Unifi net sales for the third quarter ended March 29, 2009 were $119.1 million, which represents a $50.7 million decrease from net sales of $169.8 million for the prior year March quarter. Net sales were negatively impacted by the cumulative effect of year-over-year declines in retail sales since October 2008 caused by the global recession. Volume was further impacted by reduced production levels throughout the textile supply chain as excess inventory was depleted.
For the March quarter, net loss was $33.0 million or 53 cents per share, which compares to net income of $12 thousand in the prior March quarter. Results for the current quarter were negatively impacted by a non-cash charge of $18.6 million to write-off the carrying value of goodwill associated with the company's acquisition of Dillon Yarns in 2007. The decrease in the current quarter was also related to the utilization of higher priced raw materials from the December quarter and the impact of unabsorbed converting costs associated with reduced production volume.
Cash-on-hand at the end of the March 2009 quarter was $23.5 million, which is an increase of $10.9 million from cash-on-hand at the end of the December 2008 quarter and is a result of aggressive working capital management both domestically and in Brazil. Total cash and cash equivalents at the end of March, including restricted cash, were $39.5 million compared to $32.4 million at the end of December. At the end of the March quarter, long-term debt was $192.0 million, and there were no borrowings under the Company's bank credit facility.
As previously announced on April 3rd, the company successfully completed the tender offer for $8.8 million aggregate principal amount of its 11.5% senior secured notes due in 2014. Additionally, on March 31, 2009, the company announced it closed on the sale and, subsequent to quarter end, received $9 million in proceeds related to its 50% ownership interest in Yihua Unifi Fibre Industry Co., Ltd., the Company's former joint venture in China with Sinopec Yizheng Chemical Fiber Co., Ltd.
“Retail sales in our primary end-use segments remained soft in the March quarter and the impact on our demand was compounded by the retail supply chain working through its excessive inventory levels,” said Ron Smith, CFO for Unifi. “Accordingly, the company focused much of its efforts during the quarter on liquidity and cash generation, freeing up $25.5 million of working capital committed to inventory through decreased raw material purchases and production levels well below sales volumes. The company was also able to begin recapturing lost conversion margin from 2008, as raw material prices returned to more normalized levels.”
Net sales for the first nine months of fiscal 2009 were $413.8 million compared to net sales of $523.7 million for the prior year period. Net loss for the first nine months of fiscal 2009 was $42.7 million or $0.69 per share compared to a net loss of $16.9 million or $0.28 per share for the same prior year period.
Bill Jasper, President and CEO of Unifi, said, “As anticipated, the March quarter was a challenging one, as we continued to manage through a weak market. However, by staying focused on the continuous improvement of our costs and operational efficiencies, market share growth and product mix enhancements, we have achieved fundamental improvements in our underlying business. When combined, we have realized annualized savings of more than $25 million from these initiatives, thereby substantially reducing the volume levels required to operate our business profitably, once economic conditions improve. In this difficult environment, we will continue managing our cash, and we anticipate further balance sheet improvements in the upcoming quarters. We expect this recession will be long and the recovery will be slow, but we have positioned ourselves well and are in a much better position to weather the storm than we were just a year ago. We expect to see gradual improvement in our business through the current quarter and the first half of our 2010 fiscal year. We will stay the course and remain committed as an organization to operational excellence, margin improvement, global growth and the on-going development and commercialization of new and innovative products.”
UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In Thousands Expect Per Share Data)
For the Quarters Ended For the Nine-Months Ended
———————– ————————-
March 29, March 23, March 29, March 23,
2009 2008 2009 2008
Summary of Operations:
Net sales $119,094 $169,836 $413,830 523,741
Cost of sales 118,722 156,404 397,721 490,996
Restructuring
charges
(recoveries) 293 (2,199) 293 4,638
Write down of long-
lived assets – – – 2,780
Goodwill impairment 18,580 – 18,580 –
Selling, general &
administrative
expenses 9,507 10,080 29,356 36,542
Provision for bad
debts 735 87 1,794 152
Other operating
(income) expense,
net (89) (897) (5,862) (4,087)
Non-operating (income)
expense:
Interest income (656) (651) (2,249) (2,231)
Interest expense 5,879 6,308 17,592 19,598
Equity in earnings
of unconsolidated
affiliates (825) (757) (4,469) (914)
Write down of
investment in
unconsolidated
affiliates – – 1,483 4,505
Income (loss)
from continuing
operations before
income taxes (33,052) 1,461 (40,409) (28,238)
Provision (benefit)
from income taxes (101) 1,394 2,398 (11,294)
Income (loss)
from continuing
operations (32,951) 67 (42,807) (16,944)
Income (loss) from
discontinued
operations, net of
tax (45) (55) 67 22
Net
income
(loss) $(32,996) $12 $(42,740) (16,922)
Loss per common
share (basic and
diluted):
Net loss –
continuing
operations $(0.53) $- $(0.69) $(0.28)
Net loss –
discontinued
operations – – – –
Net loss
-basic
and
diluted $(0.53) $- $(0.69) (0.28)
Weighted average
basic and diluted
shares outstanding 62,057 60,589 61,740 60,560
