P R E S S R E L E A S E
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For more information, contact:
William M. Lowe, Jr.
Vice President
Chief Operating Officer
Chief Financial Officer
(336) 316-5664
UNIFI ANNOUNCES FIRST QUARTER RESULTS
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GREENSBORO, N.C. - OCTOBER 26, 2006 - Unifi, Inc. (NYSE:UFI) today released
operating results for its first quarter ended September 24, 2006.
Net income for the current quarter, including discontinued operations,
was a net loss of $11.1 million or $0.21 per share compared a net loss of $3.1
million or $0.06 per share for the prior September quarter, which included $1.9
million of income from discontinued operations due to a gain on the sale of the
Company's property located in Ireland. Net income from continuing operations
for the current quarter was a net loss of $11.0 million or $0.21 per share
compared to a net loss of $4.8 million or $0.09 per share for the prior
September quarter.
Net sales from continuing operations for the current September quarter
of $169.9 million were down $13.2 million or 7.2% compared to net sales of
$183.1 million for the prior year September quarter.
"We were near the low-end of our forecast for the quarter, as our
results were impacted by several unexpected items. First, rising raw material
prices above our expectations resulted in a $1.5 million LIFO charge to
earnings. Second, we increased our bad debt reserve $1.0 million more than
usual as we reviewed our risks in certain customers, and the unexpected
continued increase in raw material in September slowed volumes rather
dramatically in the month of September in both the U.S. and China as fabric
mills worked through existing inventories rather than pay the higher prices for
polyester," said Bill Lowe, Chief Operating Officer and Chief Financial Officer
for Unifi. "While gasoline prices fell in September, our prices continued to
increase. Raw material prices are expected to ease during the December quarter,
and we've already seen a decline in October. Soft retail sales, especially in
home upholstery, continued to have an effect on our volumes as well. Even with
these challenges, Unifi posted an improvement in gross margin for the current
quarter as compared to the prior year September quarter."
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UNIFI ANNOUNCES FIRST QUARTER RESULTS - PAGE 2
Total debt at the end of the current quarter was $204.0 million, which
is a reduction of $60.6 million over the $264.6 million in debt at the end of
the prior year September quarter. Cash-on-hand at the end of the current
September quarter was $29.5 million, down from the $90.7 million cash-on-hand
at the end of the prior year September quarter but essentially unchanged since
June 2006.
Brian Parke, Chairman and CEO of Unifi said, "While our polyester
segment was negatively affected this quarter by several factors, our nylon
segment continues to benefit from our previous consolidation efforts. Nylon
volumes were slightly up from the June 2006 quarter and coupled with
consolidation savings resulted in an improvement over last year September of
$0.8 million in operating profit. While we expect polyester volumes to return
slowly during the current quarter and raw material prices to decline, we expect
this next quarter to look very similar to our quarter ended this September from
a volume perspective."
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(R) - all-in-one performance yarns, Sorbtek(R),
A.M.Y.(R), Mynx(R) UV, Repreve(R), Reflexx(R), MicroVista(R) and Satura(R).
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 FIRST QUARTER RESULTS - PAGE 3
UNIFI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Except Per Share Data)
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FOR THE QUARTERS ENDED
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SEPTEMBER 24, 2006 SEPTEMBER 25, 2005
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Net sales $ 169,944 $ 183,102
Cost of sales 160,904 174,699
Selling, general & administrative expenses 11,289 10,487
Provision for bad debts 1,610 527
Interest expense 6,065 4,777
Interest income (444) (1,281)
Other (income) expense, net (479) (853)
Equity in (earnings) losses of unconsolidated affiliates 1,949 (1,824)
Write down of long-lived assets 1,200 1,500
Restructuring charges -- 29
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Loss from continuing operations before
income taxes and extraordinary item (12,150) (4,959)
Benefit from income taxes (1,133) (152)
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Loss from continuing operations before
extraordinary item (11,017) (4,807)
Income (loss) from discontinued operations, net of tax (36) 1,929
Extraordinary loss - net of taxes of $0 -- (208)
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Net loss $ (11,053) $ (3,086)
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Earnings (losses) per common share (basic and diluted):
Net loss - continuing operations $ (0.21) $ (0.09)
Net income (loss) - discontinued operations -- 0.03
Extraordinary loss -- --
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Net loss $ (0.21) $ (0.06)
========= =========
Average basic and diluted shares outstanding 52,198 52,127
-continued-
UNIFI ANNOUNCES FIRST QUARTER RESULTS - PAGE 4
UNIFI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
SEPTEMBER 24, 2006 JUNE 25, 2006
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(Unaudited)
ASSETS
Cash and cash equivalents $ 29,516 $ 35,317
Receivables, net 90,958 93,236
Inventories 115,513 116,018
Deferred income taxes 12,774 11,739
Assets held for sale 15,419 15,419
Other current assets 7,319 9,229
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Total current assets 271,499 280,958
Property, plant and equipment 229,709 239,696
Investments in unconsolidated affiliates 187,444 190,217
Other noncurrent assets 22,805 21,766
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$711,457 $732,637
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 55,788 $ 68,916
Accrued expenses 25,525 23,869
Income taxes payable 2,619 2,303
Current maturities of long-term debt
and other current liabilities 5,563 6,330
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Total current liabilities 89,495 101,418
Long-term debt and other liabilities 203,980 202,405
Deferred income taxes 44,710 45,861
Shareholders' equity 373,272 382,953
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$711,457 $732,637
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UNIFI ANNOUNCES FIRST QUARTER RESULTS - PAGE 5
UNIFI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In Thousands)
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FOR THE QUARTERS ENDED
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SEPTEMBER 24, 2006 SEPTEMBER 25, 2005
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Cash and cash equivalents at beginning of period $ 35,317 $ 105,621
Operating activities:
Net loss (11,053) (3,086)
Adjustments to reconcile net loss to net cash used in
continuing operating activities:
(Income) loss from discontinued operations 36 (1,929)
Net (income) loss of unconsolidated equity affiliates, net of
distributions 1,949 (694)
Depreciation 11,124 12,357
Amortization 276 321
Net (gain) loss on asset sales 240 (319)
Non-cash write down of long-lived assets 1,200 1,500
Non-cash portion of restructuring charges -- 29
Deferred income tax (2,597) (1,200)
Provision for bad debts 1,610 527
Other 807 1,647
Change in assets and liabilities, excluding
effects of acquisitions and foreign currency
adjustments (7,944) (10,146)
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Net cash used in continuing operating activities (4,352) (993)
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Investing activities:
Capital expenditures (1,480) (3,903)
Acquisition -- (15,331)
Investment in foreign restricted assets -- 167
Collection of notes receivable 116 110
Change in restricted cash -- 2,766
Proceeds from sale of capital assets 3 2,239
Return of capital from equity affiliates 229 --
Other -- (197)
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Net cash used in investing activities (1,132) (14,149)
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Financing activities:
Payment of long-term debt -- (24,407)
Other (417) 461
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Net cash used in financing activities (417) (23,946)
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Cash flows of discontinued operations:
Operating cash flow 63 574
Investing cash flow -- 22,937
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Net cash provided by discontinued operations 63 23,511
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Effect of exchange rate changes on cash and cash
equivalents 37 700
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Net decrease in cash and cash equivalents (5,801) (14,877)
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Cash and cash equivalents at end of period $ 29,516 $ 90,744
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UNIFI ANNOUNCES FIRST QUARTER RESULTS - PAGE 6
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,
the continuation and magnitude of the Company's common stock repurchase program
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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