Good morning. My name is Melissa, and I will be your conference operator today. At this time I would like to welcome everyone to the Unifi Second Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions). Thank you. I would now turn the conference over to Mr. James Otterberg.

Thank you, operator, and good morning, everyone. Joining me for the call today is Bill Jasper, our Chairman and Chief Executive Officer; and Roger Berrier, our President and Chief Operating Officer. During this call we will be referencing a webcast presentation that can be found at unifi.com. The presentation can be accessed by clicking the Second Quarter Conference Call link found on our homepage. Before we begin I need to first advise you that certain statements included on today's call will be forward-looking statements within the meaning of federal securities laws. Management cautions that these statements are based on current expectations, estimates and/or projections about the markets in which the company operates. These statements are not guarantees of future performance and involve certain risks that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied by these statements. I direct you to the disclosures filed with the SEC in our Form 10-K and Form 10-Qs regarding various factors that may impact these results. Also please be advised that certain non-GAAP financial measures, such as adjusted EBITDA, will be discussed on this call and a non-GAAP reconciliation can be found in the schedule to the webcast presentation. Before we get to the financial details for the quarter I'd like to turn the call over to Roger, who will provide you with an overview of the company's markets, raw materials and some operating trends. Roger?

Thanks, James and good morning everyone. I'll start this morning with a few brief comments regarding the retail market. Retail sales of apparel in the December quarter were up 4.7% compared to the prior year December quarter and reflected a pick-up in demand from consumers along with signs of a strengthening economy. Based on the relative strength of retail apparel sales during the holiday selling season inventory days at retail have remained steady at approximately 69 days, which is a very encouraging sign going forward. The temperatures at the end of the year helped move inventory of cold weather merchandise, which will be a big plus to retailers as they transition their inventory to spring clothing. This should also benefit our sales volumes during the next nine months as replenishment of this merchandise takes place. In terms of total synthetic apparel consumption in the region, which includes NAFTA and CAFTA, held that sourcing share of synthetic apparel at a steady rate of 18% for the last five years and the total square meters of synthetic apparel sourced from the region is expected to have increased 6% to 7% for 2013 compared to 2012. Another positive sign for our business is that synthetic apparel versus cotton apparel and other types of yarn has increased in each of the last five years, growing from a 38% share in 2008 to an estimated 49% share in 2013. In terms of our other key segments retail sales of home and office furnishings increased 6.7% in the December 2013 quarter compared to the December 2012 quarter and U.S. auto sales increased 6% for the same period. In terms of polyester raw materials prices have stabilized over the past three quarters. We don't expect any significant changes to the raw material pricing in the March quarter.…

Thanks, Roger. I will begin the review of our preliminary financial results for the December quarter on Page three of the presentation with net sales and gross profit highlights by segment. For all periods presented the company's polyester segment has experienced sales volume and revenue declines that had been offset by improvement in gross profits. The timing of the holiday shutdown and reductions in lower merchant business are the primary reasons for the sales volume and revenue decline while the company’s mix enrichment strategies improved average selling prices and gross profits. Sales volume for our nylon segment was also impacted by the timing of the holiday shutdown but that impact was offset by new PVA programs that contributed to improvement in average selling prices and gross profits. For all periods presented the company's international segment has experienced declines in sales volume, net sales and gross profit. While overall sales volume for our Brazilian operation has remained relatively flat, net sales and gross profits have decreased due to changes in exchange rates and an unfavorable change in mix as more volume is concentrated within resale products. For China a soft market has created period-over-period declines in sales volume that have unfavorably impacted net sales and gross profit. Turning to the income statement highlights for the three months ended December 29, 2013, which are shown on page four, the company is reporting earnings per basic share of $0.34 on net sales of $160.6 million. Although net sales declined earnings per basic share increased $0.22 per share from the $0.12 per basic share reported for the December 2012 quarter. This increase in EPS was due to the improvement in gross margin from 9.7% in the prior period to 11.5% for the current quarter. The benefits of lower net interest expense and improved earnings…

Thanks, James, and good morning, everyone. I'm pleased with our earnings result for both the December quarter and first half of our fiscal year, particularly as they relate to our domestic business. The stability and the price of raw materials coupled with our ongoing strategic focus on lean manufacturing initiatives, enriching our product mix and deriving value from sustainability initiatives contributed to significant improvements in our domestic gross margins. We expect to see strong demand for our PVA products continuing into the second half of the fiscal year. And we are encouraged by the ongoing consumer shift towards synthetic apparel and the continued growth in regional production. However, as both Roger and James mentioned, we are disappointed by the pace of recovery in our international operations. Brazil and China are lagging the first half of this fiscal year versus the same period last year, both in terms of revenue and earnings. The consumer demand in Brazil continues to be hamstrung by high inflation and a weakened economy. And these conditions continue to negatively impact our revenues and gross profit. And as Roger mentioned China market conditions are soft and our volumes there have suffered. We will however continue to focus on increasing sales of our higher margin products as well as our PVA products in both Brazil and China and aggressively manage price to overcome inflationary cost increases. One thing I would specifically like to touch on is our year-over-year revenue declines in both the December quarter and in the first half of our fiscal year which totaled $15.7 million. In our first fiscal quarter the strong performance in our domestic operations was offset by revenue declines in our international segment. In our second fiscal quarter the international shortfall continued and makes up over half of our total year-to-date decline.…

(Operator Instructions). Your first question comes from the line of Chris McGinnis, Sidoti & Company. Christopher McGinnis - Sidoti & Company, LLC: Good morning, Gentlemen.

Good morning, Chris.

Good morning, Chris.

Good morning, Chris. Christopher McGinnis - Sidoti & Company, LLC: Just a couple of questions, first just on the strategy to improve your product mix, how much of that, in exiting the lower margin business, how much of that is part of the revenue decline, the exiting of the lower margin business?

Hi, Chris this is James. Well, I think I've said that -- let me give you a number. In the last half of my paragraph there before Bill talked about our cash and how well we've been generating I might have said $2.6 million, it was actually $22.6 million. But when you look at the revenue decline and I will let Bill follow-up, the biggest in magnitude were the impact of the shutdown, currency changes in Brazil and then the effects of the exiting some of the lower margin business and replacing it with some new programs and other PVA products but it's not going to be a majority of the revenue decline. Christopher McGinnis - Sidoti & Company, LLC: And I guess just with the commentary about, is there any risk that the domestic volume trend changes, I think it's around 18% of that, if I am correct, and has that changed, is there any -- you see more competition in the U.S. coming in and it's only on the lower end and are they trying to compete at all in the higher end?

Yeah, this is Bill. I think we're talking about a couple of different things here. The actual share of the region holding firm at 18% we expect that to continue basically because we've got a good cost effective supply change set up here now which can compete with Asia. The exiting of the lower end business, which Roger mentioned, that's more related to, one the cost gap between here and Asia being about $0.14; and two there are being a very slow market in China right now which is basically driving some of those yarn producers to export more to the U.S. than they normally would and selling at, frankly prices that are actually below their cost right now. This happens from time to time. I don’t know that it will continue but we've been able to replace for all intents and purposes all of the business we exited on the low end, we've been able to replace that with higher value programs. Should that the gap between here and Asia reduce I would anticipate we could potentially pick-up some of that lower-end business back if made sense to us, but right now we are running very near total capacity with the programs we have and especially I mentioned a shift to lower deniers. A lot of the programs here in this region have shifted to lighter deniers which doesn't necessarily affect our margins, though it does affect our revenue slightly. So overall I think those are the two things that are going on right now.

Bill, and Chris just add to Bill's comment, your reference to the imports usually are coming at the low end of our business. So that the commodity sector. So as we talk about product mix enrichment, replacing that lowering business with more value-added products differentiated products through our product development efforts has been one of our core strategies for several years. Christopher McGinnis - Sidoti & Company, LLC: Sure. I appreciate that. I guess just in supporting the REPREVE indicatives and your PVA imitative, I am little surprised to see just your SG&A kind of flat year-over-year. Can you maybe just talk a little bit what's -- how you are controlling that but also supporting your new growth initiatives?

Yes if you look at sort of our consumer marketing campaign with REPREVE, you look at our spend rate last year versus this year, last year we spent a lot of money creating, I would say a lot of backbone type website activity and marketing collateral. This year we didn't have to re-spend that money. So we have more funds going out directly to more consumer marketing. Last year we were building up a lot of that foundation of the platform. So our exposure out to the consumers is probably a little more this year than last year even though our SG&A expense in that area is relatively flat. Christopher McGinnis - Sidoti & Company, LLC: And just to touch on renewables real quick, obviously the Chemtex plant opened or at least broke ground, could you may be just talk about may be any contract you have with that or may be just provide a little more insight of your relationship with the Chemtex plant?

Okay, Chris. Yeah we’ve contracted a couple of hundred acres for that plant in Southeast and North Carolina. And I would expect once the plant begins to be built and once they begin to -- people or the farmers there have a little more confidence in that plant being built, I suspect we could have some additional sales. Now the majority of the feedstock today is going to be Arundo and switchgrass which has already been contracted. But I would expect that there is potential for some more business there. Christopher McGinnis - Sidoti & Company, LLC: Is there anything else on the horizon for the -- on the bio side, on the biofuel side?

Well certainly there are several different competing technologies which are being developed right now. I would expect at some point in time we'll determine what the winning technologies are. And then once we do that miscanthus still is at least for most of those technologies a very viable and in many cases the most effective product to be fed into those technologies. So I think once the industry sorts out what the winning technology is going to be there will be some significant opportunities for us but that’s still probably a few years down the road, which is why we are focused now on a market that appears to be ready and which is the poultry bedding market. Christopher McGinnis - Sidoti & Company, LLC: Sure. Now that makes sense. And I am just then looking at things, Europe is pretty strong, seemingly Europe has a stronger presence of the miscanthus and the beating market already and should sort of adapt overtime here I would imagine?

Well, yeah. I mean certainly in Europe miscanthus is very strong in the power market, also the electricity market. A lot of electricity there is generated by biomass and a good portion of that is miscanthus. But that market is much more mature there in Europe than it is here in the U.S. Christopher McGinnis - Sidoti & Company, LLC: Sure. And just with the testing that you have lined over the next year you talked about, do you see any problems with, I guess what are the issues in terms of getting the supplier? Is it getting farmers to come on board still or is it, or is that going to be your own, that you are going to grow yourself. Can you just maybe walk us through, how you plan to supply the kind of demand for the bedding market?

Okay. Well. First let me talk about our testing. Right now our testing is with several of these, they’re called chicken houses, but they are really growth facilities for chickens and what we are replacing is basically sawdust and wood chips. Initial testing we did at the North Carolina State University indicated that the health of the chickens and the growth of the chickens was actually enhanced by using chopped miscanthus versus the woodchips. We are now going to confirm that or we will approve it or disprove it in some large commercial scale tests. Should that be successful the demand could be quite large. We've got two different models, one is we would be potentially leasing land ourselves and growing and selling it. Another model is we would be planting for farmers who would then grow it and sell it. And we are probably going to have some mix of those two scenarios, should we be successful and move forward. Now should we be successful my anticipation would be several thousand acres will be planted over the next couple of years to feed multiple number of tons into this market. But again until we prove the value proposition and the viability of this product in that market it’s going to be difficult to say how big it could be but certainly if we are successful it could be quite large but again still probably two or three years down the road. Christopher McGinnis - Sidoti & Company, LLC: I agree. Thank you very much for the time today.

Yes. Thanks, Chris.

Thanks, Chris.

(Operator Instructions) And there is no further audio questions at this time.

Okay. Well, thank you operator and I guess thank you all for joining in. We are looking forward to continuing to improve and we will continue to update some of these potential benefits in future quarters. Thank you.

Thank you for joining today's conference call. You may now disconnect your lines.