Unifi’s net sales for the company’s fiscal first quarter were $185.4 million up 3.2% compared to $179.6 million last year. The company experienced considerable difficulties with raw material supply due to Hurricane Katrina and Rita and “certain key customers” adjusted inventory during the summer months. As a result gross margins declined 290 basis points to 4.1%, compared to 7.0% last year. SG&A expenses climbed 70 basis points to 5.9% in support of the up-tick in sales. The result was a net loss of $5.7 million or 11 cents per share compared to a net loss of $1.2 million or 2 cents per share last year.

The company stated that they are still assessing the long-term effect of polyester raw material supply and the increases in raw material and energy costs on the profitability of the business. However, Unifi has taken “certain measures” that should guarantee production and has assured customers of a supply of product.

Unifi’s Board of Directors is also exploring strategic alternatives to improve shareholder value, including expanding within the textile industry, restructuring outstanding debt, moving into non-textile businesses, merging or selling the company, or moving to lower-cost locations. The company also stated it does not expect to update its progress or disclose developments with respect to the exploration of strategic alternatives unless the Board of Directors has approved a definitive transaction. The company had cash-on-hand at the end of the current September quarter ended September 25, 2005 of $90.7 million.