Unifi, Inc.’s net sales increased $23 million, or 15 percent, to $178 million for the third quarter ended March 27, compared to net sales of $155 million for the prior year quarter.  The company reported a net loss for the third quarter of its 2011 fiscal year of $4.0 million, or 20 cents per share, compared to net income of $800,000, or 4 cents per share, for the prior year quarter. 


 

Earnings for the March 2011 quarter included approximately $2.2 million of charges related to the early extinguishment of debt and a loss of $2.5 million from our investment in Parkdale America, LLC. (“Parkdale America”), which compares to $2.0 million of income from Parkdale America in the prior year March quarter.


For the first nine months of the fiscal year 2011, the company reported net income of $11.6 million, or 58 cents share, compared to net income of $5.2 million, or 26 cents per share, for the prior year period.  Net sales increased $73 million, or 17 percent, to $513 million for the fiscal year-to-date compared to net sales of $440 million for the prior year period. 

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) for the March 2011 quarter were $12.3 million compared to adjusted EBITDA of $12.7 million for the prior year quarter.  Adjusted EBITDA for the first nine months of fiscal year 2011 was $46.4 million compared to $41.1 million for the prior year period.

“During the March quarter, polyester raw material prices rose significantly,” said Bill Jasper, chairman and CEO of Unifi.  “Certain quarterly pricing commitments and our strategic decision to absorb a portion of the raw material cost increases during the March quarter resulted in temporary margin pressure.  Since the end of the quarter, we have recovered most of the lost margin and our business fundamentals remain strong.” 

 

Jasper also noted, “Year-over-year volume continued to improve in our polyester business based upon retail sales improvements that are nearing pre-recession levels; continued growth of our business in China; and startup of our operations in Central America, a region which continues to develop and increase its share of the U.S. apparel market. 

 

In addition, sales of the company’s Premier Value Added products are on track to meet our stated goal of doubling over the next three years.”
Working capital usage during the quarter combined with elevated strategic capital expenditures to complete the company’s new Repreve Recycling Center resulted in a $14 million decrease in cash-on-hand from the end of December 2010, to $19.1 million as of the end of March 2011.  During the quarter, the company also redeemed $30 million of its senior secured notes, due May 2014, reducing the amount of outstanding notes to $133.7 million.  Outstanding borrowings on the company’s revolving credit facility at the end of the March quarter were $37.8 million. 

 

“Raw material cost increases also had a significant effect on our investment in working capital during the quarter,” said Ron Smith, CFO of Unifi.  “The volume increase over the last several quarters, coupled with the higher raw material costs and related selling prices increases, resulted in the company investing an additional $24 million in working capital during the quarter.”


“At Parkdale America, considerably higher cotton prices are also having a substantial effect,” said Jasper.  “With cotton prices at record highs, we understand that Parkdale America has worked to develop and implement appropriate plans to ensure availability of competitively priced cotton and recoup the lost margins.”

 

The financial statements included in this press release have been retroactively adjusted to reflect the company’s one-for-three reverse stock split, which became effective November 3, 2010. 
































































































































































































































































































UNIFI, INC.


CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited) (Amounts in Thousands, Except Per Share Data)



For the Quarters Ended

For the Nine-Months Ended



March 27, 2011

March 28, 2010

March 27, 2011

March 28, 2010










Summary of Operations:








 Net sales

$          178,164

$          154,687

$          512,986

$          439,793

 Cost of sales

163,017

138,177

457,595

386,541

 Restructuring charges  

9

254

1,555

254

 Write down of long-lived assets

–

–

–

100

 Selling, general & administrative expenses

10,344

11,252

32,223

34,568

 Provision (benefit) for bad debts

41

(105)

86

(93)

 Other operating (income) expense , net

158

(346)

417

(542)










Non-operating (income) expense:








 Interest income

(584)

(775)

(1,995)

(2,355)

 Interest expense

5,016

5,697

15,347

16,412

 Other non-operating expense

78

–

528

–

 Loss (gain) on extinguishment of debt

2,193

–

3,337

(54)

 Equity in losses (earnings) of unconsolidated affiliates

2,103

(2,175)

(11,887)

(5,847)

 Income (loss) from operations before income taxes

(4,211)

2,708

15,780

10,809

 Provision (benefit) for income taxes

(166)

1,937

4,205

5,596

               Net income (loss)

$            (4,045)

$                 771

$            11,575

$              5,213










Earnings (loss) per share:










              Income (loss) per common share – basic



$              (0.20)

$                0.04

$                0.58

$                0.26










              Income (loss) per common share – diluted

$              (0.20)

$                0.04

$                0.57

$                0.25