SEC Form 11-K filed by Culp Inc.

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 three months of continuous 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, pooled separate accounts, one common and collective trust fund, and Culp, Inc. common stock as investment options for participants. The Company makes matching safe harbor contributions equal to 100% of the participant’s contribution up to the first 4% of annual compensation contributed to the Plan. 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 3%, which is then contributed into the Plan’s T. Rowe Price Retirement Series.

Employees who elect to participate in the Plan are required to contribute at least 2% of their annual compensation to the Plan.

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, 2025, 2024, or 2023.

Participant Accounts

Each participant’s account is credited with the participant’s contributions and Company matching contributions, as well as allocations of (a) the Company’s profit-sharing contributions, (b) Plan earnings, and (c) Plan administrative expenses. Allocations are based on participant earnings, account balances, or specific transactions, as defined in the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE C - FAIR VALUE MEASUREMENTS

The Financial Accounting Standards Board issued a statement that defines fair value and establishes a framework for measuring fair value. This 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 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 - Quoted market prices in active markets for identical assets and liabilities,

Level 2 - Inputs other than level 1 inputs that are either directly or indirectly observable, and

Level 3 - Unobservable inputs developed using the company’s estimates and assumptions, which reflect those a market participant would use.

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. There have been no changes in the methodologies used during the years ended December 31, 2025, 2024, and 2023, respectively.

Registered Investment Companies

Valued at the daily closing price as reported by the fund. The funds held by the Plan are open-end mutual funds that are registered with the Securities and Exchange Commission. These funds are required to publish their daily net asset value (“NAV”) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded and therefore are classified within Level 1 of the fair value hierarchy.

Pooled Separate Accounts

The Plan's investments in pooled separate accounts (PSAs) are offered through variable annuity contracts issued by Empower. Each PSA invests exclusively in a corresponding T. Rowe Price Retirement Series target-date portfolio. These portfolios are diversified across a broad mix of T. Rowe Price equity and fixed-income mutual funds, including U.S. equity, international equity, fixed income, inflation-protected securities, and short-term investments. Asset allocations follow a through-retirement glidepath, becoming more conservative as the target retirement date approaches and continuing to adjust beyond the target year.

The PSAs are measured at fair value and are classified within Level 2 of the fair value hierarchy since their valuation is based on observable inputs, including the NAV of the underlying T. Rowe Price Retirement Series mutual funds and observable market pricing for the securities held within those funds. The PSAs do not have quoted prices for identical assets in active markets and therefore do not qualify for Level 1 classification. No significant unobservable inputs are used in determining fair value; accordingly, Level 3 classification is not applicable.

NOTE D - EXEMPT PARTY-IN-INTEREST TRANSACTIONS

During the years ended December 31, 2025, 2024, and 2023, Plan investments include shares of the Company’s common stock and therefore, transactions associated with the Company’s common stock qualify as party-in-interest.

Empower Retirement, a wholly owned subsidiary of Great West Life & Annuity Insurance Company has served as Plan administrator during the years ended December 31, 2025, 2024, and 2023.

NOTE E – ADMINISTRATIVE EXPENSES

Administrative fees paid directly by the Plan to Raymond James Financial Services for investment advisory and other administrative services were $92,302, $86,499, and $82,400 during the years ended December 31, 2025, 2024, and 2023, respectively.

Administrative fees paid directly by the Plan to GreerWalker LLP for audit services were $28,600, $27,000, and $25,000 during the years ended December 31, 2025, 2024, and 2023, respectively.

Administrative fees paid directly by the Plan to Empower Annuity Insurance Company of America were $21,375, $13,950, and $12,594 during the years ended December 31, 2025, 2024, and 2023, respectively.

No administrative fees were paid directly by the Plan to Smith Leonard PLLC for audit services during the year ended December 31, 2025. Administrative fees paid directly by the Plan to Smith Leonard PLLC for audit services were $1,000 and $2,000 during the years ended December 31, 2024, and 2023, respectively.

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 Plan has adopted a prototype plan document sponsored by the Plan’s trustee. The Internal Revenue Service has determined and informed the Plan’s trustee by a letter dated November 11, 2022, that the Plan is designed and in compliance with the applicable requirements of the IRC. The Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and, therefore, believe that the Plan is qualified, and the related trust is tax-exempt.

GAAP requires management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the taxing authorities. The Plan has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2025, and 2024, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements.

The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits of any tax periods in progress.

NOTE H - RISKS AND UNCERTAINTIES

The Plan invests in various registered investment companies, pooled separate accounts, and a common and collective trust fund. Registered investment companies, pooled separate accounts, and the common and collective trust fund are exposed to various risks, such as market volatility and asset allocation, interest rates, credit, fluctuations in foreign currency exchange rates, geopolitical events, inflation, and unemployment. Due to the level of risk associated with the Plan's investments it is at least reasonably possible that changes in the values of the Plan's investments will occur in the near term and that such changes could materially affect the participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.