Unifi CEO pleased with fundamental improvements

01 Aug '08

4 min read

Unifi Inc released operating results for its fiscal fourth quarter ended June 29, 2008.

Net income for the current quarter, including discontinued operations, was $771 thousand or $0.01 per share compared to a net loss of $74.2 million or $1.23 per share for the prior June quarter. Net sales for the quarter were $189.6 million compared to net sales of $185.3 million for the prior year June quarter.

The Company also announced a proposed agreement to sell its 50% ownership interest in Yihua Unifi Fibre Industry Co Ltd ("YUFI") to its partner, Sinopec Yizheng Chemical Fiber Co Ltd. ("YCFC"), pending final negotiation and execution of definitive agreements and Chinese regulatory approvals.

While there can be no assurances of completion, the Company expects to close the transaction in the second quarter of fiscal 2009. Net income for the June quarter was negatively impacted by $8.8 million in impairment charges and operating losses of YUFI.

The Company intends to continue servicing customers in Asia, through the formation of Unifi Textiles Suzhou Co Ltd a wholly-owned, China-based subsidiary that will develop, source, sell and service premium value-added yarns. The Company expects UTSC to begin operations during the second quarter of fiscal 2009.

Net income in the quarter was also impacted by a $3.2 million discontinued operation benefit from the pending liquidation of the Company's former operations in the United Kingdom and $2.1 million of gains related to the sale of non-productive assets.

Net income for the 2008 fiscal year was a net loss of $16.2 million or $0.27 per share compared to a net loss of $115.8 million or $2.06 per share for the prior fiscal year. Net sales for the 2008 fiscal year were $713.3 million compared to net sales of $690.3 million for the prior fiscal year.

"The supply-chain management and operational improvements made throughout the fiscal year, as well as continued growth in our premium value-added products, have driven our improved performance over the last two quarters," said Ron Smith, Chief Financial Officer for Unifi.

"Our sourcing strategy for raw materials enabled the Company to partially contend with escalating raw materials costs, which saw double digit increases during the quarter.

While domestic consumption contracted as a result of the prolonged economic slowdown in many of our market segments, certain portions of our business remained stable due to the increased volume of synthetic apparel sourced through the CAFTA region."

Cash-on-hand at the end of the June quarter was $20.2 million, which is a decrease from the $26.2 million cash-on-hand at the end of the March quarter.

Total cash and cash equivalents at the end of June, including restricted cash, were $38.5 million compared to $44.1 million as of June 2007.

Total long-term debt at the end of the June quarter was $201.8 million compared to $218.4 million as of the March 2008 quarter and $234.6 million as of the June 2007 year-end.

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