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Unifi Inc. down $50 million

Don Hogsett, Staff Staff -- Home Textiles Today, May 3, 2004

With sales sliding at a double-digit pace, and hit by almost $60 million in charges tied to the overhaul of its domestic and European operations, textiles yarn producer Unifi Inc. recorded a third-fiscal-quarter loss of $50 million, compared with a small year-ago profit of $1.1 million.

Sales at the supplier of polyester and nylon-textured yarns tumbled 13.1 percent, to $190.9 million from $219.6 million last year.

Taking a big bite out of the bottom line, the company recorded $20.8 million in restructuring charges and another $38.7 million asset-impairment writedown. Acting as a partial offset was a $17.5 million income-tax benefit.

Average gross margin thinned 250 basis points, to 4.6 percent from 7.1 percent a year ago.

Operating costs were pared 3.5 percent, to $13.7 million from $14.2 million last year, generating a savings of $497,000. But when measured as a percentage of falling sales, costs climbed by 70 basis points, or seven-tenths of a percentage point, to 7.2 percent from 6.5 percent.

William Lowe, chief operating officer and chief financial officer, commented, "Excluding restructuring, special items and the results of our equity affiliates, our operating loss as a percent of sales for the third quarter was significantly lower than the second quarter." Further improvement, said Lowe, should be seen in the fourth quarter "as the benefits of the restructuring begin to take effect."

Unifi Inc.

Qtr. 3/28 (x000) 2004 2003 % chg
Sales $190,915 $219,633 -13.1
Oper. income (EBIT) (4,901) 1,354
Net income (49,992)a 1,144a
Per share (diluted) (0.96) 0.02
Average gross margin 4.6% 7.1%
SG&A expenses 7.2% 6.5%
Nine months 2004 2003 % chg
Sales 554,786 643,022 -13.7
Oper. income (EBIT) (16,808) 13,944
Net income (63,774)b 3,301b
Per share (diluted) (1.22) 0.06
Average gross margin 4.2% 8.3%
SG&A expenses 7.2% 6.2%
(loss)
a-Third-quarter results include $725 million in interest income, compared with $344 million last year; $2.7 million in miscellaneous income vs. $90,000 a year ago; a $6.7 million loss from the company's stake in an affiliate, compared with a year-before profit of $3.2 million; $4.8 million in interest income from the company's minority stake vs. $1.2 million last year; $20.8 million in restructuring costs; $3,000 in arbitration expenses vs. $2.5 million a year ago; $206,000 in plant closing costs vs. $3.5 million last year; a $38.7 million asset impairment writedown; and an income-tax benefit of $17.5 million, compared with income tax expense of $1.5 million last year.
b-Nine-month results include $2.1 million in interest income vs. $1.1 million last year; $777,000 in miscellaneous income vs. $160,000 last year; a $6.7 million loss form the company's stake in an affiliate vs. a $9.4 million profit a year ago; $6.8 million in interest income from the company's minority stake vs. $2.4 million in expense last year; restructuring costs of $20.8 million; $3,000 in arbitration costs vs. $5.3 million last year; $206,000 in plant closing costs vs. $3.5 million last year; a $38.7 million asset impairment writedown; and a $23.4 million income-tax benefit vs. a year-ago payment of $2 million.


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