Unifi (UFI) 8-K Unifi Announces Fourth Quarter Results

Exhibit 99.1

For more information, contact:
Ronald L. Smith
Vice President
Chief Financial Officer
(336) 316-5545

Unifi Announces Fourth Quarter Results

     GREENSBORO, N.C. — July 31, 2008— Unifi, Inc. (NYSE:UFI) today released operating results for its fiscal fourth quarter ended June 29, 2008.

     Net income for the current quarter, including discontinued operations, was $771 thousand or $0.01 per share compared to a net loss of $74.2 million or $1.23 per share for the prior June quarter. Net sales for the quarter were $189.6 million compared to net sales of $185.3 million for the prior year June quarter.

     The Company also announced a proposed agreement to sell its 50% ownership interest in Yihua Unifi Fibre Industry Co. Ltd (“YUFI”) to its partner, Sinopec Yizheng Chemical Fiber Co., Ltd. (“YCFC”), pending final negotiation and execution of definitive agreements and Chinese regulatory approvals. While there can be no assurances of completion, the Company expects to close the transaction in the second quarter of fiscal 2009. Net income for the June quarter was negatively impacted by $8.8 million in impairment charges and operating losses of YUFI. The Company intends to continue servicing customers in Asia, through the formation of Unifi Textiles Suzhou Co., Ltd. (“UTSC”), a wholly-owned, China-based subsidiary that will develop, source, sell and service premium value-added yarns. The Company expects UTSC to begin operations during the second quarter of fiscal 2009.

     Net income in the quarter was also impacted by a $3.2 million discontinued operation benefit from the pending liquidation of the Company’s former operations in the United Kingdom and $2.1 million of gains related to the sale of non-productive assets.

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Unifi Announces Fourth Quarter Results — page 2

     Net income for the 2008 fiscal year was a net loss of $16.2 million or $0.27 per share compared to a net loss of $115.8 million or $2.06 per share for the prior fiscal year. Net sales for the 2008 fiscal year were $713.3 million compared to net sales of $690.3 million for the prior fiscal year.

     “The supply-chain management and operational improvements made throughout the fiscal year, as well as continued growth in our premium value-added products, have driven our improved performance over the last two quarters,” said Ron Smith, Chief Financial Officer for Unifi.  “Our sourcing strategy for raw materials enabled the Company to partially contend with escalating raw materials costs, which saw double digit increases during the quarter. While domestic consumption contracted as a result of the prolonged economic slowdown in many of our market segments, certain portions of our business remained stable due to the increased volume of synthetic apparel sourced through the CAFTA region.”

     Cash-on-hand at the end of the June quarter was $20.2 million, which is a decrease from the $26.2 million cash-on-hand at the end of the March quarter. Total cash and cash equivalents at the end of June, including restricted cash, were $38.5 million compared to $44.1 million as of June 2007. Total long-term debt at the end of the June quarter was $201.8 million compared to $218.4 million as of the March 2008 quarter and $234.6 million as of the June 2007 year-end.

     Bill Jasper, President and CEO of Unifi, said, “Although the economic slowdown and rapidly rising raw material prices have dampened the positive impacts, we continue to be pleased with the fundamental improvements in our core business. As we move into our new fiscal year, we will continue to address our supply chain management and operational discipline, and focus our efforts on driving growth of premium value-added products. Integral to our strategy will be continued investment in the development and commercialization of innovative products, such as Repreve^®, and the establishment of

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Unifi Announces Fourth Quarter Results — page 3

UTSC to service the profitable opportunities in the value-added segments of the Asian yarn markets. The positive improvements in our underlying operations over the last few quarters, and the new business model being launched in China are specific examples of how the leadership team is successfully responding to challenges in the market place while also seeking to maximize profitable growth opportunities, both domestically and abroad.”

     Unifi, Inc. (NYSE: UFI) is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. The Company adds value to the supply chain and enhances consumer demand for its products through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages. Key Unifi brands include, but are not limited to: aio^® — all-in-one performance yarns, Sorbtek^®, A.M.Y.^®, Mynx^® UV, Repreve^®, Reflexx^®, MicroVista^® and Satura^®. Unifi’s yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications. For more information about Unifi, visit http://www.unifi.com.

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Financial Statements to Follow

Unifi Announces Fourth Quarter Results — page 4

UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Except Per Share Data)

	For the Quarters Ended						For the Years Ended
	June 29, 2008			June 24, 2007			June 29, 2008			June 24, 2007
Net sales	$	189,605		$	185,267		$	713,346		$	690,308
Cost of sales		171,768			170,704			662,764			651,911
Selling, general & administrative expenses		11,030			12,032			47,572			44,886
Provision for bad debts		62			4,302			214			7,174
Interest expense		6,458			6,732			26,056			25,518
Interest income		(679	)		(970	)		(2,910	)		(3,187	)
Other (income) expense, net		(2,340	)		129			(6,427	)		(2,576	)
Equity in (earnings) losses of unconsolidated affiliates		4,179			(181	)		3,265			4,292
Restructuring charges (recoveries)		(611	)		(157	)		4,027			(157	)
Write down of long-lived assets		—			659			2,780			16,731
Write down of investment in unconsolidated affiliates		1,826			84,742			6,331			84,742
Loss from continuing operations before income taxes		(2,088	)		(92,725	)		(30,326	)		(139,026	)
Provision (benefit) for income taxes		345			(17,531	)		(10,949	)		(21,769	)
Loss from continuing operations		(2,433	)		(75,194	)		(19,377	)		(117,257	)
Income from discontinued operations, net of tax		3,204			1,002			3,226			1,465
Net income (loss)	$	771		$	(74,192	)	$	(16,151	)	$	(115,792	)
Income (loss) per common share (basic and diluted):
Net loss — continuing operations	$	(0.04	)	$	(1.24	)	$	(0.32	)	$	(2.09	)
Net income — discontinued operations		0.05			0.01			0.05			0.03
Net income (loss) — basic and diluted	$	0.01		$	(1.23	)	$	(0.27	)	$	(2.06	)
Weighted average basic and diluted shares outstanding		60,629			60,537			60,577			56,184

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Unifi Announces Fourth Quarter Results — page 5

UNIFI, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited) (Amounts in Thousands)

	June 29, 2008		June 24, 2007
Assets
Cash and cash equivalents	$	20,248	$	40,031
Receivables, net		103,272		93,989
Inventories		122,890		132,282
Deferred income taxes		2,357		9,923
Assets held for sale		4,124		7,880
Restricted cash		18,246		4,036
Other current assets		13,007		11,973
Total current assets		284,144		300,114
Property, plant and equipment		177,299		209,955
Investments in unconsolidated affiliates		70,562		93,170
Intangible assets, net		38,965		42,290
Other noncurrent assets		20,561		20,424
	$	591,531	$	665,953
Liabilities and Shareholders’ Equity
Accounts payable	$	44,553	$	61,620
Accrued expenses		25,531		28,278
Income taxes payable		681		247
Current maturities of long-term debt and other current liabilities		9,805		11,198
Total current liabilities		80,570		101,343
Long-term debt and other liabilities		204,366		236,149
Deferred income taxes		926		23,507
Shareholders’ equity		305,669		304,954
	$	591,531	$	665,953

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Unifi Announces Fourth Quarter Results — page 6

UNIFI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Amounts in Thousands)

	For the Twelve-Months Ended
	June 29, 2008			June 24, 2007
Cash and cash equivalents at beginning of year	$	40,031		$	35,317
Operating activities:
Net loss		(16,151	)		(115,792	)
Adjustments to reconcile net loss to net cash provided by continuing operating activities:
Income from discontinued operations		(3,226	)		(1,465	)
(Earnings) losses of unconsolidated equity affiliates, net of distributions		7,727			7,029
Depreciation		36,931			41,594
Amortization		4,643			3,264
Stock-based compensation expense		1,015			1,691
Deferred compensation expense, net		(665	)		1,619
Net gain on asset sales		(4,003	)		(1,225	)
Non-cash restructuring charges (recoveries), net		4,027			(157	)
Non-cash write down of long-lived assets		2,780			16,731
Non-cash write-down of investment in unconsolidated affiliates		6,331			84,742
Deferred income tax benefit		(15,066	)		(23,776	)
Provision for bad debts		214			7,174
Other		(8	)		(866	)
Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments		(10,876	)		(9,943	)
Net cash provided by continuing operating activities		13,673			10,620
Investing activities:
Capital expenditures		(12,809	)		(7,840	)
Acquisitions		—			(42,222	)
Return of capital from equity affiliates		—			3,630
Proceeds from the sale of equity affiliate		8,750			—
Proceeds from sale of capital assets		17,821			5,099
Change in restricted cash		(14,209	)		(4,036	)
Collection of notes receivable		250			1,266
Net proceeds from split dollar life insurance surrenders		—			1,757
Split dollar life insurance premiums		(216	)		(217	)
Other		(1,148	)		(943	)
Net cash used in investing activities		(1,561	)		(43,506	)
Financing activities:
Borrowing of long-term debt		147,000			133,000
Payment of long-term debt		(181,273	)		(97,000	)
Other		(733	)		(134	)
Net cash (used in) provided by financing activities		(35,006	)		35,866
Cash flows of discontinued operations:
Operating cash flow		(586	)		277
Net cash (used in) provided by discontinued operations		(586	)		277
Effect of exchange rate changes on cash and cash equivalents		3,697			1,457
Net increase (decrease) in cash and cash equivalents		(19,783	)		4,714
Cash and cash equivalents at end of period	$	20,248		$	40,031

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Unifi Announces Fourth Quarter Results — page 7

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statements within the meaning of federal security laws about Unifi, Inc.’s (the “Company”) financial condition and results of operations that are based on management’s current expectations, estimates and projections about the markets in which the Company operates, as well as management’s beliefs and assumptions. Words such as “expects,” “anticipates,” “believes,” “estimates,” variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to, availability, sourcing and pricing of raw materials, pressures on sales prices and volumes due to competition and economic conditions, reliance on and financial viability of significant customers, operating performance of joint ventures, alliances and other equity investments, technological advancements, employee relations, changes in construction spending, capital expenditures and long-term investments (including those related to unforeseen acquisition opportunities), continued availability of financial resources through financing arrangements and operations, outcomes of pending or threatened legal proceedings, negotiation of new or modifications of existing contracts for asset management and for property and equipment construction and acquisition, regulations governing tax laws, other governmental and authoritative bodies’ policies and legislation, and proceeds received from the sale of assets held for disposal. In addition to these representative factors, forward-looking statements could be impacted by general domestic and international economic and industry conditions in the markets where the Company competes, such as changes in currency exchange rates, interest and inflation rates, recession and other economic and political factors over which the Company has no control. Other risks and uncertainties may be described from time to time in the Company’s other reports and filings with the Securities and Exchange Commission.

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