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Unifi Inc revises Q2 guidance
Dec '08
Unifi Inc., announced that it is revising its Adjusted EBITDA guidance for its 2009 second fiscal quarter, which will end December 28, 2008, to a forecasted range of $2 to $4 million from the previous guidance of $8 to $9 million given on its earnings call on October 30, 2008 (a description of Adjusted EBITDA is included below).

The revised guidance is a result of significant decreases in consumer spending coupled with high supply chain inventories across the Company's key business segments. Reductions in the Company's orders across the quarter were a result of sharp year-over-year declines of 4% in October and 7% in November of retail apparel sales, 11% in October and 13% in November of retail furnishing sales and a 16% year-to-date decline in automotive sales.

"We are disappointed in having to revise our guidance at this time, particularly after the significant improvements we have made to our business in the past year," said Bill Jasper, President and CEO for Unifi.

"We expected the December quarter to be a very challenging one, but the speed and severity of the declines in spending have been much greater than anticipated. We expect sales to recover somewhat during the first six months of calendar 2009, as supply chain inventories get replenished, even though consumer spending is expected to remain weak. Accordingly, we now expect Adjusted EBITDA for the 2009 fiscal year to be in the range of $40 to $45 million. We continue to face these challenges with a solid balance sheet and strong liquidity, and we remain committed to our strategies. Our emphasis remains on controlling costs and optimizing the supply chain supporting our base business, while focusing on growing our premium value-added products and our operations in China and Brazil."

The Company also announced that it has closed on the sale of certain real property and related assets located in Yadkinville, N.C., for $7.0 million. The sale will result in net proceeds of $6.6 million to the Company and a net pre-tax gain of $5.2 million for the current quarter.

Furthermore, the Company announced that $8.8 million of net cash proceeds from asset sales of collateral has become "Excess Collateral Proceeds" under the terms of the Company's Indenture for its $190 million 11.5% Senior Secured Notes ("Bonds"). While there is no requirement in the Indenture to use Excess Collateral Proceeds to offer to repurchase the Bonds (at par) prior to the time the amount of Excess Collateral Proceeds reaches $10.0 million, the Company may elect, from time to time, to make such offers earlier, at its discretion.

Additionally, the Company may also from time to time seek to retire or purchase a portion of the Bonds in open market purchases, in privately negotiated transactions or otherwise. Such retirement or purchases of the Bonds may come from the operating cash flows of the business or other sources and will depend upon prevailing market conditions, liquidity requirements, contractual restrictions and other factors, and the amounts involved may be material.

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