Spinrite Income Fund

Spinrite Income Fund

May 03, 2007 17:00 ET

Spinrite Reports First Quarter Results for 2007

LISTOWEL, ONTARIO--(CCNMatthews - May 3, 2007) - Spinrite Income Fund (TSX:SNF.UN), today announced its financial results for the 13 weeks ended March 31, 2007.

"We are encouraged by the increasing signs of stability in the craft yarn industry and in our business," said Dario Margve, President and Chief Executive Officer. "Retail sales of Spinrite's non-fancy yarns continue to demonstrate growth compared to the prior year."

"We continued to improve our balance sheet during the first quarter by reducing debt levels by $3.7 million, or 9.2%," continued Mr. Margve. "The current debt level now stands at $36.9 million as compared to $47.9 million at April 1, 2006. We expect to make further gains in this regard throughout 2007."

Revenue for the first quarter was $17.3 million, a decrease of $3.2 million, or 15.6%, from $20.5 million in the first quarter of 2006. Sales were negatively impacted by the continued decline in fancy yarn sales and warmer weather in January, particularly in Canada. In addition, 2006 results benefited from a one-time liquidation sale of $1.0 million.

Despite the continued shift in sales mix from fancy yarns to classic yarns, the gross profit rate was 34.0% for the quarter representing a significant improvement from 28.4% in the prior year. The increase was due to major improvements in production efficiency.

Adjusted EBITDA(i) for the quarter was $3.4 million, a slight decrease from $3.5 million in the prior year period. Adjsuted EBITDA(i) includes foreign exchange gains of $0.4 million for the 13-week period ended March 31, 2007 and $0.7 million for the 13-week period ended April 1, 2006.

Conference Call and Webcast

Management will host a conference call and webcast at 10 a.m. ET on Friday, May 4, 2007 to discuss the results. The call can be accessed by calling 416-340-2219 or 1-866-862-3915.

The Fund's financial statements, notes to financial statements and management's discussion and analysis are available at www.sedar.com and www.spinriteincomefund.com.

About Spinrite Income Fund

Spinrite Income Fund (TSX:SNF.UN) is the largest producer and marketer of craft yarn in Canada and one of the largest in the United States. Established in 1952, Spinrite researches, develops, manufactures and markets a broad variety of consumer craft yarns. The company also supports its market with patterns that provide customers with creative ideas for knitted products. Spinrite has approximately 470 employees at its fully integrated manufacturing and distribution centre in Listowel, Ontario.

(i)Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization after making adjustments for pre-funded management arrangements which is a non-recurring item.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Fund that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the Fund's prospectus filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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