UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

UNIFI, INC.

(Exact name of registrant as specified in its charter)

New York (State of Incorporation)		1-10542 (Commission File Number)		11-2165495 (IRS Employer Identification No.)

7201 West Friendly Avenue
Greensboro, North Carolina 27410
(Address of principal executive offices, including zip code)

(336) 294-4410
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

ITEM 7.01. REGULATION FD DISCLOSURE.

     The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure.”

     On January 25, 2007, Unifi, Inc. (the “Registrant”) issued a press release announcing its operating results for its second fiscal quarter ended December 24, 2006, which press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

     On January 25, 2007, the Registrant will host a conference call to discuss financial results for its second fiscal quarter. The slide package prepared for use by executive management for this presentation is attached hereto as Exhibit 99.2. All of the information in the presentation is presented as of January 25, 2007, and Unifi does not assume any obligation to update such information in the future.

     The information included herein, as well as Exhibits 99.1 and 99.2 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits.

EXHIBIT NO.		DESCRIPTION OF EXHIBIT
99.1		Press Release, dated January 25, 2007 with respect to the Registrant’s financial results for its second fiscal quarter ended December 24, 2006
99.2		Slide Package prepared for use on January 25, 2007 in connection with the Registrant’s second fiscal quarter earnings conference call to be held on January 25, 2007

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                   UNIFI, INC.

Dated: January 25, 2007

INDEX TO EXHIBITS

EXHIBIT NO.		DESCRIPTION OF EXHIBIT
99.1		Press Release, dated January 25, 2007 with respect to the Registrant’s financial results for its second fiscal quarter ended December 24, 2006
99.2		Slide Package prepared for use on January 25, 2007 in connection with the Registrant’s second fiscal quarter earnings conference call to be held on January 25, 2007

For more information, contact:
William M. Lowe, Jr.
Vice President
Chief Operating Officer
Chief Financial Officer
(336) 316-5664

Unifi Announces Second Quarter Results

     GREENSBORO, N.C. – January 25, 2007 – Unifi, Inc. (NYSE:UFI) today released operating results for its second quarter ended December 24, 2006.

     Net income for the current quarter, including discontinued operations, was a net loss of $16.5 million or $0.32 per share compared to a net loss of $3.8 million or $0.07 per share for the prior December quarter. Net income from continuing operations for the current quarter was a net loss of $16.4 million or $0.32 per share compared to a net loss of $3.4 million or $0.06 per share for the prior December quarter.

     Net sales from continuing operations for the current December quarter of $156.9 million were down $34.2 million or 17.9% compared to net sales of $191.1 million for the prior year December quarter. Relatively stable sales of the Company’s nylon and textured, dyed and value-added polyester yarns in the quarter were offset by significant declines in partially oriented yarn, or POY, which were a result of the supply chain working through existing inventories.

     Bill Lowe, Chief Operating Officer and CFO for Unifi, said, “As we announced on December 7, 2006, earnings were negatively impacted by the lingering effect of higher priced POY inventory and a significant decline in POY volume during the quarter. The inventory adjustments that took place throughout the supply chain during the December quarter appear largely complete, and our POY and texturing plants are now running at expected capacities. We anticipate operating at these higher run rates and also expect to achieve mix related benefits as well during the March quarter. The transition of the Dillon manufacturing facility occurred on January 1, 2007 and appeared seamless to our customers. The facility is running at expected capacities, and we are now looking forward to improving our combined operations during this calendar year.”

-continued-

Unifi Announces Second Quarter Results – page 2

     Net income for the first half of the Company’s fiscal year 2007, including discontinued operations, was a net loss of $27.6 million or $0.53 per share compare compared to a net loss of $6.9 million or $0.13 per share for the prior year first half. Net income from continuing operations for the first half of fiscal 2007 was a net loss of $27.4 million or $0.53 per share compared to a net loss of $8.2 million or $0.16 per share for the prior year first half. Net sales for the first half of fiscal year 2007 of $326.8 were down $47.4 million or 12.7% compared to net sales of $374.2 million for the first half of fiscal year 2006.

     Total debt at the end of the current quarter was $206.1 million, which is a reduction of $58.0 million over the $264.1 million in debt at the end of the prior year December quarter, as a result of the Company’s refinancing activity in May 2006. Cash-on-hand at the end of the current December quarter was $35.6 million, which is up slightly from the September 2006 quarter of $29.5 million.

     Brian Parke, Chairman and CEO for Unifi said, “We continue to make excellent progress with our operations in China. We have many products now being sampled by critical new customers and larger scale trials are being requested. On the cost side, we have made changes that will reduce our operating costs approximately $2 million in the coming year, which will help us reach our goals. The momentum is building from the market side, and downstream opportunities are beginning to turn into solid orders.”

     Unifi, Inc. (NYSE: UFI) is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. The Company adds value to the supply chain and enhances consumer demand for its products through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages. Key Unifi brands include, but are not limited to: aio^® — all-in-one performance yarns, Sorbtek^®, A.M.Y.^®, Mynx^® UV, Repreve^®, Reflexx^®, MicroVista^® and Satura^®. Unifi’s yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications. For more information about Unifi, visit http://www.unifi.com.

###
Financial Statements to Follow

Unifi Announces Second Quarter Results – page 3

UNIFI, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Amounts in Thousands Except Per Share Data)

		For the Quarters Ended								For the Six Months Ended
		December 24, 2006				December 25, 2005				December 24, 2006				December 25, 2005
Net sales		$	156,895			$	191,117			$	326,839			$	374,219
Cost of sales			154,275				181,747				315,179				356,446
Selling, general & administrative expenses			10,388				10,461				21,677				20,948
Provision (recovery) for bad debts			(1,012	)			604				598				1,131
Interest expense			6,111				4,681				12,176				9,457
Interest income			(1,066	)			(2,189	)			(1,510	)			(3,470	)
Other (income) expense, net			236				303				(243	)			(549	)
Equity in (earnings) losses of unconsolidated affiliates			2,876				(18	)			4,825				(1,842	)
Write down of long-lived assets			2,002				—				3,202				1,500
Restructuring charges			—				—				—				29
Loss from continuing operations before income taxes and extraordinary item			(16,915	)			(4,472	)			(29,065	)			(9,431	)
Benefit from income taxes			(540	)			(1,079	)			(1,673	)			(1,231	)
Loss from continuing operations before extraordinary item			(16,375	)			(3,393	)			(27,392	)			(8,200	)
Income (loss) from discontinued operations, net of tax			(167	)			(583	)			(203	)			1,346
Extraordinary gain — net of tax of $0			—				208				—				—
Net loss		$	(16,542	)		$	(3,768	)		$	(27,595	)		$	(6,854	)
Earnings (losses) per common share (basic and diluted):
Net loss — continuing operations		$	(0.32	)		$	(0.06	)		$	(0.53	)		$	(0.16	)
Net income (loss) - discontinued operations			—				(0.01	)			—				0.03
Extraordinary gain			—				—				—				—
Net loss — basic and diluted		$	(0.32	)		$	(0.07	)		$	(0.53	)		$	(0.13	)
Weighted average basic and diluted shares outstanding			52,198				52,127				52,198				52,127

-continued-

Unifi Announces Second Quarter Results – page 4

UNIFI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Amounts in Thousands)

		December 24, 2006				June 25, 2006
Assets
Cash and cash equivalents		$	35,612			$	35,317
Receivables, net			77,486				93,236
Inventories			115,386				116,018
Deferred income taxes			11,982				11,739
Assets held for sale			15,419				15,419
Other current assets			11,287				9,229
Total current assets			267,172				280,958
Property, plant and equipment			219,461				239,696
Investments in unconsolidated affiliates			184,210				190,217
Other noncurrent assets			22,766				21,766
		$	693,609			$	732,637
Liabilities and Shareholders’ Equity
Accounts payable		$	60,518			$	68,916
Accrued expenses			18,569				23,869
Income taxes payable			373				2,303
Current maturities of long-term debt and other current liabilities			8,056				6,330
Total current liabilities			87,516				101,418
Long-term debt and other liabilities			203,691				202,405
Deferred income taxes			44,159				45,861
Shareholders’ equity			358,243				382,953
		$	693,609			$	732,637

-continued-

Unifi Announces Second Quarter Results – page 5

UNIFI, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (Amounts in Thousands)

		For the Six Months Ended
		December 24, 2006				December 25, 2005
Cash and cash equivalents at beginning of period		$	35,317			$	105,621
Operating activities:
Net loss			(27,595	)			(6,854	)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
(Income) loss from discontinued operations			203				(1,346	)
Net (earnings) loss of unconsolidated equity affiliates, net of distributions			4,825				288
Depreciation			21,449				24,688
Amortization			557				642
Stock based compensation			1,238				289
Net (gain) loss on asset sales			241				(365	)
Non-cash write down of long-lived assets			3,202				1,500
Non-cash portion of restructuring charges			—				29
Deferred income tax			(1,945	)			(2,533	)
Provision (recovery) for bad debts			598				1,131
Key executive life insurance proceeds, net			—				983
Other			20				(1,275	)
Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments			1,357				443
Net cash provided by continuing operating activities			4,150				17,620
Investing activities:
Capital expenditures			(3,341	)			(7,614	)
Acquisitions			(393	)			(30,388	)
Investment in foreign restricted assets			—				158
Collection of notes receivable			734				236
Change in restricted cash			—				2,766
Proceeds from sale of capital assets			30				2,376
Return of capital from equity affiliates			229				—
Key executive life insurance premiums			(166	)			—
Other			(362	)			(210	)
Net cash used in investing activities			(3,269	)			(32,676	)
Financing activities:
Payment of long-term debt			(290	)			(24,407	)
Other			(309	)			40
Net cash used in financing activities			(599	)			(24,367	)
Cash flows of discontinued operations:
Operating cash flow			(50	)			(4,640	)
Investing cash flow			—				23,062
Net cash provided by (used in) discontinued operations			(50	)			18,422
Effect of exchange rate changes on cash and cash equivalents			63				399
Net increase (decrease) in cash and cash equivalents			295				(20,602	)
Cash and cash equivalents at end of period		$	35,612			$	85,019

-continued-

Unifi Announces Second Quarter Results – page 6

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

Certain statements included herein contain forward-looking statements within the meaning of federal security laws about Unifi, Inc.’s (the “Company”) financial condition and results of operations that are based on management’s current expectations, estimates and projections about the markets in which the Company operates, as well as management’s beliefs and assumptions. Words such as “expects,” “anticipates,” “believes,” “estimates,” variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.

Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to, availability, sourcing and pricing of raw materials, pressures on sales prices and volumes due to competition and economic conditions, reliance on and financial viability of significant customers, operating performance of joint ventures, alliances and other equity investments, technological advancements, employee relations, changes in construction spending, capital expenditures and long-term investments (including those related to unforeseen acquisition opportunities), continued availability of financial resources through financing arrangements and operations, outcomes of pending or threatened legal proceedings, negotiation of new or modifications of existing contracts for asset management and for property and equipment construction and acquisition, regulations governing tax laws, other governmental and authoritative bodies’ policies and legislation, the Company’s ability to integrate fully the newly-acquired Dillon operations and proceeds received from the sale of assets held for disposal. In addition to these representative factors, forward-looking statements could be impacted by general domestic and international economic and industry conditions in the markets where the Company competes, such as changes in currency exchange rates, interest and inflation rates, recession and other economic and political factors over which the Company has no control. Other risks and uncertainties may be described from time to time in the Company’s other reports and filings with the Securities and Exchange Commission.

-end-