Unifi reported a net loss of $11.0 million or 21 cents per share for the quarter ending June 27, 2004, compared to a net loss of $30.5 million or 57 cents per share for the prior year June quarter. Net income for the current quarter was negatively impacted by a pre-tax charge of $7.0 million, or $0.12 cents per share associated primarily with the restructuring of the Company's operations based in Altamahaw, N.C., as announced on March 2, 2004. The prior year comparable period results included pre-tax charges for restructuring and arbitration charges of $30.8 million or $0.50 cents per share.
Net sales for the June quarter of $191.7 million reflect a decrease of 7.0 percent compared to net sales of $206.1 million for the prior year June quarter. Net sales for the 2004 fiscal year were $746.5 million, or a decrease of 12.1 percent compared to net sales of $849.1 million for the prior fiscal year.
The Company also reported a net loss of $74.8 million or $1.43 per share for the 2004 fiscal year versus a net loss of $27.2 million or $0.51 cents per share for the prior fiscal year. Net income for the 2004 fiscal year was negatively impacted by pre-tax charges totaling $67.3 million, or $0.96 cents per share, for restructuring and asset impairment. Additionally, included in the pre-tax loss for the 2004 fiscal year was a $7.1 million, or $0.10 cents per share loss from the Company's share of income or losses from its equity affiliates, which compares to pre-tax income of $10.6 million, or $0.18 cents per share for the prior fiscal year. The prior year comparable results included a pre-tax charges for restructuring and arbitration charges of $36.1 million, or $0.61 cents per share.
Also included in the results for the current June quarter and fiscal year is a pre-tax benefit, included in cost of sales, of $11.4 million and $38.3 million, respectively, generated by the Company's Manufacturing Alliance with Koch Industries (previously DuPont). Prior comparable quarter and full year comparable benefits from the Alliance were $9.5 million and $34.6 million respectively. As announced on July 26, 2004, the Manufacturing Alliance, as well as all related provisions including arbitration claims, between Unifi and INVISTA will be terminated after the Company's acquisition of the INVISTA polyester manufacturing assets located in Kinston, N.C. is completed.
William Lowe, Chief Operating Officer and Chief Financial Officer for Unifi, said, “We continue to see the impact of recent changes we have made to our business model as evidenced by the fact that we posted a small operating profit in the current June quarter, our first operating profit since our June 2003 quarter. We are making good progress on reducing our selling, general & administrative expenses as well. These expenses have been reduced to 5.6 percent of sales versus 6.8 percent for the prior year June quarter and the 7.0 percent for the quarter ended this past December.”
The Company ended the June quarter with cash-on-hand of $65.2 million, which is an improvement over the $59.7 million cash-on-hand at the end of the March quarter.
During the fiscal year, the Company repurchased approximately 1.3 million shares of the 8.1 million shares of Unifi common stock authorized for repurchase under the Unifi share repurchase program. The program was suspended in November 2003 and 6.8 million shares remain available for repurchase under this program. The Company has no immediate plans to reinstitute share repurchases.
Brian Parke, Chairman and Chief Executive Officer for Unifi, said, “We have taken many steps in the fiscal year to reposition our business in ways that address the challenges we face. These steps include unique supply chain agreements like those with Sara Lee Branded Apparel, our agreement to purchase the INVISTA polyester filament manufacturing assets, and our consolidation plans in Europe.
We recognize that there is still a lot of hard work ahead of us. Unifi will continue to take whatever actions are necessary to rationalize our production capabilities and improve the overall profitability of the Company.”
Unifi is one of the world's leading producers and processors of textured yarns. Its primary business is the texturing, dyeing, twisting, covering, and beaming of multi-filament polyester and nylon yarns. Unifi's textured yarns are found in home furnishings, apparel and industrial fabrics, automotive, upholstery, hosiery, and sewing thread. For more information, please visit www.unifi-inc.com .
UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Except Per Share Data)
For the Quarters For The Year to Date
Ended Periods Ended
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
Net sales $191,669 $206,094 $746,455 $849,116
Cost of sales 180,370 188,395 712,118 777,812
Selling, general &
administrative expense 10,824 14,015 50,670 53,676
Asset impairments and write
downs - - 38,703 -
Operating profit (loss) 475 3,684 (55,036) 17,628
Interest expense 4,433 4,821 18,705 19,900
Interest income 581 793 2,701 1,883
Other (income) expense, net 1,663 2,746 38 2,586
Equity in (earnings) losses
of unconsolidated
affiliates 518 (1,261) 7,076 (10,627)
Minority interest (income)
expense 401 2,361 (6,430) 4,769
Restructuring charges 6,970 16,893 28,616 16,893
Arbitration costs and
expenses - 13,893 3 19,185
Alliance plant closure
costs (recovery) - - (206) (3,486)
Loss before income taxes (12,929) (34,976) (100,137) (29,709)
Provision (benefit) for
income taxes (1,902) (4,498) (25,335) (2,532)
Net loss $(11,027) $(30,478) $(74,802) $(27,177)
Earnings (losses) per
common share:
Net loss per common
share $(0.21) $(0.57) $(1.43) $(0.51)
Average diluted shares
outstanding 52,077 53,703 52,249 53,761
Depreciation and
amortization included
above $14,733 $17,319 $64,758 $73,039
