What changed in this filing

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Item 1. Financial Statements

2024-05-09 compared with 2024-02-07 · 142 added, 138 removed, 373 unchanged (43% of the section changed)

2 unchanged sentences

(In thousands, except share and per share amounts)

December 31, 2023

March 31, 2024

Cash and cash equivalents

22 unchanged sentences

18,249,837 and 18,081,538

shares issued and outstanding as of December 31, 2023 and July 2, 2023, respectively)

shares issued and outstanding as of March 31, 2024 and July 2, 2023, respectively)

Capital in excess of par value

7 unchanged sentences

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Cost of sales

Gross profit (loss)

Selling, general and administrative expenses

5 unchanged sentences

Interest expense

Equity in earnings of unconsolidated affiliates

Equity in loss (earnings) of unconsolidated affiliates

Loss before income taxes

Provision (benefit) for income taxes

Provision for income taxes

Net loss per common share:

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

Other comprehensive income (loss):

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Other comprehensive (loss) income:

Foreign currency translation adjustments

Other comprehensive income (loss), net

Other comprehensive (loss) income, net

Comprehensive loss

6 unchanged sentences

Total Shareholders’ Equity

Balance at October 1, 2023

Balance at December 31, 2023

Options exercised

2 unchanged sentences

Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

Other comprehensive income, net of tax

Balance at December 31, 2023

Other comprehensive loss, net of tax

Balance at March 31, 2024

Capital in Excess of Par Value

8 unchanged sentences

Other comprehensive loss, net of tax

Balance at December 31, 2023

Balance at March 31, 2024

Capital in Excess of Par Value

2 unchanged sentences

Total Shareholders’ Equity

Balance at October 2, 2022

Balance at January 1, 2023

Options exercised

3 unchanged sentences

Other comprehensive income, net of tax

Balance at January 1, 2023

Balance at April 2, 2023

Capital in Excess of Par Value

7 unchanged sentences

Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

Other comprehensive loss, net of tax

Balance at January 1, 2023

Other comprehensive income, net of tax

Balance at April 2, 2023

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

For the Six Months Ended

December 31, 2023

January 1, 2023

For the Nine Months Ended

March 31, 2024

April 2, 2023

Cash and cash equivalents at beginning of period

1 unchanged sentence

Adjustments to reconcile net loss to net cash provided by operating activities:

Equity in earnings of unconsolidated affiliates

Equity in loss (earnings) of unconsolidated affiliates

Distribution received from unconsolidated affiliate

Depreciation and amortization expense

16 unchanged sentences

Payments on finance lease obligations

Payments of debt financing fees

Net cash (used) provided by financing activities

10 unchanged sentences

UNIFI has direct manufacturing operations in four countries and participates in joint ventures with operations in Israel and the United States (the “U.S.”).

During the quarter ended December 31, 2023, UNIFI terminated the joint venture with operations in Israel.

During the second quarter of fiscal 2024, UNIFI terminated the joint venture with operations in Israel.

Basis of Presentation;

10 unchanged sentences

All amounts, except per share amounts, are presented in thousands (000s), except as otherwise noted.

The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and its subsidiary in El Salvador ended on December 31, 2023.

Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarter ended on December 31, 2023.

The three-month periods ended December 31, 2023 and January 1, 2023 both consisted of 13 weeks.

The six-month periods ended December 31, 2023 and January 1, 2023 both consisted of 26 weeks.

The fiscal quarter for Unifi, Inc.

and its material operating subsidiaries ended on March 31, 2024.

The three-month periods ended March 31, 2024 and April 2, 2023 both consisted of 13 weeks.

The nine-month periods ended March 31, 2024 and April 2, 2023 both consisted of 39 weeks.

Recent Accounting Pronouncements

Issued and Pending Adoption

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

In December 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

2023-09 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state, and foreign).

The ASU also requires entities to disclose their income tax payments to international, federal, state, and local jurisdictions, among other changes.

The ASU is effective for UNIFI's fiscal 2026, with early adoption permitted, and should be applied on a prospective basis, but retrospective application is permitted.

UNIFI is currently evaluating the impact on the Company’s disclosures but does not expect this standard will have a material impact on its consolidated financial position, results of operations, or cash flows.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

1 unchanged sentence

2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The ASU is effective for UNIFI’s fiscal year 2025 for annual reporting and in the first quarter of fiscal 2026 for interim reporting, with early adoption permitted.

UNIFI has not and does not expect to early adopt this standard.

UNIFI does not expect this standard will have a material impact on its consolidated financial position, results of operations or cash flows.

The ASU is effective for UNIFI’s fiscal 2025 for annual reporting and in the first quarter of fiscal 2026 for interim reporting, with early adoption permitted.

UNIFI has not adopted, and does not expect to early adopt, this standard.

Based on UNIFI’s review of ASUs issued since the filing of the 2023 Form 10-K, there have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on UNIFI’s consolidated financial statements.

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Third-party manufacturer

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

REPREVE ® Fiber

20 unchanged sentences

Maturity Date

December 31, 2023

March 31, 2024

ABL Term Loan

10 unchanged sentences

Construction Financing

In connection with the construction financing arrangement, UNIFI has borrow ed a total of $ 9,755 and transitioned $ 9,755 of comple ted asset costs to finance lease obligations as of December 31, 2023.

There were no borrowings outstanding on this financing arrangement as of December 31, 2023.

In connection with the construction financing arrangement, UNIFI has borrow ed a total of $ 9,755 and transitioned $ 9,755 of comple ted asset costs to finance lease obligations as of March 31, 2024.

There were no borrowings outstanding on this financing arrangement as of March 31, 2024.

Notes to Condensed Consolidated Financial Statements (Continued)

The provision (benefit) for income taxes and effective tax rate were as follows:

The provision for income taxes and effective tax rate were as follows:

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

Provision (benefit) for income taxes

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Provision for income taxes

Effective tax rate

Income Tax Expense

UNIFI’s provision (benefit) for income taxes for the six months ended December 31, 2023 and January 1, 2023 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rate for the three and six months ended December 31, 2023 varied from the U.S.

UNIFI’s provision for income taxes for the nine months ended March 31, 2024 and April 2, 2023 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rate for the three and nine months ended March 31, 2024 varied from the U.S.

federal statutory rate primarily due to the U.S.

generated losses for which UNIFI does not expect to realize a future tax benefit.

During the six months ended December 31, 2023, the Internal Revenue Service (“IRS”) audit of fiscal years 2014 through 2019 was concluded with a refund of $ 1,275 , which has been received along with $ 457 of interest on the overpayments.

During the nine months ended March 31, 2024, the Internal Revenue Service (the “IRS”) audit of fiscal 2014 through 2019 was concluded with a refund of $ 1,275 , which has been received along with $ 457 of interest on the overpayments.

The impact from the IRS audit adjustments to the prior periods was insignificant.

The effective tax rates for the three and six months ended January 1, 2023 varied from the U.S.

federal statutory rate primarily due to losses for which UNIFI does not expect to realize a future benefit and a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years.

The effective tax rates for the three and nine months ended April 2, 2023 varied from the U.S.

federal statutory rate primarily due to the U.S.

generated losses for which UNIFI does not expect to realize a future tax benefit and a discrete tax benefit related to the recovery of certain Brazilian income taxes paid in prior years.

Unrecognized Tax Benefits

UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that its provision for income taxes is sufficient.

Following the conclusion of the IRS audit, UNIFI adjusted the uncertain tax positions for fiscal years 2014 through 2019 that were effectively settled.

Following the conclusion of the IRS audit, UNIFI adjusted the uncertain tax positions for fiscal 2014 through 2019 that were effectively settled.

The impact from releasing the netted uncertain tax position liabilities was insignificant.

During the three months ended December 31, 2023, UNIFI released $ 853 accrued for interest and penalties after receiving the final assessment from the IRS.

Shareholders’ Equity

On October 31, 2018, UNIFI announced that the Company's Board of Directors (the “Board”) approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $ 50,000 of its common stock.

On October 31, 2018, UNIFI announced that the Company's Board of Directors approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $ 50,000 of its common stock.

The share repurchase authorization is discretionary and has no expiration date.

7 unchanged sentences

however, awards outstanding under a respective prior plan remain subject to that plan’s provisions.

The following table provides information as of December 31, 2023 with respect to the number of securities remaining available for future issuance under the 2020 Plan:

The following table provides information as of March 31, 2024 with respect to the number of securities remaining available for future issuance under the 2020 Plan:

Authorized under the 2020 Plan

Share reserve increase from First Amendment

Share reserve increase from the First Amendment

Awards expired, forfeited, or otherwise terminated unexercised

4 unchanged sentences

Financial Instruments

For the six months ended December 31, 2023 and January 1, 2023, there were no significant changes to UNIFI’s assets and liabilities measured at fair value, and there were no transfers into or out of the levels of the fair value hierarchy.

For the nine months ended March 31, 2024 and April 2, 2023, there were no significant changes to UNIFI’s assets and liabilities measured at fair value, and there were no transfers into or out of the levels of the fair value hierarchy.

UNIFI believes that there have been no significant changes to its credit risk profile or the interest rates available to UNIFI for debt issuances with similar terms and average maturities, and UNIFI estimates that the fair values of its debt obligations approximate the carrying amounts.

Other financial instruments

Notes to Condensed Consolidated Financial Statements (Continued)

include cash and cash equivalents, receivables, accounts payable, and accrued expenses.

Other financial instruments include cash and cash equivalents, receivables, accounts payable, and accrued expenses.

The financial statement carrying amounts of these items approximate the fair values due to their short-term nature.

Notes to Condensed Consolidated Financial Statements (Continued)

Grantor Trust

1 unchanged sentence

Deferred Compensation Plan (the “DCP”), established in fiscal 2022, is an unfunded non-qualified deferred compensation plan in which certain key emplo yees are eligible to participate.

The fair values of the investment assets held by the grantor trust established in connection with the DCP were approximately $ 2,618 and $ 2,496 as of December 31, 2023 and July 2, 2023, respectively, and are classified as trading securities within Other non-current assets.

The fair values of the investment assets held by the grantor trust established in connection with the DCP were approximately $ 2,891 and $ 2,496 as of March 31, 2024 and July 2, 2023, respectively, and are classified as trading securities within Other non-current assets on the Condensed Consolidated Balance Sheets.

The grantor trust assets have readily available market values and are classified as Level 1 trading securities in the fair value hierarchy.

Trading gains and losses associated with these investments are recorded to Other operating expense (income), net.

The associated DCP liability is recorded within Other long-term liabilities, and any increase or decrease in the liability is also recorded in Other operating expense (income), net.

During the six months ended December 31, 2023 and January 1, 2023, we rec orded net gains on investments held by the trust of $ 122 and $ 11 , respectively.

Trading gains and losses associated with these investments are recorded within Other operating expense (income), net on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The associated DCP liability is recorded within Other long-term liabilities on the Condensed Consolidated Balance Sheets, and any increase or decrease in the liability is also recorded in Other operating expense (income), net on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

During the nine months ended March 31, 2024 and April 2, 2023, we rec orded net gains on investments held by the trust of $ 255 and $ 78 , respectively.

Earnings Per Share

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Basic weighted average shares

12 unchanged sentences

Related party balances and transactions are not material to the condensed consolidated financial statements and, accordingly, are not presented separately from other financial statement captions.

There were no related party receivables as of December 31, 2023 and July 2, 2023.

There were no related party receivables as of March 31, 2024 and July 2, 2023.

Related party payables for Salem Leasing Corporation consisted of the following:

December 31, 2023

March 31, 2024

Accounts payable

4 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

Affiliated Entity

Transaction Type

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Salem Leasing Corporation

5 unchanged sentences

UNIFI's three reportable segments are organized as follows:

• The operations within the Americas Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA and CAFTA-DR to similar customers utilizing similar methods of distribution.

• The operations within the Americas Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the United States-Mexico-Canada Agreement and the Dominican Republic—Central America Free Trade Agreement to similar customers utilizing similar methods of distribution.

These operations derive revenues primarily from manufacturing synthetic and recycled textile products with sales primarily to yarn manufacturers, knitters, and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial, medical, and other end-use markets principally in North and Central America.

5 unchanged sentences

The Asia Segment includes sales offices in China, Turkey, and Hong Kong.

UNIFI evaluates the operating performance of its segments based upon Segment Profit, which represents segment gross profit (loss) plus segment depreciation expense.

UNIFI evaluates the operating performance of its segments based upon Segment Profit (Loss), which represents segment gross profit (loss) plus segment depreciation expense.

This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the CODM.

2 unchanged sentences

Selected financial information is presented below:

For the Three Months Ended December 31, 2023

For the Three Months Ended March 31, 2024

Cost of sales

1 unchanged sentence

Segment depreciation expense

Segment (Loss) Profit

For the Three Months Ended January 1, 2023

Segment Profit

For the Three Months Ended April 2, 2023

Cost of sales

Gross (loss) profit

Segment depreciation expense

Segment (Loss) Profit

For the Six Months Ended December 31, 2023

Segment Profit

For the Nine Months Ended March 31, 2024

Cost of sales

2 unchanged sentences

Segment (Loss) Profit

For the Six Months Ended January 1, 2023

For the Nine Months Ended April 2, 2023

Cost of sales

1 unchanged sentence

Segment depreciation expense

Segment (Loss) Profit

Segment Profit

Notes to Condensed Consolidated Financial Statements (Continued)

The reconciliations of segment gross profit (loss) to consolidated loss before income taxes are as follows:

The reconciliations of segment gross profit to consolidated loss before income taxes are as follows:

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

Segment gross profit (loss)

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Segment gross profit

Selling, general and administrative expenses

5 unchanged sentences

Interest expense

Equity in earnings of unconsolidated affiliates

Equity in loss (earnings) of unconsolidated affiliates

Loss before income taxes

6 unchanged sentences

In December 2023, UNIFI dissolved its interest in UNF under an agreement whereby UNIFI agreed to pay the former joint venture partner $ 2,750 and recorded it as an associated contract termination cost within Restructuring costs on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

UNIFI made a payment to the former joint venture partner of $ 1,200 in the second quarter of fiscal 2024 and the remaining $ 1,550 is included in Other current liabilities, expected to be paid in the third quarter of fiscal 2024.

Accordingly, the balance sheet information presented below as of December 31, 2023 does not include any amounts related to UNF.

UNIFI made a payment to the former joint venture partner of $ 1,200 in the second quarter of fiscal 2024 and the remaining $ 1,550 was paid in the third quarter of fiscal 2024.

Accordingly, the balance sheet information presented below as of March 31, 2024 does not include any amounts related to UNF.

UNF America LLC

5 unchanged sentences

The supply agreement has no stated minimum purchase quantities and pricing is typically negotiated every six months, based on market rates.

As of December 31, 2023, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, were $ 571 .

As of March 31, 2024, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, were $ 618 .

UNIFI’s raw material purchases under this supply agreement consisted of the following:

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

As of December 31, 2023, UNIFI had accounts payable due to UNFA of $ 2,020 , and as of July 2, 2023, UNIFI had combined accounts payable due to UNF and UNFA of $ 3,440 .

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

As of March 31, 2024, UNIFI had accounts payable due to UNFA of $ 1,680 , and as of July 2, 2023, UNIFI had combined accounts payable due to UNF and UNFA of $ 3,440 .

UNIFI previously determined that UNF and UNFA were variable interest entities and also determined that UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement.

3 unchanged sentences

Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to UNFA.

As of December 31, 2023, UNIFI’s investment in UNFA was $ 3,101 .

As of March 31, 2024, UNIFI’s investment in UNFA was $ 1,537 .

Notes to Condensed Consolidated Financial Statements (Continued)

Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) are presented in the tables below.

December 31, 2023

March 31, 2024

Current assets

5 unchanged sentences

For the Three Months Ended

For the Six Months Ended

December 31, 2023

January 1, 2023

December 31, 2023

January 1, 2023

(Loss) income from operations

Net (loss) income

For the Nine Months Ended

March 31, 2024

April 2, 2023

March 31, 2024

April 2, 2023

Gross (loss) profit

Loss from operations

Depreciation and amortization

Distributions received

Distribution received

Supplemental Cash Flow Information

Cash payments for interest and taxes consist of the following:

For the Six Months Ended

December 31, 2023

January 1, 2023

For the Nine Months Ended

March 31, 2024

April 2, 2023

Interest, net of capitalized interest of $ 153 and $ 403 , respectively

3 unchanged sentences

Non-Cash Investing and Financing Activities

As of December 31, 2023 and July 2, 2023, $ 621 and $ 1,137 , respectively, were included in accounts payable for unpaid capital expenditures.

As of January 1, 2023 and July 3, 2022, $ 1,594 and $ 2,456 , respectively, were included in accounts payable for unpaid capital expenditures.

During the six months ended December 31, 2023 and January 1, 2023, UNIFI recorded non-cash activity relating to finance lease s of $ 1,633 a nd $ 729, respectively.

As of March 31, 2024 and July 2, 2023, $ 201 and $ 1,137 , respectively, were included in accounts payable for unpaid capital expenditures.

As of April 2, 2023 and July 3, 2022, $ 1,332 and $ 2,456 , respectively, were included in accounts payable for unpaid capital expenditures.

During the nine months ended March 31, 2024 and April 2, 2023, UNIFI recorded non-cash activity relating to finance lease s of $ 1,633 a nd $ 3,179 , respectively.

In connection with the commencement of the 2022 Credit Agreement in October 2022, $ 52,500 of borrowings outstanding on the revolving credit facility were transferred to the term loan, such that revolver borrowings were reduced by $ 52,500 and term loan borrowings were increased by $ 52,500 with no flow of cash.

2 unchanged sentences

Select balance sheet information is presented in the following table.

December 31, 2023

March 31, 2024

Receivables, net:

33 unchanged sentences

Recovery of taxes

Investments in unconsolidated affiliates

Grantor trust

Investments in unconsolidated affiliates

Intangible assets, net

2 unchanged sentences

Payroll and fringe benefits

Severance (1)

Incentive compensation

Dissolution of joint venture

Deferred revenue

Severance (1)

Property taxes, interest and other

4 unchanged sentences

Total other long-term liabilities

(1) During the second quarter of fiscal 2024, UNIFI recorded $ 2,351 of severance expenses related to a cost reduction plan intended to lower operating expenses for both production and administrative activities, included in Restructuring costs on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

(1) During the second quarter of fiscal 2024, UNIFI recorded $ 2,351 of severance expenses related to a cost reduction plan intended to lower operating expenses for both production and administrative activities, which are included in Restructuring costs on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Most of the restructuring expenses incurred impact the Americas Segment and UNIFI does not anticipate any additional, material restructuring costs at this time.

The change in the liability is due to $ 949 of cash disbursements during the current period.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements