $ 12,057,569     $ 10,977,998  
Common and collective trust fund
    6,019,822       6,273,107  
Culp, Inc. common stock
    3,429,896       506,309  
Money market fund
    128,813       25,493  
      21,636,100       17,782,907  
                 
Receivables
               
Employer contributions
    38,445       34,878  
Participant contributions
    61,502       56,716  
      99,947       91,594  
                 
NET ASSETS AVAILABLE FOR BENEFITS  AT FAIR VALUE
    21,736,047       17,874,501  
                 
Adjustment from fair value to contract value for fully
               
benefit-responsive investment contracts
    319,422       516,898  
                 
                 
NET ASSETS AVAILABLE
               
FOR BENEFITS
  $ 22,055,469     $ 18,391,399  

 
See accompanying notes to the financial statements.
Page 2

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Years Ended December 31, 2009, 2008 and 2007

 
                   
   
2009
   
2008
   
2007
 
                   
CHANGES IN NET ASSETS ATTRIBUTED TO:
                 
                   
Investment income (loss)
                 
Net appreciation (depreciation) in fair value of investments (Note C)
  $ 5,339,577     $ (6,475,583 )   $ 1,934,661  
                         
Contributions
                       
Employer
    453,131       549,274       620,972  
Participant
    849,473       1,014,851       1,126,849  
Direct rollovers
    22,594       27,230       4,200  
                         
Total contributions
    1,325,198       1,591,355       1,752,021  
                         
                         
Benefits paid to participants
    3,000,705       3,458,377       5,755,075  
                         
NET INCREASE (DECREASE)
    3,664,070       (8,342,605 )     (2,068,393 )
                         
NET ASSETS AVAILABLE
                       
FOR BENEFITS
                       
Beginning of year
    18,391,399       26,734,004       28,802,397  
                         
End of year
  $ 22,055,469     $ 18,391,399     $ 26,734,004  

 
See accompanying notes to the financial statements.
Page 3

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

 
 
NOTE A - DESCRIPTION OF PLAN

The following description of the Culp, Inc. Employees’ Retirement Builder Plan (the “Plan”) provides only general information.  Participants should refer to the summary plan description for a more complete description of the Plan’s provisions.

General

The Plan is a defined contribution plan covering all full-time employees of Culp, Inc. and its subsidiaries (the “Company”) who have 3 months of service and are at least 21 years of age. Employees who elect to participate in the Plan may do so in the next available payroll period. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Contributions

Each year, participants may contribute compensation, as defined in the Plan document, subject to certain Internal Revenue Code (“IRC”) limitations.  Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions.  Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans.  Participants direct the investment of their contributions into various investment options offered by the Plan.  The Plan currently offers various registered investment company funds, one common trust fund, a money market fund, and Culp, Inc. common stock as investment options for participants.  The Company makes matching contributions equal to 100% of the participant’s contribution up to the first 3% of annual compensation plus 50% of the next 2% of compensation contributed to the Plan which qualifies under safe harbor provisions. An employee who is eligible to participate in the Plan but does not either affirmatively elect to decline participation or designate a specified amount to be contributed to the Plan, is required to have their compensation reduced by 2%, which is in turn contributed into the Plan. Contributions are subject to certain limitations.

Additional profit sharing amounts may be contributed at the option of the Company.  No profit-sharing contributions were made during the years ended December 31, 2009, 2008 or 2007.

Participant Accounts

Each participant’s account is credited with the participant’s contribution and an allocation of (a) the Company’s contributions and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined.  The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting

Participants are immediately vested in their 401(k) contributions, including the matching contributions from the Company and actual earnings thereon.

 
Page 4

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

 
 
NOTE A - DESCRIPTION OF PLAN (CONTINUED)

 
Participant Loans
 
Participant loans are not permitted by the Plan.

Payment of Benefits

On termination of service due to death, disability, retirement, or other reasons as defined by the Plan, participants receive a lump-sum distribution equal to the value of the participant’s vested interest in the Plan.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements of the Plan are prepared under the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attributable for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. The Statements of Net Assets Available for Benefits presents the fair value of the investment contract, as well as the adjustment of the fully benefit-responsive investment contract from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.

Investment Valuation and Income Recognition

The Plan’s investments are stated at fair value. Purchases and sales of securities are recorded on a trade-date basis. Income from investments is reported as earned on the accrual basis.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and changes therein, and disclosures. Actual results could differ from those estimates.

Payment of Benefits

Benefits are recorded when paid.

Subsequent Events

The company has evaluated the effects subsequent events would have on the financial statements through June 25, 2010, which is the date the financial statements were available to be issued. No issues were noted which would impact the financial statements.
 
 
Page 5

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

 
NOTE C - INVESTMENTS
 
The following table presents investments that represent more than 5% of the Plan’s net assets at December 31.

      2009     2008   
 
Common and collective trust fund:
           
 
MFS Fixed Fund (1)
  $ 6,339,244     $ 6,790,005  
 
Culp, Inc. Common Stock (1)
    3,429,896       **  
 
Registered investment company funds:
               
 
MFS Value Fund (1)
    2,393,768       2,362,606  
 
MFS Total Return Fund (1)
    2,240,301       2,147,643  
 
MFS Core Growth Fund (1)
    1,538,745       1,423,590  
 
Federated Kaufman Fund
    1,019,764       **  
 
MFS International Diversification Fund (1)
    **       942,719  
 
(1)   Indicates party-in-interest
** Amount represents less than 5% of the Plan’s net assets.

The Plan’s investments (including interest and dividends and gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:

      2009       2008       2007  
                         
Common and collective trust
  $ 293,596     $ 293,474     $ 192,013  
Registered investment company funds
    2,170,799       (5,751,678 )     1,243,562  
Culp, Inc. common stock (1)
    2,875,182       (1,017,379 )     499,086  
                         
    $ 5,339,577     $ (6,475,583 )   $ 1,934,661  

NOTE D – FAIR VALUE MEASURMENTS

The Financial Accounting Standards Board (“FASB”) issued a statement that defines fair value and establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of fair value hierarchy are described as follows:
 
Level 1 – Inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date;

 
Page 6

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

 
 
NOTE D – FAIR VALUE MEASURMENTS (CONTINUED)

Level 2 –  Inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value can be determined through the use of models or other valuation methodologies; and
 
Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.
 
Registered Investment Companies

These investments are public investment vehicles valued using the Net Asset Value (NAV) provided by the administrator of the fund.  The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.  The NAV is a quoted price in an active market and classified within level 1 of the valuation hierarchy.

Common and Collective Trust Fund

This investment is a public investment vehicle valued using the NAV provided by the administrator of the fund.  The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding.  The NAV is classified within level 2 of the valuation hierarchy because the NAV’s unit price is quoted on a private market that is not active; however, the unit price is based on underlying investments which are traded on an active market.

Culp, Inc. Common Stock

This investment is valued at the closing price reported on the active market on which the individual security is traded. This investment is classified within level 1 of the valuation hierarchy.

Money Market Fund

This investment is a public investment vehicle valued using $1 for the NAV.  The money market fund is classified within level 2 of the valuation hierarchy.
 
 
Page 7

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

 
 
NOTE D – FAIR VALUE MEASURMENTS (CONTINUED)

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

 
The following table presents information about assets and liabilities measured at fair value on a recurring basis:
 
   
Fair value measurements at December 31, 2009 using:
 
       
   
Quoted prices in
 active markets
 for identical
 assets
   
Significant other
 observable inputs
   
Significant
 unobservable
 inputs
       
                         
Description 
 
Level 1
   
Level 2
   
Level 3
   
Total
 
                         
Registered investment companies
                       
Growth Funds
    2,665,016       -       -       2,665,016  
Large Cap Funds
    2,393,768       -       -       2,393,768  
Balanced Funds
    2,240,301       -       -       2,240,301  
Moderate/Conservative Allocation
    1,027,997       -       -       1,027,997  
Mid Cap Funds
    1,019,764       -       -       1,019,764  
International Funds
    955,630       -       -       955,630  
Small Cap Funds
    660,421       -       -       660,421  
Real Estate Funds
    570,379       -       -       570,379  
Bond Funds
    524,293       -       -       524,293  
Common and collective trust fund
    -       6,019,822       -       6,019,822  
Culp, Inc. common stock
    3,429,896       -       -       3,429,896  
Money market fund
    -       128,813       -       128,813  

Total
    15,487,465       6,148,635       -       21,636,100  

 

   
Fair value measurements at December 31, 2008 using:
 
       
   
Quoted prices in
 active markets
 for identical
 assets
   
Significant other
 observable inputs
   
Significant
 unobservable
 inputs
       
                         
Description 
 
Level 1
   
Level 2
   
Level 3
   
Total
 
                         
Registered investment companies
    10,977,998       -       -       10,977,998  
Common and collective trust fund
    -       6,273,107       -       6,273,107  
Culp, Inc. common stock
    506,309       -       -       506,309  
Money market fund
    -       25,493       -       25,493  

Total 
    11,484,307       6,298,600             17,782,907  

 
 
Page 8

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2009, 2008 and 2007

 
 
NOTE E - EXEMPT PARTY-IN-INTEREST TRANSACTIONS

Certain Plan investments are shares of a common and collective trust fund and registered investment companies managed by MFS Investment Management. MFS Investment Management is a trustee as defined by the Plan and, accordingly transactions in these investments qualify as party-in-interest.  Plan investments also include shares of the Company’s common stock.  Transactions in the Company’s common stock also qualify as party-in-interest.

NOTE F - PLAN TERMINATION

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.

NOTE G - TAX STATUS

The Internal Revenue Service has determined and informed the Company by a letter dated October 1, 2008 that the Plan and related trust are designed in accordance with applicable sections of the IRC.  The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan’s tax counsel believe that the Plan is designed and currently being operated in compliance with the applicable requirements of the IRC.
 
NOTE H - RISKS AND UNCERTAINTIES

The Plan invests in various investment securities.  Investment securities are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that changes could materially affect the participants’ account balances and the amounts reported in the statement of net assets available for benefits.

 
 
Page 9
 












SUPPLEMENTAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 

 
CULP, INC. EMPLOYEES’ RETIREMENT BUILDER PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
EIN: 56-1001967
PLAN NUMBER: 001
December 31, 2009

 
 
               
(e) Current
(a)
 
(b) Borrower, Lessor or Similar Party
 
(c) Description of Investment
 
(d) Cost **
 
Value
                 
*
 
MFS Fixed Fund
 
6,339,244 units
 
    -
 
$6,339,244
                 
*
 
MFS Value Fund
 
115,251 units
 
-
 
2,393,768
                 
*
 
MFS Total Return Fund
 
170,625 units
 
-
 
2,240,301
                 
*
 
MFS Core Growth Fund
 
98,828 units
 
-
 
1,538,745
                 
   
Federated Kaufman Fund
 
218,834 units
 
-
 
1,019,764
                 
*
 
MFS International Diversification Fund
79,437 units
 
-
 
955,630
                 
*
 
MFS Moderate Allocation Fund
 
62,154 units
 
-
 
743,989
                 
   
Oppenheimer Main St. Small Cap Fund
39,808 units
 
-
 
660,421
                 
   
JP Morgan U.S Real Estate Fund
 
46,791 units
 
-
 
570,379
                 
*
 
MFS Core Equity Fund
 
34,419 units
 
-
 
524,539
                 
   
Calvert Income Fund
 
33,935 units
 
-
 
524,293
                 
*
 
MFS Growth Allocation Fund
 
35,527 units
 
-
 
431,304
                 
*
 
MFS Conservative Allocation Fund
24,462 units
 
-
 
284,008
                 
*
 
MFS Aggressive Growth Allocation Fund
13,977 units
 
-
 
170,428
                 
*
 
MFS Money Market Fund
 
128,813 units
 
-
 
128,813
                 
*
 
Culp, Inc. Common Stock
 
343,677 shares
 
-
 
3,429,896
                 
               
$21,955,522
 
 
*
Indicates party-in-interest
**
Cost information omitted for participant-directed investments.
 
 
 
 
Page 10