What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-08-26 compared with 2024-08-23 · 486 added, 378 removed, 1656 unchanged (34% of the section changed)

17 unchanged sentences

Key drivers of our recent financial results include:

• During fiscal 2019, our operations in the U.S.

were unfavorably impacted by (i) rising raw material costs and (ii) a surge of imported polyester textured yarn that depressed our pricing, market share, and fixed cost absorption.

• During fiscal 2020, our financial results began to improve following more stable import and raw material cost environments.

5 unchanged sentences

• Throughout fiscal 2024, global textile demand remained weak, particularly in the Americas and Asia Segments with reduced overall order levels.

However, during the fourth quarter of fiscal 2024, we believe that the brands' and retailers' destocking efforts ended as our sales volumes began to modestly improve sequentially.

• Throughout fiscal 2025, inflationary pressures and uncertainty over global trade policies resulted in volatility and customer-demand headwinds, particularly in the Americas and Asia Segments.

Looking ahead, we believe our operations remain well-positioned to capture long-term growth opportunities and we are working to mitigate any potential recessionary impacts.

Once global economic pressures subside, we believe incremental revenue for the Americas Segment will be generated from our anti-dumping petitions and efforts around fair trade of textile yarn, and continued demand for innovative and sustainable products.

The Asia Segment continues to capture demand for recycled products and serves as a significant component of future growth.

The Asia Segment continues to focus on demand for recycled products and serves as a significant component of future growth.

The Brazil Segment has returned to more normalized levels of performance and is expected to maintain healthy volumes and margins.

1 unchanged sentence

The following developments and trends occurred or were occurring in fiscal 2025:

• Demand levels for the majority of our business lines in the Americas and Asia Segments were below historical trends, as a result of lower global demand amid consumer and macroeconomic uncertainty.

• Demand levels for the majority of our business lines in the Americas and Asia Segments were below expectations, as a result of lower global demand amid consumer and macroeconomic uncertainty including most recently the tariffs and retaliatory tariffs.

• Our REPREVE family of products continued to gain momentum with brands, retailers, and mill partners who value sustainability and UNIFI’s ability to produce leading-edge products with in-demand technologies.

• The Americas Segment experienced continued weak demand and weak fixed cost absorption in connection with lower production, despite stable raw material costs during fiscal 2024.

• The Brazil Segment was able to capture market share, but incurred selling price pressures from low-cost imports in the first half of the fiscal year.

• The Asia Segment's sales growth slowed in fiscal 2024, due to a slowdown in global demand;

• The Americas Segment experienced lower than anticipated manufacturing utilization and production levels, despite stable raw material costs during fiscal 2025.

In response to these challenges, we initiated a plan to transition the Madison, North Carolina manufacturing operations to other production facilities in North and Central America.

• The Brazil Segment incurred selling price pressures from low-cost imports for most of the fiscal year, but sales volumes and margins remained strong.

• The Asia Segment's sales volumes slowed in fiscal 2025, along with continued margin pressure, due to customer-demand headwinds and recent volatility from uncertainty related to tariffs;

however, there remains healthy demand for REPREVE, generating continued portfolio expansion.

6 unchanged sentences

In fiscal 2024, we experienced stable raw material prices for most of the fiscal year, although lower REPREVE sales to apparel markets impacted our profitability.

In fiscal 2025, the Americas and Asia Segments experienced lower input and freight costs, but the demand volatility and uncertainty persisted.

The Brazil Segment had increased raw material costs for the majority of the fiscal year coupled with pricing pressure from low-cost imports limiting its ability to recover all of the higher costs.

The continuing volatility in global crude oil prices is likely to impact UNIFI’s polyester and nylon raw material costs.

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The RMB to USD weighted average exchange rate was 7.21, 7.22, and 6.94 for fiscal 2025, 2024, and 2023, respectively.

Global Conflicts

While we recognize the disruption to global markets and supply chains caused by the conflicts in Ukraine and the Middle East, we have not been directly impacted.

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.

Key Performance Indicators and Non-GAAP Financial Measures

2 unchanged sentences

• sales volume and revenue for UNIFI and for each reportable segment;

• gross profit and gross margin for UNIFI and for each reportable segment;

• gross profit (loss) and gross margin for UNIFI and for each reportable segment;

• net (loss) income and (loss) earnings per share ("EPS");

2 unchanged sentences

• working capital, which represents current assets less current liabilities;

• Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net (loss) income before net interest expense, income tax expense and depreciation and amortization expense;

• Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net (loss) earnings before net interest expense, income tax expense and depreciation and amortization expense;

• Adjusted EBITDA, which represents EBITDA adjusted to exclude, from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI;

• Adjusted Net (Loss) Income, which represents net (loss) income calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;

• Adjusted Net (Loss) Income, which represents net loss calculated under GAAP, adjusted to exclude certain amounts which management believes do not reflect the ongoing operations and performance of UNIFI and/or for which exclusion may be necessary to understand and compare the underlying results of UNIFI;

• Adjusted EPS, which represents Adjusted Net (Loss) Income divided by UNIFI’s weighted average common shares outstanding;

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Review of Results of Operations for Fiscal 2025, 2024 and 2023

UNIFI’s fiscal 2024 and 2023 each consisted of 52 weeks, while its fiscal 2022 consisted of 53 weeks.

The additional week in fiscal 2022 included approximately $8,700 of net sales, an insignificant impact to gross profit, and approximately $400 of selling, general, and administrative ("SG&A") expenses.

UNIFI’s fiscal 2025, 2024 and 2023 each consisted of 52 weeks, with no impacts to net sales, gross profit, and selling, general, and administrative ("SG&A") expenses due to extra weeks.

Consolidated Overview

The below tables provide:

• the components of net (loss) income and the percentage increase or decrease over the prior fiscal year amounts,

• a reconciliation from net (loss) income to EBITDA and Adjusted EBITDA, and

• a reconciliation from net (loss) income to Adjusted Net (Loss) Income and Adjusted EPS.

Following the tables is a discussion and analysis of the significant components of net (loss) income.

Net (Loss) Income

• the components of net loss and the percentage increase or decrease over the prior fiscal year amounts,

• a reconciliation from net loss to EBITDA and Adjusted EBITDA, and

• a reconciliation from net loss to Adjusted Net Loss and Adjusted EPS.

Following the tables is a discussion and analysis of the significant components of net loss.

Cost of sales

Provision (benefit) for bad debts

(Benefit) provision for bad debts

Restructuring costs

Other operating expense (income), net

Operating (loss) income

(Gain) loss on sales and disposals of assets

Other operating expense, net

Operating loss

Interest expense, net

Loss (earnings) from unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Loss before income taxes

Provision for income taxes

Net (loss) income

nm – not meaningful

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EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

The reconciliations of the amounts reported under GAAP for Net (Loss) Income to EBITDA and Adjusted EBITDA are as follows.

Net (loss) income

The reconciliations of the amounts reported under GAAP for Net Loss to EBITDA and Adjusted EBITDA are as follows.

Interest expense, net

1 unchanged sentence

Depreciation and amortization expense (1)

Loss on joint venture dissolution (2)

Severance (3)

Transition costs (2)

Gain on sales of assets (3)

Restructuring costs (4)

Asset abandonment (5)

Contract modification costs (6)

Recovery of non-income taxes, net (6)

Adjusted EBITDA

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Within the accompanying consolidated statements of cash flows, amortization of debt issuance costs is reflected in depreciation and amortization expense.

In fiscal 2023, interest expense, net includes $273 of loss on debt extinguishment.

(2) In the second quarter of fiscal 2024, UNIFI recorded a loss of $2,750 related to the dissolution of a nylon joint venture.

(3) In the second quarter of fiscal 2024, UNIFI incurred severance costs in connection with the Profitability Improvement Plan in the U.S.

In fiscal 2025, 2024 and 2023, interest expense, net includes $136, $0 and $273, respectively, of loss on debt extinguishment.

(2) In fiscal 2025, UNIFI incurred various transition costs totaling $13,485 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $5,896, (ii) inventory write-downs of $2,923, (iii) excess fixed manufacturing costs of $1,638, (iv) employee separation or retention costs of $1,580, and (v) forfeitures of deposits for texturing machinery of $1,448.

The facility closure, equipment relocation, employee separation and retention costs, and forfeitures of deposits were all recorded within Restructuring costs and the inventory write-downs and excess fixed manufacturing costs were recorded within Cost of sales in the Condensed Consolidated Statements of Operations.

(3) In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of a manufacturing facility in Madison, North Carolina.

(4) In fiscal 2024, UNIFI incurred severance costs of $2,351 in connection with the Profitability Improvement Plan in the U.S.

and a loss of $2,750 related to the dissolution of a nylon joint venture.

(5) In fiscal 2023, UNIFI abandoned certain specialized machinery in the Americas and recorded an impairment charge.

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UNIFI paid the associated vendor $623 to establish the 18-month delay.

(6) In fiscal 2022, UNIFI reduced an estimated benefit based on additional clarity and the review of the recovery process in Brazil.

Adjusted Net (Loss) Income and Adjusted EPS (Non-GAAP Financial Measures)

The tables below set forth reconciliations of (i) (Loss) Income Before Income Taxes (“Pre-tax (Loss) Income”), Provision for Income Taxes (“Tax Impact”) and Net (Loss) Income to Adjusted Net (Loss) Income and (ii) Diluted EPS to Adjusted EPS.

Loss on joint venture dissolution (1)

Severance (2)

Adjusted Net Loss and Adjusted EPS (Non-GAAP Financial Measures)

The tables below set forth reconciliations of (i) Loss Before Income Taxes (“Pre-tax Loss”), Provision for Income Taxes (“Tax Impact”) and Net Loss to Adjusted Net Loss and (ii) Diluted EPS to Adjusted EPS.

Transition costs (1)

Gain on sales of assets (2)

Recovery of income taxes (3)

Adjusted results

Weighted average common shares outstanding

Restructuring costs (4)

Adjusted results

Weighted average common shares outstanding

Asset abandonment (5)

3 unchanged sentences

Weighted average common shares outstanding

Pre-tax Income

Recovery of non-income taxes, net (6)

Recovery of income taxes, net (7)

Adjusted results

Weighted average common shares outstanding

(1) In the second quarter of fiscal 2024, UNIFI recorded a loss of $2,750 related to the dissolution of a nylon joint venture.

(2) In the second quarter of fiscal 2024, UNIFI incurred severance costs in connection with the Profitability Improvement Plan in the U.S.

(1) In fiscal 2025, UNIFI incurred various transition costs totaling $13,485 in connection with the consolidation of its yarn manufacturing operations including (i) facility closure and equipment relocation costs (including asset impairments and disposals) of $5,896, (ii) inventory write-downs of $2,923, (iii) excess fixed manufacturing costs of $1,638, (iv) employee separation or retention costs of $1,580, and (v) forfeitures of deposits for texturing machinery of $1,448.

The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses in the U.S.

(2) In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of a manufacturing facility in Madison, North Carolina.

The associated tax impact was estimated to be $0 due to a valuation allowance against net operating losses and capital losses in the U.S.

(3) In fiscal 2025, following a favorable preliminary court injunction, UNIFI recorded a recovery of income taxes in connection with ICMS deductibility for Brazil's federal income tax return relating to the income taxes paid in prior fiscal years.

(4) In fiscal 2024, UNIFI incurred severance costs of $2,351 in connection with the Profitability Improvement Plan in the U.S.

and a loss of $2,750 related to the dissolution of a nylon joint venture.

(5) In fiscal 2023, UNIFI abandoned certain specialized machinery in the Americas and recorded an impairment charge.

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(7) In fiscal 2023, UNIFI recorded a recovery of income taxes in connection with filing amended tax returns in Brazil relating to certain income taxes paid in prior fiscal years following favorable legal rulings in fiscal 2023.

(6) In fiscal 2022, UNIFI reduced an estimated benefit based on additional clarity and the review of the recovery process in Brazil.

(7) In fiscal 2022, UNIFI recorded a recovery of income taxes in Brazil regarding certain income taxes paid in prior fiscal years.

Fiscal 2025 vs.

Consolidated net sales for fiscal 2025 decreased by $10,865, or 1.9%, and consolidated sales volumes increased 0.2%, compared to fiscal 2024.

Despite sales volume improvements in each of the reportable segments, volumes remain depressed, particularly in the Americas and Asia Segments as a result of continued weak global demand.

Net sales in fiscal 2025 were lower primarily due to lower sales in the Asia Segment which were partially offset by improved sales volumes and prices in the Brazil Segment.

However, most of Brazil's improvement was offset by unfavorable foreign currency translation effects.

Despite some volume improvements, overall sales remain depressed, particularly in the Americas and Asia Segments as a result of continued customer-demand headwinds and volatility from uncertainty over global trade policies.

Consolidated weighted average sales prices decreased 2.1%.

The decrease in sales prices was primarily attributable to sales mix and lower average selling prices in the Asia Segment, together with unfavorable foreign currency translation effects from the weakening of the BRL versus the USD within our Brazil Segment.

REPREVE Fiber products for fiscal 2025 comprised 31%, or $174,855, of consolidated net sales, compared to 32%, or $188,517, for fiscal 2024.

Fiscal 2024 vs.

Consolidated net sales for fiscal 2024 decreased by $41,318, or 6.6%, and consolidated sales volumes increased 8.2%, compared to fiscal 2023.

Despite sales volume improvements in each of the reportable segments, volumes remain depressed, particularly in the Americas and Asia Segments as a result of continued customer-demand headwinds.

Consolidated weighted average sales prices decreased 14.8% which drove the decrease in net sales.

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Fiscal 2025 vs.

Consolidated net sales for fiscal 2023 decreased by $192,231, or 23.6%, and consolidated sales volumes decreased 25.3%, compared to fiscal 2022.

The decreases occurred primarily due to lower volumes in the Americas and Asia Segments as a result of lower global demand in connection with the inventory destocking efforts of major brands and retailers in addition to pandemic-related lockdowns in Asia, partially offset by higher selling prices in response to higher raw material and input costs.

Consolidated weighted average sales prices increased 1.7%, primarily attributable to higher selling prices in response to higher input costs, partially offset by (i) competitive pricing pressures in Brazil and (ii) a greater mix of Chip and Flake product sales in the Americas Segment.

REPREVE Fiber products for fiscal 2023 comprised 30%, or $186,161, of consolidated net sales, down from 36%, or $293,080, for fiscal 2022.

The lower volumes and net sales in the Asia Segment, which has the highest portion of REPREVE ® Fiber sales as a percentage of segment net sales, was the main driver for the lower REPREVE ® Fiber sales.

Gross profit for fiscal 2025 decreased to $8,418 from $16,616 in fiscal 2024.

Gross profit decreased primarily due to (i) lower overall conversion margins and (ii) low utilization and decreased productivity related to the consolidation of yarn manufacturing operations in the Americas Segment.

This was partially offset by (a) increased sales volumes, (b) variable cost saving initiatives, and (c) improved productivity in certain manufacturing areas.

Gross profit continues to be unfavorably impacted by weak manufacturing utilization in the Americas Segment, where utilization and productivity remain below expected levels.

• For the Americas Segment, gross profit decreased primarily due to (i) low manufacturing utilization and (ii) decreased productivity related to the consolidation of yarn manufacturing operations, partially offset by (a) slightly higher sales volumes, (b) higher conversion margins, and (c) variable cost management efforts.

Additionally, $4,561 of transition costs were incurred during fiscal 2025, recorded in Cost of sales, related to (i) inventory write-downs of $2,923, and (ii) excess fixed manufacturing costs of $1,638.

• For the Brazil Segment, gross profit increased primarily due to (i) higher selling prices and (ii) higher sales volumes from market share gains, which were partially offset by (a) increased raw material costs and (b) an unfavorable foreign currency translation impact.

However, low-cost import competition unfavorably impacted sales prices during the fiscal year.

• For the Asia Segment, gross profit decreased primarily due to (i) lower sales volumes and (ii) lower conversion margins from an unfavorable change in sales mix in a volatile and weak demand environment.

Fiscal 2024 vs.

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These were partially offset by (a) higher manufacturing costs and (b) lower conversion margins.

However, gross profit continues to be unfavorably impacted by weak fixed cost absorption in the Americas Segment, where utilization and productivity remain below historical averages due to depressed demand.

However, gross profit continues to be unfavorably impacted by low manufacturing utilization in the Americas Segment, where utilization and productivity remain below expected levels due to depressed demand.

• For the Americas Segment, gross profit declined primarily due to (i) higher manufacturing costs and (ii) lower conversion margins.

1 unchanged sentence

• For the Brazil Segment, gross profit increased primarily due to higher sales volumes from market share gains and favorable foreign currency translation effects, partially offset by decreasing market prices in Brazil due to low-cost import competition.

• For the Asia Segment, gross profit increased primarily due to (i) a strong sales mix and (ii) higher sales volumes compared to fiscal 2023, despite continued weak global demand.

Fiscal 2023 vs.

Gross profit for fiscal 2023 decreased by $66,244, or 82.3%, compared to fiscal 2022.

Gross profit decreased as a result of the decline in net sales combined with weak fixed cost absorption for the Americas Segment, where utilization and productivity are materially impactful to gross profit.

Although raw material costs for the Americas Segment decreased meaningfully in the fiscal year 2023, the associated benefit was muted by low production levels, weak demand, and higher priced raw material inventory impacting gross margins in the first half of the fiscal year.

• For the Americas Segment, gross profit decreased due to (i) weaker global demand, (ii) weak fixed cost absorption in connection with lower production, and (iii) overall higher raw material cost levels in beginning inventory, despite a decrease in raw material costs during fiscal 2023.

• For the Brazil Segment, gross profit decreased primarily due to the combination of high priced raw material inventory impacting gross margins in the first half of the fiscal year and decreasing market prices in Brazil due to low-cost import competition.

• For the Asia Segment, gross profit decreased primarily due to lower sales volumes in connection with weaker global demand and pandemic-related lockdowns in Asia.

• For the Asia Segment, gross profit increased primarily due to (i) a strong sales mix and (ii) higher sales volumes compared to fiscal 2023, despite continued macro-driven customer-demand headwinds.

SG&A Expenses

1 unchanged sentence

SG&A for fiscal 2023

Net decrease in incentive expenses

Net decrease in professional fees

Net decrease in marketing expenses

Other net decreases

Net decrease in amortization expenses

Net increase in professional fees

Other net increases

SG&A for fiscal 2024

Net decrease in marketing expenses

Net decrease in amortization expenses

Net increase in compensation-related expenses

Net increase in professional fees

Other net increases

Net decrease in depreciation and amortization expenses

SG&A for fiscal 2025

Fiscal 2025 vs.

SG&A expenses decreased from fiscal 2023, primarily due to lower marketing, compensation, and amortization expenses.

SG&A expenses increased from fiscal 2024, primarily due to higher compensation-related expenses and professional fee expenses, partially offset by decreases in depreciation and amortization expenses.

Fiscal 2024 vs.

SG&A expenses decreased from fiscal 2022, primarily due to lower compensation and discretionary expenses, including marketing and advertising.

Provision (Benefit) for Bad Debts

SG&A expenses decreased from fiscal 2023, primarily due to lower marketing, compensation, and amortization expenses.

(Benefit) Provision for Bad Debts

Fiscal 2025 vs.

The provision (benefit) for bad debts changed from a benefit of $89 in fiscal 2023 to a provision of $1,571 in fiscal 2024 that reflects the provision for a specifically identified customer balance originating in the U.S.

The (benefit) provision for bad debts changed to a benefit of $166 in fiscal 2025 from a provision of $1,571 in fiscal 2024 as the current year reflects a partial recovery of a provision recorded in fiscal 2024 for a specifically identified customer balance originating in the U.S.

fiber market.

Fiscal 2024 vs.

The benefit for bad debts decreased from $445 in fiscal 2022 to $89 in fiscal 2023.

There was no material activity in either fiscal year.

Other Operating Expense (Income), Net

The provision (benefit) for bad debts changed to a provision of $1,571 in fiscal 2024 from a benefit of $89 in fiscal 2023 due to the provision recorded for a specifically identified customer balance originating in the U.S.

fiber market.

Restructuring Costs

On February 3, 2025, UNIFI announced the closing of its Madison, North Carolina facility and the transition of those manufacturing operations to other UNIFI production facilities in North and Central America.

As a result, UNIFI incurred transition costs of $8,924 in fiscal 2025 which consisted of (i) equipment relocation and facility closure costs (including asset impairments and disposals) of $5,896, (ii) employee separation or retention costs of $1,580 and (iii) $1,448 in forfeitures of deposits for texturing machinery.

Restructuring costs for fiscal 2024 consisted of (i) a loss of $2,750 for the dissolution of a nylon joint venture and (ii) severance charges of $2,351 in connection with the Profitability Improvement Plan in the U.S.

Gain (Loss) on Sales and Disposals of Assets

In the second quarter of fiscal 2025, UNIFI recorded a gain of $4,296 related to the sale of a warehouse located in Yadkinville, North Carolina.

In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $35,807 related to the sale of its manufacturing facility in Madison, North Carolina.

There was no meaningful activity in fiscal 2024 or 2023.

Other Operating Expense, Net

Fiscal 2025 vs.

Fiscal 2024 vs.

Other operating expense, net was $7,856 in fiscal 2023 and $733 in fiscal 2024, which includes foreign currency transaction gains in fiscal 2023 and foreign currency transaction losses in fiscal 2024.

Fiscal 2023 also includes (i) $8,247 of impairment related to the abandonment of certain machinery constructed in fiscal 2017 and (ii) $623 paid to a vendor to facilitate an 18-month delay for equipment purchases.

There was no meaningful activity in fiscal 2025.

Other operating expense, net was $733 in fiscal 2024 and $7,856 in fiscal 2023, which include foreign currency transaction gains and losses.

Interest Expense, Net

Fiscal 2025 vs.

Interest expense, net increased from fiscal 2023 to fiscal 2024.

The increase was attributable to higher average borrowings on the revolving credit facility combined with higher average interest rates in fiscal 2024.

Interest expense, net for fiscal 2023 includes a $273 loss on debt extinguishment.

Interest expense, net increased from fiscal 2024.

The increase was attributable to higher average borrowings on the revolving credit facilities for most of fiscal 2025 and lower global cash balances in fiscal 2025.

Fiscal 2025 also included a $136 loss on debt extinguishment.

Fiscal 2024 vs.

Interest expense, net increased from fiscal 2022 to fiscal 2023.

The increase was attributable to higher debt principal following continued capital investments and higher average interest rates in fiscal 2023.

Interest expense, net for fiscal 2023 includes a $273 loss on debt extinguishment.

Interest expense, net increased from fiscal 2023.

The increase was attributable to higher average borrowings on the revolving credit facility combined with higher average interest rates in fiscal 2024.

Fiscal 2023 also includes a $273 loss on debt extinguishment.

Loss (Earnings) from Unconsolidated Affiliates

There was no material activity for fiscal 2024, 2023, or 2022.

Recovery of Non-Income Taxes, Net

Brazilian companies are subject to various taxes on business operations, including turnover taxes used to fund social security and unemployment programs, commonly referred to as PIS/COFINS taxes.

UNIFI, along with numerous other companies in Brazil, challenged the constitutionality of certain state taxes historically included in the PIS/COFINS tax base.

On May 13, 2021, Brazil’s Supreme Federal Court (the “SFC”) ruled in favor of taxpayers, and, on July 7, 2021, the Brazilian Internal Revenue Service withdrew its existing appeal.

Following the SFC decision, the federal government will not issue refunds for these taxes but will instead allow for the overpayments and associated interest to be applied as credits against future PIS/COFINS tax obligations.

There are no limitations or restrictions on UNIFI’s ability to recover the associated overpayment claims as future income is generated.

Thus, during fiscal 2021, UNIFI recorded a $9,717 recovery of non-income taxes comprised of an estimate of prior fiscal year PIS/COFINS overpayments of $6,167 and associated interest of $3,550.

During fiscal 2022, UNIFI reduced the estimated recovery by $815 based on additional clarity and the review of the recovery process during the months following the associated SFC decision.

There was no material activity for fiscal 2025, 2024, and 2023.

Provision for Income Taxes

The change in consolidated income taxes is as follows:

(Loss) income before income taxes

Loss before income taxes

Provision for income taxes

7 unchanged sentences

Fiscal 2025 vs.

The decrease in the effective tax rate from fiscal 2023 to fiscal 2024 was primarily attributable to a discrete tax benefit recognized in fiscal 2023 related to the recovery of certain Brazilian income taxes paid in prior years.

The decrease in the effective tax rate from fiscal 2024 to fiscal 2025 was primarily attributable to (i) lower losses in the U.S.

current year and (ii) a decrease in valuation allowances and release of interest and penalty reserves for uncertain tax benefits as a result of concluding an IRS audit in prior period.

Fiscal 2024 vs.

The decrease in the effective tax rate from fiscal 2022 to fiscal 2023 was primarily attributable to lower income for foreign subsidiaries, in combination with the impact of further losses in the U.S.

and the associated valuation allowance for deferred tax assets in fiscal 2023.

Additionally, a discrete tax benefit was recognized in fiscal 2023 related to the recovery of certain Brazilian income taxes paid in prior years.

Net (Loss) Income

The decrease in the effective tax rate from fiscal 2023 was primarily attributable to a discrete tax benefit recognized in fiscal 2023 related to the recovery of certain Brazilian income taxes paid in prior years.

Fiscal 2025 vs.

Net loss for fiscal 2024 was $47,395, or $2.61 per diluted share, compared to net loss of $46,344, or $2.57 per diluted share, for fiscal 2023.

The increase in net loss was primarily attributable to lower gross profit, restructuring costs, higher bad debt expense, lower earnings from unconsolidated affiliates, and higher interest expense, net.

Net loss for fiscal 2025 was $20,348, or $1.11 per diluted share, compared to $47,395, or $2.61 per diluted share, for fiscal 2024.

The improvement in net loss was primarily attributable to gains on the sales of assets, partially offset by (a) lower gross profit and (b) higher restructuring costs.

Fiscal 2024 vs.

Net loss for fiscal 2023 was $46,344, or $2.57 per diluted share, compared to net income of $15,171, or $0.80 per diluted share, for fiscal 2022.

The change was primarily attributable to (i) the decrease in gross profit, (ii) the associated adverse impact of lower U.S.

earnings on the effective tax rate in fiscal 2023, and (iii) the charge for asset abandonment of certain machinery in fiscal 2023, partially offset by a discrete tax benefit that was recognized in fiscal 2023 related to the recovery of certain Brazilian income taxes paid in prior years.

Net loss for fiscal 2024 was $47,395, or $2.61 per diluted share, compared to $46,344, or $2.57 per diluted share, for fiscal 2023.

The increase in net loss was primarily attributable to (i) higher bad debt expense, (ii) restructuring costs, (iii) interest expense, net and (iv) lower earnings from unconsolidated affiliates, mostly offset by higher gross profit and lower other operating expense, net.

Fiscal 2023 Other operating expense, net included (a) $8,247 of impairment related to the abandonment of certain machinery constructed in fiscal 2017 and (b) $623 paid to a vendor to facilitate an 18-month delay for equipment purchases.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA decreased from $(5,197) for fiscal 2024 to $(11,551) for fiscal 2025, primarily due to lower gross profit together with increases in SG&A expenses, partially offset by the improvement in bad debt expense.

Adjusted EBITDA decreased from $(4,085) for fiscal 2023 to $(5,197) for fiscal 2024, primarily due to higher bad debt expense, lower earnings from unconsolidated affiliates, and other operating expenses, net.

Adjusted EBITDA decreased from $55,190 for fiscal 2022 to $(4,085) for fiscal 2023, primarily in connection with the decrease in gross profit.

Adjusted Net (Loss) Income (Non-GAAP Financial Measure)

Adjusted Net Loss (Non-GAAP Financial Measure)

Adjusted Net Loss increased from $(42,294) for fiscal 2024 to $(47,859) for fiscal 2025, primarily due to lower gross profit together with increases in SG&A expenses, partially offset by the improvement in bad debt expense.

Adjusted Net Loss increased from $(41,273) for fiscal 2023 to $(42,294) for fiscal 2024, primarily due to higher bad debt expense, lower earnings from unconsolidated affiliates, and a decrease in other operating expenses, net.

Adjusted Net (Loss) Income decreased from $14,283 for fiscal 2022 to $(41,273) for fiscal 2023, commensurate with lower gross profit and an unfavorable effective tax rate.

Segment Overview

3 unchanged sentences

Cost of sales

Gross (loss) profit

Depreciation expense

7 unchanged sentences

Net sales for fiscal 2023

Decrease in sales volumes

Decrease due to an additional week of sales in fiscal 2022

Net change in average selling price and sales mix

Increase in sales volumes

Net sales for fiscal 2024

3 unchanged sentences

Net sales for fiscal 2025

The increase in net sales for the Americas Segment from fiscal 2024 to fiscal 2025 was primarily attributable to higher sales volumes, partially offset by a lower-priced sales mix.

Both periods were unfavorably impacted by customer-demand headwinds and the volatile global textile demand environment.

The decrease in net sales for the Americas Segment from fiscal 2023 to fiscal 2024 was primarily attributable to the net change in average selling price and sales mix that included lower raw material input costs, partially offset by an increase in sales volumes.

Both periods were unfavorably impacted by the continued weak global textile demand environment.

The decrease in net sales for the Americas Segment from fiscal 2022 to fiscal 2023 was primarily attributable to lower sales volumes following weaker global textile demand.

Both periods were unfavorably impacted by customer-demand headwinds and the volatile global textile demand environment.

The changes in Segment Profit for the Americas Segment are as follows:

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Change in underlying margins and sales mix

Decrease in sales volumes

Increase in sales volumes

Segment Profit for fiscal 2024

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Change in underlying margins and sales mix

Increase in sales volumes

Segment Profit for fiscal 2025

The decrease in Segment Profit for the Americas Segment from fiscal 2024 to fiscal 2025 was primarily attributable to lower than anticipated manufacturing utilization and inconsistent productivity, along with transition costs related to the consolidation of yarn manufacturing operations.

The decrease in Segment Profit for the Americas Segment from fiscal 2023 to fiscal 2024 was primarily attributable to (i) higher manufacturing costs and (ii) lower conversion margins.

Segment Profit for the Americas Segment continues to be negatively impacted by a lower proportion of fiber sales volumes.

As fiber products carry a higher selling price and allocation of production costs versus Chip and Flake, lower fiber production drives weaker fixed cost absorption and adversely impacts gross profit and gross margin.

As fiber products carry a higher selling price and allocation of production costs versus Chip and Flake, lower fiber production drives weaker manufacturing utilization and adversely impacts gross profit and gross margin.

These negative impacts were partially offset by variable cost management efforts, more stable raw material costs and an increase in sales volumes in fiscal 2024.

The decrease in Segment Profit for the Americas Segment from fiscal 2022 to fiscal 2023 was primarily attributable to lower production volumes driving weaker fixed cost absorption in connection with lower sales volumes.

The difference in fiscal weeks was not meaningful to Segment Profit.

Brazil Segment

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Net sales for fiscal 2024

Decrease in average selling price and change in sales mix

Increase in average selling price and change in sales mix

Increase in sales volumes

Favorable foreign currency translation effects

Unfavorable foreign currency translation effects

Net sales for fiscal 2025

The increase in net sales for the Brazil Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) higher average selling prices in response to increasing raw material costs and (ii) an improvement in sales volumes from market share gains, mostly offset by unfavorable foreign currency translation effects from the weakening of the BRL versus the USD.

The decrease in net sales for the Brazil Segment from fiscal 2023 to fiscal 2024 was primarily attributable to lower average selling prices due to pressure from low-priced import competition, partially offset by (i) an improvement in sales volumes from market share gains and (ii) favorable foreign currency translation effects from the strengthening of the BRL versus the USD.

The decrease in net sales for the Brazil Segment from fiscal 2022 to fiscal 2023 was primarily attributable to selling price pressures from low-priced imports.

The Brazil Segment has undertaken aggressive pricing (i) against low-priced competitive imports and (ii) in the pursuit of greater market share.

The changes in Segment Profit for the Brazil Segment are as follows:

Segment Profit for fiscal 2023

Decrease in underlying margins

Increase in sales volumes

Increase in underlying unit margins

Favorable foreign currency translation effects

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Segment Profit for fiscal 2024

Increase in sales volumes

Increase in underlying unit margins

Favorable foreign currency translation effects

Increase in sales volumes

Unfavorable foreign currency translation effects

Segment Profit for fiscal 2025

The increase in Segment Profit for the Brazil Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) higher conversion margins and (ii) an increase in sales volumes discussed above, partially offset by unfavorable foreign currency translation effects.

We continue to prioritize innovation and differentiation to improve our portfolio and competitive position in Brazil.

The increase in Segment Profit for the Brazil Segment from fiscal 2023 to fiscal 2024 was primarily attributable to (i) increases in sales volumes as discussed above, (ii) improved conversion margins, and (ii) favorable foreign currency translation effects.

The decrease in Segment Profit for the Brazil Segment from fiscal 2022 to fiscal 2023 was primarily attributable to an overall decrease in gross margin mainly due to the decrease in selling prices discussed above and the impact of higher raw material costs in beginning inventory.

The components of Segment Profit and the percentage increase or decrease over the prior period amounts for the Asia Segment are as follows:

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Net sales for fiscal 2023

Decrease in sales volumes

Increase in sales volumes

Unfavorable foreign currency translation effects

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Net sales for fiscal 2024

Increase in sales volumes

Unfavorable foreign currency translation effects

Change in average selling price and sales mix

Decrease in sales volumes

Favorable foreign currency translation effects

Net sales for fiscal 2025

The increase in net sales for the Asia Segment from fiscal 2023 to fiscal 2024 was primarily attributable to improved sales volumes despite continued weak global demand and inventory destocking by brands and retailers, particularly for apparel.

The decrease in net sales for the Asia Segment from fiscal 2024 to fiscal 2025 was primarily attributable to (i) a change in sales mix of REPREVE products and (ii) an overall decrease in sales volumes due to the continued customer-demand headwinds, particularly for apparel, and volatility introduced by recent tariffs partially offset by favorable foreign currency translation effects due to the strengthening of the RMB versus the USD.

The increase in net sales for the Asia Segment from fiscal 2023 to fiscal 2024 was primarily attributable to improved sales volumes despite continued macro-driven customer-demand headwinds and inventory destocking by brands and retailers, particularly for apparel.

This was partially offset by (i) unfavorable foreign currency translation effects due to the weakening of the RMB versus the USD and (ii) the changes in average selling prices and sales mix.

The decrease in net sales for the Asia Segment from fiscal 2022 to fiscal 2023 was primarily attributable to weaker global demand and pandemic-related lockdowns driving lower sales volumes, partially offset by a strong sales mix.

The changes in Segment Profit for the Asia Segment are as follows:

Segment Profit for fiscal 2023

Decrease in sales volumes

Unfavorable foreign currency translation effects

Increase in sales volumes

Change in underlying margins and sales mix

Unfavorable foreign currency translation effects

Segment Profit for fiscal 2024

Increase in sales volumes

Change in underlying margins and sales mix

Unfavorable foreign currency translation effects

Decrease in sales volumes

Favorable foreign currency translation effects

Segment Profit for fiscal 2025

The decrease in Segment Profit for the Asia Segment from fiscal 2024 to fiscal 2025 was primarily attributable to a decline in gross margin associated with (i) a change in sales mix of REPREVE products and (ii) lower sales volumes due to customer-demand headwinds and volatility introduced by recent tariffs.

The increase in Segment Profit for the Asia Segment from fiscal 2023 to fiscal 2024 was attributable to (i) the increase in sales volumes discussed above and (ii) an improved gross margin rate associated with a strong sales mix of REPREVE products, partially offset by unfavorable foreign currency translation effects.

The decrease in Segment Profit for the Asia Segment from fiscal 2022 to fiscal 2023 follows the decline in net sales and sales volumes discussed above, as the comparable gross margin rate for the Asia Segment improved due to a stronger sales mix.

Liquidity and Capital Resources

UNIFI’s primary capital requirements are for working capital, capital expenditures, debt service, and share repurchases.

UNIFI’s primary sources of capital are cash generated from operations and borrowings available under the 2022 ABL Revolver (as defined below) of the 2022 ABL Facility (as defined below).

UNIFI’s primary capital requirements are for working capital, capital expenditures, debt service.

UNIFI’s primary sources of capital are cash generated from operations, borrowings available under the 2022 ABL Revolver (as defined below) of the 2022 ABL Facility (as defined below) and the 2024 Facility (as defined below).

On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the "2024 Facility").

The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement.

The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G.

Langone, one of the members of UNIFI's Board of Directors.

Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%.

The 2024 Facility contains no additional financial covenants beyond those already in effect for the 2022 Credit Agreement and is subject to a monthly unused line fee of 0.25% on available borrowing capacity.

In fiscal 2025, UNIFI borrowed $22,000 against the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance.

There was no impact to debt principal from these transactions.

As of June 29, 2025, all of UNIFI’s $108,008 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, and nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries.

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Cash and cash equivalents

Borrowings available under financing arrangements

Potential borrowings available under financing arrangements

Trigger level under ABL Revolver

Available liquidity

Working capital

Total debt obligations

For fiscal 2024, cash generated from operations was $2,092 and, at June 30, 2024, excess availability under the 2022 ABL Revolver was $40,832.

For fiscal 2025, cash used from operations was $21,311 and, at June 29, 2025, excess availability under the 2022 ABL Revolver and the 2024 Facility was $46,526 and $561, respectively.

Our liquidity position (calculated in the table above) and asset base remains elevated and is expected to be adequate to allow UNIFI to manage through the current macro-economic environment and to respond quickly to demand recovery.

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Inflationary pressures and demand uncertainty throughout fiscal 2023, 2024, and 2025 created risks to UNIFI's liquidity.

Following the establishment of the 2022 Credit Agreement, UNIFI’s cash and liquidity positions are considered sufficient to sustain its operations and meet its growth needs.

Following the establishment of the 2022 Credit Agreement and the reduction in net debt from the sale of the Madison manufacturing facility, UNIFI’s cash and liquidity positions are considered sufficient to sustain its operations and meet its growth needs.

However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for discretionary activities while further utilizing available and additional forms of credit.

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Management regularly evaluates such repatriations and believes that it has the ability to take additional, similar actions from time to time, as circumstances warrant.

Recognizing the continuing weak demand environment, in the third quarter of fiscal 2023, UNIFI negotiated a contract modification with an equipment vendor from which significant capital expenditures had occurred and were planned to continue through September 2024.

In the fourth quarter of fiscal 2025, UNIFI sold its Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for a cash purchase price of $45,000.

The sale of this facility was part of a plan announced in February 2025 to consolidate the Americas Segment yarn manufacturing operations and transition the associated manufacturing operations to other production facilities in North and Central America.

Recognizing the continuing weak demand environment, in fiscal 2023, UNIFI negotiated a contract modification with an equipment vendor from which significant capital expenditures had occurred and were planned to continue through September 2024.

The contract modification was executed at a cost to UNIFI of $623 and allowed UNIFI to delay the associated equipment purchases and installation activities for 18 months, deferring approximately $25,000 of capital expenditures.

In December 2023, UNIFI extended this delay by an additional 12 months at no cost to the Company.

Under the modified agreement, the capital expenditures are expected to occur over the October 2025 to September 2026 period.

These actions allow for (i) improved short- and mid-term liquidity in light of the current subdued levels of sales and facility utilization and (ii) a better matching of future capital expenditures with expected higher levels of future business activity.

In fiscal 2024, UNIFI extended this delay by an additional 12 months at no cost to the Company.

In the fourth quarter of fiscal 2025, UNIFI terminated the overall contract in exchange for the forfeiture of $1,448 in deposits.

These actions allow for (i) improved short- and mid-term liquidity in light of the current subdued levels of sales and facility utilization and (ii) a better matching of future capital expenditures with the consolidation of UNIFI's yarn manufacturing operations.

During fiscal 2026, we expect the majority of our capital will be deployed to support further working capital needs in response to the demand environment and product sales.

Nonetheless, given the current global economic risks, we are prepared to act swiftly and diligently to ensure the vitality of the business.

However, given the current global economic risks, we are prepared to act swiftly and diligently to ensure the vitality of the business.

Our recent actions, specifically the transition of our Madison operations to other production facilities within North and Central America, will improve our operational efficiency as a result of the cost savings that will be realized.

Furthermore, the sale of the Madison manufacturing facility allowed us to repay a portion of the principal balance of the term loan and revolving credit facility outstanding under the 2022 Credit Agreement lowering our future debt service costs.

Debt Obligations

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June 29, 2025

June 30, 2024

2024 Facility

ABL Term Loan

Finance lease obligations

Construction financing

Current ABL Term Loan

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Total long-term debt

(1) Scheduled maturity dates for finance lease obligations range from March 2025 to September 2028, as further outlined in Note 4, “Leases,” to the accompanying consolidated financial statements.

(2) Refer to the discussion below under the subheading “ Construction Financing ” for further information.

(1) Scheduled maturity dates for finance lease obligations range from November 2026 to August 2032, as further outlined in Note 4, “Leases,” to the accompanying consolidated financial statements.

2022 ABL Facility and Amendments

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and certain of its subsidiaries entered into a Second Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with a syndicate of lenders.

The 2022 Credit Agreement provides for a $230,000 senior secured credit facility (the “2022 ABL Facility”), including a $115,000 revolving credit facility (the "2022 ABL Revolver") and a term loan (the "2022 ABL Term Loan") that can be reset up to a maximum amount of $115,000, once per fiscal year, if certain conditions are met.

The 2022 Credit Agreement provided for a $230,000 senior secured credit facility (the “2022 ABL Facility”), including a $115,000 revolving credit facility (the "2022 ABL Revolver") and a term loan (the "2022 ABL Term Loan") that can be reset up to a maximum amount of $115,000, once per fiscal year, if certain conditions are met.

The 2022 ABL Facility has a maturity date of October 28, 2027.

The 2022 ABL Term Loan requires quarterly principal payments of $2,300 that began on February 1, 2023.

Borrowings under the 2022 ABL Facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus 0.10% plus an applicable margin of 1.25% to 1.75%, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 0.25% to 0.75%, with interest paid most commonly on a monthly basis.

In connection with entering into the 2022 Credit Agreement, UNIFI recorded a $273 loss on debt extinguishment to interest expense in the second quarter of fiscal 2023 related to its prior debt instrument.

Prior to entering into the 2022 Credit Agreement, Unifi, Inc.

and certain of its subsidiaries maintained a similar credit agreement that established a $200,000 senior secured credit facility (the “Prior ABL Facility”), including a $100,000 revolving credit facility and a term loan that could be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions were met.

The Prior ABL Facility had a maturity date of December 18, 2023 and the significant terms and conditions of the 2022 ABL Facility are nearly identical to those of the Prior ABL Facility.

Borrowings under the 2022 ABL Facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus 0.10% plus an applicable margin of 2.0%, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 1.0%, with interest paid most commonly on a monthly basis.

In connection with entering into the 2022 Credit Agreement, UNIFI recorded a $273 loss on debt extinguishment to interest expense in fiscal 2023 related to its prior debt instrument.

On September 5, 2024, UNIFI, Inc.

and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders.

The First Amendment primarily (i) permitted the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan;

(ii) reduced the Maximum Revolver Amount from $115,000 to $80,000;

(iii) modified the definition of the Trigger Level as of any date of determination to the greater of (a) $16,500 and (b) 10% of the sum of (i) the Maximum Revolver Amount plus (ii) the outstanding principal amount of the ABL Term Loan on such date of determination;

(iv) increased the range of the Applicable Margin on (a) SOFR-based loans to a new range of 1.50% to 2.00% and (b) Base Rate-based loans to a new range of 0.50% to 1.00%, with such new ranges of Applicable Margin rates becoming immediately effective and continuing until the Company achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better;

(v) for a Term Loan Reset, established an additional requirement to obtain lender approval;

and (vi) modified certain terms and conditions of the 2022 Credit Agreement including, but not limited to, Swing Loans, Letter of Credit sublimits, and costs related to normal course collateral valuations for the ABL Facility.

On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”).

The Second Amendment primarily (i) permitted the Company to enter into the purchase agreement related to, and consummate the sale of, the Madison, North Carolina property, (ii) permitted the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $25,000 or 50% of such net proceeds toward outstanding term loans, and (iii) required the consent of all lenders, rather than the Required Lenders (as defined in the 2022 Credit Agreement), in order to reset the maximum amount of the term loans available under the 2022 Credit Agreement.

The 2022 ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with all proceeds and products) of Unifi, Inc., Unifi Manufacturing, Inc., and a certain subsidiary guarantor (collectively, the “Loan Parties”).

It is also secured by a first-priority security interest in all (or 65% in the case of UNIFI’s first-tier controlled foreign subsidiary, as required by the lenders) of the stock of (or other ownership interests in) each of the Loan Parties (other than Unifi, Inc.) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof.

If excess availability under the 2022 ABL Revolver falls below the Trigger Level (as defined in the 2022 Credit Agreement), a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a quarterly basis of at least 1.05 to 1.00 becomes effective.

If excess availability under the 2022 ABL Revolver falls below the Trigger Level (as defined in the First Amendment), a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a quarterly basis of at least 1.05 to 1.00 becomes effective.

The Trigger Level as of June 29, 2025 was $16,500.

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Management maintains the capability to improve the fixed charge coverage ratio utilizing existing foreign cash and cash equivalents.

UNIFI maintained three interest rate swaps to fix the London Interbank Offered Rate ("LIBOR") at approximately 1.9% on $75,000 of variable-rate debt.

Such swaps terminated in May 2022 and no interest rate swaps were in effect during fiscal 2023 and 2024.

UNIFI did not incur additional costs or administrative burdens during the transition from LIBOR to SOFR with the establishment of the 2022 Credit Agreement.

2024 Facility

On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $25,000 revolving credit facility (the "2024 Facility").

The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement.

The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G.

Langone, one of the members of UNIFI's Board of Directors.

Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90%.

UNIFI borrowed $22,000 against the 2024 Facility during the third fiscal quarter and used the proceeds to reduce the outstanding ABL Revolver balance.

There was no impact to debt principal from these transactions.

Finance Lease Obligations

During fiscal 2024, UNIFI entered into finance lease obligations totaling $1,633 for texturing machines.

The maturity dates of these obligations occur during fiscal 2029 with interest rates between 6.6% and 6.9%.

During fiscal 2025, UNIFI entered into finance lease obligations totaling $1,716 for transportation equipment.

The maturity dates of these obligations range from March 2028 to August 2032 with interest rates ranging from 4.2% to 5.4%.

During fiscal 2024, UNIFI entered into finance lease obligations totaling $1,633 for texturing machines.

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In connection with this construction financing arrangement, UNIFI has borrowed a total of $9,755 and transitioned $9,755 of completed asset costs to finance lease obligations as of June 29, 2025.

No borrowings occurred during fiscal 2025.

Scheduled Debt Maturities

The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the following five fiscal years and thereafter.

2024 Facility

ABL Term Loan

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June 29, 2025

June 30, 2024

Long-term debt

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June 29, 2025

June 30, 2024

Cash and cash equivalents

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Adjusted Working Capital

Working capital decreased from $222,065 as of July 2, 2023 to $172,367 as of June 30, 2024, while Adjusted Working Capital decreased from $189,475 to $160,680, both primarily in connection with slower overall economic conditions and higher input costs.

Working capital decreased from $172,367 as of June 30, 2024 to $164,684 as of June 29, 2025, while Adjusted Working Capital decreased from $160,680 to $151,167, both primarily in connection with slower overall economic conditions and higher input costs.

Working capital and Adjusted Working Capital are within the range of management’s expectations based on the composition of the underlying business and global structure.

The decrease in receivables, net was primarily due to a decrease in sales and the timing of cash receipts.

The decrease in inventories was primarily attributable to concerted efforts to reduce inventory levels.

The decrease in other current assets was primarily due to the decrease in Brazil's non-income tax recovery asset in fiscal 2024.

The decrease in receivables, net was primarily due to the overall decrease in sales and the timing of cash receipts.

The decrease in inventories was primarily attributable to concerted efforts to reduce inventory levels in response to the depressed demand environment and in relation to the consolidation of yarn manufacturing operations with the closure of the Madison, North Carolina facility.

The decrease in other current assets was primarily due to the fiscal 2025 sale of a warehouse in Yadkinville, North Carolina previously classified in assets held for sale in fiscal 2024.

The decrease in accounts payable followed the decrease in inventories and production activity in fiscal 2025.

The increase in other current liabilities primarily reflects the timing of payroll and operating expense payments between the two period-ends.

The changes in income taxes receivable, income taxes payable, current operating lease liabilities, and current portion of long-term debt were insignificant.

The increase in other current liabilities primarily reflects the change in compensation-related accruals in fiscal 2025 and the timing of payroll and operating expense payments between the two period-ends.

The increase in income taxes receivable was primarily due to a reclassification of Brazil’s income tax recovery from other non-current assets to income taxes receivable due to the expectation of realizing the tax benefit within 12 months.

The change in income taxes payable, current operating lease liabilities, and current portion of long-term debt were insignificant.

Capital Projects

Maintenance capital expenditures are necessary to support UNIFI’s current operations, capacities, and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life.

In fiscal 2025, UNIFI invested $10,488 in capital projects, primarily relating to (i) modifications of machinery with the consolidation of yarn manufacturing operations, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures.

In fiscal 2024, UNIFI invested $11,198 in capital projects, primarily relating to (i) further improvements in production capabilities and technological enhancements in the Americas, and (ii) routine annual maintenance capital expenditures.

In fiscal 2023, UNIFI invested $36,434 in capital projects, primarily relating to (i) texturing machinery, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures.

In fiscal 2022, UNIFI invested $39,631 in capital projects, primarily relating to (i) texturing machinery, (ii) further improvements in production capabilities and technological enhancements in the Americas, and (iii) routine annual maintenance capital expenditures.

In fiscal 2025, UNIFI expects to invest between $10,000 and $12,000 in capital projects, primarily relating to (i) further improvements in production capabilities and technological enhancements in the Americas, and (ii) routine annual maintenance capital expenditures.

In fiscal 2026, UNIFI expects to invest between $8,000 and $12,000 in capital projects, primarily relating to routine annual maintenance capital expenditures.

UNIFI will seek to ensure maintenance capital expenditures are sufficient to allow continued production at high efficiencies.

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However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows while further utilizing available and additional forms of credit.

Cash Provided by Operating Activities

The significant components of net cash provided by operating activities are summarized below.

Cash (Used) Provided by Operating Activities

The significant components of net cash (used) provided by operating activities are summarized below.

UNIFI analyzes net cash provided by operating activities utilizing the major components of the statements of cash flows prepared under the indirect method.

Net (loss) income

Depreciation and amortization expense

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Non-cash compensation expense

(Gain) loss on sales and disposals of assets

Deferred income taxes

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Other changes in assets and liabilities

Net cash provided by operating activities

Net cash (used) provided by operating activities

Fiscal 2025 Compared to Fiscal 2024

The decrease in operating cash flows was primarily due to weaker earnings in fiscal 2024 compared to fiscal 2023, partially offset by working capital improvements.

The decrease in operating cash flows from fiscal 2024 was primarily due to weaker underlying earnings together with less favorable impacts from changes in working capital than in the prior year and transition activities.

Fiscal 2024 Compared to Fiscal 2023

The increase in operating cash flows was primarily due to reducing working capital associated with a decline in overall business activity in fiscal 2023, which was primarily offset by significantly weaker earnings.

The decrease in operating cash flows was primarily due to weaker earnings in fiscal 2024 compared to fiscal 2023, partially offset by working capital improvements.

Cash (Used) Provided by Investing Activities and Financing Activities

Significant investing activities included $10,488 for capital expenditures (as described above) and $51,553 of cash proceeds from the sales of a warehouse in Yadkinville, North Carolina and manufacturing facility in Madison, North Carolina.

Significant financing activities included $20,900 of net payments against the 2022 ABL Facility (including $25,000 and $18,322 of payments towards the 2022 ABL Term Loan and Revolver, respectively, associated with the sale of the Madison, North Carolina facility in the fourth quarter) along with $3,093 of payments on finance lease obligations.

Significant investing activities included $11,189 for capital expenditures (as described above).

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Significant financing activities included $22,200 of net borrowings against the 2022 ABL Facility, along with $2,123 of payments on finance lease obligations.

Significant investing activities included $39,631 for capital expenditures (as described above).

Significant financing activities included $28,800 of net borrowings against the 2022 ABL Facility, along with $3,707 of payments on finance lease obligations and $9,151 for share repurchases.

Contractual Obligations

In addition to management’s discussion and analysis surrounding our liquidity and capital resources, long-term debt, finance leases, operating leases, and the associated principal and interest components thereof, as of June 29, 2025, UNIFI’s contractual obligations consisted of the following additional concepts and considerations:

• Capital purchase obligations relate to contracts with vendors for the construction or purchase of assets, primarily for the normal course operations in our manufacturing facilities.

Such obligations are approximately $3,878 and $15,545 for fiscal years 2025 and 2026, respectively.

• Purchase obligations are agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum quantities to be purchased;

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Issued and Pending Adoption

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

In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

2024-03 does not change or remove existing expense disclosure requirement but requires disaggregated disclosures about certain expense categories and captions, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization, and selling expenses.

This ASU will become effective for UNIFI's fiscal 2028 and in the first quarter of fiscal 2029 for interim reporting, with retrospective application permitted.

UNIFI is currently evaluating the impact on the Company's disclosures on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

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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.

Upon review of each ASU issued by the FASB through the date of this report, UNIFI identified no other newly issued accounting pronouncements that are expected to have a significant impact on UNIFI’s consolidated financial statements.

Recently Adopted

In November 2023, the FASB issued ASU No.

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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 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.

Recently Adopted

There have been no newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a significant impact on UNIFI’s consolidated financial statements.

UNIFI adopted the ASU this fiscal year and the adoption did not have a material impact to UNIFI's consolidated financial statements.

Off-Balance Sheet Arrangements

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June 29, 2025

June 30, 2024

Net realizable value adjustment

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UNIFI is exposed to interest rate risk through its borrowing activities.

As of June 30, 2024, UNIFI had borrowings under the 2022 ABL Term Facility totaling $120,900.

As of June 29, 2025, UNIFI had borrowings under the 2022 ABL Term Facility and 2024 Facility totaling $100,000.

After considering UNIFI’s outstanding debt obligations with fixed rates of interest, UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase as of June 29, 2025 would result in an increase in annual interest expense of approximately $500.

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in USD by foreign subsidiaries

More information regarding UNIFI’s derivative financial instruments as of June 30, 2024 is provided in Note 18, “Fair Value of Financial Instruments and Non-Financial Assets and Liabilities,” to the accompanying consolidated financial statements.

Raw Material and Commodity Cost Risks

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however our underlying gross margin was pressured.

In fiscal 2024, while gross margins were still pressured, UNIFI experienced a more stable raw material pricing environment for most of the fiscal year.

In fiscal 2024 and 2025, while gross margins were still pressured, UNIFI experienced a more stable raw material pricing environment for most of the fiscal year.

Nonetheless, such costs remain subject to the volatility described above and, should raw material costs increase unexpectedly, UNIFI’s results of operations and cash flows are likely to be adversely impacted.

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Patent Security Agreement, dated as of May 24, 2012, by and among the grantors party thereto and Wells Fargo Bank, N.A., as agent (incorporated by reference to Exhibit 4.4 to the Current Report on Form 8-K filed May 25, 2012 (File No.

First Amendment to Second Amended and Restated Credit Agreement, dated September 5, 2024, by and among Unifi Manufacturing, Inc.

and certain of its domestic affiliates (including, without limitation, Unifi, Inc.), as borrowers, Wells Fargo Bank, National Association, as administrative agent, sole lead arranger and sole book runner, and the lenders party thereto (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 6, 2024 (File No.

Credit Agreement, dated as of October 25, 2024, by and among Unifi Manufacturing, Inc.

Second Amendment to Second Amended and Restated Credit Agreement, dated April 10, 2025, by and among Unifi Manufacturing, Inc.

and certain of its domestic affiliates, Well Fargo Bank, National Association, as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10‑Q for the quarter ended March 30, 2025 (File No.

Third Amendment to Second Amended and Restated Credit Agreement, dated May 19, 2025, by and among Unifi, Inc.

and certain of its domestic affiliates, Well Fargo Bank, National Association, as administrative agent, and the lenders party thereto.

(incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed May 21, 2025 (File No.

2008 Unifi, Inc.

60 unchanged sentences

Employment Agreement by and between Unifi, Inc.

and Gregory K.

Sigmon, effective as of July 4, 2022 (incorporated by reference to Exhibit 10.30 to the Annual Report on Form 10-K for the fiscal year ended July 3, 2022 (File No.

Employment Agreement by and between Unifi, Inc.

Moore, effective as of January 22, 2024 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter ended December 31, 2023 (File No.

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(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 25, 2012 (File No.

Insider Trading Policy.

Form of Restricted Stock Unit Agreement for Employees for use in connection with the Unifi, Inc.

Second Amended and Restated 2013 Incentive Compensation Plan (File No.

001-10542) (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10‑Q for the quarter ended September 29, 2024 (File No.

Form of Cash-Settled Restricted Stock Unit Agreement for Employees for use in connection with the Unifi, Inc.

Second Amended and Restated 2013 Incentive Compensation Plan (File No.

001-10542) (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10‑Q for the quarter ended September 29, 2024 (File No.

Form of Performance Share Unit Agreement for Employees for use in connection with the Unifi, Inc.

Second Amended and Restated 2013 Incentive Compensation Plan (File No.

001-10542) (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10‑Q for the quarter ended September 29, 2024 (File No.

Form of Cash-Settled Performance Share Unit Agreement for Employees for use in connection with the Unifi, Inc.

Second Amended and Restated 2013 Incentive Compensation Plan (File No.

001-10542) (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10‑Q for the quarter ended September 29, 2024 (File No.

Real Estate Purchase and Sale Agreement, dated as of April 10, 2025, by and between Unifi Manufacturing, Inc.

and Enovum Data Centers Corp.

(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed April 16, 2025 (File No.

Amendment to Real Estate Purchase and Sale Agreement, dated as of May 19, 2025, by and between Unifi Manufacturing, Inc.

and Enovum NC-1 Bidco, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 21, 2025 (File No.

Insider Trading Policy (incorporated by reference to Exhibit 19 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (File No.

Subsidiaries of Unifi, Inc.

5 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incentive-Based Compensation Recovery Policy.

Incentive-Based Compensation Recovery Policy (incorporated by reference to Exhibit 97 to the Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (File No.

The following financial information from Unifi, Inc.’s Annual Report on Form 10-K for the fiscal year ended June 29, 2025, filed August 26, 2025, formatted in Inline XBRL:

(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive (Loss) Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

(i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

The cover page from Unifi, Inc.’s Annual Report on Form 10-K for the fiscal year ended June 29, 2025, filed August 26, 2025, formatted in Inline XBRL (included in Exhibit 101).

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Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of June 30, 2024 and July 2, 2023

Consolidated Statements of Operations for the fiscal years ended June 30, 2024, July 2, 2023, and July 3, 2022

Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended June 30, 2024, July 2, 2023, and July 3, 2022

Consolidated Statements of Shareholders’ Equity for the fiscal years ended June 30, 2024, July 2, 2023, and July 3, 2022

Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2024, July 2, 2023, and July 3, 2022

Consolidated Balance Sheets as of June 29, 2025 and June 30, 2024

Consolidated Statements of Operations for the fiscal years ended June 29, 2025, June 30, 2024, and July 2, 2023

Consolidated Statements of Comprehensive Loss for the fiscal years ended June 29, 2025, June 30, 2024, and July 2, 2023

Consolidated Statements of Shareholders’ Equity for the fiscal years ended June 29, 2025, June 30, 2024, and July 2, 2023

Consolidated Statements of Cash Flows for the fiscal years ended June 29, 2025, June 30, 2024, and July 2, 2023

Notes to Consolidated Financial Statements

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We have audited the accompanying consolidated balance sheets of Unifi, Inc.

and subsidiaries (the Company) as of June 30, 2024 and July 2, 2023, the related consolidated statements of operations, comprehensive (loss) income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and July 2, 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended June 30, 2024, in conformity with U.S.

and subsidiaries (the Company) as of June 29, 2025 and June 30, 2024, the related consolidated statements of operations, comprehensive loss, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 29, 2025, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 29, 2025 and June 30, 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended June 29, 2025, in conformity with U.S.

generally accepted accounting principles.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 29, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2024 and July 2, 2023, the related consolidated statements of operations, comprehensive (loss) income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 30, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated August 23, 2024 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 29, 2025 and June 30, 2024, the related consolidated statements of operations, comprehensive loss, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 29, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated August 26, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

20 unchanged sentences

June 29, 2025

June 30, 2024

Cash and cash equivalents

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18,360,663 and

18,081,538 shares issued and outstanding as of June 30, 2024 and July 2, 2023,

18,251,545 shares issued and outstanding as of June 29, 2025 and June 30, 2024,

respectively)

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June 29, 2025

June 30, 2024

Cost of sales

Selling, general and administrative expenses

Provision (benefit) for bad debts

(Benefit) provision for bad debts

Restructuring costs

Other operating expense (income), net

Operating (loss) income

(Gain) loss on sales and disposals of assets

Other operating expense, net

Operating loss

Interest income

1 unchanged sentence

Equity in loss (earnings) of unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Loss before income taxes

Provision for income taxes

Net (loss) income

Net (loss) income per common share:

Net loss per common share:

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

1 unchanged sentence

June 29, 2025

Net (loss) income

Other comprehensive (loss) income:

June 30, 2024

Other comprehensive income (loss):

Foreign currency translation adjustments

Changes in interest rate swaps, net of tax of nil , nil and $ 282 ,

Other comprehensive (loss) income, net

Comprehensive (loss) income

Other comprehensive income (loss), net

Comprehensive loss

See accompanying notes to consolidated financial statements.

4 unchanged sentences

Shareholders’

Balance at June 27, 2021

Balance at July 3, 2022

Options exercised

1 unchanged sentence

Conversion of equity units

Common stock repurchased and retired under

publicly announced programs

Common stock withheld in satisfaction of tax

withholding obligations under net share settle

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Balance at July 2, 2023

4 unchanged sentences

withholding obligations under net share settle

Other comprehensive income, net of tax

Balance at July 2, 2023

Other comprehensive loss, net of tax

Balance at June 30, 2024

Options exercised

3 unchanged sentences

withholding obligations under net share settle

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Balance at June 29, 2025

4 unchanged sentences

June 29, 2025

June 30, 2024

Cash and cash equivalents at beginning of year

Operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to

net cash provided by operating activities:

Adjustments to reconcile net loss to

net cash (used) provided by operating activities:

Equity in loss (earnings) of unconsolidated affiliates

2 unchanged sentences

Non-cash compensation expense

(Gain) loss on sales and disposals of assets

Deferred income taxes

Loss on disposal of assets

Impairment for asset abandonment

6 unchanged sentences

Other non-current liabilities

Net cash provided by operating activities

Net cash (used) provided by operating activities

Investing activities:

Capital expenditures

Net cash used by investing activities

Proceeds from sale of assets

Net cash provided (used) by investing activities

Financing activities:

4 unchanged sentences

Payments on finance lease obligations

Common stock repurchased and retired under publicly announced program

Common stock withheld in satisfaction of tax withholding obligations under

14 unchanged sentences

The fiscal year for Unifi, Inc., its domestic subsidiaries, and its subsidiary in El Salvador ends on the Sunday in June or July nearest to June 30 of each year.

Unifi, Inc.’s fiscal 2024, 2023, and 2022 ended on June 30, 2024, July 2, 2023, and July 3, 2022, respectively.

Unifi, Inc.’s fiscal 2025, 2024, and 2023 ended on June 29, 2025, June 30, 2024, and July 2, 2023, respectively.

Unifi, Inc.’s remaining material operating subsidiaries’ fiscal years end on June 30.

For fiscal 2025 and 2023, there were no significant transactions or events that occurred between Unifi, Inc.’s fiscal year end and such wholly owned subsidiaries’ fiscal year ends.

Unifi, Inc.’s fiscal 2024 and 2023 each consisted of 52 weeks, while its fiscal 2022 con sisted of 53 weeks.

Unifi, Inc.’s fiscal 2025, 2024 and 2023 each consisted of 52 weeks .

Reclassifications

Certain reclassifications of prior fiscal years’ data within the unrecognized tax benefits reconciliation in Note 14, "Income Taxes," have been made to conform to the current presentation.

Certain reclassifications of prior fiscal years’ data within the effective tax rate, deferred income taxes, and unrecognized tax benefits reconciliations in Note 14, "Income Taxes," and within Other operating expenses, net in the Consolidated Statements of Operations have been made to conform to the current presentation.

Summary of Significant Accounting Policies

50 unchanged sentences

Fully depreciated assets are retained in cost and accumulated depreciation accounts until they are disposed.

In the case of disposals, asset costs and related accumulated depreciation amounts are removed from the accounts, and the net amounts, less proceeds from disposal, are included in the determination of net (loss) income and presented within Other operating expense (income), net.

In the case of disposals, asset costs and related accumulated depreciation amounts are removed from the accounts, and the net amounts, less proceeds from disposal, are included in the determination of net loss and presented w ithin (Gain) loss on sales and disposals of assets.

For fiscal 2025, certain machinery and equipment that was disposed of as part of the consolidation of yarn manufacturing operations resulted in $ 762 of net losses that were included within Restructuring costs in the Consolidated Statements of Operations.

These net losses were included within the (Gain) loss on sales and disposals of assets in the Consolidated Statements of Cash Flows together with the net gains realized on the sale of the Yadkinville, North Carolina warehouse and Madison, North Carolina manufacturing facility that occurred during fiscal 2025.

Repair and maintenance costs related to PP&E, which do not significantly increase the useful life of an existing asset or do not significantly alter, modify, or change the capabilities or production capacity of an existing asset, are expensed as incurred.

26 unchanged sentences

There were no transfers into or out of the levels of the fair value hierarchy for any years presented.

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

O ther 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.

19 unchanged sentences

UNIFI translates the results of its foreign operations at the average exchange rates during the respective periods.

Transaction gains and losses are included within other operating expense (income), net .

Transaction gains and losses are included within other operating expense, net .

Revenue Recognition

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which primarily occurs at a point in time, upon either shipment or delivery to the customer.

Revenue is recognized over time for contracts in which the associated inventory produced has no alternative use and for which an enforceable right to payment exists or the associated services have been rendered.

Revenue is measured as the amount of consideration UNIFI expects to receive in exchange for completing its performance obligations (i.e., transferring goods or providing services), which includes estimates for variable consideration.

34 unchanged sentences

Issued and Pending Adoption

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

Disaggregation of Income Statement Expenses .

This ASU will become effective for UNIFI's fiscal 2028 and in the first quarter of fiscal 2029 for interim reporting, with retrospective application permitted.

UNIFI is currently evaluating the impact on the Company's disclosures on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

4 unchanged sentences

There have been no other newly issued accounting pronouncements that are expected to have a significant impact on UNIFI’s consolidated financial statements.

Recently Adopted

In November 2023, the FASB issued ASU No.

2 unchanged sentences

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 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.

There have been no other newly issued accounting pronouncements that are expected to have a significant impact on UNIFI’s consolidated financial statements.

Recently Adopted

There have been no accounting pronouncements adopted after fiscal 2021 that had a significant impact on UNIFI's consolidated financial statements.

UNIFI adopted the ASU this fiscal year and the adoption did not have a material impact to UNIFI's consolidated financial statements.

UNIFI has adopted the following post-implementation practical expedients related to its accounting for leases:

10 unchanged sentences

June 29, 2025

June 30, 2024

Operating lease assets

39 unchanged sentences

June 29, 2025

June 30, 2024

Weighted average remaining lease term (years):

41 unchanged sentences

June 29, 2025

June 30, 2024

Customer receivables

12 unchanged sentences

Quality Claims

Balance at June 27, 2021

Credited (charged) to costs and expenses

Translation activity

Balance at July 3, 2022

5 unchanged sentences

Balance at June 30, 2024

Credited (charged) to costs and expenses

Translation activity

Balance at June 29, 2025

Amounts credited (charged) to costs and expenses for the allowance for uncollectible accounts are reflected in the benefit for bad debts and deductions represent amounts written off which were deemed to not be collectible, net of any recoveries.

2 unchanged sentences

June 29, 2025

June 30, 2024

Raw materials

5 unchanged sentences

The cost for the majority of UNIFI’s inventories is determined using the first-in, first-out method.

Certain foreign inventories and limited categories of supplies of $ 52,040 a nd $ 58,490 as of June 30, 2024 and July 2, 2023, respectively, were valued using the average cost method.

Certain foreign inventories and limited categories of supplies of $ 52,642 a nd $ 52,040 as of June 29, 2025 and June 30, 2024, respectively, were valued using the average cost method.

Other Current Assets

1 unchanged sentence

June 29, 2025

Assets held for sale

June 30, 2024

Prepaid expenses and other

Vendor deposits

Value-added taxes receivable

Prepaid expenses and other

Contract assets

Recovery of non-income taxes, net

Assets held for sale

Total other current assets

Assets held for sale as of June 30, 2024 relates to a warehouse located in Yadkinville, North Carolina that is being actively marketed for sale.

Prepaid expenses and other consists of advance payments for routine operating expenses.

Vendor deposits primarily relates to down payments made toward the purchase of inventory.

Value-added taxes receivable relates to recoverable taxes associated with the sales and purchase activities of UNIFI’s foreign operations.

Prepaid expenses and other consists of advance payments for routine operating expenses.

Contract assets represents the estimated revenue attributable to UNIFI in connection with completed performance obligations under contracts with customers for which revenue is recognized over time.

The contract assets are classified to receivables when the right to payment becomes unconditional.

Assets held for sale as of June 30, 2024 relates to a warehouse located in Yadkinville, North Carolina that was being actively marketed f or sale and was subsequently sold during fiscal 2025 for total proceeds of $ 8,084 .

Notes to Consolidated Financial Statements – (Continued)

Recovery of Non-Income Taxes, Net

Brazilian companies are subject to various taxes on business operations, including turnover taxes used to fund social security and unemployment programs, commonly referred to as PIS/COFINS taxes.

UNIFI, along with numerous other companies in Brazil, challenged the constitutionality of certain state taxes historically included in the PIS/COFINS tax base.

On May 13, 2021, Brazil’s Supreme Federal Court (the “SFC”) ruled in favor of taxpayers, and on July 7, 2021, the Brazilian Internal Revenue Service withdrew its existing appeal.

In fiscal 2021, UNIFI recorded $ 11,519 to reflect the current and non-current recovery of PIS/COFINS taxes and associated interest, with $ 942 of recoveries relating to fiscal 2021 included within net sales and $ 10,577 of recoveries relating to fiscal years prior to 2021, which was reduced by fees related to the recovery efforts to comprise $ 9,717 for recovery of non-income taxes.

During fiscal 2022, UNIFI reduced the estimated recovery by $ 815 , based on additional clarity and the review of the recovery process during the months following the associated SFC decision.

There are no limitations or restrictions on UNIFI’s ability to recover the associated overpayment claims as future income is generated and the Company has been utilizing these amounts to offset its current tax obligations under PIC/COFINS.

The Company utilized the remaining credits in fiscal 2024.

Property, Plant, and Equipment, Net

1 unchanged sentence

June 29, 2025

June 30, 2024

Land improvements

10 unchanged sentences

June 29, 2025

June 30, 2024

Machinery and equipment

4 unchanged sentences

Repair and maintenance expenses

In the fourth quarter of fiscal 2025, UNIFI sold land and land improvements, buildings and improvements and certain machinery and equipment associated with its manufacturing facility located in Madison, North Carolina.

UNIFI received net proceeds of $ 43,322 and recorded a gain of $ 35,807 .

See Note 20, “Restructuring Costs, ” for further detail.

In fiscal 2017, UNIFI constructed specialized bi-component spinning machinery in the Americas with a 15-year useful life to accommodate tolling demand and development efforts of a specific U.S.

1 unchanged sentence

As a result of the lack of potential future demand, the machinery was considered to have zero future sales potential and negative future cash flows and was abandoned by the Company.

Accordingly, UNIFI recorded an impairment of $ 8,247 to Other operating expense (income), net during the fourth quarter of fiscal 2023.

Accordingly, UNIFI recorded an impairment of $ 8,247 to Other operating expense, net during the fourth quarter of fiscal 2023.

Prior to the abandonment, the asset's net book value was $ 8,247 .

The new book value of $ 0 , based on the income method (Level 3), reflects the lack of positive future cash flows, and no scrap or salvage value.

Notes to Consolidated Financial Statements – (Continued)

Other Non-Current Assets

1 unchanged sentence

June 29, 2025

Recovery of taxes

June 30, 2024

Grantor trust

1 unchanged sentence

Intangible assets, net

Total other non-current assets

Recovery of taxes

In fiscal 2023, UNIFI recorded a recovery of income taxes in connection with filing amended tax returns in Brazil relating to certain income taxes paid in prior fiscal years, following favorable legal rulings in fiscal 2023.

Total other non-current assets

Grantor Trust

8 unchanged sentences

A change in the value of the trust assets would substantially be offset by a change in the liability to the participants, resulting in an immaterial net impact to the consolidated financial statements.

The fair value of the investment assets held by the trust were approximately $ 2,942 and $ 2,496 as of June 30, 2024 and July 2, 2023, respectively, and are classified as trading securities within Other non-current assets.

Notes to Consolidated Financial Statements – (Continued)

The fair value of the investment assets held by the trust were approximately $ 2,310 and $ 2,942 as of June 29, 2025 and June 30, 2024, respectively, and are classified as trading securities within Other non-current assets.

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

The associated DCP liability is recorded within Other current liabilities and Other long-term liabilities based on expected payment timing, and any increase or decrease in the liability is reflected as compensation in SG&A expenses.

During fiscal 2024, 2023, and 2022, we recorded (gains)/losses on investments held by the trust of $( 308 ), $( 154 ), and $ 48 , respectively.

Intangible Assets, Net

Intangible assets, net consists of the following:

June 30, 2024

Customer lists

Total intangible assets, gross

Accumulated amortization – customer lists

Accumulated amortization – trademarks

Total accumulated amortization

Total intangible assets, net

Amortization expense for intangible assets consists of the following:

Customer lists

Non-compete agreement

Total amortization expense

The following table presents the expected intangible asset amortization for the next five fiscal years:

Expected amortization

Notes to Consolidated Financial Statements – (Continued)

During fiscal 2025, 2024, and 2023, we recorded gains on investments held by the trust of $ 219 , $ 308 , and $ 154 , respectively.

Investments in Unconsolidated Affiliates

17 unchanged sentences

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

As of June 30, 2024, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, were $ 1,309 .

As of June 29, 2025, UNIFI’s open purchase orders related to this supply agreement, all with UNFA, we re $ 2,167 .

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

As of June 30, 2024, UNIFI had accounts payable due to UNFA of $ 2,197 , a nd, as of July 2, 2023, UNIFI had combined accounts payable due to UNF and UNFA of $ 3,440 .

As of June 29, 2025 and June 30, 2024, UNIFI had accounts payable due to UN FA of $ 1,368 a nd $ 2,197 , respectively .

UNIFI has determined that UNF was, and UNFA is, a variable interest entity and has also determined that UNIFI has been the primary beneficiary of these entities, based on the terms of the supply agreement.

1 unchanged sentence

As (i) UNIFI purchases substantially all of the output and all intercompany sales would be eliminated in consolidation, (ii) the entity balance sheets constitute 5 % or less of UNIFI’s current assets and total assets, and (iii) such balances are not expected to comprise a larger portion in the future, UNIFI has not included the accounts of UNF and UNFA in its consolidated financial statements and instead is accounting for these entities as equity investments.

As of June 30, 2024, UNIFI’s investment in UNFA was $ 1,603 , and on July 2, 2023, UNIFI’s combined investments in UNF and UNFA was $ 2,997 .

As of June 29, 2025 and June 30, 2024, UNIFI’s investment in UNFA was $ 1,151 and $ 1,603 , respectively.

The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with UNIFI’s accounting policy.

1 unchanged sentence

June 29, 2025

June 30, 2024

Current assets

4 unchanged sentences

UNIFI’s portion of undistributed earnings

Notes to Consolidated Financial Statements – (Continued)

(Loss) income from operations

2 unchanged sentences

Distributions received

Notes to Consolidated Financial Statements – (Continued)

Intangible Assets, Net

Intangible assets, net consists of the following:

June 29, 2025

June 30, 2024

Customer lists

Total intangible assets, gross

Accumulated amortization – customer lists

Accumulated amortization – trademarks

Total accumulated amortization

Total intangible assets, net

Amortization expense for intangible assets consists of the following:

Customer lists

Non-compete agreement

Total amortization expense

The following table presents the expected intangible asset amortization for the next five fiscal years:

Expected amortization

Recovery of Taxes

In fiscal 2025, Brazil's expected recovery of income taxes was reclassified from Other non-current assets to income taxes receivable due to the expectation of realizing the tax benefit within 12 months.

Brazil received a cash refund of $ 2,339 in fiscal 2025 related to this receivable and expects to realize approximately half of the remaining income tax recovery through cash refunds and the other half through credits offsetting future federal tax liabilities in Brazil.

Deposits on Contracts for Machinery

In the fourth quarter of fiscal 2025, UNIFI terminated a contract related to future purchases of texturing machinery in exchange for the forfeiture of $ 1,448 in deposits which is included in Restructuring costs within the Consolidated Statements of Operations.

These deposits were previously recorded in Other non-current assets within the Consolidated Balance Sheets.

Other Current Liabilities

1 unchanged sentence

June 29, 2025

June 30, 2024

Payroll and fringe benefits

Deferred revenue

Incentive compensation

Deferred revenue

Property taxes and other

Total other current liabilities

Notes to Consolidated Financial Statements – (Continued)

Long-Term Debt

7 unchanged sentences

June 29, 2025

June 30, 2024

2024 Facility

ABL Term Loan

Finance lease obligations

Construction financing

Current ABL Term Loan

2 unchanged sentences

Total long-term debt

(1) Scheduled maturity dates for finance lease obligations range from March 2025 to September 2028 .

(2) Refer to the discussion below under the subheading “ Construction Financing ” for further information.

(1) Scheduled maturity dates for finance lease obligations range from November 2026 to August 2032 .

2022 ABL Facility and Amendments

4 unchanged sentences

The 2022 ABL Term Loan requires quarterly principal payments of $ 2,300 that began on February 1, 2023.

Borrowings under the 2022 ABL Facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus 0.10% plus an applicable margin of 1.25 % to 1.75 %, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 0.25 % to 0.75 %, with interest paid most commonly on a monthly basis.

In connection with entering into the 2022 Credit Agreement, UNIFI recorded a $ 273 loss on debt extinguishment to interest expense in the second quarter of fiscal 2023 related to its prior debt instrument.

Borrowings under the 2022 ABL Facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus 0.10% plus an applicable margin of 2.0 %, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 1.0 %, with interest paid most commonly on a monthly basis.

In connection with entering into the 2022 Credit Agreement, UNIFI recorded a $ 273 loss on debt extinguishment to interest expense in fiscal 2023 related to its prior debt instrument.

On September 5, 2024, UNIFI, Inc.

and certain of its subsidiaries entered into a First Amendment to the 2022 Credit Agreement (the “First Amendment”) with a syndicate of lenders.

The First Amendment primarily (i) permits the sale of a Company-owned real estate asset (consisting of an industrial warehouse building and land acreage) located in Yadkinville, North Carolina with application of the net proceeds to reduce the outstanding ABL Revolver balance, in lieu of the prescribed mandatory prepayment to the ABL Term Loan;

(ii) reduces the Maximum Revolver Amount from $ 115,000 to $ 80,000 ;

(iii) modifies the definition of the Trigger Level as of any date of determination to the greater of (a) $ 16,500 and (b) 10 % of the sum of (i) the Maximum Revolver Amount plus (ii) the outstanding principal amount of the ABL Term Loan on such date of determination;

(iv) increases the range of the Applicable Margin on (a) SOFR-based loans to a new range of 1.50 % to 2.00 % and (b) Base Rate-based loans to a new range of 0.50 % to 1.00 %, with such new ranges of Applicable Margin rates becoming immediately effective and continuing until the Company achieves a Fixed Charge Coverage Ratio of 1.05 to 1.00 or better;

(v) for a Term Loan Reset, establishes an additional requirement to obtain lender approval;

and (vi) modifies certain terms and conditions of the 2022 Credit Agreement including, but not limited to, Swing Loans, Letter of Credit sublimits, and costs related to normal course collateral valuations for the ABL Facility.

On April 10, 2025, UNIFI entered into a Second Amendment to the 2022 Credit Agreement (the “Second Amendment”).

The Second Amendment primarily (i) permits the Company to enter into the purchase agreement related to, and consummate the sale of, the Madison, North Carolina property, (ii) permits the Company to allocate a portion of the net proceeds from the sale to repay outstanding revolving loans under the 2022 Credit Agreement, after the application of the greater of $ 25,000 or 50 % of such net proceeds toward outstanding term loans, and (iii) requires the consent of all lenders, rather than the Required Lenders (as defined in the 2022 Credit Agreement), in order to reset the maximum amount of the term loans available under the 2022 Credit Agreement.

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Subject to specific provisions, the 2022 ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at UNIFI’s discretion.

Notes to Consolidated Financial Statements – (Continued)

The applicable margin is based on (i) the excess availability under the 2022 ABL Revolver and (ii) the consolidated leverage ratio, calculated as of the end of each fiscal quarter.

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There is also a monthly unused line fee under the 2022 ABL Revolver of 0.25 %.

Notes to Consolidated Financial Statements – (Continued)

UNIFI did not incur additional costs or administrative burden during the transition from the London Interbank Offered Rate ("LIBOR") to SOFR with the establishment of the 2022 Credit Agreement.

2024 Facility

On October 25, 2024, UNIFI entered into a new credit agreement with Wells Fargo Bank, National Association for a $ 25,000 revolving credit facility (the "2024 Facility").

The maturity date of the 2024 Facility is the earlier of (i) October 28, 2027 and (ii) the termination or refinancing of the 2022 Credit Agreement.

The 2024 Facility is deemed unsecured financing for UNIFI, but is collateralized by certain assets pledged by related party Kenneth G.

Langone, one of the members of UNIFI's Board of Directors.

Borrowings under the 2024 Facility bear interest at a rate of SOFR plus 0.90 %.

UNIFI borrowed $ 22,000 against the 2024 Facility during the third fiscal quarter and used the proceeds to reduce the outstanding ABL Revolver balance.

There was no impact to debt principal from these transactions.

Finance Lease Obligations

During fiscal 2025, U NIFI entered into finance lease obligations totaling $ 1,716 for transportation equipment.

The maturity dates of these obligations range from March 2028 to August 2032 with interest rates ranging from 4.2 % to 5.4 % .

During fiscal 2024, U NIFI entered into finance lease obligations totaling $ 1,633 for texturing machines.

The maturity dates of these obligations occur during fiscal 2029 with interest rates between 6.6 % and 6.9 %.

During fiscal 2023, UNIFI entered into finance lease obligations totaling $ 5,629 for texturing machines.

The maturity dates of these obligations occur during fiscal 2028 with interest rates between 4.4 % and 6.2 %.

Construction Financing

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Each borrowing under the agreement provides for 60 monthly payments, which will commence upon the completion of the construction period with a fixed interest rate of approximately SOFR plus 1.0 % to 1.2 %.

In connection with this construction financing arrangement, UNIFI has borrowed a total of $ 9,755 and transitioned $ 9,755 of completed asset costs to finance lease obligations as of June 30, 2024.

In connection with this construction financing arrangement, UNIFI has borrowed a total of $ 9,755 and transitioned $ 9,755 o f completed asset costs to finance lease obligations as of June 29, 2025.

No new borrowings occurred during fiscal 2025.

Scheduled Debt Maturities

The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the following five fiscal years and thereafter.

2024 Facility

ABL Term Loan

Finance lease obligations

Interest Rate Swaps

In 2017, UNIFI entered into three swaps to fix LIBOR at approximately 1.9 % for $ 75,000 of variable rate borrowings which expired on May 24, 2022.

The designated hedges increased interest expense for fiscal 2022 by $ 1,190 .

There were no interest rate swaps in effect during fiscal 2024 and 2023.

Other Long-Term Liabilities

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June 29, 2025

June 30, 2024

Nonqualified deferred compensation plan obligation

4 unchanged sentences

Notes to Consolidated Financial Statements – (Continued)

Components of (Loss) Income Before Income Taxes

The components of (loss) income before income taxes consist of the following:

(Loss) income before income taxes

Components of Loss Before Income Taxes

The components of loss before income taxes consist of the following:

Loss before income taxes

Components of Provision for Income Taxes

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Change in valuation allowance

Repatriation of foreign earnings and withholding taxes

Foreign income taxed at different rates

Repatriation of foreign earnings and withholding taxes

Change in uncertain tax positions

Nondeductible expenses and other

Nondeductible compensation

Recovery of income taxes in Brazil

State income taxes, net of federal tax benefit

Tax expense on unremitted foreign earnings

Revaluation of deferred balances due to tax law changes

Nontaxable income

Foreign tax credits

Research and other business credits

Research and other business tax credits

Recovery of income taxes in Brazil

Tax on unremitted foreign earnings

Interest on income taxes

Nontaxable income

IRS audit adjustment

Nondeductible expenses and other

State income taxes, net of federal tax benefit

IRS RAR adjustment

Effective tax rate

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June 29, 2025

June 30, 2024

Deferred tax assets:

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Accrued compensation

Disallowed interest deduction carryforwards

Total gross deferred tax assets

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Based on consideration of these items, management believes that UNIFI will be able to utilize a portion of foreign tax credits claimed by one of its non-U.S.

subsidiaries in the foreseeable future, and has released $ 558 of valuation allowance previously applied to this deferred tax asset.

subsidiaries in the foreseeable future, and has released $ 86 of the v aluation allowance previously applied to this deferred tax asset.

Management has also determined that there is not enough positive evidence to support the realization of its deferred income tax asset balances of its U.S.

consolidated group and certain foreign subsidiaries, and that a full valuation allowance against these deferred tax assets is warranted.a s of June 30, 2024.

consolidated group and certain foreign subsidiaries, and that a full valuation allowance against these deferred tax assets is warranted as of June 29, 2025.

Components of UNIFI’s deferred tax valuation allowance are as follows:

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NOL carryforwards and reversing temporary differences

Disallowed interest deduction carryforwards

Other deferred tax assets

Total deferred tax valuation allowance

During fiscal 2025, UNIFI’s valuation allowance decreased by $ 42 .

The decrease was primarily driven by a decrease in the valuation allowance on capital loss carryforwards that were utilized or expired, which was partially offset by an increase in the valuation allowance on federal NOL and disallowed interest carryforwards.

During fiscal 2024, UNIFI’s valuation allowance increased by $ 11,340 .

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The increase was primarily driven by an increase in the valuation allowance on federal NOL and research credits carryforwards, partially offset by a decrease in the valuation allowance on foreign tax credits.

During fiscal 2022, UNIFI’s valuation allowance decreased by $ 5,313 .

The decrease was primarily driven by a decrease in the valuation allowance on foreign tax credits and capital loss carryforwards, offset by an increase in the valuation allowance on federal NOL and research credits carryforwards.

Notes to Consolidated Financial Statements – (Continued)

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UNIFI does not expect material changes in uncertain tax positions within the next 12 months.

(Benefit) expense for interest and penalties recognized by UNIFI within the provision for income taxes was $( 657 ), $ 400 , and $ 287 for fiscal 2024, 2023, and 2022, respectively.

UNIFI had $ 302 , $ 959 , and $ 559 accrued for interest and/or penalties related to uncertain tax positions as of June 30, 2024, July 2, 2023, and July 3, 2022, respectively.

Expense (benefit) for interest and penalties recognized by UNIFI within the provision for income taxes was $ 120 , $( 657 ), and $ 400 for fiscal 2025, 2024, and 2023, respectively.

UNIFI had $ 422 , $ 302 , and $ 959 accrued for interest and/or penalties related to uncertain tax positions as of June 29, 2025, June 30, 2024, and July 2, 2023, respectively.

Expiration of NOL Carryforwards and Tax Credit Carryforwards

As of June 30, 2024, UNIFI had U.S.

A s of June 29, 2025, UNIFI had U.S.

federal capital loss carryforwards of $ 3,628 , U.S.

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state NOL carryforwards of $ 4,317 , and foreign NOL carryforwards of $ 3,264 .

The NOL carryforwards begin expiring in varying amounts in fiscal 2025 .

The state NOL carryforwards begin expiring in varying amounts in fiscal 2027 .

As of June 29, 2025, UNIFI had the following carryforward attributes held outside of the U.S.

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federal foreign tax credit carryforwards of $ 415 and foreign tax credit carryforwards in foreign jurisdictions of $ 2,407 .

The foreign tax credit carryforwards begin expiring in varying amounts in fiscal 2028 .

federal foreign tax credit carryforwards begin expiring in varying amounts in fiscal 2028 .

As of June 29, 2025, UNIFI had U.S.

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Contractual Life

Outstanding at July 2, 2023

Outstanding at June 30, 2024

Cancelled or forfeited

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Exercisable at June 29, 2025

Unrecognized compensation cost at June 30, 2024 and stock option activity for fiscal 2024, 2023 and 2022 were insignificant.

There was no unrecognized compensation cost at June 29, 2025, and stock option activity for fiscal 2025, 2024 and 2023 was insignificant.

Stock Units and Share Units

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A summary of RSU, VSU and PSU activity for fiscal 2025 is as follows:

Outstanding at July 2, 2023

Outstanding at June 30, 2024

Cancelled or forfeited

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Notes to Consolidated Financial Statements – (Continued)

As of June 30, 2024, no outstanding PSUs were expected to vest and, accordingly, the associated compensation expense was $ 0 .

At June 30, 2024, the number of RSUs and VSUs vested and expected to vest was 761 , with an aggregate intrinsic value of $ 4,484 .

At June 29, 2025, the number of PSUs, RSUs, and VSUs vested and expected to vest was 1,362 , with an aggregate intrinsic value of $ 7,139 .

There were no vested PSUs at June 29, 2025.

The aggregate intrinsic value of the 403 vested RSUs and VSUs at June 29, 2025 was $ 2,113 .

The unrecognized compensation cost related to the unvested RSUs at June 30, 2024 was $ 1,746 , which is expected to be recognized over a weighted average period of 1.6 years.

The unrecognized compensation cost related to the unvested PSUs and RSUs at June 29, 2025 was $ 3,574 , which is expected to be recognized over a weighted average period of 1.6 years.

For fiscal 2025, 2024, and 2023, the total intrinsic value of RSUs and VSUs converted was $ 731 , $ 978 , and $ 882 , respectively.

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Stock options

RSUs and VSUs

PSUs, RSUs and VSUs

Total compensation cost

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Amounts due within the next operating cycle are reflected in Other current liabilities and the remaining DCP obligation is reflected in Other long-term liabilities.

The total DCP obligation as of June 30, 2024 and July 2, 2023, was $ 3,096 and $ 2,669 , respectively.

The total DCP obligation as of June 29, 2025 and June 30, 2024, was $ 2,432 and $ 3,096 , respectively.

Notes to Consolidated Financial Statements – (Continued)

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Comprehensive

Balance at June 27, 2021

Other comprehensive (loss) income, net of tax

Balance at July 3, 2022

Other comprehensive income, net of tax

Foreign currency translation gain

Balance at July 2, 2023

Other comprehensive loss, net of tax

Foreign currency translation loss

Balance at June 30, 2024

A summary of other comprehensive (loss) income for fiscal 2024, 2023, and 2022 is provided as follows:

Other comprehensive (loss) income:

Foreign currency translation

Changes in interest rate

swaps, net of reclassification

Other comprehensive (loss)

Foreign currency translation gain

Balance at June 29, 2025

Computation of Earnings Per Share

The computation of basic and diluted earnings per share (“EPS”) is as follows:

Net (loss) income

Weighted average common shares outstanding

Net (loss) income

Weighted average common shares outstanding

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The calculation of diluted earnings per common share presents the effect of all potential dilutive common shares that were outstanding during the respective period, unless the effect of doing so is anti-dilutive.

Restructuring Costs

On February 3, 2025, UNIFI announced the pending closure of a manufacturing facility in Madison, North Carolina, and a plan to transition the associated manufacturing operations to other production facilities in North and Central America.

In the fourth quarter of fiscal 2025, UNIFI sold the Madison, North Carolina facility, as well as certain machinery and equipment located thereon, for a cash purchase price of $ 45,000 ("Madison Sale").

The net proceeds of the Madison Sale were used to repay a portion of the principal balance of the term loan and revolving credit facility outstanding under the 2022 Credit Agreement.

As part of the Madison Sale, there is an amendment to the purchase agreement for the potential payment of deferred compensation to UNIFI in the amount of (i) $ 8,000 , if certain energy supply conditions are met within two years of closing, (ii) $ 5,000 , if the same conditions are not met within two years of closing but are met within three years of closing, and (iii) up to $ 5,000 , if certain additional energy conditions beyond those referred to in (i) and (ii) are met within four years of closing.

No amounts related to the future occurrence of these events have been recorded in the Consolidated Financial Statements as of June 29, 2025.

During fiscal 2025, UNIFI incurred transition costs related to the consolidation of Americas yarn manufacturing operations discussed above for facility closure and equipment relocation costs including asset impairments and disposals, deposits for texturing machinery forfeitures and employee retention or separation costs that were recorded within Restructuring costs in the Consolidated Statements of Operations.

UNIFI expects that these restructuring charges, other than any asset impairment or losses from disposal, will consist of cash payments, which are anticipated to continue through the end of calendar year 2025.

In fiscal 2024, UNIFI initiated the Profitability Improvement Plan intended to lower operating expenses for both production and administrative activities.

The restructuring expenses incurred in all periods primarily impacted the Americas Segment.

Notes to Consolidated Financial Statements – (Continued)

Other Operating Expense (Income), Net

Other operating expense (income), net primarily consists of the following:

A summary of the restructuring activities consists of the following:

Facility closure and equipment relocation costs

Employee separation or retention costs

Forfeiture of deposits for texturing machinery

Dissolution of joint venture

Restructuring costs

Cash payments

Non-cash charges

Ending Liability

UNIFI estimates that it will incur an additional $ 2,000 to $ 4,000 of additional restructuring costs over the next 3 to 6 months related to the closure of the Madison, North Carolina facility.

Other Operating Expense, Net

Other operating expense, net primarily consists of the following:

Foreign currency transaction losses (gains)

Net loss on sale or disposal of assets

Impairment for asset abandonment (1)

Contract modification costs (2)

Other operating expense (income), net

Other operating expense, net

(1) In fiscal 2023, UNIFI abandoned certain specialized machinery in the Americas and recorded an impairment charge.

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At this time, UNIFI does not expect any active site remediation will be required but expects that any costs associated with active site remediation, if ever required, would likely be immaterial.

Notes to Consolidated Financial Statements – (Continued)

Unconditional Obligations

8 unchanged sentences

Costs for unconditional service obligations

Notes to Consolidated Financial Statements – (Continued)

Related Party Transactions

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

There were no related party receivables as of June 30, 2024 and July 2, 2023, and there were no revenues derived from related parties in the current and prior two fiscal years.

There were no related party receivables as of June 29, 2025 and June 30, 2024, and there were no revenues derived from related parties in the current and prior two fiscal years.

Langone, a member of the Board, is a director, shareholder and non-executive Chairman of the Board of Directors of Salem Holding Company.

4 unchanged sentences

June 29, 2025

June 30, 2024

Accounts payable

9 unchanged sentences

lease debt service

As discussed in Note 12, "Long-Term Debt", UNIFI entered into the 2024 Facility in October 2024 which was collateralized by personal assets of a board member.

During the six-month period ended June 29, 2025, UNIFI borrowed $ 22,000 on the 2024 Facility and used the proceeds to reduce the outstanding ABL Revolver balance.

Notes to Consolidated Financial Statements – (Continued)

Business Segment Information

UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s chief executive officer , who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources.

Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly provided to and reviewed by the CODM for the purpose of assessing performance and allocating resources.

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 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.

These operations derive revenues primarily from manufacturing recycled and synthetic 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.

The Americas Segment consists of sales and manufacturing operations in the U.S., El Salvador, and Colombia.

• The Brazil Segment primarily manufactures and sells polyester-based products to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Brazil.

• The Brazil Segment primarily manufactures and sells recycled and synthetic textile products to knitters and weavers that produce fabric for the apparel, home furnishings, automotive, industrial, and other end-use markets principally in Brazil.

The Brazil Segment includes a manufacturing location and sales offices in Brazil.

• The operations within the Asia Segment exhibit similar long-term economic characteristics and sell to similar customers utilizing similar methods of distribution primarily in Asia and Europe.

The Asia Segment primarily sources synthetic and recycled textile products from third-party suppliers and sells to yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia and Europe.

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

The Asia Segment primarily sources recycled and synthetic textile products from third-party suppliers and sells to yarn manufacturers, knitters, and weavers principally in Asia and Europe that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets.

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

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

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The technologies expense (i) reflects the sharing of certain manufacturing know-how, processes, and product technical information and design and (ii) is included in the segment evaluations performed by the CODM.

Notes to Consolidated Financial Statements – (Continued)

Selected financial information is presented below:

8 unchanged sentences

Cost of sales

Gross (loss) profit

Segment depreciation expense

Segment Profit

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

Notes to Consolidated Financial Statements – (Continued)

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

Segment gross profit

Provision (benefit) for bad debts

(Benefit) provision for bad debts

Restructuring costs

Other operating expense (income), net

Operating (loss) income

(Gain) loss on sale of assets

Other operating expense, net

Operating loss

Interest income

1 unchanged sentence

Equity in loss (earnings) of unconsolidated affiliates

Recovery of non-income taxes, net

(Loss) income before income taxes

Loss before income taxes

The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows:

2 unchanged sentences

Depreciation and amortization expense

Notes to Consolidated Financial Statements – (Continued)

The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows:

4 unchanged sentences

June 29, 2025

June 30, 2024

Segment total assets

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operations to external customers

Notes to Consolidated Financial Statements – (Continued)

The net sales amounts are based on the operating locations from where the items were produced or distributed.

1 unchanged sentence

June 29, 2025

June 30, 2024

Remaining Foreign Countries

4 unchanged sentences

and other non-current assets.

Notes to Consolidated Financial Statements – (Continued)

Quarterly Results (Unaudited)

1 unchanged sentence

For the Fiscal Quarter Ended

October 1, 2023

September 29, 2024

December 29, 2024

2 unchanged sentences

Net sales (1)

Gross (loss) profit (2)

Net loss per common share:

Gross profit (loss) (2)

Net (loss) income (3)

Net (loss) income per common share:

For the Fiscal Quarter Ended

October 1, 2023

January 1, 2023

April 2, 2023

December 31, 2023

March 31, 2024

June 30, 2024

Net sales (5)

Gross profit (loss) (6)

Gross (loss) profit (6)

Net loss per common share:

(1) Net sales for fiscal 2025 includes lower volumes in the Americas and Asia Segments.

(2) Gross profit (loss) for our domestic operations for all fiscal quarters of fiscal 2025 was impacted by softer sales and profitability in the Asia Segment and transition costs in the Americas Segment.

(3) Net (loss) income for our domestic operations for all fiscal quarters of fiscal 2025 includes the adverse pressures on gross profit (loss) which included transition costs.

In the fourth quarter of fiscal 2025, UNIFI recorded a gain of $ 35,807 related the sale of a manufacturing facility.

(4) (Loss) income per share is computed independently for each of the periods presented.

The sum of the loss per share amounts for the fiscal quarters may not equal the total for the fiscal year.

(5) Net sales for fiscal 2024 includes lower volumes in the Americas and Asia Segments as a result of lower global demand in connection with inventory destocking efforts of major brands and retailers.

2 unchanged sentences

Net loss for fiscal 2024 includes both a loss on dissolution of a joint venture and severance costs.

(4) Loss per share is computed independently for each of the periods presented.

The sum of the loss per share amounts for the fiscal quarters may not equal the total for the fiscal year.

(5) Net sales for all fiscal quarters of fiscal 2023 includes adverse demand pressures in the Americas and Asia Segments.

(6) Gross profit (loss) for our domestic operations for all fiscal quarters of fiscal 2023 was impacted by lower production volumes driving weaker fixed cost absorption in connection with lower sales volumes.

(7) Net loss for our domestic operations for all fiscal quarters of fiscal 2023 includes the adverse pressures on gross profit (loss).

Net loss for the fourth quarter of fiscal 2023 includes an impairment further described in Note 9, "Property, Plant and Equipment, Net."

Notes to Consolidated Financial Statements – (Continued)

Supplemental Cash Flow Information

4 unchanged sentences

and foreign jurisdictions, net of refunds.

Fiscal 2022 includes an income tax payment of $ 3,749 related to the recovery of non-income taxes described in Note 8, “Other Current Assets.”

Non-Cash Investing and Financing Activities

As of June 30, 2024, July 2, 2023, and July 3, 2022, $ 879 , $ 1,137 , and $ 2,456 , respectively, were included in accounts payable for unpaid capital expenditures.

During fiscal years ended June 30, 2024, July 2, 2023, and July 3, 2022, UNIFI recorded non-cash activity relating to finance leases of $ 1,633 , $ 5,629 , and $ 2,493 , respectively.

As of June 29, 2025, June 30, 2024, and July 2, 2023, $ 676 , $ 879 , and $ 1,137 , respectively, were included in accounts payable for unpaid capital expenditures.

During fiscal years ended June 29, 2025, June 30, 2024, and July 2, 2023, UNIFI recorded non-cash activity relating to finance leases of $ 1,716 , $ 1,633 , and $ 5,629 , 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.

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-K

Item 7. Management’s Discussion and Analysis