EX-99.1 2 g16297kexv99w1.htm EX-99.1 EX-99.1
Exhibit 99.1
(UNIFI LOGO)
For more information, contact:
Ronald L. Smith
Chief Financial Officer
(336) 316-5545
Unifi Announces First Quarter Results
     GREENSBORO, N.C. – October 30, 2008 – Unifi, Inc. (NYSE:UFI) today released preliminary operating results for its first fiscal quarter ended September 28, 2008.
     For the September quarter, income from continuing operations before taxes was $1.3 million and net income was a loss of $676 thousand or $0.01 per share, which compares to a loss from continuing operations before taxes of $16.1 million and a net loss of $9.2 million or $0.15 per share in the prior September quarter. Increased sales of the Company’s premium value-added yarns and other product mix enrichments contributed to year-over-year margin improvements and the prior year quarter was negatively impacted by approximately $11 million of restructuring and impairment costs.
     Net sales for the current quarter were $169.0 million, which represents a slight decrease from net sales of $170.5 million for the prior year September quarter. Net sales were positively impacted by volume gains in Brazil and strength in the Company’s nylon business, which continues to be driven by consumer and fashion preferences.
     “During the quarter, volume started out ahead of plan but softened in September as the economy weakened,” said Ron Smith, Chief Financial Officer for Unifi.  “Our results for the quarter confirm that the Company’s strategies to focus on our core business and develop our portfolio of premium value-added products, while exploring growth opportunities in China and Brazil, are the correct ones for our business. We are
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(UNIFI LOGO)
Unifi Announces First Quarter Results – page 2
reacting quickly and decisively to an uncertain market caused by the economic slow down and significant fluctuations in our raw material prices. This price volatility, combined with softening volumes, will have a negative impact on our conversion margin in the December quarter, but we expect to see improvement as we move into the second half of our fiscal year.”
     Cash-on-hand at the end of September was $20.4 million, which increased slightly from the $20.2 million cash-on-hand at the end of June. Total cash and cash equivalents at the end of September, including restricted cash, were $47.7 million compared to $55.6 million at the end of June. Going forward, restricted cash now includes deposits in Brazil, which secure VAT tax incentive loans, as well as the domestic cash restricted primarily for capital expenditures in accordance with the Company’s long-term borrowing agreements. At the end of September, long-term debt was reduced to $196.5 million from $201.8 million as the Company repaid the remaining $3 million of outstanding borrowings under its revolver from the June quarter end.
     Bill Jasper, President and CEO of Unifi, said, “The continuing decline in sales of existing homes and cars and light trucks began taking a toll on our volume in the home furnishings and automotive business segments during the quarter, and we expect the ongoing softness in the economy to make our December quarter a challenging one. However, we will face these challenges with a strong financial base and flexibility that we have not had in the past, including the ability to shift the supply of our raw materials to the most competitive sources and to adjust our mix more efficiently and effectively. We feel confident that the Company will emerge from the economic downturn stronger and with new opportunities based on the actions we have taken over the past year to enhance our overall financial strength.”
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(UNIFI LOGO)
Unifi Announces First Quarter Results – page 3
     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®, visit the new website www.repreve.com.
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Financial Statements to Follow

 

 

(UNIFI LOGO)
Unifi Announces First Quarter Results – page 4

UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Except Per Share Data)
                 
    For the Quarters Ended  
    September 28 , 2008     September 23, 2007  
Net sales
   $ 169,009     $ 170,536  
Cost of sales
     155,584       159,543  
Selling, general & administrative expenses
     10,545       14,454  
Provision for bad debts
     558       254  
Interest expense
     5,965       6,712  
Interest income
     (913 )     (826 )
Other (income) expense, net
     (561 )     (1,006 )
Equity in earnings of unconsolidated affiliates
     (3,482 )     (178 )
Write down of long-lived assets
     —       533  
Write down of investment in unconsolidated affiliate
     —       4,505  
Restructuring charges
     —       2,632  
 
            
Income (loss) from continuing operations before income taxes
     1,313       (16,087 )
Provision (benefit) for income taxes
     1,885       (6,931 )
 
            
Loss from continuing operations
     (572 )     (9,156 )
Loss from discontinued operations, net of tax
     (104 )     (32 )
 
            
Net loss
   $ (676 )   $ (9,188 )
 
            
 
                
Loss per common share (basic and diluted):
                
Net loss — continuing operations
   $ (0.01 )   $ (0.15 )
Net loss — discontinued operations
     —       —  
 
            
Net loss — basic and diluted
   $ (0.01 )   $ (0.15 )
 
            
 
                
Weighted average basic and diluted shares outstanding
     61,134       60,537  
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(UNIFI LOGO)
Unifi Announces First Quarter Results – page 5

UNIFI, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
                 
    September 28, 2008     June 29, 2008  
    (Unaudited)          
Assets
                
Cash and cash equivalents
   $ 20,396     $ 20,248  
Receivables, net
     95,247       103,272  
Inventories
     127,994       122,890  
Deferred income taxes
     1,962       2,357  
Assets held for sale
     3,808       4,124  
Restricted cash
     7,308       9,314  
Other current assets
     4,290       3,693  
 
            
Total current assets
     261,005       265,898  
 
                
Property, plant and equipment, net
     167,845       177,299  
Investments in unconsolidated affiliates
     71,950       70,562  
Restricted cash
     19,989       26,048  
Goodwill
     18,579       18,579  
Intangible assets, net
     19,607       20,386  
Other noncurrent assets
     11,698       12,759  
 
            
 
   $ 570,673     $ 591,531  
 
            
Liabilities and Shareholders’ Equity
                
Accounts payable
   $ 43,897     $ 44,553  
Accrued expenses
     26,061       25,531  
Income taxes payable
     832       681  
Current maturities of long-term debt and other current liabilities
     7,729       9,805  
 
            
Total current liabilities
     78,519       80,570  
 
                
Long-term debt and other liabilities
     198,518       204,366  
Deferred income taxes
     657       926  
Shareholders’ equity
     292,979       305,669  
 
            
 
   $ 570,673     $ 591,531  
 
            
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(UNIFI LOGO)
Unifi Announces First Quarter Results – page 6

UNIFI, INC.
CONSOLIDATED STATEMENTS OF CASHFLOWS
(Unaudited) (Amounts in Thousands)
                 
    For the Quarters Ended  
    September 28 , 2008     September 23, 2007  
Cash and cash equivalents at beginning of year
   $ 20,248     $ 40,031  
Operating activities:
                
Net loss
     (676 )     (9,188 )
Adjustments to reconcile net loss to net cash provided by (used in) continuing operating activities:
                
Loss from discontinued operations
     104       32  
Earnings of unconsolidated equity affiliates, net of distributions
     (1,417 )     282  
Depreciation
     8,980       9,599  
Amortization
     1,069       1,162  
Stock-based compensation expense
     282       107  
Deferred compensation expense, net
     (81 )     30  
Net gain on asset sales
     (316 )     (142 )
Non-cash write down of long-lived assets
     —       533  
Non-cash write down of investment in equity affiliate
     —       4,505  
Non-cash portion of restructuring charges
     —       2,632  
Deferred income tax benefit
     (115 )     (7,524 )
Provision for bad debts
     558       254  
Other
     296       (473 )
Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments
     (6,082 )     (3,016 )
 
            
Net cash provided by (used in) continuing operating activities
     2,602       (1,207 )
 
            
Investing activities:
                
Capital expenditures
     (3,569 )     (1,064 )
Change in restricted cash
     5,183       (915 )
Proceeds from sale of capital assets
     101       2,216  
Return of capital from equity affiliate
     —       234  
Other
     (94 )     264  
 
            
Net cash provided by investing activities
     1,621       735  
 
            
Financing activities:
                
Borrowings of long-term debt
     4,600       157  
Payments of long-term debt
     (9,080 )     (6,705 )
Proceeds from stock option exercises
     3,551       —  
Other
     37       33  
 
            
Net cash used in financing activities
     (892 )     (6,515 )
 
            
Cash flows of discontinued operations:
                
Operating cash flow
     (114 )     (78 )
 
            
Net cash used in discontinued operations
     (114 )     (78 )
 
            
Effect of exchange rate changes on cash and cash equivalents
     (3,069 )     893  
 
            
Net increase (decrease) in cash and cash equivalents
     148       (6,172 )
 
            
Cash and cash equivalents at end of period
   $ 20,396     $ 33,859  
 
            
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(UNIFI LOGO)
Unifi Announces First 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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