−Removed: Many of the factors that affect UNIFI’s business and operations involve risk and uncertainty.
−Removed: The factors described below are some of the risks that could materially negatively affect UNIFI’s business, financial condition, results of operations, and cash flows.
+Added: Many of the factors that affect UNIFI’s business and operations involve risk and uncertainty.
+Added: The factors described below are some of the risks that could materially negatively affect UNIFI’s business, financial condition, results of operations, and cash flows.
You should consider all such risks in evaluating UNIFI or making any investment decision involving UNIFI.
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UNIFI faces intense competition from a number of domestic and foreign yarn producers and importers of foreign-sourced fabric, apparel, and other textile products.
−Removed: Because UNIFI and the supply chains in which UNIFI conducts its business do not typically operate on the basis of long-term contracts with textile customers or brand partners, these competitive factors could cause UNIFI’s customers or brand partners to shift rapidly to other producers.
+Added: Because UNIFI and the supply chains in which UNIFI conducts its business do not typically operate on the basis of long-term contracts with textile customers or brand partners, these competitive factors could cause UNIFI’s customers or brand partners to shift rapidly to other producers.
UNIFI competes not only against domestic and foreign yarn producers, but also against importers of foreign-sourced fabric, apparel, and other textile products into the U.S.
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The needs of certain customers and brand partners and the characteristics of particular products determine the relative importance of these various factors.
−Removed: A large number of UNIFI’s foreign competitors have significant competitive advantages that may include lower labor and raw material costs, production facilities in locations outside UNIFI’s existing supply chain, government subsidies, and favorable foreign currency exchange rates against the USD.
−Removed: If any of these advantages increase, if new and/or larger competitors emerge in the future, or if UNIFI’s brand reputation is detrimentally impacted, UNIFI’s products could become less competitive, and its sales and profits may decrease as a result.
−Removed: In particular, devaluation of the Chinese currency against the USD could result in UNIFI’s products becoming less competitive from a pricing standpoint and/or could result in the Americas region losing market share to Chinese imports, thereby adversely impacting UNIFI’s sales and profits.
+Added: A large number of UNIFI’s foreign competitors have significant competitive advantages that may include lower labor and raw material costs, production facilities in locations outside UNIFI’s existing supply chain, government subsidies, and favorable foreign currency exchange rates against the USD.
+Added: If any of these advantages increase, if new and/or larger competitors emerge in the future, or if UNIFI’s brand reputation is detrimentally impacted, UNIFI’s products could become less competitive, and its sales and profits may decrease as a result.
+Added: In particular, devaluation of the Chinese currency against the USD could result in UNIFI’s products becoming less competitive from a pricing standpoint and/or could result in the Americas region losing market share to Chinese imports, thereby adversely impacting UNIFI’s sales and profits.
While foreign competitors have traditionally focused on commodity production, entities are now increasingly focused on value-added products and unbranded recycled products.
−Removed: Competition from unbranded recycled yarns has recently increased, and could drive market share losses for our flagship REPREVE brand.
+Added: Competition from unbranded recycled yarns has increased, and could drive market share losses for our flagship REPREVE brand.
UNIFI may not be able to continue to compete effectively with foreign-made textile and apparel products, which would materially adversely affect its business, financial condition, results of operations, or cash flows.
−Removed: Similarly, to maximize their own supply chain efficiency, customers and brand partners sometimes request that UNIFI’s products be produced and sourced from specific geographic locations that are in close proximity to the customer’s fabric mills or that have other desirable attributes from the customer’s perspective.
−Removed: These locations are sometimes situated outside the footprint of UNIFI’s existing global supply chain.
+Added: Similarly, to maximize their own supply chain efficiency, customers and brand partners sometimes request that UNIFI’s products be produced and sourced from specific geographic locations that are in close proximity to the customer’s fabric mills or that have other desirable attributes from the customer’s perspective.
+Added: These locations are sometimes situated outside the footprint of UNIFI’s existing global supply chain.
If UNIFI is unable to move production based on customer requests or other shifts in regional demand, we may lose sales and experience an adverse effect on our business, financial condition, results of operations, or cash flows.
A significant portion of our sales is dependent upon demand from a few large brand partners.
−Removed: UNIFI’s strategy involves the sale of products and solutions to other yarn manufacturers and knitters and weavers (UNIFI’s direct customers) that produce yarn and/or fabric for brands and retailers in the apparel, hosiery, home furnishings, automotive, industrial and other end-use markets (UNIFI’s indirect customers).
−Removed: We refer to these indirect customers as “brand partners.”
−Removed: Although we generally do not derive revenue directly from our brand partners, sales volumes to our direct customers are linked with demand from our brand partners because our direct sales generally form a part of our brand partners’
−Removed: supply chains.
+Added: UNIFI’s strategy involves the sale of products and solutions to other yarn manufacturers and knitters and weavers (UNIFI’s direct customers) that produce yarn and/or fabric for brands and retailers in the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets (UNIFI’s indirect customers).
+Added: We sometimes refer to these indirect customers as “brand partners.” Although we generally do not derive revenue directly from our brand partners, sales volumes to our direct customers are linked with demand from our brand partners because our direct sales generally form a part of our brand partners’ supply chains.
A significant portion of our overall sales is tied to ongoing programs for a limited number of brand partners.
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The loss of a large brand partner, and the failure to add new customers to replace the corresponding lost sales, would have a material adverse effect on our business, financial condition, results of operations, and cash flows.
−Removed: Significant price volatility of UNIFI’s raw materials and rising energy costs may result in increased production costs.
+Added: Significant price volatility of UNIFI’s raw materials and rising energy costs may result in increased production costs.
UNIFI attempts to pass such increases in production costs on to its customers through responsive price increases.
However, any such price increases are effective only after a time lag that may span one or more quarters, during which UNIFI and its margins are negatively affected.
−Removed: Petroleum-based chemicals and recycled plastic bottles comprise a significant portion of UNIFI’s raw materials.
+Added: Petroleum-based chemicals and recycled plastic bottles comprise a significant portion of UNIFI’s raw materials.
The prices for these products and related energy costs are volatile and dependent on global supply and demand dynamics, including geo-political risks.
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UNIFI attempts to pass on to its customers increases in raw material costs, but at times it cannot.
−Removed: When it can, there is typically a time lag that adversely affects UNIFI and its margins during one or more quarters.
−Removed: Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of certain raw materials in the prior quarter.
+Added: When it can, there is typically a time lag that adversely affects UNIFI's margins during one or more quarters.
+Added: Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of certain raw materials in the prior quarter.
Pricing adjustments for other customers must be negotiated independently.
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In addition, competitors may be able to obtain raw materials at a lower cost due to market regulations that favor local producers in certain foreign locations where UNIFI operates, and certain other market regulations that favor UNIFI over other producers may be amended or repealed.
−Removed: Additionally, inflation can have a long-term impact by increasing the costs of materials, labor, and/or energy, any of which costs may adversely impact UNIFI’s ability to maintain satisfactory margins.
+Added: Additionally, inflation can have a long-term impact by increasing the costs of materials, labor, and/or energy, any of which costs may adversely impact UNIFI’s ability to maintain satisfactory margins.
If UNIFI is not able to pass on such cost increases to customers in a timely manner (or if it loses a large number of customers to competitors as a result of price increases), the result could be material and adverse to its business, financial condition, results of operations, or cash flows.
−Removed: Depending on the price volatility of petroleum-based inputs, recycled bottles, and other raw materials, the price gap between virgin chip and recycled chip could make virgin raw materials more cost-effective than recycled raw materials, which could result in an adverse effect on UNIFI’s ability to sell its REPREVE brand recycled products profitably.
−Removed: The success of UNIFI’s business is tied to the strength and reputation of its brands.
+Added: Depending on the price volatility of petroleum-based inputs, recycled bottles, and other raw materials, the price gap between virgin Chip and recycled Chip could make virgin raw materials more cost-effective than recycled raw materials, which could result in an adverse effect on UNIFI’s ability to sell its REPREVE brand recycled products profitably.
+Added: The success of UNIFI’s business is tied to the strength and reputation of its brands.
If the reputation of one or more of our brands erodes significantly, it could have a material impact on our financial results.
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Our financial success is directly dependent on the success of our brands.
−Removed: The success of a brand can suffer if our marketing plans or product initiatives do not have the desired impact on a brand’s image or its ability to attract consumers.
+Added: The success of a brand can suffer if our marketing plans or product initiatives do not have the desired impact on a brand’s image or its ability to attract consumers.
Our financial results could also be negatively impacted if one of our brands suffers substantial harm to its reputation due to a product recall, product-related litigation, the sale of counterfeit products, or other circumstances that tarnish the qualities and values represented by our brands.
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If the reputation of one or more of our brands is significantly eroded, it could adversely affect our sales, results of operations, cash flows, and/or financial condition.
−Removed: UNIFI’s future success will depend in part on its ability to protect and preserve its intellectual property rights, and UNIFI’s inability to enforce these rights could cause it to lose sales, reduce any competitive advantage it has developed, or otherwise harm its business.
−Removed: UNIFI’s future success depends in part on its ability to protect and preserve its rights in the trademarks and other intellectual property it owns or licenses, including its proprietary know-how, methods, and processes.
+Added: UNIFI’s future success will depend in part on its ability to protect and preserve its intellectual property rights, and UNIFI’s inability to enforce these rights could cause it to lose sales, reduce any competitive advantage it has developed, or otherwise harm its business.
+Added: UNIFI’s future success depends in part on its ability to protect and preserve its rights in the trademarks and other intellectual property it owns or licenses, including its proprietary know-how, methods, and processes.
UNIFI relies on the trademark, copyright, and trade secret laws of the U.S.
and other countries, as well as nondisclosure and confidentiality agreements, to protect its intellectual property rights.
−Removed: However, UNIFI may be unable to prevent third parties, employees, or contractors from using its intellectual property without authorization, breaching nondisclosure or confidentiality agreements, or independently developing technology that is similar to UNIFI’s.
−Removed: The use of UNIFI’s intellectual property by others without authorization may cause it to lose sales, reduce any competitive advantage UNIFI has developed, or otherwise harm its business.
+Added: However, UNIFI may be unable to prevent third parties, employees, or contractors from using its intellectual property without authorization, breaching nondisclosure or confidentiality agreements, or independently developing technology that is similar to UNIFI’s.
+Added: The use of UNIFI’s intellectual property by others without authorization may cause it to lose sales, reduce any competitive advantage UNIFI has developed, or otherwise harm its business.
Financial Risks
UNIFI has significant foreign operations, and its consolidated results of operations and business may be adversely affected by the risks associated with doing business in foreign locations, including the risk of fluctuations in foreign currency exchange rates.
−Removed: UNIFI has foreign operations in Brazil, China, Colombia, El Salvador, and Turkey and participates in joint ventures located in Israel and the U.S.
+Added: UNIFI has foreign operations in Brazil, China, Colombia, El Salvador, and Turkey and participates in a joint venture located in the U.S.
In addition, to help service its customers, UNIFI from time to time engages with third-party independent contractors to provide sales and distribution, manufacturing, and other operational and administrative support services in locations around the world.
UNIFI serves customers throughout the Americas and Asia, as well as various countries in Europe.
−Removed: UNIFI’s foreign operations are subject to certain political, tax, economic, and other uncertainties not encountered by its domestic operations that can materially impact UNIFI’s supply chains or other aspects of its foreign operations.
+Added: UNIFI’s foreign operations are subject to certain political, tax, economic, and other uncertainties not encountered by its domestic operations that can materially impact UNIFI’s supply chains or other aspects of its foreign operations.
The risks of international operations include trade barriers, duties, exchange controls, national and regional labor strikes, social and political unrest, general economic risks, compliance with a variety of foreign laws (including tax laws), the difficulty of enforcing agreements and collecting receivables through foreign legal systems, taxes on distributions or deemed distributions to UNIFI or any of its U.S.
subsidiaries, maintenance of minimum capital requirements, and import and export controls.
−Removed: UNIFI’s consolidated results of operations and business could be adversely affected as a result of a significant adverse development with respect to any of these risks.
+Added: UNIFI’s consolidated results of operations and business could be adversely affected as a result of a significant adverse development with respect to any of these risks.
Through its foreign operations, UNIFI is also exposed to foreign currency exchange rate fluctuations.
−Removed: Fluctuations in foreign currency exchange rates will impact period-to-period comparisons of UNIFI’s reported results.
+Added: Fluctuations in foreign currency exchange rates will impact period-to-period comparisons of UNIFI’s reported results.
Additionally, UNIFI operates in countries with foreign exchange controls.
−Removed: These controls may limit UNIFI’s ability to transfer funds from its international operations and joint ventures or otherwise to convert local currencies into USDs.
−Removed: These limitations could adversely affect UNIFI’s ability to access cash from its foreign operations.
−Removed: In addition, due to its foreign operations, a risk exists that UNIFI’s employees, contractors, or agents could engage in business practices prohibited by U.S.
+Added: These controls may limit UNIFI’s ability to transfer funds from its international operations and joint venture or otherwise to convert local currencies into USDs.
+Added: These limitations could adversely affect UNIFI’s ability to access cash from its foreign operations.
+Added: In addition, due to its foreign operations, a risk exists that UNIFI’s employees, contractors, or agents could engage in business practices prohibited by U.S.
laws and regulations applicable to the Company, such as the Foreign Corrupt Practices Act or the anti-bribery and corruption laws and regulations of other countries in which we do business.
UNIFI maintains policies prohibiting these practices but remains subject to the risk that one or more of its employees, contractors, or agents, specifically ones based in or from countries where such practices are customary, will engage in business practices in violation of these laws and regulations.
−Removed: Any such violations, even if in breach of UNIFI’s policies, could adversely affect its business or financial performance.
+Added: Any such violations, even if in breach of UNIFI’s policies, could adversely affect its business or financial performance.
UNIFI may be subject to greater tax liabilities.
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and in numerous foreign jurisdictions.
−Removed: UNIFI’s domestic and foreign income tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed.
−Removed: Additionally, the amount of taxes paid is subject to UNIFI’s interpretation of applicable tax laws in the jurisdictions in which we operate.
+Added: UNIFI’s domestic and foreign income tax liabilities are dependent on the jurisdictions in which profits are determined to be earned and taxed.
+Added: Additionally, the amount of taxes paid is subject to UNIFI’s interpretation of applicable tax laws in the jurisdictions in which we operate.
Changes in tax laws including further regulatory developments arising from U.S.
−Removed: tax reform legislation, judicial interpretations in the jurisdictions in which we operate, and multi-jurisdictional changes enacted in response to the action items provided by the Organization for Economic Co-operation and Development could have an adverse effect on UNIFI’s business, financial condition, operating results, and cash flows.
+Added: tax reform legislation, judicial interpretations in the jurisdictions in which we operate, and multi-jurisdictional changes enacted in response to the action items provided by the Organization for Economic Co-operation and Development could have an adverse effect on UNIFI’s business, financial condition, operating results, and cash flows.
Significant judgment, knowledge, and experience are required in determining our worldwide provision for income taxes.
UNIFI requires cash to service its indebtedness and to fund capital expenditures and strategic initiatives, and its ability to generate sufficient cash for those purposes depends on many factors beyond its control.
−Removed: UNIFI’s principal sources of liquidity are cash flows generated from operations and borrowings under its credit facility.
−Removed: UNIFI’s ability to make payments on its indebtedness and to fund planned capital expenditures and strategic initiatives will depend on its ability to generate future cash flows from operations.
−Removed: This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond UNIFI’s control.
+Added: UNIFI’s principal sources of liquidity are cash flows generated from operations and borrowings under its credit facility.
+Added: UNIFI’s ability to make payments on its indebtedness and to fund planned capital expenditures and strategic initiatives will depend on its ability to generate future cash flows from operations.
+Added: This ability, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond UNIFI’s control.
The business may not generate sufficient cash flows from operations, and future borrowings may not be available to UNIFI in amounts sufficient to enable UNIFI to pay its indebtedness and to fund its other liquidity needs.
Any such development would have a material adverse effect on UNIFI.
−Removed: During fiscal 2023, certain regional bank crises and failures generated additional uncertainty and volatility in the financial and credit markets.
−Removed: UNIFI currently holds the vast majority of its cash deposits with large foreign banks in our associated operating regions, and management believes that it has the ability to repatriate cash to the U.S.
+Added: UNIFI currently holds the majority of its cash deposits with large foreign banks in our associated operating regions, and management believes that it has the ability to repatriate cash to the U.S.
relatively quickly, although management recognizes that various inherent risks do exist in executing the repatriation of cash from foreign subsidiaries.
−Removed: If any of the financial institutions within our 2022 Credit Agreement or construction financing arrangement our lending counterparties are unable to perform on their commitments, our liquidity could be adversely impacted, and we may not be able to adequately fund our operations and pay our debts as they become due.
+Added: If any of the financial institutions within the 2022 Credit Agreement (as defined below) or the construction financing arrangement ("lending counterparties") are unable to perform on their commitments, our liquidity could be adversely impacted, and we may not be able to adequately fund our operations and pay our debts as they become due.
We actively monitor all lending counterparties, and none have indicated that they may be unable to perform on their commitments.
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These suppliers are also at risk with their raw material supply chains.
−Removed: Any significant disruption or curtailment in the supply of any of its raw materials could cause UNIFI to reduce or cease its production for an extended
−Removed: period, or require UNIFI to increase its pricing, any of which could have a material adverse effect on its business, financial condition, results of operations, or cash flows.
+Added: Any significant disruption or curtailment in the supply of any of its raw materials could cause UNIFI to reduce or cease its production for an extended period, or require UNIFI to increase its pricing, any of which could have a material adverse effect on its business, financial condition, results of operations, or cash flows.
A disruption at one of our facilities could harm our business and result in significant losses, lead to a decline in sales, and increase our costs and expenses.
−Removed: Our operations and business could be disrupted by natural disasters, industrial accidents, power or water shortages, extreme weather conditions, pandemics, and other man-made disasters or catastrophic events.
+Added: Our operations and business could be disrupted by natural disasters, industrial accidents, power or water shortages, extreme weather conditions, epidemics or pandemics, and other man-made disasters or catastrophic events.
We carry commercial property damage and business interruption insurance against various risks, with limits we deem adequate, for reimbursement for damage to our fixed assets and resulting disruption of our operations.
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The theft, unauthorized use, or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives, or otherwise adversely affect our business.
−Removed: To the extent that any cybersecurity breach results in inappropriate disclosure of our customers’
−Removed: or brand partners’
−Removed: confidential information, we may incur significant liability and reputational harm as a result.
+Added: To the extent that any cybersecurity breach results in inappropriate disclosure of our customers’ or brand partners’ confidential information, we may incur significant liability and reputational harm as a result.
In addition, devoting additional resources to the security of our information technology systems in the future could significantly increase the cost of doing business or otherwise adversely impact our financial results.
−Removed: A decline or change in general economic conditions, political conditions, and/or levels of consumer spending could cause a decline in demand for textile products, including UNIFI’s products.
−Removed: UNIFI’s products are used in the production of fabric primarily for the apparel, hosiery, home furnishings, automotive, industrial, and other end-use markets.
+Added: A decline or change in general economic conditions, political conditions, and/or levels of consumer spending could cause a decline in demand for textile products, including UNIFI’s products.
+Added: UNIFI’s products are used in the production of fabric primarily for the apparel, hosiery, home furnishings, automotive, industrial, medical, and other end-use markets.
Demand for furniture and other durable goods is often affected significantly by economic conditions that have global or regional industry-wide consequences.
−Removed: Demand for a number of categories of apparel also tends to be tied to economic cycles and customer preferences that affect the textile industry in general.
+Added: Demand for a number of categories of apparel is impacted by discretionary spending by consumers.
+Added: Discretionary spending is affected by many factors that are outside of our control, including general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency exchange rates, taxation, energy prices, unemployment trends, and other matters that influence consumer confidence and spending.
Demand for textile products, therefore, tends to vary with the business cycles of the U.S.
and other economies, as well as changes in global trade flows, and economic and political conditions.
−Removed: Additionally, prolonged economic downturns that negatively impact UNIFI’s results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including facilities and equipment, amortizable intangible assets, and equity affiliates.
−Removed: We recognize the disruption to global markets and supply chains caused by Russia’s invasion of Ukraine.
−Removed: While volatility and uncertainty continue, we have no significant customers or supply chain partners in the conflicted region, and we have not been directly impacted by the conflict.
−Removed: Indirectly, we recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our raw material costs or unforeseen adverse impacts.
−Removed: Changes in consumer spending, customer preferences, fashion trends, and end-uses for UNIFI’s products could weaken UNIFI’s competitive position and cause UNIFI’s products to become less competitive, and its sales and profits may decrease as a result.
−Removed: Additionally, the end-consumer retail and apparel markets may continue to experience difficult conditions and other transformations, which could have an adverse effect on UNIFI’s business and financial condition.
+Added: Additionally, prolonged economic downturns that negatively impact UNIFI’s results of operations and cash flows could result in future material impairment charges to write-down the carrying value of certain assets, including facilities and equipment, amortizable intangible assets, and equity affiliates.
+Added: We recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East.
+Added: While volatility and uncertainty continue, we have no significant customers or supply chain partners in the conflicted regions, and we have not been directly impacted by the conflicts.
+Added: Indirectly, we recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our global raw material costs or unforeseen adverse impacts.
+Added: Changes in consumer spending, customer preferences, fashion trends, and end-uses for UNIFI’s products could weaken UNIFI’s competitive position and cause UNIFI’s products to become less competitive, and its sales and profits may decrease as a result.
+Added: Additionally, the end-consumer retail and apparel markets may continue to experience difficult conditions and other transformations, which could have an adverse effect on UNIFI’s business and financial condition.
General Risks
−Removed: Unfavorable changes in trade policies and/or violations of existing trade policies could weaken UNIFI’s competitive position significantly and have a material adverse effect on its business.
+Added: Unfavorable changes in trade policies and/or violations of existing trade policies could weaken UNIFI’s competitive position significantly and have a material adverse effect on its business.
A number of markets within the textile industry in which UNIFI sells its products, particularly the apparel, hosiery, and home furnishings markets, are subject to intense foreign competition.
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Political and policy-driven influences are subjecting international trade regulations to significant volatility.
−Removed: Future changes in such trade regulations or duties may make the price of UNIFI’s products less attractive than the goods of its competitors or the finished products of a competitor in the supply chain, which could have a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows.
+Added: Future changes in such trade regulations or duties may make the price of UNIFI’s products less attractive than the goods of its competitors or the finished products of a competitor in the supply chain, which could have a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows.
Such changes in import duties in the U.S.
−Removed: and other countries in which we operate might also result in increased direct and indirect costs on items imported to support UNIFI’s operations and/or countervailing or responsive changes applicable to exports of our products outside the U.S.
+Added: and other countries in which we operate might also result in increased direct and indirect costs on items imported to support UNIFI’s operations and/or countervailing or responsive changes applicable to exports of our products outside the U.S.
According to industry experts and trade associations, there has been a significant amount of illegal transshipments of POY and apparel products into the U.S.
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Illegal transshipment involves circumventing duties by falsely claiming that textiles and apparel are products of a particular country of origin (or include yarn of a particular country of origin) to avoid paying higher duties or to receive benefits from regional free trade agreements, such as USMCA/NAFTA and CAFTA-DR.
−Removed: If illegal transshipments are not monitored, and if enforcement is not effective to limit them, these shipments could have a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows.
−Removed: In order to compete effectively, we must attract, retain, and motivate qualified key employees, and our failure to do so could harm our business and our results of operations.
+Added: If illegal transshipments are not monitored, and if enforcement is not effective to limit them, these shipments could have a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows.
+Added: In order to compete effectively, we must attract and retain qualified employees, and our failure to do so could harm our business and our results of operations.
In order to compete effectively, we must attract and retain qualified employees.
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Catastrophic or extraordinary events, including epidemics or pandemics such as the COVID-19 pandemic, could disrupt global economic activity and/or demand and negatively impact our financial performance and results of operations.
−Removed: The COVID-19 pandemic negatively impacted the global economy, disrupted consumer spending, and affected global supply chains.
−Removed: Specifically, containment efforts in China have impacted our supply chain, negatively impacting the results of our Asia Segment.
−Removed: The long-term impact on our businesses is currently unknown.
−Removed: UNIFI will continue to monitor the COVID-19 pandemic by prioritizing health and safety while delivering on customer demand.
−Removed: However, the COVID-19 pandemic could resurge or another epidemic or pandemic could arise, and, accordingly, could adversely affect our organization.
−Removed: The risks associated with climate change, localized energy management initiatives, and other environmental impacts could negatively affect UNIFI’s business and operations.
−Removed: UNIFI’s business is susceptible to risks associated with climate change, including, but not limited to, disruptions to our supply chain, which could potentially impact the production and distribution of our products and the availability and pricing of raw materials.
+Added: Widespread public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases, such as the COVID-19 pandemic, have had, and could in the future have, a material adverse effect on UNIFI’s business, financial condition, results of operations, or cash flows.
+Added: The full extent to which a global health crisis may impact our business and operating results would depend on future developments that are highly uncertain and cannot be accurately predicted, including new medical and other information that may emerge as a result and the actions by governmental entities or others to contain it or treat its impact.
+Added: The risks associated with climate change, localized energy management initiatives, other environmental impacts and compliance with new reporting regulations could negatively affect UNIFI’s business and operations.
+Added: UNIFI’s business is susceptible to risks associated with climate change, including, but not limited to, disruptions to our supply chain, which could potentially impact the production and distribution of our products and the availability and pricing of raw materials.
Increased frequency and intensity of weather events could lead to supply chain disruption, energy and resource rationing, or an adverse event at one of our manufacturing facilities or the facilities of our manufacturing partners.
Further, regulatory responses to climate change could adversely affect our operations.
−Removed: For instance, the recent energy management initiatives in China temporarily constrained global supply chains and reduced supplier and customer activity.
Additionally, weaknesses in energy infrastructure could result in supply disruptions that could indirectly affect our operations and could adversely impact our results of operations and cash flows.
+Added: In March 2024, the SEC issued a final rule that requires registrants to provide climate disclosures in their annual reports and registration statements.
+Added: The disclosure requirements of the new rule, as they stand currently, become effective for UNIFI beginning in fiscal 2027 and continue through fiscal 2032.
+Added: A legal challenge to the new rule has been filed in the U.S.
+Added: Court of Appeals and the SEC has announced that it would voluntarily stay its final climate disclosure rule pending judicial review.
+Added: As such, the final disclosure requirements and reporting timeline are currently unknown, as is the cost of compliance with the new disclosure requirements in their final form.
Unresolv ed Staff Comments
−Removed: The following table contains information about the principal properties owned or leased by UNIFI as of July 2, 2023 (not in thousands):
+Added: Cybers ecurity
+Added: Risk Management and Strategy
+Added: As a part of the Company's overall risk management and compliance programs, we have developed an enterprise cybersecurity program designed to detect, identify, classify, and mitigate cybersecurity and other data security threats.
+Added: Our enterprise cybersecurity program classifies potential threats by risk levels and we typically prioritize our threat mitigation efforts based on those risk classifications, while focusing on maintaining the resiliency of our systems.
+Added: In recent years, we have increased our investments in our ability to detect, identify, classify and mitigate cybersecurity and other data security threats within our environment.
+Added: In the event we identify a potential cybersecurity or other data security issue, we have defined procedures for responding to such issues, including procedures that address when and how to engage with Company management, the Board, other stakeholders and law enforcement when responding to such issues.
+Added: The Company’s enterprise cybersecurity program focuses on vulnerability management, access management, and user awareness training.
+Added: Among other things, the Company implements scheduled patching and system updates and proactively scans for vulnerabilities.
+Added: We regularly engage qualified third-party experts to assess the Company’s information technology infrastructure and identify vulnerabilities and opportunities for continued focus and improvement.
+Added: The Company utilizes industry-standard technologies, processes, and capabilities designed to protect our systems and data and to detect potential suspicious activity.
+Added: We provide cybersecurity training and user education on a regular basis for users with access to the Company’s information technology systems.
+Added: We conduct monthly social engineering tests to promote phishing awareness and security awareness.
+Added: The Company monitors servers and endpoint devices across the organization to detect signs of a cyberattack.
+Added: We maintain and practice a response and recovery plan to restore systems and data.
+Added: We also maintain cyber liability insurance against cyber-attacks as part of our comprehensive insurance portfolio.
+Added: Because we are aware of the risks related to third-party service providers, we have implemented processes to oversee, identify, and manage risks from cybersecurity threats associated with our most significant third-party service providers.
+Added: We have experienced targeted and non-targeted cybersecurity attacks and incidents in the past, and we could in the future experience similar attacks.
+Added: For the years presented, we did not identify any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that had, or were reasonably likely to have, a material affect on the Company, including our business strategy, results of operations, or financial condition.
+Added: For additional information regarding the risks from cybersecurity threats we face, see “ Operational Risks - Our business and operations could suffer in the event of cybersecurity breaches," in "Item 1A.
+Added: Risk Factors" in this report.
+Added: Day-to-day management of cybersecurity risk is performed by the Company’s Information Technology Security Team with direct oversight from the Chief Information Officer (the "CIO").
+Added: The Company’s incident response plan includes a defined escalation matrix for critical or high severity information security events involving notifications to the CIO, who further escalates critical or high severity events to the Company’s Cyber Incident Steering Committee (the "CISC"), which consists of the CIO, the Chief Financial Officer, the General Counsel, and the Internal Audit Manager.
+Added: Additional senior management from relevant business units are included as needed based on the nature of identified cybersecurity incidents.
+Added: The CISC is responsible for providing support, guidance, and oversight of UNIFI’s incident response, including making a determination of materiality to evaluate the need for escalation and disclosure.
+Added: The materiality evaluation is made using the framework established in the federal securities laws, with a focus on the importance of the information to a reasonable investor.
+Added: The Board recognizes the important role of information security and mitigating cybersecurity and other data security threats, as part of our efforts to protect and maintain the confidentiality and security of customer, employee, and vendor information, as well as non-public information about UNIFI.
+Added: Although the Board as a whole is ultimately responsible for the oversight of our risk management function, the Board uses its committees to assist in its risk oversight function.
+Added: The Audit Committee of the Board has primary responsibility for oversight of risk assessment and risk management, including risks related to cybersecurity and other technology issues.
+Added: The Audit Committee regularly reviews our cybersecurity and other technology risks, controls and procedures.
+Added: The Audit Committee receives reports from the CIO quarterly regarding our cybersecurity framework, as well as our plans to mitigate cybersecurity risks and to respond to any data breaches.
+Added: The Company’s Information Technology Security Team and its cybersecurity infrastructure is overseen by the CIO who reports to the Chief Executive Officer.
+Added: The CIO has served in various roles in information technology for over 29 years.
+Added: Furthermore, UNIFI management prepares, and the Audit Committee reviews and discusses, a quarterly assessment of our risks on an enterprise-wide basis.
+Added: We conduct a rigorous enterprise risk management program that is updated quarterly and is designed to bring to the Audit Committee’s attention our most critical risks for evaluation, including cybersecurity risks.
+Added: The following table contains information about the principal properties owned or leased by UNIFI as of June 30, 2024 (not in thousands):
Principal Use
22 unchanged sentences
Manufacturing facility
+Added: Reidsville, North Carolina
Madison, North Carolina
1 unchanged sentence
Madison, North Carolina
+Added: Madison, North Carolina
Ciudad Arce, El Salvador
13 unchanged sentences
Suzhou, China
−Removed: Management believes all of UNIFI’s operating properties are well maintained and in good condition.
−Removed: In fiscal 2023, UNIFI’s manufacturing facilities in the Americas Segment operated below capacity for most of the year, primarily due to a decline in demand throughout the apparel supply chains.
+Added: Management believes all of UNIFI’s operating properties are well maintained and in good condition.
+Added: In fiscal 2024, UNIFI’s manufacturing facilities in the Americas Segment operated below capacity for most of the year, primarily due to a decline in demand throughout the apparel supply chains.
Management does not perceive any capacity constraints in the foreseeable future.
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.