Unifi Inc, the world's largest producer and processor of textured yarns, reported a second-quarter net loss of $3.5 million or seven cents per share, slightly wider than the net loss of $3.4m or six cents per share for the December quarter of the previous year.

The results were impacted by losses stemming from the sale of Unifi Technology Group (Cimtec) and a charge to write off fees associated with the refinancing of the company's bank debt.

Net sales for the quarter were $221.7m compared to $299.1m for the prior year December quarter.

The company has reduced funded debt by $181.6m since September 24, 2000, by maximising cash flow from operations, reducing working capital levels, selling certain non-core assets, and utilising its state-of-the-art manufacturing facilities and information technology to minimise capital expenditures.

Brian Parke, Unifi's president and CEO, said: "We are extremely pleased with our continued progress in strengthening free cash flow and reducing our debt. Exiting the quarter with our lowest level of total funded debt in more than four years is a tribute to the fact that Unifi has created a sustainable business model.

"We are also very pleased with the improved performance of our foreign operations. Improved local market conditions, the success of new value-added products, and continuing progress in cost reduction have led to significantly improved results from our Brazilian and European operations. We expect these operations to continue to improve as we move through calendar 2002.

"We are actively exploring additional volume opportunities in the world's growth regions, including the Caribbean Basin and Asia, where our high quality, value-added yarns provide a competitive advantage for our customers. The terms of our new credit facility provide us with greater flexibility to capitalise on these opportunities and the many others that exist throughout the global supply chain."

However, he added: "Looking forward, we anticipate continued volatility in volumes as the economy seeks its new equilibrium. The potential impact of credit issues with some of our customers, as well as an extended shutdown in January, will also adversely affect sales volumes in our third quarter of fiscal 2002."