Unifi, Inc. (NYSE: UFI) today released operating results for its third quarter ended March 23, 2008.

Net income for the current quarter, including discontinued operations, was $12 thousand compared to a net loss of $13.3 million or $0.22 per share for the prior March quarter. Net loss for the first nine months of the 2008 fiscal year was $16.9 million or $0.28 per share compared to a net loss of $41.6 million or $0.76 per share for the prior year period. Income from continuing operations, before taxes of $1.5 million for the current quarter was positively impacted by a $2.2 million recovery of previously accrued restructuring charges.

Net sales for the current March quarter were $169.8 million compared to net sales of $178.2 million for the prior year March quarter. Net sales for the first nine months of the 2008 fiscal year were $523.7 million compared to net sales of $505.0 million for the prior year period.

"The Company's operating performance for the quarter was positive and on an improving trajectory despite a difficult operating environment in which overall U.S. polyester consumption contracted at twice the expected rate, due primarily to the economic slowdown in the automotive, furnishings, and apparel segments," said Ron Smith, Chief Financial Officer for Unifi. "Although our domestic polyester business had to contend with weaker than expected demand and raw materials costs at five-year highs, we were positively impacted by the benefits of our focus on sourcing strategies, cost reduction efforts, and continued strength in our nylon and Brazilian businesses. We anticipate further increases in raw material prices throughout the fourth quarter based on oil prices, growing demand for PET bottles, and increased U.S. gasoline consumption in the summer, all of which put demand pressures on key chemical ingredients of domestic polyester raw materials. Accordingly, the Company will continue to focus on executing our profitability plan, while working with our customers and suppliers to optimize our sourcing mix and minimize the resulting impact on the supply chain."

Cash-on-hand at the end of the March quarter was $26.2 million, which is essentially unchanged from the $25.8 million cash-on-hand at the end of the December quarter. Total cash and cash equivalents at the end of March, including restricted cash, were $42.6 million compared to $44.1 million as of June 2007. Total long-term debt at the end of the March quarter was $218.4 million compared to $223.8 million as of December 2007 and $234.6 million as of June 2007.

Bill Jasper, President and CEO of Unifi, said, "Our focus on the profitability of our core business has resulted in improving financial performance, which we expect to continue. In addition, the new leadership team has been working with our joint venture partner in China to develop appropriate strategies aimed at accelerating our path to profitability. We are exploring strategic options with our partner and will provide further guidance when more information becomes available. We remain committed to our original objective for China, which is to provide locally produced value-added products to our Asian customers."

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(R) - all-in-one performance yarns, Sorbtek(R), A.M.Y.(R), Mynx(R) UV, Repreve(R), Reflexx(R), MicroVista(R) and Satura(R). 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 .

UNIFI, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In Thousands Except Per Share Data) For the Quarters For the Nine-Months Ended Ended March 23, March 25, March 23, March 25, 2008 2007 2008 2007 Net sales $169,836 $178,202 $523,741 $505,041 Cost of sales 156,404 164,814 490,996 481,207 Selling, general & administrative expenses 10,080 11,177 36,542 32,854 Provision for bad debts 87 2,274 152 2,872 Interest expense 6,308 6,610 19,598 18,786 Interest income (651) (707) (2,231) (2,217) Other (income) expense, net (897) (2,462) (4,087) (2,705) Equity in (earnings) losses of unconsolidated affiliates (757) (352) (914) 4,473 Write down of long-lived assets - 12,870 2,780 16,072 Restructuring (recoveries) charges (2,199) - 4,638 - Write down of investment in unconsolidated affiliate - - 4,505 - Income (loss) from continuing operations before income taxes 1,461 (16,022) (28,238) (46,301) Provision (benefit) for income taxes 1,394 (2,099) (11,294) (4,238) Income (loss) from continuing operations 67 (13,923) (16,944) (42,063) Income (loss) from discontinued operations, net of tax (55) 666 22 463 Net income (loss) $12 $(13,257) $(16,922) $(41,600) Losses per common share (basic and diluted): Net income (loss) - continuing operations $- $(0.23) $(0.28) $(0.77) Net income - discontinued operations - 0.01 - 0.01 Net income (loss) - basic and diluted $- $(0.22) $(0.28) $(0.76) Weighted average basic and diluted shares outstanding 60,589 59,803 60,560 54,733 UNIFI, INC. CONSOLIDATED BALANCE SHEETS (Amounts in Thousands) March 23, 2008 June 24, 2007 Assets Cash and cash equivalents $26,187 $40,031 Receivables, net 99,123 93,989 Inventories 128,903 132,282 Deferred income taxes 2,078 9,923 Assets held for sale - 7,880 Restricted cash 16,374 4,036 Other current assets 12,774 11,973 Total current assets 285,439 300,114 Property, plant and equipment 183,269 209,955 Investments in unconsolidated affiliates 79,390 93,170 Intangible assets, net 39,837 42,290 Other noncurrent assets 20,349 20,424 $608,284 $665,953 Liabilities and Shareholders' Equity Accounts payable $45,465 $61,620 Accrued expenses 31,559 28,278 Income taxes payable 1,343 247 Current maturities of long-term debt and other current liabilities 11,218 11,198 Total current liabilities 89,585 101,343 Long-term debt and other liabilities 221,281 236,149 Deferred income taxes 858 23,507 Shareholders' equity 296,560 304,954 $608,284 $665,953 UNIFI, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Amounts in Thousands) For the Nine-Months Ended March 23, 2008 March 25, 2007 Cash and cash equivalents at beginning of year $40,031 $35,317 Operating activities: Net loss (16,922) (41,600) Adjustments to reconcile net loss to net cash provided by (used in) continuing operating activities: Income from discontinued operations (22) (463) (Earnings) losses of unconsolidated equity affiliates, net of distributions 262 4,473 Depreciation 27,568 31,701 Amortization 3,486 1,967 Stock-based compensation expense 724 1,433 Deferred compensation expense (425) 1,540 Net gain on asset sales (1,872) (1,593) Non-cash write down of long-lived assets 2,780 16,072 Non-cash write-down of investment in unconsolidated affiliate 4,505 - Non-cash restructuring charges, net 4,638 - Deferred income tax benefit (14,951) (5,832) Provision for bad debts 152 2,872 Split dollar life insurance proceeds, net - 1,761 Other (263) 93 Change in assets and liabilities, excluding effects of acquisitions and foreign currency adjustments (11,083) (16,035) Net cash used in continuing operating activities (1,423) (3,611) Investing activities: Capital expenditures (7,310) (5,502) Acquisition - (42,222) Proceeds from the sale of equity affiliate 8,750 - Change in restricted cash (12,338) (1,000) Collection of notes receivable 269 766 Proceeds from sale of capital assets 15,797 2,399 Return of capital from equity affiliates - 229 Split dollar life insurance premiums (217) (217) Other (793) (669) Net cash provided by (used in) investing activities 4,158 (46,216) Financing activities: Borrowing of long-term debt - 40,000 Payment of long-term debt (16,000) - Other (2,142) (1,168) Net cash provided by (used in) financing activities (18,142) 38,832 Cash flows of discontinued operations: Operating cash flow (230) 463 Net cash provided by (used in) discontinued operation (230) 463 Effect of exchange rate changes on cash and cash equivalents 1,793 1,995 Net decrease in cash and cash equivalents (13,844) (8,537) Cash and cash equivalents at end of period $26,187 $26,780 SOURCE Unifi, Inc. -0- 05/01/2008 /CONTACT: Ronald L. Smith, Vice President, Chief Financial Officer,Unifi, Inc., +1-336-316-5545/ /Web site: http://www.unifi.com / (UFI)CO: Unifi, Inc.ST: North Carolina, South CarolinaIN: TEXSU: ERNKK-CT-- CLTH040 --5582 05/01/2008 08:53 EDT http://www.prnewswire.com