Unifi is taking a number of actions to improve the efficiency of its Nylon business unit, located in Rockingham County, North Carolina.
The Company will close Plant one in Mayodan, North Carolina and move its operations and offices to Plant three in nearby Madison, North Carolina, which is the Nylon division's largest facility with over one million square feet of production space. The Company expects that fewer than thirty current positions will be eliminated due to this move and that the majority of employees will be transferred from Plant one to Plant three. This move allows Unifi to centralize production between these two sites and increase the overall efficiency of the Nylon business unit operations. The move is expected to begin in September, with the majority of the process being completed by December 2005. The remainder of the process will be completed by March 2006.
In addition, the Company will move a small number of machines into Plant three to improve its capabilities. Moving costs associated with this relocation are estimated to be approximately six-hundred thousand dollars. The Company will spend approximately an additional two-hundred thousand dollars in capital expenditures to effectuate this change.
“While Unifi has made progress toward returning the Company to profitability over the past year, our work is still far from being finished, and we have not yet obtained our goal,” said Bill Lowe, Chief Operating Officer and CFO for Unifi. “Despite past efforts, the Nylon business unit has continued to report disappointing results over the past couple of years and operate in more facilities than the current business environment requires. We are also reviewing our product mix similar to our efforts last year in the polyester division and are considering other actions to improve the Nylon business. Unifi is committed to improving the health of the Nylon business and is taking these steps to improve its operations and increase its profitability.”
In keeping with Unifi's strategic plan to divest idle assets, the Company will put the Plant one building and its machines, along with a warehouse and its Central Distribution Center building, which are in close proximity, up for sale. The sale of these buildings is intended to reduce costs associated with maintaining nonessential assets and to generate cash for future investment in the business unit and the Company. The Company is in the process of valuing these assets on a “held for sale” basis and cannot determine at this time if it will be required to recognize a non-cash impairment charge as a result of this move.
