Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~January 25, 2018,~~November 3, 2023, there were ~~18,297,602~~18,116,605 shares of the registrant’s common stock, par value $0.10 per share, outstanding.

This Quarterly Report on Form 10-Q contains ~~forward-looking statements~~“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that relate to our plans, objectives, estimates, and goals. Statements expressing expectations regarding our future, or projections or estimates relating to products, sales, revenues, expenditures, costs, strategies, initiatives, or earnings, are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions and expectations about our future ~~economic~~ performance, considering the information currently available to management. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” ~~“strive”~~“strive,” and words of similar import, or the negative of such words, identify or signal the presence of forward-looking statements. These statements are not statements of historical ~~fact, and~~fact; they involve risks and uncertainties that may cause our actual results, performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition that we express or imply in any forward-looking statement. Factors that could contribute to such differences include, but are not limited to:

All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our control. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities ~~law.~~laws.

In light of all the above considerations, we reiterate that forward-looking statements are not guarantees of future performance, and we caution you not to rely on them as such.

FOR THE THREE MONTHS ~~AND SIX MONTHS~~ ENDED ~~DECEMBER 24, 2017~~OCTOBER 1, 2023

CONDENSED CONSOLIDATED ~~STATEMENTS~~STATEMENTS OF ~~INCOME~~OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF CO~~MPREHENSIVE INCOME~~SHAREHOLDERS’ EQUITY

~~Certain reclassifications of prior years’ data have been made to conform to the current year presentation.~~

3. Recent Accounting Pronouncements

~~Issued and Pending Adoption~~

~~In May 2014, the Financial Accounting Standards Board (the “FASB”) issued~~ ~~Accounting Standards Update (“ASU”) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~. Subsequent ASUs have been issued to provide clarity and defer the effective date of the new guidance. The new revenue recognition standard eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principles-based approach. While UNIFI has not yet determined the effect of the new guidance on its ongoing financial reporting, UNIFI notes the following considerations: (i) UNIFI is primarily engaged in the business of manufacturing and delivering tangible products utilizing relatively straightforward contract terms without multiple performance obligations and (ii) transaction prices for UNIFI’s primary and material revenue activities are determinable and lack significant timing considerations. UNIFI is currently performing the following activities regarding implementation of the new guidance: (a) reviewing material contracts and (b) assessing accounting policy elections and disclosures under the new guidance. In

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

addition, implementation matters remaining include (x) evaluating the systems and processes to support revenue recognition and (y) selecting the method of adoption. The new revenue recognition guidance is effective for UNIFI’s fiscal 2019.

~~In February 2016, the FASB issued~~ ~~ASU No. 2016-02,~~ ~~Leases (Topic 842)~~. The new guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. While UNIFI has not yet determined the full effect of the new guidance on its ongoing financial reporting, as of June 25, 2017, UNIFI had approximately $6,400 of future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and did not enter into any new material operating lease agreements during the six months ended December 24, 2017. The new lease guidance is effective for UNIFI’s fiscal 2020, and early adoption is permitted.

In connection with the SEC Staff Announcement on July 20, 2017 relating to the transition to ASU No. 2014-09 and ASU No. 2016-02, due to its status as a significant subsidiary of Unifi, Inc., PAL expects to adopt (i) the new revenue recognition guidance in its fiscal 2019 and (ii) the new lease guidance in its fiscal 2020.

~~Recently Adopted~~

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~. The ASU is intended to improve and simplify the rules around hedge accounting, reduce complexity for certain hedging concepts and better align financial reporting with an entity’s risk management activities. UNIFI early adopted ASU No. 2017-12 in the three months ended December 24, 2017. Early adoption will allow UNIFI to (i) eliminate consideration for hedge ineffectiveness, (ii) utilize a qualitative effectiveness assessment prospectively and (iii) contemplate hedge accounting for additional risk management activities allowed by the simplified guidance. Due to a lack of complexity in UNIFI’s recent risk management activities, there are no applicable cumulative adjustments to UNIFI’s financial statements in connection with adoption of the ASU.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments, including the accounting and classification of the respective income tax impacts, forfeitures and statutory withholding requirements. UNIFI adopted the ASU in the three months ended September 24, 2017, on a prospective basis. The adoption resulted in a $148 decrease to the provision for income taxes for excess tax benefits and an immaterial increase in potential dilutive weighted average shares for the six months ended December 24, 2017. In connection with the adoption of the ASU, UNIFI has elected to recognize forfeitures as they occur, and there is no corresponding retrospective adjustment to retained earnings. Additionally, UNIFI is presenting the change in classification of excess tax benefits in the condensed consolidated statements of cash flows on a prospective basis.

~~In July 2015, the FASB issued ASU No. 2015-11,~~ ~~Inventory (Topic 330): Simplifying the Measurement of Inventory~~, which modifies the subsequent measurement of inventories recorded under a first-in, first-out or average cost method. Under the new standard, such inventories are required to be measured at the lower of cost and net realizable value. UNIFI adopted the ASU in the three months ended September 24, 2017, with prospective application. UNIFI’s historical principles for inventory measurement had utilized net realizable value, and, therefore, adoption of the ASU had no material impact on UNIFI’s consolidated financial statements.

Based on UNIFI’s review of ~~ASUs~~Accounting Standards Updates issued since the filing of the ~~2017~~2023 Form 10-K, there have been no ~~other~~ newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a ~~significant~~material impact on UNIFI’s consolidated financial statements.

~~4. Receivables, Net~~

~~Receivables, net consists of the following:~~

December 24, 2017

June 25, 2017

Customer receivables

$
82,637

$
83,291

Allowance for uncollectible accounts

(2,089
)

(2,222
)
Reserves for yarn quality claims

(731
)

(1,278
)
Net customer receivables

79,817

79,791

Other receivables

1,030

1,330

Total receivables, net

$
80,847

$
81,121

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

4. Revenue

The following tables present net sales disaggregated by (i) classification of customer type and (ii) REPREVE® Fiber sales:

Third-Party Manufacturer


	For the Three Months Ended
	October 1, 2023		October 2, 2022
Third-party manufacturer	$	137,620	$	178,212
Service		1,224		1,307
Net sales	$	138,844	$	179,519


	For the Three Months Ended
	October 1, 2023		October 2, 2022
REPREVE® Fiber	$	42,461	$	49,179
All other products and services		96,383		130,340
Net sales	$	138,844	$	179,519

Third-party manufacturer revenue is primarily generated through sales to direct customers. Such sales represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts. Each of UNIFI’s reportable segments derives revenue from sales to third-party manufacturers.

Service Revenue

Service revenue is primarily generated, as services are rendered, through fulfillment of toll manufacturing of textile products or transportation services governed by written agreements. Such toll manufacturing and transportation services represent satisfaction of UNIFI’s performance obligations required by the associated revenue contracts.

REPREVE® Fiber

REPREVE® Fiber represents UNIFI's collection of fiber products on our recycled platform, with or without added technologies.

Variable Consideration

For all variable consideration, where appropriate, UNIFI estimates the amount using the expected value method, which takes into consideration historical experience, current contractual requirements, specific known market events, and forecasted customer buying and payment patterns. Overall, these reserves reflect UNIFI’s best estimates of the amount of consideration to which the customer is entitled based on the terms of the contracts. Variable consideration has been immaterial to UNIFI’s financial statements for all periods presented.

5. Long-Term Debt

Debt Obligations

The following table and narrative presents the detail of UNIFI’s debt obligations. Capitalized terms not otherwise defined within this Note shall have the meanings attributed to them in the Second Amended and Restated Credit Agreement, dated as of October 28, 2022 (the "2022 Credit Agreement").


		Weighted Average
	Scheduled	Interest Rate as of			Principal Amounts as of
	Maturity Date	October 1, 2023			October 1, 2023			July 2, 2023
ABL Revolver	October 2027		7.7	%	$	21,700		$	18,100
ABL Term Loan	October 2027		6.9	%		108,100			110,400
Finance lease obligations	(1)		5.0	%		11,687			10,767
Construction financing	(2)		0.0	%		—			1,632
Total debt						141,487			140,899
Current ABL Term Loan						(9,200	)		(9,200	)
Current portion of finance lease obligations						(3,123	)		(2,806	)
Unamortized debt issuance costs						(274	)		(289	)
Total long-term debt					$	128,890		$	128,604

(1)

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

(2)

Refer to the discussion below under “Construction Financing” for further information.

ABL Facility and Amendments

There have been no ~~material~~ changes ~~in UNIFI’s allowance for uncollectible accounts since June 25, 2017.~~

~~The changes in UNIFI’s reserves for yarn quality claims were as follows:~~

Reserves for
Yarn
Quality Claims

Balance at June 25, 2017

$
(1,278
)
Charged to costs and expenses

(616
)
Translation activity

(12
)
Deductions

1,175

Balance at December 24, 2017

$
(731
)

~~5. Inventories~~

~~Inventories consists~~to the 2022 Credit Agreement following the filing of the ~~following:~~2023 Form 10-K.

Construction Financing

December 24, 2017

June 25, 2017

Raw materials

$
38,342

$
36,748

Supplies

6,537

6,104

Work in process

6,819

7,399

Finished goods

66,872

63,121

Gross inventories

118,570

113,372

Inventory reserves

(2,331
)

(1,967
)
Total inventories

$
116,239

$
111,405

In connection with the 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 October 1, 2023.

~~6. Property, Plant and Equipment, Net~~

~~Property, plant and equipment, net (“PP&E”) consists of the following:~~

December 24, 2017

June 25, 2017

Land

$
2,931

$
2,931

Land improvements

15,099

15,066

Buildings and improvements

157,984

157,115

Assets under capital leases

34,568

34,568

Machinery and equipment

586,798

579,211

Computers, software and office equipment

19,850

19,360

Transportation equipment

4,780

4,798

Construction in progress

8,820

7,371

Gross property, plant and equipment

830,830

820,420

Less: accumulated depreciation

(621,107
)

(612,355
)
Less: accumulated amortization – capital leases

(6,024
)

(4,677
)
Total PP&E

$
203,699

$
203,388

~~Depreciation expense and repair and maintenance expenses were as follows:~~

For the Three Months Ended

For the Six Months Ended

December 24, 2017

December 25, 2016

December 24, 2017

December 25, 2016

Depreciation expense

$
5,237

$
4,486

$
10,360

$
8,700

Repair and maintenance expenses

4,779

4,514

9,504

8,754

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

~~7. Accrued Expenses~~

~~Accrued expenses consists of the following:~~

December 24, 2017

June 25, 2017

Payroll and fringe benefits

$
7,277

$
10,469

Other

5,713

5,675

Total accrued expenses

$
12,990

$
16,144

Other consists primarily of accruals for utilities, property taxes, employee-related claims and payments, interest, marketing expenses, freight expenses, rent, other non-income related taxes and deferred revenue.

~~8. Long-Term Debt~~

~~Debt Obligations~~

The following table presents the total balances outstanding for UNIFI’s debt obligations, their scheduled maturity dates and the weighted average interest rates for borrowings as well as the applicable current portion of long-term debt:

Weighted Average

Scheduled

Interest Rate as of

Principal Amounts as of

Maturity Date

December 24, 2017

December 24, 2017

June 25, 2017

ABL Revolver

March 2020

3.3%

$
21,900

$
9,300

ABL Term Loan ⁽¹⁾

March 2020

3.3%

90,000

95,000

Capital lease obligations

(2)

3.7%

21,640

25,168

Total debt

133,540

129,468

Current portion of capital lease obligations

(7,112
)

(7,060
)
Current portion of other long-term debt

(10,000
)

(10,000
)
Unamortized debt issuance costs

(840
)

(1,026
)
Total long-term debt

$
115,588

$
111,382

~~(1)~~

~~Includes the effects of interest rate swaps.~~

~~(2)~~

~~Scheduled maturity dates for capital lease obligations range from July 2018 to November 2027.~~

~~ABL Facility~~

On March 26, 2015, Unifi, Inc. and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated Credit Agreement for a $200,000 senior secured credit facility (the “ABL Facility”) with a syndicate of lenders. The ABL Facility consists of a $100,000 revolving credit facility (the “ABL Revolver”) and a term loan that can be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions are met (the “ABL Term Loan”). The ABL Facility has a maturity date of March 26, 2020.

~~Scheduled Debt Maturities~~

~~The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal 2018 and the fiscal years thereafter:~~

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Thereafter

ABL Revolver

$
—

$
—

$
21,900

$
—

$
—

$
—

ABL Term Loan

5,000

10,000

75,000

—

—

—

Capital lease obligations

3,533

6,996

5,519

2,624

2,417

551

Total

$
8,533

$
16,996

$
102,419

$
2,624

$
2,417

$
551

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~9. Other Long-Term Liabilities~~

~~Other long-term liabilities consists of the following:~~

December 24, 2017

June 25, 2017

Uncertain tax positions

$
5,293

$
5,077

Other

5,800

6,727

Total other long-term liabilities

$
11,093

$
11,804

Other primarily includes UNIFI’s unfunded supplemental post-employment plan, certain retiree and post-employment medical and disability liabilities, deferred revenue and deferred energy incentive credits.

~~10.~~6. Income Taxes

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


	For the Three Months Ended
	October 1, 2023			October 2, 2022
(Benefit) provision for income taxes	$	(463	)	$	2,734
Effective tax rate		3.4	%		(53.6	)%

Income Tax Expense

For the Three Months Ended

For the Six Months Ended

December 24, 2017

December 25, 2016

December 24, 2017

December 25, 2016

(Benefit) provision for income taxes

$
(4,826
)

$
1,924

$
(1,630
)

$
5,650

Effective tax rate

(69.2
)%

30.6
%

(8.5
)%

29.5
%

UNIFI’s (benefit) provision for income taxes for the three months ended October 1, 2023 and October 2, 2022 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

~~H.R.~~The effective tax rate for the three months ended October 1, ~~formerly known as the Tax Cuts and Jobs Act, was enacted on December 22, 2017. H.R. 1 includes significant changes to existing tax law, including a permanent reduction to~~2023 varied from the U.S. federal ~~corporate income tax rate from 35% to 21%, a one-time mandatory deemed repatriation of foreign earning and profits (the “toll charge”), deductions, credits and business-related exclusions.~~

The permanent reduction to the U.S. federal corporate income tax rate from 35% to 21% was effective January 1, 2018. When a U.S. federal tax rate change occurs during a fiscal year, taxpayers are required to compute a weighted daily average rate for the fiscal year of enactment. As a result of H.R. 1, UNIFI has calculated a U.S. federal corporate income tax rate of 28.25% for its fiscal 2018 tax year.

~~The effective tax rates for the periods presented above are lower than the U.S.~~ statutory ~~tax~~ rate primarily due to the ~~one-time~~U.S.-generated losses for which UNIFI does not expect to realize a future tax ~~benefit resulting~~benefit.

During the three months ended October 1, 2023, the Internal Revenue Service (the “IRS”) audit of fiscal years 2014 through 2019 was concluded with a net refund of $1,248 which is yet to be received. The impact from the ~~revaluation of UNIFI’s domestic deferred~~audit adjustments to the prior periods was insignificant.

The effective tax ~~balances~~rate for the three months ended October 2, 2022 was lower U.S. statutory tax rate, the release of a valuation allowance on certain historical net operating losses (“NOLs”) and foreign income being taxed at lower rates. These benefits were partially offset by a provisional amount for the toll charge, net of foreign tax credits, and losses in tax jurisdictions for which no tax benefit can currently be recognized.

UNIFI revalued its measurable deferred tax balances based upon the new tax rate at which the temporary differences and carryforwards are expected to reverse. UNIFI recorded a tax benefit of approximately $4,500 as a result of the net change in deferred tax balances. UNIFI determined that the impact ofthan the U.S. federal ~~corporate income tax~~statutory rate ~~change on~~primarily due to an increase in the ~~U.S.~~valuation allowance for deferred tax assets and ~~liabilities is provisional because the number cannot be calculated until the underlying timing differences are known rather than estimated.~~

~~Specific to the toll charge, UNIFI has recorded a $1,700 provisional charge, net of foreign~~current U.S. tax ~~credits, based~~ on the following estimates: (i) earnings and profits of foreign jurisdictions that will not be complete until the end of fiscal 2018, (ii) the aggregate cash position at June 24, 2018 and (iii) finalization of taxes paid in foreign jurisdictions. Additionally, the estimates have been made based on UNIFI’s interpretation of H.R. 1. The U.S. Treasury has indicated in Notice 2018-07 that it expects to issue further guidance to clarify certain technical aspects of H.R. 1, which could impact UNIFI’s computations and provisional amounts recorded.

Within the calculation of the annual effective tax rate, UNIFI has used assumptions and estimates that may change as a result of future guidance, interpretation, and rulemaking from the Internal Revenue Service, the SEC, the FASB and/or various other taxing authorities. For example, UNIFI anticipates that state taxing authorities will continue to determine and announce their conformity to H.R. 1 which could have an impact on UNIFI’s annual effective tax rate.

~~UNIFI continues to review the anticipated impacts of the~~ global intangible ~~low-taxed~~low-tax income (“GILTI”) ~~and base erosion anti-abuse tax (“BEAT”), which are not effective until fiscal 2019. UNIFI has not recorded any impact associated with either GILTI or BEAT.~~.

Unrecognized Tax Benefits

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

UNIFI has recorded all known and estimable impacts of H.R. 1 that are effective for fiscal 2018. Future adjustments to the provisional numbers will be recorded as discrete adjustments to income tax expense in the period in which those adjustments become estimable and/or are finalized.

UNIFI regularly assesses the outcomes of both completed and ongoing examinations to ensure that ~~UNIFI’s~~its provision for income taxes is sufficient. Certain returns that remain open to examination have utilized carryforward tax attributes generated in prior tax years, including ~~NOLs,~~net operating losses, which could potentially be revised upon examination.

Following the conclusion of the IRS audit, UNIFI ~~also regularly assesses whether it~~adjusted the uncertain tax positions for fiscal years 2014 through 2019 that were effectively settled. The impact from releasing the netted uncertain tax position liabilities was insignificant.

7. Shareholders’ Equity

On October 31, 2018, UNIFI announced that the Company's Board of Directors (the “Board”) approved a share repurchase program (the “2018 SRP”) under which UNIFI is ~~more-likely-than-not that some portion or all~~authorized to acquire up to $50,000 of its deferred tax assets will not be realized. UNIFI considers the scheduled reversal of taxable temporary differences, taxable income in carryback years, projected future taxable income and tax planning strategies in making this assessment. Since UNIFI operates in multiple jurisdictions, the assessmentcommon stock. The share repurchase authorization is made on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law. Due to new facts and circumstances in the second quarter of fiscal 2018, UNIFI has determined it can utilize certain NOLs to offset future taxable incomediscretionary and has ~~reduced the corresponding valuation allowance by $3,807. There was also~~no expiration date. No shares have been repurchased in fiscal 2023 and 2024 and $38,859 remains available for repurchase.

8. Stock-Based Compensation

On October 31, 2023, UNIFI’s shareholders approved a ~~reduction to valuation allowances on U.S. deferred tax assets in the current period as a result of the lower U.S. statutory tax rate under H.R. 1.~~

~~The components of UNIFI’s deferred tax valuation allowance are as follows:~~

December 24, 2017

June 25, 2017

Investment in a former domestic unconsolidated affiliate

$
(3,958
)

$
(6,269
)
Equity-method investment in PAL

(1,217
)

(1,520
)
Certain losses carried forward ⁽¹⁾

(1,548
)

(5,924
)
State NOLs

(108
)

(108
)
Other foreign NOLs⁽²⁾

(2,963
)

(3,347
)
Foreign tax credits

(1,167
)

(789
)
Total deferred tax valuation allowance

$
(10,961
)

$
(17,957
)

~~(1)~~

~~Certain U.S. NOLs and capital losses outside the U.S. consolidated tax filing group.~~

~~(2)~~

~~Presented net of certain NOL carryforward deferred tax assets.~~

~~11. Shareholders’ Equity~~

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at June 25, 2017

18,230

$
1,823

$
51,923

$
339,940

$
(32,880
)

$
360,806

Options exercised

54

6

213

—

—

219

Conversion of restricted stock units

3

—

—

—

—

—

Stock-based compensation

4

—

3,079

—

—

3,079

Other comprehensive income, net of tax

—

—

—

—

1,423

1,423

Net income

—

—

—

20,762

—

20,762

Balance at December 24, 2017

18,291

$
1,829

$
55,215

$
360,702

$
(31,457
)

$
386,289

~~No dividends were paid during the six months ended December 24, 2017 or in the two most recently completed fiscal years.~~

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~12. Stock-Based Compensation~~

~~The following table provides information as of December 24, 2017 with respect~~First Amendment (the "First Amendment") to the ~~number of securities remaining available for future issuance under the~~ Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (the ~~“2013~~“2020 Plan”):. The 2020 Plan set the initial number of shares available for future issuance ("share reserve") pursuant to awards granted under the 2020 Plan to 850. The First Amendment increased the remaining share reserve by 1,100. No additional awards can be granted under prior plans; however, awards outstanding under a respective prior plan remain subject to that plan’s provisions.

~~Authorized under the 2013 Plan~~	~~1,000~~
~~Plus: Certain awards expired, forfeited or otherwise terminated unexercised~~	~~343~~
~~Less: Awards granted to employees~~	~~(678~~	)
~~Less: Awards granted to non-employee directors~~	~~(133~~	)
~~Available for issuance under the 2013 Plan~~	~~532~~

~~During the six months ended December 24, 2017 and December 25, 2016, UNIFI granted stock options to purchase 54 and 128 shares of common stock, respectively.~~

~~During the six months ended December 24, 2017 and December 25, 2016, UNIFI granted 90 and 31 restricted stock units (“RSUs”), respectively.~~

~~13.~~9. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities

UNIFI may use derivative financial instruments such as foreign currency forward contracts or interest rate swaps to reduce its ongoing business exposures to fluctuations in foreign currency exchange rates or interest rates. UNIFI does not enter into derivative contracts for speculative purposes. The following table presents details regarding UNIFI’s hedging activities:Financial Instruments

For the Three Months Ended

For the Six Months Ended

December 24, 2017

December 25, 2016

December 24, 2017

December 25, 2016

Interest expense

$
1,190

$
914

$
2,375

$
1,606

Increase in fair value of interest rate swaps

(1,077
)

(89
)

(1,492
)

(188
)
Impact of interest rate swaps on interest expense

123

65

254

137

For the ~~six~~three months ended ~~December 24, 2017~~October 1, 2023 and ~~December 25, 2016,~~October 2, 2022, there were no significant changes to UNIFI’s assets and liabilities measured at fair value, and there were no transfers into or out of the levels of the fair value hierarchy.

UNIFI believes that there have been no significant changes to its credit risk profile or the interest rates available to UNIFI for debt issuances with similar terms and average maturities, and UNIFI estimates that the fair values of its debt obligations approximate the carrying amounts. Other financial instruments include cash and cash equivalents, receivables, accounts payable, and accrued expenses. The financial statement carrying amounts of these items approximate the fair ~~value~~values due to their short-term nature.

~~14. Accumulated Other Comprehensive Loss~~

~~The components of and the changes in accumulated other comprehensive loss, net of tax, as applicable, consist of the following:~~

Foreign
Currency
Translation
Adjustments

Changes in Interest
Rate Swaps

Accumulated
Other
Comprehensive
Loss

Balance at June 25, 2017

$
(32,372
)

$
(508
)

$
(32,880
)
Other comprehensive (loss) income, net of tax

(69
)

1,492

1,423

Balance at December 24, 2017

$
(32,441
)

$
984

$
(31,457
)

117

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

~~A summary~~

Grantor Trust

The UNIFI, Inc. Deferred Compensation Plan (the “DCP”), established in fiscal 2022, is an unfunded non-qualified deferred compensation plan in which certain key employees are eligible to participate. The fair values of the ~~after-tax effects~~investment assets held by the grantor trust established in connection with the DCP were approximately $2,463 and $2,496 as of ~~the components of other comprehensive (loss) income, net for the three-month~~October 1, 2023 and ~~six-month periods ended December 24, 2017~~July 2, 2023, respectively, and ~~December 25, 2016 is included~~are classified as trading securities within Other non-current assets. The grantor trust assets have readily-available market values and are classified as Level 1 trading securities in the ~~accompanying condensed consolidated statements~~fair value hierarchy. Trading gains and losses associated with these investments are recorded to Other operating (income) expense, net. The associated DCP liability is recorded within Other long-term liabilities, and any increase or decrease in the liability is also recorded in Other operating expense (income), net. During the three months ended October 1, 2023 and October 2, 2022, we recorded net losses on investments held by the trust of ~~comprehensive income.~~$33 and $49, respectively.

14. Investments in Unconsolidated Affiliates ~~and Variable Interest Entities~~

~~UNIFI currently maintains~~Included within Other non-current assets are UNIFI’s investments in ~~three entities classified as~~ unconsolidated affiliates: ~~PAL;~~ U.N.F. Industries, Ltd. (“UNF”); and UNF America LLC (“UNFA”) (collectively “UNFs”). As of December 24, 2017, UNIFI’s investment in PAL was $110,321 and UNIFI’s combined investments in UNF and UNFA were $3,302, each of which is reflected within investments in unconsolidated affiliates in the accompanying condensed consolidated balance sheets.

~~Parkdale America, LLC~~

PAL is a limited liability company treated as a partnership for income tax reporting purposes. UNIFI accounts for its investment in PAL using the equity method of accounting. PAL is subject to price risk related to anticipated fixed-price yarn sales. To protect the gross margin of these sales, PAL may enter into cotton futures to manage changes in raw material prices. The derivative instruments used are listed and traded on an exchange and are valued using quoted prices classified within Level 1 of the fair value hierarchy. As of December 2017, PAL had no futures contracts designated as cash flow hedges.

~~The reconciliation between UNIFI’s share of the underlying equity of PAL and its investment is as follows:~~

Underlying equity as of December 24, 2017

$
128,412

Initial excess capital contributions

53,363

Impairment charge recorded by UNIFI in fiscal 2007

(74,106
)
Anti-trust lawsuit against PAL in which UNIFI did not participate

2,652

Investment as of December 24, 2017

$
110,321

U.N.F. Industries, Ltd.

Raw material and production services for UNF are provided by Nilit Ltd. under separate supply and services agreements. UNF’s fiscal year end is December 31, and it is a registered Israeli private company located in Migdal Ha-Emek, Israel.

UNF America LLC

Raw material and production services for UNFA are provided by Nilit America Inc. under separate supply and services agreements. UNFA’s fiscal year end is December 31, and it is a limited liability company located in Ridgeway, Virginia. UNFA is treated as a partnership for its income tax ~~reporting purposes located in Ridgeway, Virginia.~~reporting.

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

In conjunction with the formation of UNFA, UNIFI entered into a supply agreement with UNF and UNFA whereby UNIFI agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNFA. The supply agreement has no stated minimum purchase quantities and pricing is typically negotiated every six months, based on market rates. As of ~~December 24, 2017,~~October 1, 2023, UNIFI’s open purchase orders related to this supply agreement were ~~$3,158.~~$2,265.

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


	For the Three Months Ended
	October 1, 2023		October 2, 2022
UNFA	$	3,126	$	7,401
UNF		—		37
Total	$	3,126	$	7,438

For the Six Months Ended

December 24, 2017

December 25, 2016

UNF

$
1,141

$
1,250

UNFA

10,406

9,579

Total

$
11,547

$
10,829

As of ~~December 24, 2017~~October 1, 2023 and ~~June 25, 2017,~~July 2, 2023, UNIFI had combined accounts payable due to UNF and UNFA of ~~$1,483~~$2,238 and ~~$2,301,~~$3,440, respectively.

UNIFI has determined that UNF and UNFA are variable interest entities ~~(“VIEs”)~~ and has also determined that UNIFI is the primary beneficiary of these entities, based on the terms of the supply ~~agreement discussed above.~~agreement. As a result, these entities should be consolidated with UNIFI’s financial results. As (i) UNIFI purchases substantially all of the output from the two entities and all intercompany sales would be eliminated in consolidation, (ii) the two entities’ balance sheets constitute 3%5% or less of UNIFI’s current assets and total assets, and ~~total liabilities and because~~(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.~~statements and instead is accounting for these entities as equity investments. As of October 1, 2023, UNIFI’s combined investments in UNF and UNFA were $3,213. 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. Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to either UNF or UNFA.

Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) isare presented in the tables below. ~~PAL is defined as significant and its information is separately disclosed. PAL does not meet the criteria for segment reporting.~~

	As of December 24, 2017
	PAL		Other		Total		October 1, 2023		July 2, 2023
Current assets	$	265,491	$	8,797	$	274,288	$	9,288	$	10,608
Noncurrent assets		171,256		971		172,227
Non-current assets								480		494
Current liabilities		56,134		3,262		59,396		5,823		7,304
Noncurrent liabilities		2,933		—		2,933
Non-current liabilities								—		—
Shareholders’ equity and capital accounts		377,680		6,506		384,186		3,945		3,798

UNIFI’s portion of undistributed earnings		41,432		1,411		42,843		3,154		2,938

As of June 25, 2017

PAL

Other

Total

Current assets

$
247,820

$
10,340

$
258,160

Noncurrent assets

183,418

1,039

184,457

Current liabilities

54,389

3,588

57,977

Noncurrent liabilities

3,263

—

3,263

Shareholders’ equity and capital accounts

373,586

7,791

381,377

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

For the Three Months Ended December 24, 2017

PAL

Other

Total

Net sales

$
176,577

$
6,756

$
183,333

Gross profit

2,379

1,628

4,007

(Loss) income from operations

(1,922
)

1,185

(737
)
Net (loss) income

(1,398
)

1,198

(200
)
Depreciation and amortization

10,885

47

10,932

Cash received by PAL under cotton rebate program

4,701

—

4,701

Earnings recognized by PAL for cotton rebate program

3,191

—

3,191

Distributions received

—

1,500

1,500

For the Three Months Ended December 25, 2016

PAL

Other

Total

Net sales

$
153,074

$
5,056

$
158,130

Gross profit

1,765

983

2,748

(Loss) income from operations

(2,849
)

509

(2,340
)
Net (loss) income

(2,238
)

513

(1,725
)
Depreciation and amortization

11,708

45

11,753

Cash received by PAL under cotton rebate program

3,635

—

3,635

Earnings recognized by PAL for cotton rebate program

2,907

—

2,907

Distributions received

—

750

750

For the Six Months Ended December 24, 2017

PAL

Other

Total

Net sales

$
379,368

$
12,449

$
391,817

Gross profit

16,089

2,582

18,671

Income from operations

8,034

1,694

9,728

Net income

6,948

1,716

8,664

Depreciation and amortization

20,485

94

20,579

Cash received by PAL under cotton rebate program

6,942

—

6,942

Earnings recognized by PAL for cotton rebate program

6,446

—

6,446

Distributions received

7,178

1,500

8,678

For the Six Months Ended December 25, 2016

PAL

Other

Total

Net sales

$
358,974

$
11,058

$
370,032

Gross profit

7,261

2,528

9,789

(Loss) income from operations

(1,988
)

1,594

(394
)
Net (loss) income

(1,364
)

1,610

246

Depreciation and amortization

23,184

84

23,268

Cash received by PAL under cotton rebate program

7,762

—

7,762

Earnings recognized by PAL for cotton rebate program

6,796

—

6,796

Distributions received

—

1,500

1,500

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~17. Commitments and Contingencies~~

~~Collective Bargaining Agreements~~

While employees of UNIFI’s Brazilian operations are unionized, none of the labor force employed by UNIFI’s domestic or other foreign subsidiaries is currently covered by a collective bargaining agreement.

~~Environmental~~

On September 30, 2004, UNIFI completed its acquisition of polyester filament manufacturing assets located in Kinston, North Carolina from Invista S.a.r.l. (“INVISTA”). The land for the Kinston site was leased pursuant to a 99-year ground lease (the “Ground Lease”) with E.I. DuPont de Nemours (“DuPont”). Since 1993, DuPont has been investigating and cleaning up the Kinston site under the supervision of the U.S. Environmental Protection Agency and the North Carolina Department of Environmental Quality (“DEQ”) pursuant to the Resource Conservation and Recovery Act Corrective Action program. The program requires DuPont to identify all potential areas of environmental concern (“AOCs”), assess the extent of containment at the identified AOCs and remediate the AOCs to comply with applicable regulatory standards. Effective March 20, 2008, UNIFI entered into a lease termination agreement associated with conveyance of certain assets at the Kinston site to DuPont. This agreement terminated the Ground Lease and relieved UNIFI of any future responsibility for environmental remediation, other than participation with DuPont, if so called upon, with regard to UNIFI’s period of operation of the Kinston site, which was from 2004 to 2008. At this time, UNIFI has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potential liability for the same.

UNIFI continues to own property acquired in the 2004 transaction with INVISTA that has contamination from DuPont’s operations and is monitored by DEQ. This site has been remediated by DuPont, and DuPont has received authority from DEQ to discontinue further remediation, other than natural attenuation. Prior to transfer of responsibility to UNIFI, DuPont has a duty to monitor and report the environmental status of the site to DEQ. UNIFI expects to assume that responsibility in fiscal 2018 and will be entitled to receive from DuPont seven years of monitoring and reporting costs, less certain adjustments. At that time, UNIFI will assume responsibility for any future remediation of the site. At this time, UNIFI has no basis to determine if or when it will have any obligation to perform further remediation or the potential cost thereof.

~~Leases~~

UNIFI routinely leases sales and administrative office space, warehousing and distribution centers, manufacturing space, transportation equipment, manufacturing equipment, and other information technology and office equipment from third parties.

UNIFI has assumed various financial obligations and commitments in the normal course of its operating and financing activities. Financial obligations are considered to represent known future cash payments that UNIFI is required to make under existing contractual arrangements, such as debt and lease agreements.

~~18. Related Party Transactions~~

~~For details regarding the nature of certain related party relationships, see Note 24, “Related Party Transactions,” to the consolidated financial statements in the 2017 Form 10-K.~~

~~Related party receivables consists of the following:~~

December 24, 2017

June 25, 2017

Salem Global Logistics, Inc.

$
7

$
6

Total related party receivables (included within receivables, net)

$
7

$
6

~~Related party payables consists of the following:~~

December 24, 2017

June 25, 2017

Salem Leasing Corporation (included within accounts payable)

$
294

$
298

Salem Leasing Corporation (capital lease obligation)

911

947

Total related party payables

$
1,205

$
1,245

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~Related party transactions in excess of $120 for the current or prior two fiscal years consist of the following amounts for the periods presented:~~

For the Three Months Ended

Affiliated Entity

Transaction Type

December 24, 2017

December 25, 2016

Salem Leasing Corporation

Transportation equipment costs and capital lease debt service

$
969

$
1,291

Salem Global Logistics, Inc.

Freight service income

50

31

For the Six Months Ended

Affiliated Entity

Transaction Type

December 24, 2017

December 25, 2016

Salem Leasing Corporation

Transportation equipment costs and capital lease debt service

$
1,950

$
2,269

Salem Global Logistics, Inc.

Freight service income

92

52

~~19. 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 the organization which were relied upon in making the determination of reportable segments include the nature of the products sold, the organization’s internal 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.

~~UNIFI~~’s operating segments are aggregated into three reportable segments based on similarities between the operating segments’ economic characteristics, nature of products sold, type of customer, methods of distribution and regulatory environment.

The operations within the Polyester Segment exhibit similar long-term economic characteristics and sell into an economic trading zone covered by the North American Free Trade Agreement (“NAFTA”) and the Dominican Republic—Central America Free Trade Agreement (“CAFTA-DR”) to similar customers utilizing similar methods of distribution. These operations derive revenues from polyester-based products with sales primarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the United States and El Salvador.

The operations within the Nylon Segment exhibit similar long-term economic characteristics and sell into an economic trading zone covered by NAFTA and CAFTA-DR to similar customers utilizing similar methods of distribution. The Nylon Segment includes an immaterial operating segment in Colombia that sells similar nylon-based textile products to similar customers in Colombia and Mexico utilizing similar methods of distribution. These operations derive revenues from nylon-based products with sales to knitters and weavers that produce fabric primarily for the apparel and hosiery markets. The Nylon Segment consists of sales and manufacturing operations in the United States and Colombia.

The operations within the International Segment exhibit similar long-term economic characteristics and sell to similar customers utilizing similar methods of distribution in geographic regions that are outside of the economic trading zone covered by NAFTA and CAFTA-DR. The International Segment primarily sells polyester-based products to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, industrial and other end-use markets primarily in the South American and Asian regions. The International Segment includes a manufacturing location in Brazil and sales offices in Brazil, China and Sri Lanka.


	For the Three Months Ended
	October 1, 2023		October 2, 2022
Net sales	$	4,741	$	8,811
Gross profit		638		489
Income from operations		196		25
Net income		165		15
Depreciation and amortization		14		28

Distributions received		—		—

In addition to UNIFI’s reportable segments, the selected financial information presented below includes an All Other category. All Other consists primarily of for-hire transportation services and Repreve Renewables, LLC (“Renewables”) (up through December 23, 2016, the date of the sale by UNIFI of its 60% equity ownership interest in Renewables). For-hire transportation services revenue is derived from performing common carrier services utilizing UNIFI’s fleet of transportation equipment. Revenue for Renewables was primarily derived from (i) facilitating the use of miscanthus grass as bio-fuel through service agreements and (ii) delivering harvested miscanthus grass to poultry producers for animal bedding.

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

The operations within All Other (i) are not subject to review by the CODM at a level consistent with UNIFI’s other operations, (ii) are not regularly evaluated using the same metrics applied to UNIFI’s other operations and (iii) do not qualify for aggregation with an existing reportable segment. Therefore, such operations are excluded from reportable segments.

UNIFI evaluates the operating performance of its segments based upon Segment Profit (Loss), which represents segment gross profit (loss) plus segment depreciation expense. This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the CODM.

The accounting policies for the segments are consistent with UNIFI’s accounting policies. Intersegment sales are omitted from the below financial information, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM.

~~Selected financial information is presented below:~~

For the Three Months Ended December 24, 2017

Polyester

Nylon

International

All Other

Total

Net sales

$
90,316

$
25,103

$
51,046

$
1,013

$
167,478

Cost of sales

81,740

22,027

40,072

963

144,802

Gross profit

8,576

3,076

10,974

50

22,676

Segment depreciation expense

3,973

552

397

64

4,986

Segment Profit

$
12,549

$
3,628

$
11,371

$
114

$
27,662

For the Three Months Ended December 25, 2016

Polyester

Nylon

International

All Other

Total

Net sales

$
86,671

$
28,302

$
38,868

$
1,314

$
155,155

Cost of sales

76,200

25,679

29,419

1,727

133,025

Gross profit (loss)

10,471

2,623

9,449

(413
)

22,130

Segment depreciation expense

3,384

530

228

244

4,386

Segment Profit (Loss)

$
13,855

$
3,153

$
9,677

$
(169
)

$
26,516

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

For the Three Months Ended

December 24, 2017

December 25, 2016

Polyester

$
8,576

$
10,471

Nylon

3,076

2,623

International

10,974

9,449

All Other

50

(413
)
Segment gross profit

22,676

22,130

Selling, general and administrative expenses

14,626

12,868

Benefit for bad debts

(72
)

(95
)
Other operating expense, net

348

319

Operating income

7,774

9,038

Interest income

(181
)

(183
)
Interest expense

1,190

914

Loss on sale of business

—

1,662

Equity in (earnings) loss of unconsolidated affiliates

(211
)

367

Income before income taxes

$
6,976

$
6,278

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~Selected financial information is presented below:~~

For the Six Months Ended December 24, 2017

Polyester

Nylon

International

All Other

Total

Net sales

$
178,054

$
51,930

$
99,705

$
2,031

$
331,720

Cost of sales

160,565

45,540

77,733

1,914

285,752

Gross profit

17,489

6,390

21,972

117

45,968

Segment depreciation expense

7,840

1,089

813

129

9,871

Segment Profit

$
25,329

$
7,479

$
22,785

$
246

$
55,839

For the Six Months Ended December 25, 2016

Polyester

Nylon

International

All Other

Total

Net sales

$
171,356

$
56,797

$
84,212

$
2,759

$
315,124

Cost of sales

152,435

51,037

62,493

3,482

269,447

Gross profit (loss)

18,921

5,760

21,719

(723
)

45,677

Segment depreciation expense

6,492

1,040

474

496

8,502

Segment Profit (Loss)

$
25,413

$
6,800

$
22,193

$
(227
)

$
54,179

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

For the Six Months Ended

December 24, 2017

December 25, 2016

Polyester

$
17,489

$
18,921

Nylon

6,390

5,760

International

21,972

21,719

All Other

117

(723
)
Segment gross profit

45,968

45,677

Selling, general and administrative expenses

27,489

24,278

Benefit for bad debts

(131
)

(462
)
Other operating expense, net

663

249

Operating income

17,947

21,612

Interest income

(262
)

(329
)
Interest expense

2,375

1,606

Loss on sale of business

—

1,662

Equity in earnings of unconsolidated affiliates

(3,298
)

(473
)
Income before income taxes

$
19,132

$
19,146

~~The reconciliations of segment total assets to consolidated total assets are as follows:~~

December 24, 2017

June 25, 2017

Polyester

$
266,522

$
270,819

Nylon

60,210

57,789

International

95,198

80,824

Segment total assets

421,930

409,432

Other current assets

33,033

27,375

Other PP&E

15,988

14,904

Other non-current assets

2,891

279

Investments in unconsolidated affiliates

113,623

119,513

Total assets

$
587,465

$
571,503

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements (Continued)~~

~~20.~~15. Supplemental Cash Flow Information

Cash payments for interest and taxes consist of the following:


	For the Three Months Ended
	October 1, 2023		October 2, 2022
Interest, net of capitalized interest of $62 and $87, respectively	$	2,443	$	767
Income tax payments, net		1,633		2,928

For the Six Months Ended

December 24, 2017

December 25, 2016

Interest, net of capitalized interest of $85 and $395, respectively

$
2,130

$
1,527

Income taxes, net of refunds

5,340

5,695

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

Cash payments for taxes shown above consist primarily of income and withholding tax payments made by UNIFI in both U.S. and foreign ~~jurisdictions.~~jurisdictions, net of refunds.

Non-Cash Investing and Financing Activities

As of ~~December 24, 2017~~October 1, 2023 and ~~June 25, 2017, $2,610~~July 2, 2023, $1,084 and ~~$3,234,~~$1,137, respectively, were included in accounts payable for unpaid capital expenditures. As of ~~December 25, 2016~~October 2, 2022 and ~~June 26, 2016, $3,700~~July 3, 2022, $1,449 and ~~$4,197,~~$2,456, respectively, were included in accounts payable for unpaid capital expenditures.

During the ~~six~~three months ended ~~December 25, 2016,~~October 1, 2023 and October 2, 2022, UNIFI recorded ~~$5,139~~non-cash activity relating to ~~construction~~finance leases of $1,633 and $729 respectively.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

16. Other Financial Data

Select balance sheet information is presented in ~~progress~~the following table.


	October 1, 2023			July 2, 2023
Receivables, net:
Customer receivables	$	73,147		$	79,174
Allowance for uncollectible accounts		(1,132	)		(1,362	)
Reserves for quality claims		(663	)		(682	)
Net customer receivables		71,352			77,130
Banker's acceptance notes		6,608			5,870
Other receivables		746			725
Total receivables, net	$	78,706		$	83,725

Inventories:
Raw materials	$	54,538		$	59,983
Supplies		11,705			11,787
Work in process		7,945			6,633
Finished goods		68,672			78,032
Gross inventories		142,860			156,435
Net realizable value adjustment		(6,768	)		(5,625	)
Total inventories	$	136,092		$	150,810

Other current assets:
Prepaid expenses and other	$	2,592		$	2,584
Vendor deposits		2,585			3,863
Value-added taxes receivable		2,574			3,398
Recovery of non-income taxes, net		1,467			1,933
Contract assets		201			549
Total other current assets	$	9,419		$	12,327

Property, plant and equipment, net:
Land	$	2,496		$	2,512
Land improvements		16,445			16,443
Buildings and improvements		167,643			167,589
Assets under finance leases		18,030			16,397
Machinery and equipment		659,027			656,431
Computers, software and office equipment		25,255			26,654
Transportation equipment		10,646			10,710
Construction in progress		2,266			10,003
Gross property, plant and equipment		901,808			906,739
Less: accumulated depreciation		(683,263	)		(682,768	)
Less: accumulated amortization – finance leases		(5,911	)		(5,450	)
Total property, plant and equipment, net	$	212,634		$	218,521

Other non-current assets:
Recovery of taxes	$	5,808		$	5,957
Investments in unconsolidated affiliates		3,213			2,997
Grantor trust		2,463			2,496
Intangible assets, net		973			1,210
Other		2,176			1,848
Total other non-current assets	$	14,633		$	14,508

Other current liabilities:
Payroll and fringe benefits	$	8,541		$	6,981
Utilities		2,065			1,634
Deferred revenue		1,346			1,441
Incentive compensation		1,183			298
Property taxes and other		3,308			2,578
Total other current liabilities	$	16,443		$	12,932

Other long-term liabilities:
Nonqualified deferred compensation plan obligation	$	2,469		$	2,659
Uncertain tax positions		1,871			1,973
Other		450			468
Total other long-term liabilities	$	4,790		$	5,100

Item 2. Management’s Discussion and ~~long-term debt, in connection with a historical construction financing arrangement.~~ Analysis of Financial Condition and Results of Operations

~~Item 2.~~

~~Management’s Discussion and Analysis~~ ~~of Financial Condition and Results of Operations~~

The following is management’s discussion and analysis of certain significant factors that have affected UNIFI’s operations, along with material changes in financial condition, during the periods included in the accompanying condensed consolidated financial statements. A reference to a “note” in this section refers to the accompanying notes to condensed consolidated financial statements. A reference to the “current period” refers to the three-month period ended ~~December 24, 2017,~~October 1, 2023, while a reference to the “prior period” refers to the three-month period ended December 25, 2016. A reference to the “current six-month period” refers to the six-month period ended December 24, 2017, while a reference to the “prior six-month period” refers to the six-month period ended December 25, 2016.October 2, 2022. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks.

Our discussions in this Item 2 ~~are based upon the more detailed discussions about our business, operations and financial condition included in the 2017 Form 10-K. These discussions~~ focus on our results during, or as of, the three months ended October 1, 2023 and ~~six months ended December 24, 2017 and December 25, 2016,~~October 2, 2022, and, to the extent applicable, any material changes from the information discussed in the ~~2017~~2023 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the ~~2017~~2023 Form 10-K for more detailed and background ~~information.~~information about our business, operations, and financial condition.

~~All~~Discussion of foreign currency translation is primarily associated with changes in the Brazilian Real (“BRL”) and ~~share~~changes in the Chinese Renminbi (“RMB”) versus the U.S. Dollar (“USD”). Weighted average exchange rates were as follows:


	For the Three Months Ended
	October 1, 2023		October 2, 2022
BRL to USD		4.89		5.25
RMB to USD		7.25		6.85

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

Overview and Significant General Matters

UNIFI ~~remains focused~~focuses on delivering ~~PVA~~ products and solutions to direct customers and brand partners throughout the world, leveraging our internal manufacturing capabilities and an enhanced global supply chain that delivers a diverse range of synthetic and recycled fibers and polymers. This strategic and synergistic focus includes a number of supporting pillars, such as investing in commercial expansion; growing our existing portfolio of technologies and capabilities; engaging in strategic partnerships; and investing in UNIFI’s people and teams. UNIFI remains committed to theseOur strategic initiatives ~~which it believes~~include (i) leveraging our competitive advantages to grow market share in each of the major geographies we serve, (ii) expanding our presence in non-apparel markets with additional REPREVE® products, (iii) advancing the development and commercialization of innovative and sustainable solutions, and (iv) increasing brand awareness for REPREVE®. Due to the recent volatility of the apparel market, we have increased our focus on sales opportunities beyond traditional apparel customers, and we continue to drive innovation throughout our portfolio to further diversify the business and enhance gross profit. We believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.

~~UNIFI has three reportable segments for its operations – the Polyester Segment, the Nylon Segment~~Current Economic Environment

The current economic environment and significant decrease in textile product demand adversely impacted our consolidated sales and profitability in fiscal 2023 and the International Segment – as well as certain ancillary operations, which comprise an All Other category. The ancillary operations classified within All Other are insignificant for all periods presented; therefore, UNIFI’s discussion and analysisfirst quarter of ~~those activities is generally limited~~fiscal 2024. In addition to ~~their impact on consolidated results, where appropriate.~~

~~Significant highlights for~~ the current ~~period~~unfavorable economic environment and the ~~current six-month period include~~inventory destocking measures taken by brands and retailers, the following ~~each of which is outlined in more detail below:~~

~~Net sales for the current period increased $12,323, or 7.9%, to $167,478, compared to $155,155 for the prior period, and increased $11,433, or 7.4%, when excluding~~pressures have been present: (i) the impact of ~~foreign currency translation;~~

~~Net sales~~inflation on consumer spending, (ii) rising interest rates for consumers and customers, including the impact on the carrying costs of customer inventories, (iii) the Russia-Ukraine conflict, (iv) the recent conflict in the Middle East and the potential impacts to petroleum pricing and geopolitics, and (v) supply chain volatility. UNIFI will continue to monitor these and other aspects of the current ~~six-month period increased $16,596,~~economic environment and work closely with stakeholders to ensure business continuity and liquidity.

We recognize the disruption to global markets and supply chains caused by (i) Russia’s invasion of Ukraine and (ii) the recent conflict in the Middle East. While we currently have a raw material supplier based in Israel for which the recent supply levels have been insignificant, we have not been directly impacted by either conflict. Indirectly, we recognize that additional or ~~5.3%, to $331,720, compared to $315,124 for the prior six-month period, and increased $14,985, or 4.8%, when excluding the impact of foreign currency translation;~~

~~Revenues from PVA products for the current period grew more than 20% compared~~prolonged impacts to the ~~prior period,~~petroleum or other global markets could cause further inflationary pressures to our raw material costs or unforeseen adverse impacts.

Input Costs and ~~represented~~Global Production Volatility

Despite lowered input and freight costs and a marginally more ~~than 45%~~stable labor pool during fiscal 2023 and 2024, the global demand volatility and uncertainty that existed in fiscal 2023 continued into fiscal 2024. The threat of recession and global tensions continue to create uncertainty. Such existing challenges and future uncertainty, particularly for rising input costs, labor productivity, and global demand, could worsen and/or continue for prolonged periods, materially impacting our consolidated ~~net sales;~~

~~Gross margin was 13.5%~~sales and gross profit. Also, the need for future selling price adjustments in connection with inflationary costs could impact our ability to retain current customer programs and compete successfully for new programs in certain regions.

Cash Deposits and Financial Institution Risk

During fiscal 2023, certain regional bank crises and failures generated additional uncertainty and volatility in the financial and credit markets. UNIFI currently holds the vast majority of its cash deposits with large foreign banks in our associated operating regions, and management maintains the ability to repatriate cash to the U.S. relatively quickly. Accordingly, UNIFI has not modified its mix of financial institutions holding cash deposits, but UNIFI will continue to monitor the environment and current ~~period, compared~~events to ~~14.3% for~~ensure any increase in concentration or credit risk is appropriately and timely addressed. If any of our lending counterparties are unable to perform on their commitments, our liquidity could be impacted. We actively monitor all lending counterparties, and none have indicated that they may be unable to perform on their commitments. In addition, we periodically review our lending counterparties, considering the ~~prior period,~~stability of the institutions and ~~was 13.9% for~~other aspects of the ~~current six-month period, compared~~relationships. Based on our monitoring activities, we currently believe our lending counterparties will be able to ~~14.5% for the prior six-month period;~~perform their commitments.

~~Operating income was $7,774 for the current period, compared to $9,038 for the prior period, and was $17,947 for the current six-month period, compared to $21,612 for the prior six-month period; and~~13

~~Diluted EPS was $0.63 for the current period, compared to $0.25 for the prior period, and was $1.12 for the current six-month period, compared to $0.76 for the prior six-month period.~~

Key Performance Indicators and Non-GAAP Financial Measures

UNIFI continuously reviews performance indicators to measure its success. These performance indicators form the basis of management’s discussion and analysis included below:

•

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

•

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

•

~~Net income attributable to Unifi, Inc. (“Net Income”)~~net loss and diluted EPS;

•

Segment (Loss) Profit, which equals segment gross (loss) profit plus segment depreciation expense;

•

~~Segment Profit (Loss), which represents segment gross profit (loss) plus segment depreciation expense;~~

•

unit conversion margin, which represents unit net sales price less unit raw material costs, for UNIFI and for each reportable segment;

•

working capital, which represents current assets less current liabilities;

•

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

•

Adjusted EBITDA, which represents EBITDA adjusted to exclude, ~~equity in loss (earnings) of PAL, and,~~ from time to time, certain other adjustments necessary to understand and compare the underlying results of UNIFI;

•

Adjusted Net ~~Income,~~Loss, which represents ~~Net Income~~net loss calculated under GAAP, adjusted to exclude the approximate after-tax impact of certain income or expense items (as well as specific impacts to the provision for income taxes) necessary to understand and compare the underlying results of UNIFI. Adjusted Net Income excludes 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 ~~Income~~Loss divided by UNIFI’s diluted weighted average common shares outstanding; ~~and~~

•

Adjusted Working Capital, which ~~represents~~equals receivables plus ~~inventory,~~inventories and other current assets, less accounts payable and ~~accrued expenses.~~

other current liabilities; and

•

Net Debt, which represents debt principal less cash and cash equivalents.

EBITDA, Adjusted EBITDA, Adjusted Net ~~Income,~~Loss, Adjusted EPS, ~~and~~ Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management’s discussion and analysis includes specific consideration for items that comprise the reconciliations of its non-GAAP financial measures.

We believe that these non-GAAP financial measures better reflect UNIFI’s underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies.

Management uses Adjusted EBITDA (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of items (a) ~~items~~ directly related to our asset base (primarily depreciation and amortization) ~~and~~and/or (b) ~~items~~ that we would not expect to occur as a part of our normal business on a regular basis; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures, and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is a key performance metric utilized in the determination of variable compensation. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity because it serves as a high-level proxy for cash generated from operations and is relevant to our fixed charge coverage ratio. ~~Equity in loss (earnings) of PAL is excluded from Adjusted EBITDA because such results do not reflect our operating performance.~~

Management uses Adjusted Net ~~Income~~Loss and Adjusted EPS (i) as measurements of net operating performance because they assist us in comparing such performance on a consistent basis, as they remove the impact of (a) items that we would not expect to occur as a part of our normal business on a regular basis and (b) components of the provision for income taxes that we would not expect to occur as a part of our underlying taxable operations; (ii) for planning purposes, including the preparation of our annual operating budget; and (iii) as measures in determining the value of other acquisitions and dispositions.

Historically, EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS aimed to exclude the impact of the non-controlling interest in Renewables, while the consolidated amounts for such entity were required to be included in UNIFI’s financial amounts reported under GAAP.

Management uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage ~~inventory~~inventories and receivables.

Management uses Net Debt as a liquidity and leverage metric to determine how much debt would remain if all cash and cash equivalents were used to pay down debt principal.

Review of Results of Operations

Three Months Ended October 1, 2023 Compared to Three Months Ended October 2, 2022

Consolidated Overview

The below tables provide:

•

the components of net loss and the percentage increase or decrease over the prior period amounts,

~~Non-GAAP Reconciliations~~

•

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

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

Net loss


	For the Three Months Ended
	October 1, 2023						October 2, 2022
				% of Net Sales						% of Net Sales			% Change
Net sales	$	138,844			100.0		$	179,519			100.0			(22.7	)
Cost of sales		139,419			100.4			172,956			96.3			(19.4	)
Gross (loss) profit		(575	)		(0.4	)		6,563			3.7			(108.8	)
SG&A		11,609			8.4			11,773			6.6			(1.4	)
(Benefit) provision for bad debts		(209	)		(0.2	)		174			0.1		nm
Other operating expense (income), net		54			—			(689	)		(0.4	)		(107.8	)
Operating loss		(12,029	)		(8.6	)		(4,695	)		(2.6	)		156.2
Interest expense, net		1,904			1.4			700			0.4			172.0
Equity in earnings of unconsolidated affiliates		(200	)		(0.1	)		(295	)		(0.2	)		(32.2	)
Loss before income taxes		(13,733	)		(9.9	)		(5,100	)		(2.8	)		169.3
(Benefit) provision for income taxes		(463	)		(0.3	)		2,734			1.6			(116.9	)
Net loss	$	(13,270	)		(9.6	)	$	(7,834	)		(4.4	)		69.4

nm = not meaningful

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

The reconciliations of the amounts reported under GAAP for Net ~~Income~~loss to EBITDA and Adjusted EBITDA ~~are~~were as follows:


	For the Three Months Ended
	October 1, 2023			October 2, 2022
Net loss	$	(13,270	)	$	(7,834	)
Interest expense, net		1,904			700
(Benefit) provision for income taxes		(463	)		2,734
Depreciation and amortization expense (1)		6,988			6,697
EBITDA		(4,841	)		2,297

Other adjustments (2)		—			—
Adjusted EBITDA	$	(4,841	)	$	2,297

For the Three Months Ended

For the Six Months Ended

December 24, 2017

December 25, 2016

December 24, 2017

December 25, 2016

Net income attributable to Unifi, Inc.

$
11,802

$
4,591

$
20,762

$
13,994

Interest expense, net

1,009

716

2,113

1,246

(Benefit) provision for income taxes

(4,826
)

1,924

(1,630
)

5,650

Depreciation and amortization expense

5,532

4,830

10,949

9,396

EBITDA

13,517

12,061

32,194

30,286

Equity in loss (earnings) of PAL

376

745

(2,478
)

431

EBITDA excluding PAL

13,893

12,806

29,716

30,717

Loss on sale of business ⁽¹⁾

—

1,662

—

1,662

Adjusted EBITDA

$
13,893

$
14,468

$
29,716

$
32,379

(1)

~~(1)~~

~~For the three and six months ended December 25, 2016, UNIFI incurred a loss on the sale of its historical investment in Renewables of $1,662.~~

~~Amounts presented~~Within this reconciliation, depreciation and amortization expense excludes the amortization of debt issuance costs, which are reflected in ~~the reconciliations above may not be consistent with amounts included in~~interest expense, net. Within the accompanying condensed consolidated ~~financial statements. Any such inconsistencies are insignificant~~statements of cash flows, amortization of debt issuance costs is reflected in depreciation and ~~are integral~~amortization expense.

For the current and the prior period, there were no adjustments necessary to reconcile Net loss to Adjusted Net Loss or Adjusted EPS.

Consolidated net sales for the current period decreased by $40,675, or 22.7%, and consolidated sales volumes decreased 5.2%, compared to the ~~reconciliations.~~prior period. 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 apparel demand weakness and inventory destocking efforts of major brands and retailers.

~~Adjusted~~Consolidated weighted average sales prices decreased 17.5%, primarily attributable to lower selling prices in response to lower input costs, along with (a) competitive pricing pressures in Brazil and (b) a greater mix of Chip and Flake product sales in the Americas Segment.

REPREVE® Fiber products for the current period comprised 31%, or $42,461, of consolidated net sales, compared to 27%, or $49,179, for the prior period.

Gross (loss) profit for the current period worsened by $7,138, or 108.8%, compared to the prior period. Gross (loss) 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 were stable in fiscal 2024, low production levels and weak demand were significantly adverse.

SG&A did not change meaningfully from the prior period to the current period, nor did the change include any significant offsetting impacts.

The current period and prior period bad debt changes reflect no material activity.

The current period and prior period include foreign currency transaction gains of $33 and $725, respectively, with no other meaningful activity.

Interest expense, net increased in connection with higher debt principal and higher interest rates.

(Benefit) provision for income taxes and ~~Adjusted EPS~~the effective tax rate were as follows:

The ~~tables below set forth reconciliations~~effective tax rate is subject to variation due to a number of ~~(i) Income~~factors, including: variability in pre-tax book income; the mix of income by jurisdiction; changes in deferred tax valuation allowances; and changes in statutes, regulations, and case law. Additionally, the impacts of discrete and other rate impacting items are more pronounced when income (loss) before income taxes ~~(“Pre-tax Income”), Provision~~is lower.

The increase in the effective tax rate from the prior period to the current period is primarily attributable to an increase in valuation allowance for ~~income taxes (“Tax Impact”)~~deferred tax assets generated in the current period. The increase in the effective tax rate is then offset by a decrease in valuation allowance on deferred tax asset balances adjusted by the IRS audit of tax years 2014 through 2019, which was concluded during the current period.

Following is a discussion and ~~Net Income to Adjusted Net Income~~analysis of the revenue and ~~(ii) Diluted EPS to Adjusted EPS:~~profitability performance of UNIFI’s reportable segments for the current period.

~~See the discussion under the heading “Working Capital” within “Liquidity and Capital Resources” below.~~

~~Three Months Ended December 24, 2017 Compared to Three Months Ended December 25, 2016~~

The components of ~~Net Income,~~Segment (Loss) Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior period amounts ~~are~~for the Americas Segment, were as follows:

~~Consolidated~~The change in net sales for the ~~current period increased by $12,323, or 7.9%,~~Americas Segment was as ~~compared to the prior period.~~follows:

Consolidated sales volumes increased 14.5%, attributable to continued growth in sales of recycled polyester Chip and plastic bottle flake in the Polyester Segment and sales of staple fiber and other PVA products in the International Segment. Sales continue to expand in the International Segment as our PVA portfolio resonates with numerous customers. The ~~increase~~change in sales volumes in our Polyester and International Segments was partially offset by soft yarn sales in the Nylon Segment. We believe the softness in the domestic environment continues to be a challenge for the textile supply chain, while our nylon business results also reflect the current global trend of declines in demand for nylon socks, ladies’ hosiery and intimate apparel.

Consolidated average sales prices decreased 6.3%, attributable to disproportionate growth of lower-priced recycled polyester Chip, plastic bottle flake and staple fiber among the Polyester and International Segments, as well as a lower proportion of nylon products that carry higher selling prices. The decrease in consolidated average sales prices was partially offset by a net favorable foreign currency translation compared to the prior period of approximately $900, primarily associated with the strengthening of the Chinese Renminbi (“RMB”) and the Brazilian Real (“BRL”). PVA products comprised more than 45% of net sales for the ~~current~~Americas Segment from the prior period ~~while representing approximately 40% of net sales for fiscal 2017.~~

~~Gross profit for~~to the current period ~~increased by $546, or 2.5%, as compared~~was primarily attributable to (i) the ~~prior period. For the International Segment,~~net change in average selling price and sales mix that reflects both (a) lower input costs and (b) a larger proportion of lower-priced Flake and Chip sales in the current period ~~gross margin rate~~and (ii) lower fiber sales volumes following weaker global textile demand.

The change in Segment (Loss) Profit for the Americas Segment was ~~impacted by disproportionate growth~~as follows:

The decrease in ~~lower-margin sales mix and pressure brought by higher costs compared to~~Segment (Loss) Profit for the Americas Segment from the prior ~~period. For the Polyester Segment, the decline in gross margin rate was primarily due~~period to a rise in raw material costs, a greater mix of lower margin product sales and incremental depreciation, primarily due to expanded recycling operations, partially offset by the conversion services performed for Eastman Chemical Company (“Eastman”) on bi-component machinery, a revenue stream that did not exist in the prior period. The Nylon Segment achieved an increase in gross margin rate due in part to a more favorable sales mix and cost management. Consolidated gross profit for the current period ~~also included approximately $200~~was primarily attributable to lower production volumes of ~~favorable foreign currency translation reflected~~fiber products in connection with the ~~International Segment.~~

~~Further details regarding the changes in net~~lower fiber sales volumes described above. As fiber products carry a higher selling price and allocation of production costs versus Flake and Chip, lower fiber production drives weaker fixed cost absorption and adversely impacts gross profit and gross ~~profit, by reportable segment, follow.~~margin.

The components of Segment Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior period amounts for the ~~Polyester~~Brazil Segment, ~~are~~were as follows:

The ~~increase~~decrease in net sales for the ~~Polyester~~Brazil Segment from the prior period to the current period was primarily attributable to selling price pressures from low-priced imports, partially offset by favorable foreign currency translation effects. The Brazil Segment has undertaken aggressive pricing (i) ~~higher sales of plastic bottle flake, recycled polyester Chip and POY~~against low-priced competitive imports and (ii) in the ~~conversion services performed for Eastman on bi-component machinery. The unfavorable change in sales price and mix was due to (a) lower sales volumes~~pursuit of ~~higher-priced textured and dyed yarns and (b) higher sales volumes of lower-priced plastic bottle flake, recycled polyester Chip and POY.~~greater market share.

The change in Segment Profit for the ~~Polyester~~Brazil Segment iswas as follows:

The decrease in Segment Profit for the ~~Polyester~~Brazil Segment from the prior period to the current period was primarily attributable to ~~the unfavorable sales mix shift towards lower-margin products discussed above~~an overall decrease in ~~the net sales analysis, along with raw material cost pressures, partially offset by the benefit of the conversion services performed for Eastman~~gross margin mainly due to pressure on ~~bi-component machinery~~selling prices from low-priced import competition. We continue to prioritize innovation and ~~an increase~~differentiation to improve our portfolio and competitive position in ~~sales volumes.~~Brazil.

~~Polyester~~Asia Segment net sales and Segment Profit, as a percentage of total consolidated amounts, were 53.9% and 45.4%, respectively, for the current period, compared to 55.9% and 52.3%, respectively, for the prior period.

The components of Segment Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior period amounts for the ~~Nylon~~Asia Segment, ~~are~~were as follows:

The decrease in net sales for the ~~Nylon~~Asia Segment from the prior period to the current period was primarily attributable to (i) ~~lower sales volumes as a result of soft domestic market conditions in which nylon socks, ladies’ hosiery~~weak global demand and ~~intimates have experienced demand declines~~inventory destocking by brands and retailers, particularly for apparel, and (ii) ~~a lower-priced sales mix.~~unfavorable foreign currency translation effects due to the weakening of the RMB versus the USD.

~~The increase in Segment Profit for the Nylon~~Asia Segment was ~~attributable to a more profitable sales mix and cost management.~~

Nylon Segment net sales and Segment Profit, as a percentage of total consolidated amounts, were 15.0% and 13.1%, respectively, for the current period, compared to 18.2% and 11.9%, respectively, for the prior period.

~~The components of Segment Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior period amounts for the International Segment are~~ as follows:

The increase in net sales for the International Segment was attributable to (i) higher sales volumes from our Asian subsidiaries, primarily relating to our recycled polyester Chip and staple fiber products, with strong demand for REPREVE^®, (ii) higher sales volumes at our Brazilian subsidiary due to increased demand for synthetic yarns, including air-covered PVA products for use in applications such as stretch denim, and (iii) favorable foreign currency translation due to the strengthening of the RMB and the BRL. These benefits were partially offset by a decrease in the average selling price in Asia due to a greater mix of lower-priced product sales.

The RMB weighted average exchange rate was 6.61 RMB/U.S. Dollar (“USD”) and 6.84 RMB/USD for the current period and the prior period, respectively. The BRL weighted average exchange rate was 3.24 BRL/USD and 3.29 BRL/USD for the current period and the prior period, respectively.

~~The~~nominal change in Segment Profit for the ~~International~~Asia Segment ~~is as follows:~~

~~The increase in Segment Profit for~~from the ~~International Segment was~~prior period to the current period is attributable to ~~(i) improved~~the decline in net sales and sales volumes ~~and (ii) favorable~~discussed above along with unfavorable foreign currency translation effects, ~~due to the strengthening of the RMB and the BRL versus the USD, partially~~ offset by ~~a greater mix of lower-priced product sales in Asia.~~

International Segment net sales and Segment Profit, as a percentage of total consolidated amounts, were 30.5% and 41.1%, respectively, for the current period, compared to 25.1% and 36.5%, respectively, for the prior period.

~~The change in selling, general and administrative (“SG&A”) expenses is as follows:~~

~~Total SG&A expenses were higher for the current period compared to the prior period, primarily as a result of (i)~~ an increase in compensation expenses due to recent talent acquisition and higher incentive compensation expenses and (ii) an increase in supplemental retirement plan expenses due to comparatively higher performance of the stock market index benchmark, partially offset by other net decreases that include fees paid to external service providers and other administrative expenses.

The change in other operating expense, net is primarily attributable to foreign currency losses in the current period, mostly resulting from changes in the value of USDs held by our subsidiary in China, while the prior period includes executive relocation expenses.

Interest expense, net increased from the prior period, as reflected below, primarily due to (i) a higher weighted average interest rate resulting from fixing the variable portion of the interest rate on $75,000 of debt principal, beginning in May 2017, (ii) less interest capitalized to project costs and (iii) a prior period favorable mark-to-market adjustment on the historical interest rate swap that terminated in May 2017.

On December 23, 2016, UNIFI, through a wholly owned foreign subsidiary, entered into an agreement to sell its historical 60% equity ownership interest in Renewables to the existing third-party joint venture partner for $500 in cash and release of certain debt obligations. In connection with the transaction, UNIFI recognized a loss on sale of business of $1,662.

~~The components of (earnings) loss from unconsolidated affiliates are as follows:~~

UNIFI’s 34% share of PAL’s loss decreased in the current period versus the prior period, which was primarily attributable to lower depreciation expense. The earnings from the nylon joint ventures experienced an increase primarily due to higher volumes and improved ~~margins for the current period despite overall softness in the nylon market.~~

The effective tax rate for the current period is lower than the U.S. statutory tax rate primarily due to the $4,500 tax benefit resulting from the revaluation of UNIFI’s domestic deferred tax balances for the lower U.S. statutory tax rate, the release of a $3,807 valuation allowance and foreign income being taxed at lower rates. These benefits were partially offset by a $1,700 provisional charge for the deemed mandatory repatriation of foreign earnings and profits, net of foreign tax credits, and by losses in tax jurisdictions for which no tax benefit can currently be recognized.

The effective tax rate for the prior period is lower than the U.S. statutory tax rate primarily due to foreign income being taxed at lower rates and a decrease in the valuation allowance for UNIFI’s investment in PAL. These benefits were partially offset by losses in tax jurisdictions for which no tax benefit can currently be recognized and state and local income taxes net of federal benefits.

Net Income for the current period was $11,802, or $0.63 per diluted share, compared to $4,591, or $0.25 per diluted share, for the prior period. The increase was primarily attributable to (i) a significantly lower effective tax rate and (ii) a prior period loss on sale of business, partially offset by higher operating expenses.

Adjusted EBITDA for the current period was $13,893, compared to $14,468 for the prior period. The decrease was primarily attributable to higher operating expenses, as described in the discussions above.

~~Six Months Ended December 24, 2017 Compared to Six Months Ended December 25, 2016~~

~~The components of Net Income, each component as a percentage of net sales and the percentage increase or decrease over the prior six-month period amounts are as follows:~~

~~Consolidated net sales for the current six-month period increased by $16,596, or 5.3%, as compared to the prior six-month period.~~

Consolidated sales volumes increased 11.0%, attributable to continued growth in sales of recycled polyester Chip and plastic bottle flake in the Polyester Segment and staple fiber and other PVA products in the International Segment. Sales continue to expand in the International Segment as our PVA portfolio resonates with numerous customers. The increase in sales volumes was partially offset by soft yarn sales in the Polyester and Nylon Segments. We believe the softness in the domestic environment continues to be a challenge for the textile supply chain. Our nylon business results also reflect the current global trend of declines in demand for nylon socks, ladies’ hosiery and intimate apparel.

Consolidated average sales prices decreased 5.5%, attributable to disproportionate growth of lower-priced recycled polyester Chip, plastic bottle flake and staple fiber among the Polyester and International Segments, as well as a lower proportion of nylon products

that carry higher selling prices. The decrease in consolidated sales pricing was partially offset by a benefit from net favorable foreign currency translation compared to the prior period of approximately $1,600, primarily associated with the strengthening of the BRL and the RMB.

~~Gross profit for the current six-month period increased by $291, or 0.6%, as compared to the prior six-month period. The Nylon Segment achieved an increase in~~ gross margin rate ~~due in part to~~associated with a ~~more favorable~~strong sales mix and cost management. For the International Segment, gross profit increased due to sales growth; however, margins were lower due to a less favorable sales mix and pressure from higher costs. For the Polyester Segment, the decline in gross margin rate was primarily due to a greater mix of lower margin product sales and incremental depreciation, primarily due to expanded recycling operations, partially offset by the conversion services performed for Eastman on bi-component machinery, a revenue stream that did not exist in the prior six-month period. Consolidated gross profit for the current six-month period also included approximately $400 of favorable foreign currency translation.REPREVE products.

~~Further details regarding the changes in net sales and gross profit, by reportable segment, follow.~~

~~The components of Segment Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior six-month period amounts for the Polyester Segment are as follows:~~

The increase in net sales for the Polyester Segment was primarily attributable to (i) higher sales of plastic bottle flake, recycled polyester Chip and POY and (ii) the conversion services performed for Eastman on bi-component machinery. The unfavorable change in sales mix was due to (a) lower sales volumes of higher-priced textured, dyed and beamed yarns and (b) higher sales volumes of lower-priced plastic bottle flake, recycled polyester Chip and POY.

The decrease in Segment Profit for the Polyester Segment was primarily attributable to the unfavorable sales mix shift towards lower-margin products discussed above in the net sales analysis, along with raw material cost pressures, partially offset by the benefit of the conversion services performed for Eastman on bi-component machinery and an increase in sales volumes.

Polyester Segment net sales and Segment Profit, as a percentage of total consolidated amounts, were 53.7% and 45.4%, respectively, for the current six-month period, compared to 54.4% and 46.9%, respectively, for the prior six-month period.

~~The components of Segment Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior six-month period amounts for the Nylon Segment are as follows:~~

The decrease in net sales for the Nylon Segment was primarily attributable to (i) lower sales volumes as a result of soft domestic market conditions in which nylon socks, ladies’ hosiery and intimates have experienced demand declines and (ii) a lower-priced sales mix.

~~The increase in Segment Profit for the Nylon Segment was attributable to a more profitable sales mix and cost management.~~

Nylon Segment net sales and Segment Profit, as a percentage of total consolidated amounts, were 15.7% and 13.4%, respectively, for the current six-month period, compared to 18.0% and 12.6%, respectively, for the prior six-month period.

The components of Segment Profit, each component as a percentage of net sales and the percentage increase or decrease over the prior six-month period amounts for the International Segment are as follows:

~~The increase in net sales for the International Segment was attributable to (i) higher sales volumes from our Asian subsidiaries due to growth in our REPREVE~~^® portfolios, particularly staple fiber and recycled polyester Chip, (ii) higher sales volumes at our Brazilian subsidiary due to increased demand for synthetic yarns, including air-covered PVA products for use in applications such as stretch denim, and (iii) favorable foreign currency translation due to the strengthening of the BRL and the RMB. These benefits were partially offset by a decrease in the average selling price in Asia due to a greater mix of lower-priced product sales.

The BRL weighted average exchange rate was 3.20 BRL/USD and 3.27 BRL/USD for the current six-month period and the prior six-month period, respectively. The RMB weighted average exchange rate was 6.64 RMB/USD and 6.75 RMB/USD for the current six-month period and the prior six-month period, respectively.

The increase in Segment Profit for the International Segment was attributable to (i) improved sales volumes and (ii) favorable foreign currency translation effects due to the strengthening of both the BRL and the RMB versus the USD, partially offset by a greater mix of lower-margin product sales in Asia.

International Segment net sales and Segment Profit, as a percentage of total consolidated amounts, were 30.1% and 40.8%, respectively, for the current six-month period, compared to 26.7% and 41.0%, respectively, for the prior six-month period.

Total SG&A expenses were higher for the current six-month period compared to the prior six-month period, primarily as a result of an increase in compensation expenses due to recent talent acquisition and other net increases.

~~The benefit in the prior six-month period reflects a decrease in the reserve against specifically identified customer balances in the Polyester and International Segments.~~

The change in other operating expense, net is primarily attributable to foreign currency losses in the current six-month period, mostly resulting from changes in the value of USDs held by our subsidiary in China.

Interest expense, net increased from the prior six-month period, as reflected below, primarily due to (i) a higher weighted average interest rate resulting from fixing the variable portion of the interest rate on $75,000 of debt principal, beginning in May 2017, (ii) less interest capitalized to project costs and (iii) a prior period favorable mark-to-market adjustment on the historical interest rate swap that terminated in May 2017.

UNIFI’s 34% share of PAL’s earnings increased in the current six-month period versus the prior six-month period, which was primarily attributable to improved operating margins and lower depreciation expense. The earnings from the nylon joint ventures experienced a decrease primarily due to softness in the nylon market, consistent with the results of the Nylon Segment, as well as higher raw material costs.

The effective tax rate for the current six-month period is lower than the U.S. statutory tax rate primarily due to the $4,500 tax benefit resulting from the revaluation of UNIFI’s domestic deferred tax balances for the lower U.S. statutory tax rate, the release of a $3,807 valuation allowance and foreign income being taxed at lower rates. These benefits were partially offset by a $1,700 provisional charge for the deemed mandatory repatriation of foreign earnings and profits, net of foreign tax credits, and by losses in tax jurisdictions for which no tax benefit can currently be recognized.

The effective tax rate for the prior six-month period is lower than the U.S. statutory tax rate primarily due to foreign income being taxed at lower rates and a decrease in the valuation allowance for UNIFI’s investment in PAL. These benefits were partially offset by losses in tax jurisdictions for which no tax benefit can currently be recognized and state and local income taxes net of federal benefits.

Net Income for the current six-month period was $20,762, or $1.12 per diluted share, compared to $13,994, or $0.76 per diluted share, for the prior six-month period. The increase was primarily attributable to a significantly lower effective tax rate, higher earnings from PAL and a loss on sale of business in the prior six-month period, partially offset by higher operating expenses and interest expense.

Adjusted EBITDA for the current six-month period was $29,716, compared to $32,379 for the prior six-month period. The decrease was primarily attributable to higher operating expenses, as described in the discussions above.

Note 5, “Long-Term Debt” to the condensed consolidated financial statements includes the detail of UNIFI’s debt obligations and terms and conditions thereof. Further discussion and analysis of liquidity and capital resources follow.

UNIFI’s primary capital requirements are for working capital, capital expenditures, debt service, and ~~stock~~share repurchases. UNIFI’s primary sources of capital are cash generated from operations, ~~and~~ borrowings available under the ~~ABL Revolver.~~2022 Credit Agreement, and asset financing arrangements. For the current ~~six-month~~ period, cash ~~generated from~~provided by operations was ~~$20,389,~~$7,119, and, at ~~December 24, 2017, excess~~October 1, 2023, availability under the ABL Revolver was ~~$54,379.~~$44,164.

As of ~~December 24, 2017,~~October 1, 2023, all of UNIFI’s ~~$133,540~~$141,487 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while nearly all of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries. Cash and cash equivalents held by ~~such~~ foreign subsidiaries may not be presently available to fund UNIFI’s domestic capital requirements, including its domestic debt obligations. UNIFI employs a variety of ~~tax planning and financing~~ strategies to ensure that its worldwide cash is available in the locations where it is needed.

The following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of ~~December 24, 2017~~October 1, 2023 for domestic ~~and~~operations compared to foreign operations:

UNIFI’s primary cash requirements, in addition to normal course operating activities (e.g. working capital and payroll), primarily include (i) capital expenditures that generally have commitments of up to 12 months, (ii) contractual obligations that support normal course ongoing operations and production, (iii) operating leases and finance leases, (iv) debt service, and (v) share repurchases.

~~On March 26, 2015, Unifi, Inc. and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated~~Following the establishment of the 2022 Credit Agreement, ~~(as subsequently amended,~~UNIFI’s global cash and liquidity positions are sufficient to sustain its operations and meet its growth needs. However, further degradation in the ~~“Amended Credit Agreement”)~~macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for ~~a $200,000 senior secured~~discretionary activities while further utilizing available and additional forms of credit.

We do not currently anticipate that any adverse events or circumstances will place critical pressure on our liquidity position or our ability to fund our operations and expected business growth. Should global demand, economic activity, or input availability decline considerably for an even longer period of time, UNIFI maintains the ability to (i) seek additional credit or financing arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations. Management continues to (i) explore cost savings opportunities and (ii) prioritize repayment of debt in the current operating environment.

When business levels increase, we expect to use cash in support of working capital needs.

The following outlines the attributes relating to our credit facility (the ABL Facility) with a syndicate of lenders. The ABL Facility consists of a $100,000 revolving credit facility (the ABL Revolver) and a term loan that can be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions are met (the ABL Term Loan). The ABL Facility has a maturity date of March 26, 2020.

The 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 certain subsidiary guarantors (the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of certain first-tier controlled foreign corporations, 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 ABL Revolver falls below the defined Trigger Level, a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a monthly basis of at least 1.05 to 1.00 becomes effective. The Trigger Level as of ~~December 24, 2017 was $23,750. In addition, the ABL Facility contains restrictions on particular payments and investments, including~~October 1, 2023:

certain restrictions on the payment of dividends and share repurchases. Subject to specific provisions, the ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at UNIFI’s discretion.

ABL Facility borrowings bear interest at the London Interbank Offer Rate (“LIBOR”) plus an applicable margin of 1.50% to 2.00%, or the Base Rate (as defined below) plus an applicable margin of 0.50% to 1.00%, with interest currently being paid on a monthly basis. The applicable margin is based on (i) the excess availability under the ABL Revolver and (ii) the consolidated leverage ratio, calculated as of the end of each fiscal quarter. The Base Rate means the greater of (a) the prime lending rate as publicly announced from time to time by Wells Fargo Bank, National Association, (b) the Federal Funds Rate plus 0.50% or (c) LIBOR plus 1.00%. UNIFI’s ability to borrow under the ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventory and is subject to certain conditions and limitations. There is also a monthly unused line fee under the ABL Revolver of 0.25%. As of December 24, 2017, •

•

$0 of standby letters of credit ~~none of which had been drawn upon.~~

~~UNIFI currently maintains three interest rate swaps that fix LIBOR at approximately 1.9% on $75,000 of variable-rate debt under the ABL Facility. Such swaps are scheduled to terminate in May 2022.~~

~~Summary of Debt Obligations~~

~~(1) Includes the effects of interest rate swaps.~~

~~(2) Scheduled maturity dates for capital lease obligations range from July 2018 to November 2027.~~

In addition to making payments in accordance with the scheduled maturities of debt required under its existing debt obligations, UNIFI may, from time to time, elect to repay additional amounts borrowed under the ABL Facility. Funds to make such repayments may come from the operating cash flows of the business or other sources and will depend upon UNIFI’s strategy, prevailing market conditions, liquidity requirements, contractual restrictions, and other factors.

~~Scheduled Debt Maturities~~

~~The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal 2018 and the fiscal years thereafter:~~

~~Working Capital~~

~~The following table presents the components of working capital and the reconciliation of working capital to Adjusted Working Capital:~~

December 24, 2017

June 25, 2017

Cash and cash equivalents

$
48,615

$
35,425

Receivables, net

80,847

81,121

Inventories

116,239

111,405

Other current assets

17,466

15,686

Accounts payable

(35,420
)

(41,499
)
Accrued expenses

(12,990
)

(16,144
)
Other current liabilities

(18,945
)

(18,411
)
Working capital

$
195,812

$
167,583

Less: Cash and cash equivalents

(48,615
)

(35,425
)
Less: Other current assets

(17,466
)

(15,686
)
Less: Other current liabilities

18,945

18,411

Adjusted Working Capital

$
148,676

$
134,883

Working capital increased from $167,583 as of June 25, 2017 to $195,812 as of December 24, 2017, while Adjusted Working Capital increased from $134,883 to $148,676. Working capital and Adjusted Working Capital are within our range of expectations based on the composition of the underlying business and global structure.

The increase in cash and cash equivalents reflects the strong performance of our international subsidiaries and the intent to leave cash available in foreign jurisdictions for future expansion. The decrease in receivables, net is attributable to lower sales associated with the routine December shutdown period. The increase in inventories is primarily attributable to increased international sales activity and the impact of the routine December shutdown period. The increase in other current assets is attributable to an increase in income taxes receivable. The decrease in accounts payable is mainly due to the routine December shutdown period. The decrease in accrued expenses is primarily attributable to a net decrease in amounts due to employees, resulting from the timing of accrual and payment of (i) variable compensation earned in fiscal 2017 and (ii) routine payrolls. The change in other current liabilities is insignificant.

~~Capital Projects~~

During the current six-month period, UNIFI invested approximately $11,400 in capital projects, primarily relating to routine maintenance expenditures as well as the completion and start-up of the fourth production line in the REPREVE^® ~~Recycling Center, which is intended to increase UNIFI’s capacity to produce recycled polyester Chip for internal consumption and external sales.~~

Through the remainder of fiscal 2018, UNIFI expects to invest an additional $18,600 in capital projects (for an aggregate fiscal 2018 estimate of $30,000), which include (i) making further improvements in production capabilities and technology enhancements in the Americas and (ii) routine annual maintenance capital expenditures to allow continued efficient production.

The total amount ultimately invested in fiscal 2018 could be more or less than the anticipated amount, depending on the timing and scale of contemplated initiatives and other factors, and is expected to be funded by a combination of cash from operations and borrowings under the ABL Revolver. UNIFI expects the recent capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily of machinery and equipment.

~~As a result of our continued focus on REPREVE~~^® and other PVA yarns as part of our mix enrichment strategy, we may incur additional expenditures for capital projects beyond the currently estimated amount, as we pursue new, currently unanticipated opportunities in order to expand our manufacturing capabilities for these products, for other strategic growth initiatives or to further streamline our manufacturing process, in which case we may be required to increase the amount of our working capital and long-term borrowings. If our strategy is successful, we would expect higher gross profit as a result of the combination of potentially higher sales volumes and an improved mix from higher-margin products.

~~Stock Repurchase Program~~

On April 23, 2014, UNIFI announced a stock repurchase program (the “2014 SRP”) to authorize UNIFI to acquire up to $50,000 of its common stock. Under the 2014 SRP, UNIFI is authorized to repurchase shares at prevailing market prices, through open market purchases or privately negotiated transactions at such times and prices and in such manner as determined by management, subject to market conditions, applicable legal requirements, contractual obligations and other factors. Repurchases, if any, are expected to be financed through cash generated from operations and borrowings under the ABL Revolver, and are subject to applicable limitations and restrictions as set forth in the ABL Facility. The 2014 SRP has no stated expiration or termination date, and there is no time limit or specific time frame otherwise for repurchases. UNIFI may discontinue repurchases at any time that management determines additional purchases are not beneficial or advisable.

UNIFI made no repurchases of its shares of common stock during the current six-month period. As of December 24, 2017, UNIFI had repurchased a total of 806 shares, at an average price of $27.79 (for a total of $22,409, inclusive of commission costs) pursuant to the 2014 SRP. As of December 24, 2017, $27,603 remained available for share repurchases under the 2014 SRP.

Liquidity Summary

UNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that its existing cash balances, cash provided by operating activities, and ~~borrowings available under the ABL Revolver~~credit facility will enable UNIFI to ~~comply with the terms of its indebtedness and~~ meet its foreseeable liquidity requirements. Domestically, UNIFI’s cash balances, cash provided by operating activities, and borrowings available under the ABL Revolver continue to be sufficient to fund UNIFI’s domestic operating activities as well as cash commitments for its investing and financing activities. For its ~~existing~~ foreign operations, UNIFI expects its existing cash balances, ~~and~~ cash provided by operating activities, and available financing arrangements will provide the needed liquidity to fund ~~its foreign~~the associated operating activities and ~~any foreign~~ investing activities, such as future capital expenditures. ~~However, expansion~~UNIFI’s operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the operating results of ~~our foreign operations may require~~each subsidiary.

Net Debt (Non-GAAP Financial Measure)

The reconciliations for Net Debt are as follows:


	October 1, 2023		July 2, 2023
Long-term debt	$	128,890	$	128,604
Current portion of long-term debt		12,323		12,006
Unamortized debt issuance costs		274		289
Debt principal		141,487		140,899
Less: cash and cash equivalents		51,515		46,960
Net Debt	$	89,972	$	93,939

The decrease in Net Debt primarily reflects the generation of operating cash ~~sourced~~flows during fiscal 2024, aided by reduced levels of capital expenditures.

Working Capital and Adjusted Working Capital (Non-GAAP Financial Measures)

The following table presents the components of working capital and the reconciliation of working capital to Adjusted Working Capital:


	October 1, 2023			July 2, 2023
Cash and cash equivalents	$	51,515		$	46,960
Receivables, net		78,706			83,725
Inventories		136,092			150,810
Income taxes receivable		1,592			238
Other current assets		9,419			12,327
Accounts payable		(37,064	)		(44,455	)
Other current liabilities		(16,443	)		(12,932	)
Income taxes payable		(996	)		(789	)
Current operating lease liabilities		(1,885	)		(1,813	)
Current portion of long-term debt		(12,323	)		(12,006	)
Working capital	$	208,613		$	222,065

Less: Cash and cash equivalents		(51,515	)		(46,960	)
Less: Income taxes receivable		(1,592	)		(238	)
Less: Income taxes payable		996			789
Less: Current operating lease liabilities		1,885			1,813
Less: Current portion of long-term debt		12,323			12,006
Adjusted Working Capital	$	170,710		$	189,475

Adjusted Working Capital decreased $18,765 from ~~our domestic subsidiaries.~~July 2, 2023 to October 1, 2023.

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 lower weighted average costs in the current period and lower units on hand. The decrease in other current assets was primarily due to lower vendor deposits, lower value-added taxes receivable, and the utilization of the fiscal 2021 recovery of non-income taxes in Brazil. The decrease in accounts payable followed the decrease in inventories and production activity in the current period. The increase in other current liabilities primarily reflects the routine timing differences for payroll and other operating expenses. The change in income taxes receivable reflects the conclusion of an IRS audit. The changes in current operating lease liabilities, current portion of long-term debt, and income taxes payable were insignificant.

Operating Cash ~~Provided by Operating Activities~~Flows

The significant components of net cash provided (used) 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.~~


	For the Three Months Ended
	October 1, 2023			October 2, 2022
Net loss	$	(13,270	)	$	(7,834	)
Equity in earnings of unconsolidated affiliates		(200	)		(295	)
Depreciation and amortization expense		7,026			6,740
Non-cash compensation expense		212			633
Deferred income taxes		(679	)		(373	)
Subtotal		(6,911	)		(1,129	)

Receivables, net		4,111			13,800
Inventories		12,608			6,475
Accounts payable and other current liabilities		(3,432	)		(28,615	)
Other changes		743			3,577
Net cash provided (used) by operating activities	$	7,119		$	(5,892	)

For the Six Months Ended

December 24, 2017

December 25, 2016

Net income including non-controlling interest

$
20,762

$
13,496

Loss on sale of business

—

1,662

Equity in earnings of unconsolidated affiliates

(3,298
)

(473
)
Depreciation and amortization expense

11,135

9,731

Non-cash compensation expense

3,569

1,862

Deferred income taxes

(6,282
)

5,335

Subtotal

25,886

31,613

Distributions received from unconsolidated affiliates

8,678

1,500

Other changes

(14,175
)

(15,817
)
Net cash provided by operating activities

$
20,389

$
17,296

The increase in ~~net~~operating cash ~~provided by operating activities from the prior six-month period to the current six-month period~~flows was primarily due to ~~distributions received from PAL of $7,178 and~~reduced working capital associated with a ~~comparably lower build of working capital. The increase was partially~~decline in overall business activity in the current period, primarily offset by ~~lower consolidated earnings, consistent with the comparable decrease in Adjusted EBITDA discussed above.~~weaker earnings.

Investing Cash ~~Used in~~ Flows

Investing ~~Activities and Cash Provided by Financing Activities~~

~~UNIFI utilized $11,345 (net) for investing~~ activities ~~and was provided $3,963 (net) from financing activities during the current six-month period.~~

~~Significant investing activities include $11,360~~primarily includes $2,937 for capital ~~expenditures,~~expenditures. UNIFI expects recent and future capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily ~~relating to ongoing maintenance capital expenditures~~of machinery and equipment.

Financing Cash Flows

Financing activities primarily include net proceeds from the ~~completion and start-up of the fourth production line~~ABL Revolver.

Share Repurchase Program

As described in ~~the REPREVE~~^® ~~Recycling Center, which is intended to increase UNIFI’s capacity to produce recycled polyester Chip for internal consumption and external sales.~~

~~Significant financing activities include $7,600 for net borrowings against long-term debt. The borrowings helped fund the investing activities described above.~~ Note 7, “Shareholders’ Equity,” no share repurchases have been completed in fiscal 2024.

Contractual Obligations

UNIFI ~~has incurred~~incurs various financial obligations and commitments in ~~its normal~~the ordinary course of business. Financial obligations are considered to represent known future cash payments that UNIFI is required to make under existing contractual arrangements, such as debt and lease agreements.

There have been no material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed ~~in the table~~ under the heading “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the ~~2017~~2023 Form 10-K.

Off-Balance Sheet Arrangements

UNIFI is not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on UNIFI’s financial condition, results of operations, liquidity, or capital expenditures.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as those involving accounting estimates that require management to make assumptions about matters that are highly uncertain at the time and where different reasonable estimates or changes in the accounting estimates from quarter to quarter could materially impact the presentation of the financial statements. UNIFI’s critical accounting policies are discussed in the ~~2017~~2023 Form 10-K. There ~~were~~have been no ~~material~~ changes to ~~these~~UNIFI’s critical accounting policies ~~during the current period.~~in fiscal 2024.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

UNIFI is exposed to market risks associated with changes in interest rates, fluctuations in foreign currency exchange rates, and raw material and commodity costs, which may adversely affect its financial position, results of operations, or cash flows. UNIFI does not enter into derivative financial instruments for trading purposes, nor is it a party to any leveraged financial instruments.

Interest Rate Risk

UNIFI is exposed to interest rate risk through its borrowing activities. As of ~~December 24, 2017,~~October 1, 2023, UNIFI had borrowings under its ABL ~~Revolver and ABL Term Loan~~Facility that totaled $111,900 and contain variable rates of interest; however, UNIFI hedges a significant portion of such interest rate variability using interest rate swaps. As of December 24, 2017, after considering the variable rate debt obligations that have been hedged and UNIFI’s outstanding debt obligations with fixed rates of interest,$129,800. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase ~~in LIBOR~~ as of ~~December 24, 2017~~October 1, 2023 would result in an increase in annual interest expense of ~~less than $200.~~approximately $700.

Foreign Currency Exchange Rate Risk

~~UNIFI conducts its business in various foreign countries and in various foreign currencies. Each~~A complete discussion of UNIFI’s subsidiaries may enter into transactions (sales, purchases, fixed purchase commitments, etc.) that are denominated in currencies other than the subsidiary’s functional currency and thereby expose UNIFI to foreign currency exchange rate risk. UNIFI may enter into foreign currency forward contracts to hedge this exposure. UNIFI may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. risk is included in the 2023 Form 10-K and is supplemented by the following disclosures.

As of ~~December 24, 2017,~~October 1, 2023, UNIFI had no outstanding foreign currency forward contracts.

A significant portion of raw materials purchased by UNIFI’s Brazilian subsidiary are denominated in USD, requiring UNIFI to regularly exchange BRL. During recent fiscal years, UNIFI was negatively impacted by a devaluation of the BRL. Predicting fluctuations in the BRL is impracticable. Discussion and analysis surrounding the impact of fluctuations of the BRL as well as the RMB on UNIFI’s results of operations are included above in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

As of December 24, 2017, UNIFI’s subsidiaries outside the United States, whose functional currency is other than the USD, held approximately 16.7% of UNIFI’s consolidated total assets. UNIFI does not enter intoOctober 1, 2023, foreign currency ~~derivatives to hedge its net investment in its foreign operations.~~exchange rate risk concepts included the following:

~~As of December 24, 2017, $44,996, or 92.6%, of UNIFI’s cash and cash equivalents was held outside the United States, of which $31,061 was held in USD and $12,439 was held in BRL.~~


	Approximate Amount or Percentage
Percentage of total consolidated assets held by UNIFI's subsidiaries outside the U.S. whose functional currency is not the USD		31.0	%

Cash and cash equivalents held outside the U.S.:
Denominated in USD	$	18,332
Denominated in RMB		16,740
Denominated in BRL		15,812
Denominated in other foreign currencies		156
Total cash and cash equivalents held outside the U.S.	$	51,040
Percentage of total cash and cash equivalents held outside the U.S.		99.1	%

Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries	$	447

Raw Material and Commodity Cost Risks

A ~~significant portion~~complete discussion of ~~UNIFI’s~~ raw ~~materials~~material and energy costs are derived from petroleum-based chemicals. The prices for petroleum and petroleum-related products and energy costs are volatile and dependent on global supply and demand dynamics, including certain geo-political risks. A sudden risecommodity cost risks is included in the price of petroleum and petroleum-based products could have a material impact on UNIFI’s profitability. UNIFI does not use financial instruments to hedge its exposure to changes in these costs. The costs of the primary raw materials that UNIFI uses throughout all of its operations are generally based on USD pricing, and such materials are purchased at market or at fixed prices that are established with individual vendors as part of the purchasing process for quantities expected to be consumed in the ordinary course of business.2023 Form 10-K.

Other Risks

UNIFI is also exposed to ~~political~~geopolitical risk, including changing laws and regulations governing international trade, such as quotas, tariffs, and tax laws. The degree of impact and the frequency of these events cannot be predicted.

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

As of ~~December 24, 2017,~~October 1, 2023, an evaluation of the effectiveness of UNIFI’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) was performed under the supervision and with the participation of UNIFI’s management, including the principal executive officer and interim principal financial officer. Based on that evaluation, UNIFI’s principal executive officer and interim principal financial officer concluded that UNIFI’s disclosure controls and procedures are effective to ensure that information required to be disclosed by UNIFI in ~~the~~its reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that information required to be disclosed by UNIFI in the reports itUNIFI files or submits under the Exchange Act is accumulated and communicated to UNIFI’s management, including its principal executive officer and interim principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in UNIFI’s internal control over financial reporting during the three months ended ~~December 24, 2017~~October 1, 2023 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.

PART II—~~OTHE~~ROTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

Item 1. Legal Proceedings

We are from time to time a party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of business. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on our results of operations, financial position, or cash flows. We maintain liability insurance for certain risks that is subject to certain self-insurance limits.

~~Item 1A.~~

~~Risk Factors~~

~~There have been no material changes in UNIFI’s risk factors from those disclosed in “Item 1A. Risk Factors” in the 2017 Form 10-K.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 6. Exhibits


~~Item 6.~~Exhibit No.	~~Exhibits~~

~~Exhibit No.~~		Description

3.1		Restated Certificate of Incorporation of Unifi, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 31, 2016 (File No. 001-10542)).

3.2		Amended and Restated By-laws of Unifi, Inc., as of October 26, 2016 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed October 31, 2016 (File No. 001-10542)).

~~10.1~~⁺*3.3		~~Employment Agreement by~~Declaration of Amendment to the Amended and ~~between~~Restated By-laws of Unifi, Inc. ~~and Mark McNeill,~~ effective ~~as of November 3, 2017.~~April 30, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed May 1, 2019 (File No. 001-10542)) .
~~31.1~~⁺
10.1*+		Unifi, Inc. Director Compensation Policy, effective September 1, 2023.

31.1+		Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+
~~31.2~~⁺		Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~³²⁺⁺		~~Certification~~Certifications of Principal Executive Officer ~~pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~⁺⁺		~~Certification of~~and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~⁺101.INS		~~The following financial information (unaudited) from Unifi, Inc.’s Quarterly Report on Form 10-Q for~~Inline XBRL Instance Document – the ~~quarter ended December 24, 2017, filed January 31, 2018, formatted~~instance document does not appear in ~~eXtensible Business Reporting Language: (i)~~ the ~~Condensed Consolidated Balance Sheets, (ii)~~Interactive Data File because XBRL tags are embedded within the ~~Condensed Consolidated Statements of Income, (iii)~~Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the ~~Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.~~Inline XBRL document)

+	~~Filed herewith.~~

++	~~Furnished herewith.~~

^*	~~Indicates a management contract or compensatory plan or arrangement.~~

~~SIGNATURES~~

+ Filed herewith.

++ Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	UNIFI, INC.
	(Registrant)

Date: ~~January 31, 2018~~November 8, 2023	By:	/s/ ~~JEFFREY C. ACKERMAN~~ANDREW J. EAKER
		~~Jeffrey C. Ackerman~~Andrew J. Eaker
		~~Executive Vice President &~~Interim Chief Financial Officer Treasurer
		(Interim Principal Financial Officer and Interim Principal Accounting Officer)


New York		11-2165495
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

7201 West Friendly Avenue
Greensboro, North Carolina		27410
(Address of principal executive offices) ~~(Zip~~		(Zip Code)


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

		Emerging growth company	☐


	For the Three Months Ended
	October 1, 2023			October 2, 2022
Net loss	$	(13,270	)	$	(7,834	)
Other comprehensive loss:
Foreign currency translation adjustments		(5,540	)		(5,908	)
Other comprehensive loss, net		(5,540	)		(5,908	)
Comprehensive loss	$	(18,810	)	$	(13,742	)

	For the Three Months Ended						For the Six Months Ended
	December 24, 2017			December 25, 2016			December 24, 2017			December 25, 2016
Net income including non-controlling interest	$	11,802		$	4,354		$	20,762		$	13,496
Other comprehensive (loss) income:
Foreign currency translation adjustments		(2,341	)		(780	)		524			(1,359	)
Foreign currency translation adjustments for an unconsolidated affiliate		(487	)		(280	)		(593	)		(523	)
Changes in interest rate swaps		1,077			19			1,492			38
Other comprehensive (loss) income, net		(1,751	)		(1,041	)		1,423			(1,844	)
Comprehensive income including non-controlling interest		10,051			3,313			22,185			11,652
Less: comprehensive loss attributable to non-controlling interest		—			(237	)		—			(498	)
Comprehensive income attributable to Unifi, Inc.	$	10,051		$	3,550		$	22,185		$	12,150

	For the Six Months Ended
	December 24, 2017			December 25, 2016			For the Three Months Ended
Cash and cash equivalents at beginning of year	$	35,425		$	16,646
							October 1, 2023			October 2, 2022
Cash and cash equivalents at beginning of period							$	46,960		$	53,290
Operating activities:
Net income including non-controlling interest		20,762			13,496
Adjustments to reconcile net income including non-controlling interest to net cash provided by operating activities:
Net loss								(13,270	)		(7,834	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Equity in earnings of unconsolidated affiliates		(3,298	)		(473	)		(200	)		(295	)
Distributions received from unconsolidated affiliates		8,678			1,500
Depreciation and amortization expense		11,135			9,731			7,026			6,740
Non-cash compensation expense		3,569			1,862			212			633
Loss on sale of business		—			1,662
Excess tax benefit on stock-based compensation plans		—			(1,111	)
Deferred income taxes		(6,282	)		5,335			(679	)		(373	)
Other, net		(206	)		34			(62	)		324
Changes in assets and liabilities:
Receivables, net		267			6,043			4,111			13,800
Inventories		(4,556	)		(6,751	)		12,608			6,475
Other current assets		(210	)		837			2,126			4,026
Income taxes		(945	)		(6,841	)		(1,148	)		(789	)
Accounts payable and accrued expenses		(8,796	)		(8,160	)
Accounts payable and other current liabilities								(3,432	)		(28,615	)
Other, net		271			132			(173	)		16
Net cash provided by operating activities		20,389			17,296
Net cash provided (used) by operating activities								7,119			(5,892	)

Investing activities:
Capital expenditures		(11,360	)		(19,343	)		(2,937	)		(11,198	)
Other, net		15			(180	)		457			(222	)
Net cash used in investing activities		(11,345	)		(19,523	)
Net cash used by investing activities								(2,480	)		(11,420	)

Financing activities:
Proceeds from ABL Revolver		59,200			65,200			31,100			65,500
Payments on ABL Revolver		(46,600	)		(61,600	)		(27,500	)		(52,300	)
Proceeds from ABL Term Loan		—			14,500
Payments on ABL Term Loan		(5,000	)		(4,750	)		(2,300	)		(2,500	)
Payments on capital lease obligations		(3,528	)		(2,154	)
Proceeds from stock option exercises		219			2,481
Excess tax benefit on stock-based compensation plans		—			1,111
Other		(328	)		(368	)
Proceeds from construction financing								—			2,449
Payments on finance lease obligations								(713	)		(436	)
Other, net								17			—
Net cash provided by financing activities		3,963			14,420			604			12,713

Effect of exchange rate changes on cash and cash equivalents		183			(349	)		(688	)		(1,491	)
Net increase in cash and cash equivalents		13,190			11,844
Net increase (decrease) in cash and cash equivalents								4,555			(6,090	)
Cash and cash equivalents at end of period	$	48,615		$	28,490		$	51,515		$	47,200


☒(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


PART I—FINANCIAL INFORMATION
		Page

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of ~~December 24, 2017~~October 1, 2023 and ~~June 25, 2017~~July 2, 2023	1

	Condensed Consolidated Statements of ~~Income~~Operations and Comprehensive Loss for the Three Months Ended October 1, 2023 and ~~Six Months Ended December 24, 2017 and December 25, 2016~~October 2, 2022	2

	Condensed Consolidated Statements of ~~Comprehensive Income~~Shareholders’ Equity for the Three Months Ended October 1, 2023 and ~~Six Months Ended December 24, 2017 and December 25, 2016~~October 2, 2022	3

	Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~December 24, 2017~~October 1, 2023 and ~~December 25, 2016~~October 2, 2022	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2013

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3721

Item 4.	Controls and Procedures	3822

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3923

Item ~~1A.~~2.	~~Risk Factors~~Unregistered Sales of Equity Securities and Use of Proceeds	3923

Item 6.	Exhibits	4023

	Signatures	4124


	December 24, 2017			June 25, 2017			October 1, 2023			July 2, 2023
ASSETS
Cash and cash equivalents	$	48,615		$	35,425		$	51,515		$	46,960
Receivables, net		80,847			81,121			78,706			83,725
Inventories		116,239			111,405			136,092			150,810
Income taxes receivable		10,612			9,218			1,592			238
Other current assets		6,854			6,468			9,419			12,327
Total current assets		263,167			243,637			277,324			294,060
Property, plant and equipment, net		203,699			203,388			212,634			218,521
Operating lease assets								7,576			7,791
Deferred income taxes		4,161			2,194			4,094			3,939
Investments in unconsolidated affiliates		113,623			119,513
Other non-current assets		2,815			2,771			14,633			14,508
Total assets	$	587,465		$	571,503		$	516,261		$	538,819

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	35,420		$	41,499		$	37,064		$	44,455
Accrued expenses		12,990			16,144
Income taxes payable		1,833			1,351			996			789
Current operating lease liabilities								1,885			1,813
Current portion of long-term debt		17,112			17,060			12,323			12,006
Other current liabilities								16,443			12,932
Total current liabilities		67,355			76,054			68,711			71,995
Long-term debt		115,588			111,382			128,890			128,604
Non-current operating lease liabilities								5,842			6,146
Deferred income taxes								2,999			3,364
Other long-term liabilities		11,093			11,804			4,790			5,100
Deferred income taxes		7,140			11,457
Total liabilities		201,176			210,697			211,232			215,209

Commitments and contingencies

Common stock, $0.10 par value (500,000,000 shares authorized; 18,290,935 and 18,229,777 shares issued and outstanding as of December 24, 2017 and June 25, 2017, respectively)		1,829			1,823
Common stock, $0.10 par value (500,000,000 shares authorized; 18,084,522 and 18,081,538 shares issued and outstanding as of October 1, 2023 and July 2, 2023, respectively)								1,808			1,808
Capital in excess of par value		55,215			51,923			69,130			68,901
Retained earnings		360,702			339,940			293,522			306,792
Accumulated other comprehensive loss		(31,457	)		(32,880	)		(59,431	)		(53,891	)
Total Unifi, Inc. shareholders’ equity		386,289			360,806
Non-controlling interest		—			—
Total shareholders’ equity		386,289			360,806			305,029			323,610
Total liabilities and shareholders’ equity	$	587,465		$	571,503		$	516,261		$	538,819


	Shares		Common Stock		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at July 2, 2023		18,081	$	1,808	$	68,901		$	306,792		$	(53,891	)	$	323,610
Options exercised		3		—		21			—			—			21
Conversion of equity units		1		—		—			—			—			—
Stock-based compensation		—		—		209			—			—			209
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		—		—		(1	)		—			—			(1	)
Other comprehensive loss, net of tax		—		—		—			—			(5,540	)		(5,540	)
Net loss		—		—		—			(13,270	)		—			(13,270	)
Balance at October 1, 2023		18,085	$	1,808	$	69,130		$	293,522		$	(59,431	)	$	305,029

	Reserves for Yarn Quality Claims
Balance at June 25, 2017	$	(1,278	)
Charged to costs and expenses		(616	)
Translation activity		(12	)
Deductions		1,175
Balance at December 24, 2017	$	(731	)

	Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Thereafter
ABL Revolver	$	—	$	—	$	21,900	$	—	$	—	$	—
ABL Term Loan		5,000		10,000		75,000		—		—		—
Capital lease obligations		3,533		6,996		5,519		2,624		2,417		551
Total	$	8,533	$	16,996	$	102,419	$	2,624	$	2,417	$	551

	December 24, 2017			June 25, 2017
Investment in a former domestic unconsolidated affiliate	$	(3,958	)	$	(6,269	)
Equity-method investment in PAL		(1,217	)		(1,520	)
Certain losses carried forward ⁽¹⁾		(1,548	)		(5,924	)
State NOLs		(108	)		(108	)
Other foreign NOLs⁽²⁾		(2,963	)		(3,347	)
Foreign tax credits		(1,167	)		(789	)
Total deferred tax valuation allowance	$	(10,961	)	$	(17,957	)

	Foreign Currency Translation Adjustments			Changes in Interest Rate Swaps			Accumulated Other Comprehensive Loss
Balance at June 25, 2017	$	(32,372	)	$	(508	)	$	(32,880	)
Other comprehensive (loss) income, net of tax		(69	)		1,492			1,423
Balance at December 24, 2017	$	(32,441	)	$	984		$	(31,457	)


		For the Three Months Ended
Affiliated Entity	Transaction Type	October 1, 2023		October 2, 2022
Salem Leasing Corporation	Payments for transportation equipment costs and finance lease debt service	$	1,209	$	1,199


	For the Three Months Ended October 1, 2023
	Americas			Brazil		Asia		Total
Net sales	$	81,573		$	29,909	$	27,362	$	138,844
Cost of sales		88,953			27,742		22,724		139,419
Gross (loss) profit		(7,380	)		2,167		4,638		(575	)
Segment depreciation expense		5,497			840		—		6,337
Segment (Loss) Profit	$	(1,883	)	$	3,007	$	4,638	$	5,762


	For the Three Months Ended October 2, 2022
	Americas			Brazil		Asia		Total
Net sales	$	107,644		$	38,879	$	32,996	$	179,519
Cost of sales		112,513			32,092		28,351		172,956
Gross (loss) profit		(4,869	)		6,787		4,645		6,563
Segment depreciation expense		5,480			470		—		5,950
Segment Profit	$	611		$	7,257	$	4,645	$	12,513

Underlying equity as of December 24, 2017	$	128,412
Initial excess capital contributions		53,363
Impairment charge recorded by UNIFI in fiscal 2007		(74,106	)
Anti-trust lawsuit against PAL in which UNIFI did not participate		2,652
Investment as of December 24, 2017	$	110,321

	As of June 25, 2017
	PAL		Other		Total
Current assets	$	247,820	$	10,340	$	258,160
Noncurrent assets		183,418		1,039		184,457
Current liabilities		54,389		3,588		57,977
Noncurrent liabilities		3,263		—		3,263
Shareholders’ equity and capital accounts		373,586		7,791		381,377

	December 24, 2017		June 25, 2017
Salem Global Logistics, Inc.	$	7	$	6
Total related party receivables (included within receivables, net)	$	7	$	6

	December 24, 2017		June 25, 2017
Salem Leasing Corporation (included within accounts payable)	$	294	$	298
Salem Leasing Corporation (capital lease obligation)		911		947
Total related party payables	$	1,205	$	1,245

	For the Three Months Ended December 24, 2017
	Polyester		Nylon		International		All Other		Total
Net sales	$	90,316	$	25,103	$	51,046	$	1,013	$	167,478
Cost of sales		81,740		22,027		40,072		963		144,802
Gross profit		8,576		3,076		10,974		50		22,676
Segment depreciation expense		3,973		552		397		64		4,986
Segment Profit	$	12,549	$	3,628	$	11,371	$	114	$	27,662

	For the Three Months Ended December 24, 2017											For the Three Months Ended December 25, 2016
	Pre-tax Income		Tax Impact			Net Income			Diluted EPS			Pre-tax Income		Tax Impact			Net Income		Diluted EPS
GAAP results	$	6,976	$	4,826		$	11,802		$	0.63		$	6,278	$	(1,924	)	$	4,591	$	0.25
Certain tax valuation allowance reversal ⁽¹⁾		—		(3,807	)		(3,807	)		(0.20	)		—		—			—		—
Loss on sale of business⁽²⁾		—		—			—			—			1,662		—			1,662		0.09
Adjusted results	$	6,976	$	1,019		$	7,995		$	0.43		$	7,940	$	(1,924	)	$	6,253	$	0.34

Diluted weighted average common shares outstanding										18,651										18,442

	For the Six Months Ended December 24, 2017											For the Six Months Ended December 25, 2016
	Pre-tax Income		Tax Impact			Net Income			Diluted EPS			Pre-tax Income		Tax Impact			Net Income		Diluted EPS
GAAP results	$	19,132	$	1,630		$	20,762		$	1.12		$	19,146	$	(5,650	)	$	13,994	$	0.76
Certain tax valuation allowance reversal ⁽¹⁾		—		(3,807	)		(3,807	)		(0.21	)		—		—			—		—
Loss on sale of business⁽²⁾		—		—			—			—			1,662		—			1,662		0.09
Adjusted results	$	19,132	$	(2,177	)	$	16,955		$	0.91		$	20,808	$	(5,650	)	$	15,656	$	0.85

Diluted weighted average common shares outstanding										18,598										18,391


Net sales for the prior period	$	107,644
Net change in average selling price and sales mix		(22,984	)
Decrease in sales volumes		(3,087	)
Net sales for the current period	$	81,573


Segment Profit for the prior period	$	611
Net decrease in underlying margins		(2,476	)
Decrease in sales volumes		(18	)
Segment Loss for the current period	$	(1,883	)


Net sales for the prior period	$	38,879
Decrease in average selling price		(10,311	)
Decrease in sales volumes		(1,546	)
Favorable foreign currency translation effects		2,887
Net sales for the current period	$	29,909

Net sales for the prior period	$	86,671
Increase in sales volumes		6,192
Net change in average selling price and sales mix		(2,547	)
Net sales for the current period	$	90,316


Segment Profit for the prior period	$	7,257
Decrease in underlying unit margins		(4,489	)
Decrease in sales volumes		(288	)
Favorable foreign currency translation effects		527
Segment Profit for the current period	$	3,007

Segment Profit for the prior period	$	13,855
Net decrease in underlying margins		(2,296	)
Increase in sales volumes		990
Segment Profit for the current period	$	12,549


Net sales for the prior period	$	32,996
Net decrease in sales volumes		(3,143	)
Unfavorable foreign currency translation effects		(1,661	)
Change in average selling price and sales mix		(830	)
Net sales for the current period	$	27,362

Net sales for the prior period	$	28,302
Decrease in sales volumes		(1,993	)
Net change in average selling price and sales mix		(1,206	)
Net sales for the current period	$	25,103

Segment Profit for the prior period	$	3,153
Net improvement in underlying margins		697
Decrease in sales volumes		(222	)
Segment Profit for the current period	$	3,628

Net sales for the prior period	$	38,868
Increase in sales volumes		11,985
Favorable foreign currency translation effects (RMB and BRL)		882
Net change in average selling price and sales mix		(689	)
Net sales for the current period	$	51,046

Segment Profit for the prior period	$	9,677
Increase in sales volumes		2,985
Favorable foreign currency translation effects (RMB and BRL)		221
Decrease in underlying margins		(1,512	)
Segment Profit for the current period	$	11,371

SG&A expenses for the prior period	$	12,868
Increase in compensation expenses		1,895
Increase in supplemental retirement plan expenses		141
Other net decreases		(278	)
SG&A expenses for the current period	$	14,626