EX-99 2 ex99-1_form8k102606.txt EXHIBIT 99.1 P R E S S R E L E A S E ------------------------------------------------------------------------------- For more information, contact: William M. Lowe, Jr. Vice President Chief Operating Officer Chief Financial Officer (336) 316-5664 UNIFI ANNOUNCES FIRST QUARTER RESULTS ------------------------------------------------------------------------------- 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." -continued- 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. ### 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) ------------------------------------------- FOR THE QUARTERS ENDED ------------------------------------------- SEPTEMBER 24, 2006 SEPTEMBER 25, 2005 ------------------ ------------------ 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 --------- --------- Loss from continuing operations before income taxes and extraordinary item (12,150) (4,959) Benefit from income taxes (1,133) (152) --------- --------- 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) --------- --------- Net loss $ (11,053) $ (3,086) ========= ========= 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 -- -- --------- --------- 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 ------------------ ------------- (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 -------- -------- 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 -------- -------- $711,457 $732,637 ======== ======== 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 -------- -------- 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 -------- -------- $711,457 $732,637 ======== ========
-continued- UNIFI ANNOUNCES FIRST QUARTER RESULTS - PAGE 5
UNIFI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) ---------------------------------------------- FOR THE QUARTERS ENDED ---------------------------------------------- SEPTEMBER 24, 2006 SEPTEMBER 25, 2005 ------------------ ------------------ 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) --------- --------- Net cash used in continuing operating activities (4,352) (993) --------- --------- 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) --------- --------- Net cash used in investing activities (1,132) (14,149) --------- --------- Financing activities: Payment of long-term debt -- (24,407) Other (417) 461 --------- --------- Net cash used in financing activities (417) (23,946) --------- --------- Cash flows of discontinued operations: Operating cash flow 63 574 Investing cash flow -- 22,937 --------- --------- Net cash provided by discontinued operations 63 23,511 --------- --------- Effect of exchange rate changes on cash and cash equivalents 37 700 --------- --------- Net decrease in cash and cash equivalents (5,801) (14,877) --------- --------- Cash and cash equivalents at end of period $ 29,516 $ 90,744 ========= =========
-continued- 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. -end-