Spinrite Income Fund
TSX : SNF.UN

Spinrite Income Fund

July 28, 2005 12:41 ET

Spinrite Reports Second Quarter Results for Fiscal 2005

LISTOWEL, ONTARIO--(CCNMatthews - July 28, 2005) -

Performance reflects solid growth powered by strong demand

Highlights:

- Revenue increased 26.6%

- Sales of value-added fancy yarns up 33.7% and classic yarns up 32.8%

- Gross profit increase of 17.3%

- Adjusted EBITDA up 8.9% to $11.2 million

- Generated distributable cash available to public unitholders of $8.2 million

- Declared three cash distributions to public unitholders totalling $5.1 million

Spinrite Income Fund (TSX:SNF.UN), today announced its financial results for the 13 weeks ended July 2, 2005, and for the combined 26 weeks from January 1 to July 2, 2005.

"Demand for craft yarns continues to grow steadily throughout North America. As a result, we're pleased to report a strong second quarter for 2005," said Dario Margve, President and Chief Executive Officer. "Furthermore, retailers are anticipating successful Fall and Holiday seasons for craft yarns and have already started increasing inventory positions compared to the prior year," he said.

The second quarter results reported are compared to Spinrite Limited Partnership's results of operations for the 13 weeks ended June 26, 2004. The year-to-date combined results include active operations of the Fund from February 8 to April 2, 2005 and Spinrite Limited Partnership's operations from January 1 to February 7, 2005.

Spinrite's revenue in the second quarter increased by 26.6% to $37.7 million, up from $29.8 million for the same period in the prior year. Sales of value-added fancy yarns were up 33.7% against strong prior year sales. Classic yarns continued to show strong growth, up 32.8% over last year. Revenues of $78.2 million for the 26 weeks ended July 2, 2005 increased by $21.8 million, or 38.7%, from $56.4 million for the comparable period ended June 26, 2004. Gross profit in the second quarter increased by 17.3% to $14.7 million from $12.5 million for same the period in 2004.

Spinrite reported Adjusted EBITDA(1) of $11.2 million for the 13 weeks ended July 2, 2005, an increase of 8.9% from $10.3 million for the 13 weeks ended June 26, 2004. For the 26 weeks ended July 2, 2005 Spinrite reported Adjusted EBITDA of $22.9 million, an increase of $4.5 million, or 24.2%, from $18.4 million for the comparable period in 2004.

The Fund makes regular monthly distributions to public unitholders of record as of the last business day of each month. Distributable cash available to public unitholders for the second quarter was $8.2 million, from which the Fund declared three cash distributions to public unitholders totalling $5.1 million. Since inception, Spinrite has generated distributable cash available to public unitholders of $13.0 million and declared distributions to public unitholders of $8.0 million.

"It's anticipated that demand for craft yarns will continue to increase. As an established leader in the market with strong manufacturing capabilities, Spinrite is ideally positioned to benefit from this ongoing trend," said Mr. Margve.

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

Spinrite is the largest marketer of craft yarn in Canada and one of the largest and fastest growing 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 600 employees at its fully integrated manufacturing and distribution centre in Listowel, Ontario.

(1) While not a Canadian GAAP measure, the Company believes that in addition to net income or loss, EBITDA is a useful supplemental measure of cash available for distribution prior to debt service, changes in working capital, capital expenditures and taxes.

Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization after making adjustments for certain non-recurring items. These adjustments include non-recurring management fees, foreign exchange translation gains or losses on debt and other instruments, and pre-funded management arrangements.

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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