Exhibit 99.1
For more information, contact:
Ronald L. Smith
Chief Financial Officer
(336) 316-5545
Unifi Announces Second Quarter Results
GREENSBORO, N.C. – February 5, 2009– Unifi, Inc. (NYSE:UFI) today released preliminary operating results for its second fiscal quarter ended December 28, 2008.
Net sales for the current quarter were $125.7 million, which represents a $57.7 million decrease from net sales of $183.4 million for the prior year December quarter. Net sales were negatively impacted by the reduced demand for the Company’s products caused by sharp declines in consumer spending and compounded by the related effect of excess inventory across the respective supply chains. In addition, the prior year quarter contained approximately $7 million of sales from its commodity POY facility in Kinston N.C., which ceased operations during that quarter.
For the December quarter, loss from continuing operations before taxes was $8.7 million and net loss was $9.1 million or $0.15 per share, which compares to a loss from continuing operations before taxes of $13.6 million and a net loss of $7.7 million or $0.13 per share in the prior December quarter. The prior year quarter included the negative impact of $6.3 million in restructuring and severance charges and $2.2 million of impairment charges. The decrease in current quarter results was predominately driven by the decreased demand and higher priced raw material purchased from the first fiscal quarter working its way through the Company’s inventory.
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Unifi Announces Second Quarter Results – page 2
“Retail sales in our primary end-use segments: apparel, home furnishings and automotive, were all down dramatically in the quarter, resulting in a significant buildup of inventory throughout the supply chain,” said Ron Smith, Chief Financial Officer for Unifi. “In response, brands and retailers cancelled orders and fabric mills curtailed production suddenly during the fourth quarter, which dramatically reduced demand for our products. Based on current retail sales estimates, we expect it to take an additional four to six months for this built-up inventory to completely work through the supply chain. Accordingly, we anticipate continued pressure on our sales throughout the second half of the fiscal year. We do, however, expect conversion margins and cost to improve during the second half of the fiscal year, and we anticipate continued strength in our sales to the CAFTA region as more apparel production is shifted there from Asia to reduce the overall sourcing cycle.”
Net loss for the first half of fiscal 2009 was $9.7 million or $0.16 per share compared to a net loss of $16.9 million or $0.28 per share for the same prior year period. Net sales for the first half of fiscal 2009 were $294.7 million compared to net sales of $353.9 million for the prior year period, which included approximately $19 million of sales from our now closed Kinston N.C. facility.
Cash-on-hand at the end of the December 2008 quarter was $12.6 million, a decrease of $7.8 million from the cash-on-hand at the end of the September 2008 quarter, as $6.8 million in proceeds from asset sales were offset by working capital uses, the semi-annual note interest payment and the currency effect on cash in Brazil. Total cash and cash equivalents at the end of December, including restricted cash, were $32.4 million compared to $47.7 million at the end of September. At the end of December, long-term debt was reduced to $193.7 million from $196.5 million as of the end of September.
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Unifi Announces Second Quarter Results – page 3
Bill Jasper, President and CEO of Unifi, said, “We are confident that the Company has the financial stability to withstand one of the harshest operating environments we have seen in decades and to outlast the inventory de-stocking that is taking place throughout the supply chain. We believe we have strong liquidity and a debt structure that will allow us to pursue our strategies without the undue pressure of financial maintenance covenants. Although uncertainty around the depth and duration of the recession makes it difficult to project when sales will rebound, our cost savings initiatives and the improvements already in place will allow us to weather the storm and emerge as a more competitive and more profitable Company. We will continue to invest in the development and commercialization of new products and branded premium value-added yarns during these difficult times to help capitalize on the opportunities that will arise as market conditions normalize. We are focused on aggressively improving our business fundamentals and strengthening our overall market position.”
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 www.unifi.com, or to learn more about REPREVE®, visitwww.repreve.com.
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Financial Statements to Follow
Unifi Announces Second Quarter Results — page 4
UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Except Per Share Data)
| | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | For Year To Date Periods Ended | |
| | December 28, 2008 | | | December 23, 2007 | | | December 28, 2008 | | | December 23, 2007 | |
Net sales | | $ | 125,727 | | | $ | 183,369 | | | $ | 294,736 | | | $ | 353,905 | |
Cost of sales | | | 123,415 | | | | 175,049 | | | | 278,999 | | | | 334,592 | |
Selling, general & administrative expenses | | | 9,304 | | | | 12,008 | | | | 19,849 | | | | 26,462 | |
Provision (recovery) for bad debts | | | 501 | | | | (189 | ) | | | 1,059 | | | | 65 | |
Interest expense | | | 5,748 | | | | 6,578 | | | | 11,713 | | | | 13,290 | |
Interest income | | | (680 | ) | | | (746 | ) | | | (1,593 | ) | | | (1,580 | ) |
Other (income) expense, net | | | (5,212 | ) | | | (2,192 | ) | | | (5,773 | ) | | | (3,190 | ) |
Equity in (earnings) losses of unconsolidated affiliates | | | (162 | ) | | | 21 | | | | (3,644 | ) | | | (157 | ) |
Write down of long-lived assets | | | — | | | | 2,247 | | | | — | | | | 2,780 | |
Write down of investment in unconsolidated affiliates | | | 1,483 | | | | — | | | | 1,483 | | | | 4,505 | |
Restructuring charges | | | — | | | | 4,205 | | | | — | | | | 6,837 | |
| | | | | | | | | | | | |
Loss from continuing operations before income taxes | | | (8,670 | ) | | | (13,612 | ) | | | (7,357 | ) | | | (29,699 | ) |
Provision (benefit) from income taxes | | | 614 | | | | (5,757 | ) | | | 2,499 | | | | (12,688 | ) |
| | | | | | | | | | | | |
Loss from continuing operations | | | (9,284 | ) | | | (7,855 | ) | | | (9,856 | ) | | | (17,011 | ) |
Income from discontinued operations, net of tax | | | 216 | | | | 109 | | | | 112 | | | | 77 | |
| | | | | | | | | | | | |
Net loss | | $ | (9,068 | ) | | $ | (7,746 | ) | | $ | (9,744 | ) | | $ | (16,934 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Income (loss) per common share (basic and diluted): | | | | | | | | | | | | | | | | |
Net loss — continuing operations | | $ | (0.15 | ) | | $ | (0.13 | ) | | $ | (0.16 | ) | | $ | (0.28 | ) |
Net income — discontinued operations | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Net loss — basic and diluted | | $ | (0.15 | ) | | $ | (0.13 | ) | | $ | (0.16 | ) | | $ | (0.28 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Weighted average basic and diluted shares outstanding | | | 62,030 | | | | 60,553 | | | | 61,582 | | | | 60,545 | |
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Unifi Announces Second Quarter Results – page 5
UNIFI, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
| | | | | | | | |
| | December 28, 2008 | | | June 29, 2008 | |
| | (Unaudited) | | | | | |
Assets | | | | | | | | |
Cash and cash equivalents | | $ | 12,619 | | | $ | 20,248 | |
Receivables, net | | | 68,611 | | | | 103,272 | |
Inventories | | | 127,107 | | | | 122,890 | |
Deferred income taxes | | | 1,417 | | | | 2,357 | |
Assets held for sale | | | 1,700 | | | | 4,124 | |
Restricted cash | | | 5,970 | | | | 9,314 | |
Other current assets | | | 5,330 | | | | 3,693 | |
| | | | | | |
Total current assets | | | 222,754 | | | | 265,898 | |
| | | | | | | | |
Property, plant and equipment, net | | | 162,295 | | | | 177,299 | |
Investments in unconsolidated affiliates | | | 71,094 | | | | 70,562 | |
Restricted cash | | | 13,817 | | | | 26,048 | |
Goodwill | | | 18,579 | | | | 18,579 | |
Intangible assets, net | | | 19,328 | | | | 20,386 | |
Other noncurrent assets | | | 10,841 | | | | 12,759 | |
| | | | | | |
| | $ | 518,708 | | | $ | 591,531 | |
| | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | |
Accounts payable | | $ | 28,505 | | | $ | 44,553 | |
Accrued expenses | | | 17,475 | | | | 25,531 | |
Income taxes payable | | | 41 | | | | 681 | |
Current maturities of long-term debt and other current liabilities | | | 6,313 | | | | 9,805 | |
| | | | | | |
Total current liabilities | | | 52,334 | | | | 80,570 | |
| | | | | | | | |
Long-term debt and other liabilities | | | 195,502 | | | | 204,366 | |
Deferred income taxes | | | 477 | | | | 926 | |
Shareholders’ equity | | | 270,395 | | | | 305,669 | |
| | | | | | |
| | $ | 518,708 | | | $ | 591,531 | |
| | | | | | |
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Unifi Announces Second Quarter Results – page 6
UNIFI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Amounts in Thousands)
| | | | | | | | |
| | For the Six-Months Ended | |
| | December 28, 2008 | | | December 23, 2007 | |
Cash and cash equivalents at beginning of year | | $ | 20,248 | | | $ | 40,031 | |
Operating activities: | | | | | | | | |
Net loss | | | (9,744 | ) | | | (16,934 | ) |
Adjustments to reconcile net loss to net cash used in continuing operating activities: | | | | | | | | |
Income from discontinued operations | | | (112 | ) | | | (77 | ) |
(Earnings) losses of unconsolidated equity affiliates, net of distributions | | | (1,579 | ) | | | 303 | |
Depreciation | | | 15,832 | | | | 18,850 | |
Amortization | | | 2,137 | | | | 2,324 | |
Stock-based compensation expense | | | 622 | | | | 392 | |
Deferred compensation expense (recovery), net | | | (69 | ) | | | 173 | |
Net gain on asset sales | | | (5,910 | ) | | | (1,413 | ) |
Non-cash write down of long-lived assets | | | — | | | | 2,780 | |
Non-cash write down of investment in unconsolidated affiliate | | | 1,483 | | | | 4,505 | |
Non-cash portion of restructuring charges | | | — | | | | 6,837 | |
Deferred income tax expense (benefit) | | | 35 | | | | (14,699 | ) |
Provision for bad debts | | | 1,059 | | | | 65 | |
Other | | | 256 | | | | (568 | ) |
Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments | | | (11,962 | ) | | | (8,124 | ) |
| | | | | | |
Net cash used in continuing operating activities | | | (7,952 | ) | | | (5,586 | ) |
| | | | | | |
Investing activities: | | | | | | | | |
Capital expenditures | | | (7,829 | ) | | | (3,827 | ) |
Acquisition | | | (500 | ) | | | — | |
Change in restricted cash | | | 10,118 | | | | (14,810 | ) |
Proceeds from sale of capital assets | | | 6,950 | | | | 10,560 | |
Proceeds from sale of equity affiliate | | | — | | | | 8,750 | |
Collection of notes receivable | | | — | | | | 267 | |
Return of capital from equity affiliate | | | — | | | | 234 | |
| | | | | | |
Net cash provided by investing activities | | | 8,739 | | | | 1,174 | |
| | | | | | |
Financing activities: | | | | | | | | |
Borrowings of long-term debt | | | 14,600 | | | | — | |
Payments of long-term debt | | | (20,578 | ) | | | (11,000 | ) |
Proceeds from stock option exercises | | | 3,830 | | | | — | |
Other | | | 37 | | | | (708 | ) |
| | | | | | |
Net cash used in financing activities | | | (2,111 | ) | | | (11,708 | ) |
| | | | | | |
Cash flows of discontinued operations: | | | | | | | | |
Operating cash flow | | | (162 | ) | | | (201 | ) |
| | | | | | |
Net cash used in discontinued operations | | | (162 | ) | | | (201 | ) |
| | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (6,143 | ) | | | 2,065 | |
| | | | | | |
Net decrease in cash and cash equivalents | | | (7,629 | ) | | | (14,256 | ) |
| | | | | | |
Cash and cash equivalents at end of period | | $ | 12,619 | | | $ | 25,775 | |
| | | | | | |
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Unifi Announces Second 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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