Unifi, Inc. posted a net loss from continuing operations for the company's third fiscal quarter of $1.3 million or 3 cents per share, a slight improvement from a net loss of $1.6 million or 3 cents per share for the prior year's quarter. Net income from continuing operations for the first nine months of fiscal year 2006 was a net loss of $9.5 million or 18 cents per share, which includes a total of $2.3 million in pre-tax impairment charges associated with the company's properties located in Mayodan, N.C., compared to a net loss of $7.3 million or 14 cents per share for the prior year period.
Net income for the current March quarter, including discontinued operations, was a net loss of $2.1 million or 4 cents per share compared a net loss of $1.9 million or 4 cents per share for the prior March quarter. Net income for the first nine months of fiscal year 2006, including discontinued operations, was a net loss of $9.0 million or 17 cents per share compared to a net loss of $32.2 million or 62 cents per share for the prior year period, which includes charges associated with the closure of the company's facility in Ireland.
Net sales from continuing operations for the current March quarter of $181.4 million were down $26.3 million or 12.7 percent compared to net sales of $207.7 million for the prior year March quarter. Net sales for the first nine months of fiscal year 2006 were $555.6 million, which is a decrease of $37.8 million or 6.4 percent compared to net sales of $593.4 million for the first nine months of fiscal year 2005. Net sales volume for the current quarter reflects the impact that higher energy prices and rising interest rates had on substantially slowing consumer spending in the fourth quarter of 2005. Cash-on-hand at the end of the current March quarter was $88.4 million.
“Our underlying business experienced distinct improvements, including cash generation, in the current quarter,” said Bill Lowe, Chief Operating Officer and Chief Financial Officer for Unifi. “We continue to be selective with our product mix to maximize our financial results, and we are continuing to capitalize on opportunities that exist in our region, including emerging markets, by offering innovation, differentiation, and speed-to-market advantages to our customers.”
Brian Parke, Chairman and CEO of Unifi, said, “Our Board of Directors has completed its strategic review, which was designed to scrutinize the various strategic alternatives available to our business and our shareholders. Based on the review, both management and the Board of Directors agree the optimal strategy is the pursuit of selective consolidation opportunities in our domestic yarn market, while continuing to explore participation in the global growth of emerging markets. As part of this strategy, the Company will continue to evaluate its debt structure in order to maintain flexibility to make selective acquisitions and investments. We believe this strategy allows the company to create meaningful and sustainable shareholder value, significantly in excess of the value provided from other alternatives, such as a sale or merger of the company.”
UNIFI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands Except Per Share Data) For the Quarters For the Nine Months Ended Ended March 26, March 27, March 26, March 27, 2006 2005 2006 2005 Net sales $181,398 $207,688 $555,617 $593,368 Cost of sales 168,261 198,356 524,707 563,379 Selling, general & administrative expenses 10,184 11,360 31,132 30,548 Provisions for bad debts 218 561 1,349 5,039 Interest expense 4,606 5,256 14,044 15,214 Interest income (1,162) (473) (3,587) (1,351) Other (income) expense, net (969) (701) (2,544) (1,247) Equity in (earnings) losses of unconsolidated affiliates 564 (4,457) (1,278) (6,285) Minority interest (income) expense - 53 - (444) Restructuring charges - - 29 - Write down of long-lived assets 815 - 2,315 - Loss from continuing operations before income taxes and extraordinary item (1,119) (2,267) (10,550) (11,485) Provision (benefit) for income taxes 208 (654) (1,023) (4,163) Loss from continuing operations before extraordinary item (1,327) (1,613) (9,527) (7,322) Income (loss) from discontinued operations, net of tax (790) (1,659) 556 (26,251) Extraordinary gain - net of taxes of $0 - 1,342 - 1,342 Net loss $(2,117) $(1,930) $(8,971) $(32,231) Earnings (losses) per common share (basic and diluted): Net loss - continuing operations $(0.03) $(0.03) $(0.18) $(0.14) Net income (loss) - discontinued operations (0.01) (0.04) 0.01 (0.51) Extraordinary gain - net of taxes of $0 - 0.03 - 0.03 Net loss $(0.04) $(0.04) $(0.17) $(0.62) Average basic and diluted shares outstanding 52,177 52,125 52,144 52,099