Unifi Narrows Q4 Loss on 18% Revenue Gain

Unifi, Inc. reported a net loss from continuing operations of $4.7 million or 9 cents per share for the quarter ending December 26, 2004 compared to a net loss of $7.0 million or 14 cents per share for the prior year December quarter. Net income, including discontinued operations, was a net loss of $7.7 million or 15 cents per share compared to a net loss, including discontinued operations of $9.2 million or 18 cents per share for the prior year December quarter.

Net sales from continuing operations for the December quarter, which include sales from the INVISTA polyester manufacturing assets acquired in September 2004, were $208.5 million, an increase of $42.2 million or 25.4% compared to net sales of $166.3 million for the prior year December quarter.

Selling, general and administrative (SG&A) expenses were 4.8% of sales from continuing operations for the December quarter and 5.0 percent for the first half of fiscal 2005, compared to prior year results of 7.1% and 7.3%, respectively. Cash-on-hand as of December 26, 2004 was $53.0 million, up $7.3 million from the quarter ended September 26, 2004.

“The first 90-days of transition following our acquisition in Kinston, North Carolina have gone extremely well, as evidenced by the improvement in the current quarter results compared to last year. Considering that we exited the Manufacturing Alliance agreement and took over a facility in need of significant reorganization, we are very pleased with the execution of our plan to date,” said Bill Lowe, Chief Operating Officer and CFO for Unifi. “We have also continued to focus on the fundamentals of reducing SG&A expenses and balance sheet management, which has enabled the Company to record an operating profit from continuing operations of $0.7 million for the first half of fiscal 2005 compared to a loss of $7.7 million for the same period in the prior year.”

Net sales from continuing operations for the first half of fiscal 2005 were $388.6 million, an increase of $58.6 million or 17.8% over net sales of $330.0 million for the prior year first half.

For the first half of fiscal 2005, the company reported a net loss from continuing operations of $6.0 million or 11 cents per share, which compares favorably to a net loss of $9.6 million or 18 cents per share for the prior year first half. Net income, including discontinued operations for the first half of fiscal 2005, includes charges associated with the closure of the Company’s facility in Ireland, was a net loss of $30.3 million or 58 cents per share compared to a net loss of $13.8 million or 26 cents per share for the prior year fiscal first half.

Brian Parke, Chairman and Chief Executive Officer for Unifi, said, “The success of the strategies and actions taken by the Company are not only visible in our operating results, they have also prepared us for the elimination of quotas. Our products and services are more diversified and vertically-integrated than ever and our cost structure remains competitive for the markets we serve. We are confident that the strength of our underlying business, our strong balance sheet, and strategies for global growth have the Company well-prepared for the continued challenges that our industry will face in the year ahead.”

UNIFI, INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited) (In Thousands Except Per Share Data)

                            For the Quarters Ended       For the Year to
                                                        Date Periods Ended
                           December 26, December 28, December 26, December 28,
                                  2004         2003         2004         2003

    Net sales                 $208,473     $166,311     $388,628     $330,032
    Cost of sales              198,787      161,262      368,382      313,523
    Selling, general &
     administrative
     expense                    10,013       11,787       19,527       24,210
    Operating profit (loss)       (327)      (6,738)         719       (7,701)
    Interest expense             5,294        4,789        9,961        9,530
    Interest income               (509)        (484)        (922)      (1,226)
    Other (income)
     expense, net                3,276          415        3,734          992
    Equity in (earnings)
     losses of unconsolidated
     affiliates                   (674)         146       (1,791)        (111)
    Minority interest (income)
     expense                      (309)      (1,121)        (497)      (2,077)
    Restructuring charges           --          800           --          800

    Loss before income tax
     benefit                    (7,405)     (11,283)      (9,766)     (15,609)
    Benefit for income taxes    (2,710)      (4,255)      (3,815)      (5,984)
    Loss from continuing
     operations                 (4,695)      (7,028)      (5,951)      (9,625)
    Loss from discontinued
     operations - net of tax    (3,051)      (2,192)     (24,350)      (4,157)
    Net loss                   $(7,746)     $(9,220)    $(30,301)    $(13,782)

    Earnings (losses) per
     common share
     (basic and diluted):
        Net loss -
         continuing operations  $(0.09)      $(0.14)      $(0.11)      $(0.18)
        Net loss -
         discontinued
         operations             $(0.06)      $(0.04)      $(0.47)      $(0.08)
        Net loss                $(0.15)      $(0.18)      $(0.58)      $(0.26)