100726--9/8/2006--UNIFI

related topics

{cost, regulation, environmental}

{debt, indebtedness, cash}

{condition, economic, financial}

{property, intellectual, protect}

{cost, operation, labor}

{operation, international, foreign}

{personnel, key, retain}

{operation, natural, condition}

{competitive, industry, competition}

{product, market, service}

{tax, income, asset}

{regulation, change, law}

{acquisition, growth, future}

{customer, product, revenue}

{interest, director, officer}

Despite its current indebtedness levels, the Company may still be able to incur substantially more debt. This could exacerbate further the risks associated with its substantial leverage. The Company will require a significant amount of cash to service its indebtedness and its ability to generate cash depends on many factors beyond its control. The terms of the Company s outstanding indebtedness impose significant operating and financial restrictions, which may prevent the Company from pursuing certain business opportunities and taking certain actions. The Company faces intense competition from a number of domestic and foreign yarn producers and importers of textile and apparel products. Changes in the trade regulatory environment could weaken the Company s competitive position dramatically and have a material adverse effect on its business, net sales and profitability. The significant price volatility of many of the Company s raw materials and rising energy costs may result in increased production costs, which the Company may not be able to pass on to its customers, which could have a material adverse effect on its business, financial condition, results of operations or cash flows. The Company depends upon limited sources for raw materials, and interruptions in supply could increase its costs of production and cause its operations to suffer. A decline in general economic or political conditions and changes in consumer spending could cause the Company s sales and profits to decline. Failure to successfully reduce the Company s production costs may adversely affect its financial results. Changes in customer preferences, fashion trends and end-uses could have a material adverse effect on the Company s business, net sales and profitability and cause inventory build-up if the Company is not able to adapt to such changes. The Company has significant foreign operations and its results of operations may be adversely affected by currency fluctuations. The Company may be exposed to liabilities under the Foreign Corrupt Practices Act and any determination that the Company violated the Foreign Corrupt Practices Act could have a material adverse effect on its business. The Company s business could be negatively impacted by the financial condition of its customers. Failure to implement future technological advances in the textile industry or fund capital expenditure requirements could have a material adverse effect on the Company s competitive position and net sales. Unforeseen or recurring operational problems at any of the Company s facilities may cause significant lost production, which could have a material adverse effect on its business, financial condition, results of operations and cash flows. The Company has made and may continue to make investments in entities that it does not control. The Company s acquisition strategy may not be successful, which could adversely affect its business. Increases of illegal transshipment of textile and apparel goods into the United States could have a material adverse effect on the Company s business. The Company is subject to many environmental and safety regulations that may result in significant unanticipated costs or liabilities or cause interruptions in its operations. Health and safety regulation costs could increase. The Company s business may be adversely affected by adverse employee relations. The Company depends on the continued services of key managers and employees. The Company s future financial results could be adversely impacted by asset impairments or other charges. The Company s business could be adversely affected if the Company fails to protect its intellectual property rights.

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100726--9/8/2006--UNIFI_INC