Unifi, Inc.'s net income for the current quarter, including discontinued operations, was a net loss of $11.1 million or 21 cents per share compared a net loss of $3.1 million or 6 cents 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.”

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.”

     (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