EX-99.1 2 g05197exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

For more information, contact:
William M. Lowe, Jr.
Vice President
Chief Operating Officer
Chief Financial Officer
(336) 316-5664
Unifi Announces Second Quarter Results
     GREENSBORO, N.C. – January 25, 2007 – Unifi, Inc. (NYSE:UFI) today released operating results for its second quarter ended December 24, 2006.
     Net income for the current quarter, including discontinued operations, was a net loss of $16.5 million or $0.32 per share compared to a net loss of $3.8 million or $0.07 per share for the prior December quarter. Net income from continuing operations for the current quarter was a net loss of $16.4 million or $0.32 per share compared to a net loss of $3.4 million or $0.06 per share for the prior December quarter.
     Net sales from continuing operations for the current December quarter of $156.9 million were down $34.2 million or 17.9% compared to net sales of $191.1 million for the prior year December quarter. Relatively stable sales of the Company’s nylon and textured, dyed and value-added polyester yarns in the quarter were offset by significant declines in partially oriented yarn, or POY, which were a result of the supply chain working through existing inventories.
     Bill Lowe, Chief Operating Officer and CFO for Unifi, said, “As we announced on December 7, 2006, earnings were negatively impacted by the lingering effect of higher priced POY inventory and a significant decline in POY volume during the quarter. The inventory adjustments that took place throughout the supply chain during the December quarter appear largely complete, and our POY and texturing plants are now running at expected capacities. We anticipate operating at these higher run rates and also expect to achieve mix related benefits as well during the March quarter. The transition of the Dillon manufacturing facility occurred on January 1, 2007 and appeared seamless to our customers. The facility is running at expected capacities, and we are now looking forward to improving our combined operations during this calendar year.”
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Unifi Announces Second Quarter Results – page 2
     Net income for the first half of the Company’s fiscal year 2007, including discontinued operations, was a net loss of $27.6 million or $0.53 per share compare compared to a net loss of $6.9 million or $0.13 per share for the prior year first half. Net income from continuing operations for the first half of fiscal 2007 was a net loss of $27.4 million or $0.53 per share compared to a net loss of $8.2 million or $0.16 per share for the prior year first half. Net sales for the first half of fiscal year 2007 of $326.8 were down $47.4 million or 12.7% compared to net sales of $374.2 million for the first half of fiscal year 2006.
     Total debt at the end of the current quarter was $206.1 million, which is a reduction of $58.0 million over the $264.1 million in debt at the end of the prior year December quarter, as a result of the Company’s refinancing activity in May 2006. Cash-on-hand at the end of the current December quarter was $35.6 million, which is up slightly from the September 2006 quarter of $29.5 million.
     Brian Parke, Chairman and CEO for Unifi said, “We continue to make excellent progress with our operations in China. We have many products now being sampled by critical new customers and larger scale trials are being requested. On the cost side, we have made changes that will reduce our operating costs approximately $2 million in the coming year, which will help us reach our goals. The momentum is building from the market side, and downstream opportunities are beginning to turn into solid orders.”
     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 Second Quarter Results – page 3
UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Amounts in Thousands Except Per Share Data)
                                 
    For the Quarters Ended     For the Six Months Ended  
    December 24, 2006     December 25, 2005     December 24, 2006     December 25, 2005  
Net sales
   $ 156,895     $ 191,117     $ 326,839     $ 374,219  
Cost of sales
     154,275       181,747       315,179       356,446  
Selling, general & administrative expenses
     10,388       10,461       21,677       20,948  
Provision (recovery) for bad debts
     (1,012 )     604       598       1,131  
Interest expense
     6,111       4,681       12,176       9,457  
Interest income
     (1,066 )     (2,189 )     (1,510 )     (3,470 )
Other (income) expense, net
     236       303       (243 )     (549 )
Equity in (earnings) losses of unconsolidated affiliates
     2,876       (18 )     4,825       (1,842 )
Write down of long-lived assets
     2,002       —       3,202       1,500  
Restructuring charges
     —       —       —       29  
 
                        
Loss from continuing operations before income taxes and extraordinary item
     (16,915 )     (4,472 )     (29,065 )     (9,431 )
Benefit from income taxes
     (540 )     (1,079 )     (1,673 )     (1,231 )
 
                        
Loss from continuing operations before extraordinary item
     (16,375 )     (3,393 )     (27,392 )     (8,200 )
Income (loss) from discontinued operations, net of tax
     (167 )     (583 )     (203 )     1,346  
Extraordinary gain — net of tax of $0
     —       208       —       —  
 
                        
Net loss
   $ (16,542 )   $ (3,768 )   $ (27,595 )   $ (6,854 )
 
                        
 
                                
Earnings (losses) per common share (basic and diluted):
                                
Net loss — continuing operations
   $ (0.32 )   $ (0.06 )   $ (0.53 )   $ (0.16 )
Net income (loss) - discontinued operations
     —       (0.01 )     —       0.03  
Extraordinary gain
     —       —       —       —  
 
                        
Net loss — basic and diluted
   $ (0.32 )   $ (0.07 )   $ (0.53 )   $ (0.13 )
 
                        
 
                                
Weighted average basic and diluted shares outstanding
     52,198       52,127       52,198       52,127  
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Unifi Announces Second Quarter Results – page 4
UNIFI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Amounts in Thousands)
                 
    December 24, 2006     June 25, 2006  
Assets
                
Cash and cash equivalents
   $ 35,612     $ 35,317  
Receivables, net
     77,486       93,236  
Inventories
     115,386       116,018  
Deferred income taxes
     11,982       11,739  
Assets held for sale
     15,419       15,419  
Other current assets
     11,287       9,229  
 
            
Total current assets
     267,172       280,958  
 
                
Property, plant and equipment
     219,461       239,696  
Investments in unconsolidated affiliates
     184,210       190,217  
Other noncurrent assets
     22,766       21,766  
 
            
 
   $ 693,609     $ 732,637  
 
            
Liabilities and Shareholders’ Equity
                
Accounts payable
   $ 60,518     $ 68,916  
Accrued expenses
     18,569       23,869  
Income taxes payable
     373       2,303  
Current maturities of long-term debt and other current liabilities
     8,056       6,330  
 
            
Total current liabilities
     87,516       101,418  
 
                
Long-term debt and other liabilities
     203,691       202,405  
Deferred income taxes
     44,159       45,861  
Shareholders’ equity
     358,243       382,953  
 
            
 
   $ 693,609     $ 732,637  
 
            
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Unifi Announces Second Quarter Results – page 5
UNIFI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Amounts in Thousands)
                 
    For the Six Months Ended  
    December 24, 2006     December 25, 2005  
Cash and cash equivalents at beginning of period
   $ 35,317     $ 105,621  
Operating activities:
                
Net loss
     (27,595 )     (6,854 )
Adjustments to reconcile net loss to net cash used in continuing operating activities:
                
(Income) loss from discontinued operations
     203       (1,346 )
Net (earnings) loss of unconsolidated equity affiliates, net of distributions
     4,825       288  
Depreciation
     21,449       24,688  
Amortization
     557       642  
Stock based compensation
     1,238       289  
Net (gain) loss on asset sales
     241       (365 )
Non-cash write down of long-lived assets
     3,202       1,500  
Non-cash portion of restructuring charges
     —       29  
Deferred income tax
     (1,945 )     (2,533 )
Provision (recovery) for bad debts
     598       1,131  
Key executive life insurance proceeds, net
     —       983  
Other
     20       (1,275 )
Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments
     1,357       443  
 
            
Net cash provided by continuing operating activities
     4,150       17,620  
 
            
 
                
Investing activities:
                
Capital expenditures
     (3,341 )     (7,614 )
Acquisitions
     (393 )     (30,388 )
Investment in foreign restricted assets
     —       158  
Collection of notes receivable
     734       236  
Change in restricted cash
     —       2,766  
Proceeds from sale of capital assets
     30       2,376  
Return of capital from equity affiliates
     229       —  
Key executive life insurance premiums
     (166 )     —  
Other
     (362 )     (210 )
 
            
Net cash used in investing activities
     (3,269 )     (32,676 )
 
            
 
                
Financing activities:
                
Payment of long-term debt
     (290 )     (24,407 )
Other
     (309 )     40  
 
            
Net cash used in financing activities
     (599 )     (24,367 )
 
            
 
                
Cash flows of discontinued operations:
                
Operating cash flow
     (50 )     (4,640 )
Investing cash flow
     —       23,062  
 
 
            
Net cash provided by (used in) discontinued operations
     (50 )     18,422  
 
            
Effect of exchange rate changes on cash and cash equivalents
     63       399  
 
            
Net increase (decrease) in cash and cash equivalents
     295       (20,602 )
 
            
Cash and cash equivalents at end of period
   $ 35,612     $ 85,019  
 
            
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Unifi Announces Second 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 Company’s ability to integrate fully the newly-acquired Dillon operations 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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