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 every Interactive Data File required to be submitted 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 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 May ~~2, 2019,~~4, 2020, there were ~~18,423,538~~18,446,436 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 performance, considering the information currently available to management. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek,” “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;~~fact, and 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.

	March 31, 2019			June 24, 2018			March 29, 2020			June 30, 2019
ASSETS
Cash and cash equivalents	$	27,898		$	44,890		$	33,393		$	22,228
Receivables, net		91,701			86,273			86,376			88,884
Inventories		130,981			126,311			124,146			133,781
Income taxes receivable		13,039			10,291			589			4,373
Other current assets		16,365			6,529			18,477			16,356
Total current assets		279,984			274,294			262,981			265,622
Property, plant and equipment, net		207,303			205,516			206,993			206,787
Operating lease assets								6,084			—
Deferred income taxes		3,159			3,288			5,943			2,581
Investments in unconsolidated affiliates		114,747			112,639			58,854			114,320
Other non-current assets		3,598			6,070			2,187			2,841
Total assets	$	608,791		$	601,807		$	543,042		$	592,151

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	47,726		$	48,970		$	40,862		$	41,796
Accrued expenses		13,076			17,720			15,347			16,849
Income taxes payable		7,899			1,317			5,841			569
Current operating lease liabilities								1,709			—
Current portion of long-term debt		16,054			16,996			14,112			15,519
Total current liabilities		84,755			85,003			77,871			74,733
Long-term debt		119,804			113,553			118,827			111,541
Non-current operating lease liabilities								4,481			—
Other long-term liabilities		5,685			5,337			8,029			6,185
Income tax payable		—			470
Deferred income taxes		7,092			7,663			5			6,847
Total liabilities		217,336			212,026			209,213			199,306

Commitments and contingencies

Common stock, $0.10 par value (500,000,000 shares authorized; 18,410,594 and 18,352,824 shares issued and outstanding as of March 31, 2019 and June 24, 2018, respectively)		1,841			1,835
Common stock, $0.10 par value (500,000,000 shares authorized; 18,446,436 and 18,462,296 shares issued and outstanding as of March 29, 2020 and June 30, 2019, respectively)								1,845			1,846
Capital in excess of par value		59,088			56,726			61,080			59,560
Retained earnings		373,666			371,753			335,971			374,668
Accumulated other comprehensive loss		(43,140	)		(40,533	)		(65,067	)		(43,229	)
Total shareholders’ equity		391,455			389,781			333,829			392,845
Total liabilities and shareholders’ equity	$	608,791		$	601,807		$	543,042		$	592,151

		For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended						For the Nine Months Ended
		March 31, 2019			March 25, 2018			March 31, 2019			March 25, 2018				March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Net sales		$	179,989		$	165,867		$	529,311		$	497,587			$	170,994		$	179,989		$	520,454		$	529,311
Cost of sales			166,198			149,311			481,345			435,063				155,611			166,198			471,963			481,345
Gross profit			13,791			16,556			47,966			62,524				15,383			13,791			48,491			47,966
Selling, general and administrative expenses			11,439			13,846			40,672			41,335				11,720			11,439			35,208			40,672
Provision (benefit) for bad debts			218			27			381			(104	)
Other operating expense, net			1,359			1,100			1,218			1,763
Provision for bad debts																580			218			331			381
Other operating (income) expense, net																(62	)		1,359			900			1,218
Operating income			775			1,583			5,695			19,530				3,145			775			12,052			5,695
Interest income			(149	)		(182	)		(448	)		(444	)			(173	)		(149	)		(595	)		(448	)
Interest expense			1,256			1,187			4,078			3,562				1,231			1,256			3,589			4,078
Equity in earnings of unconsolidated affiliates																(3,526	)		(1,873	)		(1,904	)		(3,126	)
Impairment of investment in unconsolidated affiliate																45,194			—			45,194			—
Loss on extinguishment of debt			—			—			131			—				—			—			—			131
Equity in earnings of unconsolidated affiliates			(1,873	)		(544	)		(3,126	)		(3,842	)
Income before income taxes			1,541			1,122			5,060			20,254
Provision (benefit) for income taxes			3,070			946			3,606			(684	)
(Loss) income before income taxes																(39,581	)		1,541			(34,232	)		5,060
Provision for income taxes																1,530			3,070			2,758			3,606
Net (loss) income		$	(1,529	)	$	176		$	1,454		$	20,938			$	(41,111	)	$	(1,529	)	$	(36,990	)	$	1,454

Net (loss) income per common share:	Net (loss) income per common share:													Net (loss) income per common share:
Basic		$	(0.08	)	$	0.01		$	0.08		$	1.15			$	(2.23	)	$	(0.08	)	$	(2.00	)	$	0.08
Diluted		$	(0.08	)	$	0.01		$	0.08		$	1.12			$	(2.23	)	$	(0.08	)	$	(2.00	)	$	0.08

CONDENSED CONSOLIDATED STATEMENTS OF CO~~MPREHENSIVE (LOSS) INCOME~~COMPREHENSIVE LOSS

For the Three Months Ended

For the Nine Months Ended

March 31, 2019

March 25, 2018

March 31, 2019

March 25, 2018

Net (loss) income

$
(1,529
)

$
176

$
1,454

$
20,938

Other comprehensive (loss) income:

Foreign currency translation adjustments

55

1,047

(1,454
)

1,571

Foreign currency translation adjustments for an unconsolidated affiliate

102

439

144

(154
)
Changes in interest rate swaps, net of tax of $173, $0, $392 and $0, respectively

(572
)

1,142

(1,297
)

2,634

Other comprehensive (loss) income, net

(415
)

2,628

(2,607
)

4,051

Comprehensive (loss) income

$
(1,944
)

$
2,804

$
(1,153
)

$
24,989

	For the Three Months Ended						For the Nine Months Ended
	March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Net (loss) income	$	(41,111	)	$	(1,529	)	$	(36,990	)	$	1,454
Other comprehensive loss:
Foreign currency translation adjustments		(15,684	)		55			(18,900	)		(1,454	)
Foreign currency translation adjustments for an unconsolidated affiliate		(1,586	)		102			(1,450	)		144
Changes in interest rate swaps, net of tax of $434, $173, $434 and $392, respectively		(1,449	)		(572	)		(1,488	)		(1,297	)
Other comprehensive loss, net		(18,719	)		(415	)		(21,838	)		(2,607	)
Comprehensive loss	$	(59,830	)	$	(1,944	)	$	(58,828	)	$	(1,153	)

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at December 29, 2019		18,505		$	1,851		$	61,187		$	378,789		$	(46,348	)	$	395,479
Options exercised		—			—			—			—			—			—
Conversion of restricted stock units		42			4			(4	)		—			—			—
Stock-based compensation		—			—			596			—			—			596
Common stock repurchased and retired under publicly announced program		(84	)		(8	)		(279	)		(1,707	)		—			(1,994	)
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(17	)		(2	)		(420	)		—			—			(422	)
Other comprehensive loss, net of tax		—			—			—			—			(18,719	)		(18,719	)
Net loss		—			—			—			(41,111	)		—			(41,111	)
Balance at March 29, 2020		18,446		$	1,845		$	61,080		$	335,971		$	(65,067	)	$	333,829

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 30, 2019		18,462		$	1,846		$	59,560		$	374,668		$	(43,229	)	$	392,845
Options exercised		10			1			28			—			—			29
Conversion of restricted stock units		76			8			(8	)		—			—			—
Stock-based compensation		4			1			2,298			—			—			2,299
Common stock repurchased and retired under publicly announced program		(84	)		(8	)		(279	)		(1,707	)		—			(1,994	)
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(22	)		(3	)		(519	)		—			—			(522	)
Other comprehensive loss, net of tax		—			—			—			—			(21,838	)		(21,838	)
Net loss		—			—			—			(36,990	)		—			(36,990	)
Balance at March 29, 2020		18,446		$	1,845		$	61,080		$	335,971		$	(65,067	)	$	333,829

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at December 30, 2018		18,383		$	1,838		$	59,619		$	375,195		$	(42,725	)	$	393,927
Options exercised		6			—			29			—			—			29
Conversion of restricted stock units		24			3			(3	)		—			—			—
Stock-based compensation		9			1			(314	)		—			—			(313	)
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(11	)		(1	)		(243	)		—			—			(244	)
Other comprehensive loss, net of tax		—			—			—			—			(415	)		(415	)
Net loss		—			—			—			(1,529	)		—			(1,529	)
Balance at March 31, 2019		18,411		$	1,841		$	59,088		$	373,666		$	(43,140	)	$	391,455

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 24, 2018		18,353		$	1,835		$	56,726		$	371,753	$	(40,533	)	$	389,781
Options exercised		22			2			271			—		—			273
Conversion of restricted stock units		41			4			(4	)		—		—			—
Stock-based compensation		10			1			2,471			—		—			2,472
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(15	)		(1	)		(376	)		—		—			(377	)
Other comprehensive loss, net of tax		—			—			—			—		(2,607	)		(2,607	)
Adoption of the new revenue recognition guidance		—			—			—			459		—			459
Net income		—			—			—			1,454		—			1,454
Balance at March 31, 2019		18,411		$	1,841		$	59,088		$	373,666	$	(43,140	)	$	391,455

	For the Nine Months Ended						For the Nine Months Ended
	March 31, 2019			March 25, 2018			March 29, 2020			March 31, 2019
Cash and cash equivalents at beginning of year	$	44,890		$	35,425
Cash and cash equivalents at beginning of period							$	22,228		$	44,890
Operating activities:
Net income		1,454			20,938
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net (loss) income								(36,990	)		1,454
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Equity in earnings of unconsolidated affiliates		(3,126	)		(3,842	)		(1,904	)		(3,126	)
Distributions received from unconsolidated affiliates		1,380			11,226			10,437			1,380
Depreciation and amortization expense		17,242			16,844			17,685			17,242
Impairment of investment in unconsolidated affiliate								45,194			—
Non-cash compensation expense		2,758			4,878			2,510			2,758
Deferred income taxes		(190	)		(8,441	)		(10,029	)		(190	)
Other, net		(459	)		(180	)		(171	)		(459	)
Changes in assets and liabilities:
Receivables, net		(5,877	)		(6,084	)		(2,295	)		(5,877	)
Inventories		(13,409	)		(9,424	)		2,126			(13,409	)
Other current assets		(1,338	)		(493	)		(3,020	)		(1,338	)
Income taxes								8,849			3,388
Accounts payable and accrued expenses		(4,523	)		(323	)		(488	)		(4,523	)
Income taxes		3,388			(464	)
Other, net		1,183			354			201			1,183
Net cash (used in) provided by operating activities		(1,517	)		24,989
Net cash provided by (used in) operating activities								32,105			(1,517	)

Investing activities:
Capital expenditures		(19,199	)		(17,091	)		(14,971	)		(19,199	)
Other, net		9			—			35			9
Net cash used in investing activities		(19,190	)		(17,091	)		(14,936	)		(19,190	)

Financing activities:
Proceeds from ABL Revolver		93,300			80,200			79,000			93,300
Payments on ABL Revolver		(97,400	)		(70,500	)		(67,500	)		(97,400	)
Proceeds from ABL Term Loan		20,000			—			—			20,000
Payments on ABL Term Loan		(5,000	)		(7,500	)		(7,500	)		(5,000	)
Payments on capital lease obligations		(5,308	)		(5,286	)
Payments on finance lease obligations								(4,606	)		(5,308	)
Common stock repurchased and retired under publicly announced program								(1,994	)		—
Proceeds from stock option exercises		273			219			29			273
Payments of debt financing fees		(720	)		—			—			(720	)
Other		(1,017	)		(597	)		(521	)		(1,017	)
Net cash provided by (used in) financing activities		4,128			(3,464	)
Net cash (used in) provided by financing activities								(3,092	)		4,128

Effect of exchange rate changes on cash and cash equivalents		(413	)		717			(2,912	)		(413	)
Net (decrease) increase in cash and cash equivalents		(16,992	)		5,151
Net increase (decrease) in cash and cash equivalents								11,165			(16,992	)
Cash and cash equivalents at end of period	$	27,898		$	40,576		$	33,393		$	27,898

Unifi, Inc., a New York corporation formed in 1969 (together with its subsidiaries, “UNIFI,” the “Company,” “we,” “us” or “our”), is a multi-national company that manufactures and sells innovative recycled and synthetic products made from polyester and nylon primarily to other yarn manufacturers and knitters and weavers (UNIFI’s direct customers) that produce yarn and/or fabric for the apparel, hosiery, home furnishings, automotive, industrial and other end-use markets (UNIFI’s indirect customers). We refer to these indirect customers as “brand partners.” Polyester filament yarns include partially oriented yarn (“POY”), textured, solution and package dyed, twisted, beamed and draw wound yarns, and each is available in virgin or recycled varieties. Recycled solutions, made from both pre-consumer and post-consumer waste, include plastic bottle flake (“Flake”) ~~and~~, polyester polymer beads (“Chip”). and staple fiber. Nylon yarns include virgin or recycled textured, solution dyed and spandex covered yarns.

UNIFI maintains one of the textile industry’s most comprehensive product offerings that include a range of specialized, premium value-added (“PVA”) and commodity solutions, with principal geographic markets in the Americas, Asia and ~~Asia.~~Europe.

UNIFI has direct manufacturing operations in four countries and participates in joint ventures with operations in Israel and the United States ~~the most significant~~(“U.S.”). As of ~~which is~~March 29, 2020, UNIFI owned a 34% non-controlling partnership interest in Parkdale America, LLC (“PAL”), a significant unconsolidated affiliate that produces cotton and synthetic yarns for sale to the global textile industry and apparel market. As further described in Note 19, “Investments in Unconsolidated Affiliates and Variable Interest Entities,” UNIFI sold the 34% interest on April 29, 2020.

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the ~~United States~~U.S. (“GAAP”) for interim financial information. As contemplated by the instructions of the Securities and Exchange Commission (the “SEC”) to Form 10-Q, the following notes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to UNIFI’s year-end audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended June ~~24, 2018~~30, 2019 (the ~~“2018~~“2019 Form 10-K”).

The financial information included in this report has been prepared by UNIFI, without audit. In the opinion of management, all adjustments, which consist of normal, recurring adjustments, considered necessary for a fair statement of the results for interim periods have been included. Nevertheless, the results shown for interim periods are not necessarily indicative of results to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the amounts reported and certain financial statement disclosures. Actual results may vary from these estimates.

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

The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and ~~all of~~ its ~~wholly owned subsidiaries~~subsidiary in El Salvador ended on March 29, 2020, the Sunday nearest to March 31, 2019. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarter ended on March 31, ~~2019, the last Sunday in March.~~2020. There were no significant transactions or events that occurred between Unifi, Inc.’s fiscal quarter end and such wholly owned subsidiaries’ subsequent fiscal quarter end. The three-month periods ended March ~~31, 2019~~29, 2020 and March ~~25, 2018~~31, 2019 consisted of 13 ~~fiscal~~ weeks. ~~The~~For the primary subsidiaries in the U.S. and Central America, the nine-month ~~periods~~period ended March 29, 2020 consisted of 39 weeks and the nine-month period ended March 31, 2019 ~~and March 25, 2018~~ consisted of 40 ~~and 39 fiscal weeks, respectively.~~

In ~~February~~June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses. The new guidance requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will begin to use forward-looking information to better inform their credit loss estimates. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019 and for interim periods therein, thus beginning with UNIFI’s fiscal 2021 and associated first fiscal quarter. UNIFI has not and does not expect to early adopt this standard. UNIFI does not expect this standard will have a material impact on its consolidated financial position, results of operations or cash flows.

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. The new lease guidance ~~is effective for UNIFI’s fiscal 2020.~~

~~Upon adoption, UNIFI expects to make an accounting policy election to not reflect leases with an initial term of 12 months or less~~was adopted in the ~~Consolidated Balance Sheets, recognizing those respective lease payments~~first quarter of fiscal 2020, and adoption is described in the Consolidated Statements of Operations on a straight-line basis over the respective lease term. UNIFI also plans to elect the package of transition practical expedients which would allow UNIFI to carry forward prior conclusions related to: (i) whether any expired or existing contracts are leases or contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for existing leases. UNIFI does not expect to elect the hindsight practical expedient.more detail in Note 4, “Leases.”

UNIFI continues to assess the effect the guidance will have on its existing accounting policies and the Consolidated Financial Statements, and upon adoption, expects there will be approximately a 1% increase in total assets on the Consolidated Balance Sheets due to the recognition of right-of-use assets and corresponding lease liabilities.

~~Under the guidance in the SEC Staff Announcement on July 20, 2017 relating~~Relating to the transition to ASU No. 2016-02, ~~due to its status as a significant subsidiary of Unifi, Inc.,~~ PAL expects to adopt the new lease guidance in its fiscal ~~2020.~~year 2021 ending on January 1, 2022. PAL is currently evaluating the impact of the new lease guidance.

In ~~May 2014,~~fiscal 2019, UNIFI adopted the ~~FASB issued~~new revenue recognition guidance prescribed by ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). Subsequent ASUs were issued to provide clarity and defer the effective date of the new guidance. The new revenue recognition guidance (the “New Revenue Recognition Guidance”) eliminated the transaction- and industry-specific revenue recognition guidance under previous GAAP and replaced it with a principles-based approach.

Upon adoption in fiscal 2019, UNIFI determined that the impact of the New Revenue Recognition Guidance is immaterial. Accordingly, UNIFI utilized the modified retrospective method of adoption and recorded the impact of open contracts as of June 24, 2018 as an adjustment to the opening balance of fiscal 2019 retained earnings, and ~~prior period balances are not adjusted.~~ ~~Details of the fiscal 2019 adjustment follow.~~ See Note 4,5, “Revenue Recognition,” for further detail regarding adoption and additional disclosures.

Under the guidance in the SEC Staff Announcement on July 20, 2017 relating to the transition to ASU No. 2014-09, due to its status as a significant subsidiary of Unifi, Inc., PAL ~~expects~~adopted the new revenue recognition guidance on December 30, 2018, with no material impact on its consolidated financial position, results of operations or cash flows in connection with the adoption.

Notes to ~~adopt the New Revenue Recognition Guidance in its fiscal 2019. PAL is currently evaluating the impact of the New Revenue Recognition Guidance.~~Condensed Consolidated Financial Statements (Continued)

Based on UNIFI’s review of ASUs issued since the filing of the ~~2018~~2019 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 impact on UNIFI’s consolidated financial statements.

In ~~fiscal 2019,~~February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). UNIFI adopted the ~~New~~new lease guidance utilizing the modified retrospective transition method, applied at the date of adoption, recording existing leases as of the effective date, July 1, 2019. Under this method, no adjustment to comparative prior periods is required and, accordingly, financial statement information and disclosures required under Topic 842 will not be provided for dates and periods prior to July 1, 2019. UNIFI made no adjustment to the July 1, 2019 opening retained earnings balance for fiscal 2020.

UNIFI adopted the following practical expedients and elected the following accounting policies related to this standard update:

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. The lease terms range from 1 to 15 years with various options for renewal. There are no residual value guarantees, restrictions, covenants or sub-leases related to these leases. Variable lease payments are determined as the amounts included in the lease payment that are based on the change in index or usage. The adoption of this standard resulted in the recognition of operating lease right-of-use assets of $9,802 and corresponding lease liabilities of $10,105 with the difference adjusting prepayments and accruals on the consolidated balance sheet as of July 1, 2019. UNIFI’s accounting for finance leases remained substantially unchanged. The standard did not materially impact operating results or liquidity. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included below.

The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities at March 29, 2020:

The following table sets forth the components of UNIFI’s total lease cost for the three months and nine months ended March 29, 2020:

The following table presents supplemental information related to leases at March 29, 2020:

UNIFI calculates its operating lease liabilities and finance lease liabilities entered into after the adoption of the new lease standard based upon UNIFI’s incremental borrowing rate (the “IBR”). When determining the IBR, we consider our centralized treasury function and our current credit profile. We then make adjustments to this rate for securitization, the length of the lease term, and leases denominated in foreign currencies. Generally, the IBR for each jurisdiction is the specific risk-free rate for the respective jurisdiction incremented for UNIFI’s corporate credit risk.

The following table sets forth UNIFI's weighted average remaining lease term in years and discount rate percentage used in the calculation of its outstanding lease liabilities as of March 29, 2020:

Future minimum finance lease payments and future minimum payments under non-cancelable operating leases with initial lease terms in excess of one year under Topic 842 as of March 29, 2020 by fiscal year were:

As reported in the 2019 Form 10-K under the previous accounting guidance, future minimum capital lease payments and future minimum lease payments under non-cancelable operating leases with initial lease terms in excess of one year as of June 30, 2019 by fiscal year were:

Rental expenses incurred under the operating leases and included in operating income consist of the following:

5. Revenue Recognition ~~Guidance. Details surrounding the impact of adoption and the additional disclosures follow.~~

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which primarily occurs at a point in time, upon either shipment or delivery to the customer. Revenue is also recognized over time for certain contracts in which the associated inventory produced has no alternative use and for which enforceable right to payment exists, or the associated services are rendered. Revenue is measured as the amount of consideration UNIFI expects to receive in exchange for completing its performance obligations (i.e., transferring goods or providing services), which includes estimates for variable consideration. Variable consideration includes volume-based incentives and product claims, which are offered within certain contracts between UNIFI and its customers. Sales taxes and value added taxes assessed by governmental entities are excluded from the measurement of consideration expected to be received. Shipping and handling costs incurred after a customer has taken possession of our goods are treated as a fulfillment cost and are not considered a separate performance obligation.

	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018		March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019
Third-party textile manufacturer	$	177,977	$	163,616	$	522,636	$	491,143
Third-party manufacturer									$	169,033	$	177,977	$	514,590	$	522,636
Service		2,012		2,251		6,675		6,444		1,961		2,012		5,864		6,675
Net sales	$	179,989	$	165,867	$	529,311	$	497,587	$	170,994	$	179,989	$	520,454	$	529,311

Third-party ~~textile~~ 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 ~~textile~~ manufacturers.

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. The Polyester Segment derives service revenue for toll manufacturing, and the All Other category derives service revenue for transportation services.

Volume-based incentives involve rebates or refunds of cash that are redeemable if the customer satisfies certain order volume thresholds during a defined time period. Under these incentive programs, UNIFI estimates the anticipated rebate to be paid and allocates a portion of the estimated cost of the rebate to each underlying sales transaction with the customer.

UNIFI generally offers customers claims support or remuneration for defective products. UNIFI estimates the amount of its product sales that may be claimed as defective by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

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.

The following table summarizes the impact of the adoption of the New Revenue Recognition Guidance on UNIFI's applicable financial statement line items for the nine months ended March 31, 2019. Any impact to other financial statement line items is insignificant and excluded from the below.

Contract assets represents the estimated revenue attributable to UNIFI in connection with completed performance obligations under contracts with customers for which revenue is recognized over time. The contract assets are classified to receivables when the right to payment becomes unconditional. The $9,454 change in the contract assets balance from June 24, 2018 to March 31, 2019 represents the routine recognition of satisfied performance obligations, in connection with adoption of and treatment under the New Revenue Recognition Guidance.

~~There have been no material changes in UNIFI’s allowance for uncollectible accounts or reserves for yarn quality claims since June 24, 2018.~~

	March 31, 2019			June 24, 2018			March 29, 2020			June 30, 2019
Raw materials	$	49,725		$	45,448		$	49,100		$	55,531
Supplies		8,859			7,314			9,252			9,020
Work in process		9,034			8,834			7,558			8,510
Finished goods		65,912			66,314			61,496			63,111
Gross inventories		133,530			127,910			127,406			136,172
Inventory reserves		(2,549	)		(1,599	)		(3,260	)		(2,391	)
Total inventories	$	130,981		$	126,311		$	124,146		$	133,781

In connection with UNIFI’s utilization of the modified retrospective method of adopting the New Revenue Recognition Guidance, prior period balances were not adjusted to reflect the impact that the New Revenue Recognition Guidance would have had on prior periods. See Note 4, “Revenue Recognition,” for further detail regarding the impact of the New Revenue Recognition Guidance to fiscal 2019.

	March 31, 2019		June 24, 2018		March 29, 2020		June 30, 2019
Contract assets	$	9,454	$	—	$	9,909	$	7,794
Value-added taxes receivable						3,437		2,519
Vendor deposits		3,456		3,703		3,328		4,187
Prepaid expenses		1,847		1,802		1,803		1,856
Value-added taxes receivable		1,608		1,024
Total other current assets	$	16,365	$	6,529	$	18,477	$	16,356

Vendor deposits primarily relates to down payments made toward the purchase of inventory. Prepaid expenses consists of advance payments for general operating expenses. Value-added taxes receivable relates to recoverable taxes associated with the sales and purchase activities of UNIFI’s foreign operations.

	March 31, 2019			June 24, 2018			March 29, 2020			June 30, 2019
Land	$	2,848		$	2,860		$	3,164		$	3,138
Land improvements		15,201			15,118			16,333			15,249
Buildings and improvements		160,593			157,354			158,388			161,566
Assets under capital leases		31,977			34,568
Assets under finance leases								30,749			31,897
Machinery and equipment		599,851			589,237			602,956			603,950
Computers, software and office equipment		22,636			19,723			22,355			23,011
Transportation equipment		5,815			5,029			6,929			5,809
Construction in progress		8,719			8,651			6,219			6,483
Gross PP&E		847,640			832,540			847,093			851,103
Less: accumulated depreciation		(632,700	)		(619,654	)		(632,608	)		(636,135	)
Less: accumulated amortization – capital leases		(7,637	)		(7,370	)
Less: accumulated amortization – finance leases								(7,492	)		(8,181	)
Total PP&E, net	$	207,303		$	205,516		$	206,993		$	206,787

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

	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Nine Months Ended
	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018		March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019
Depreciation expense	$	5,257	$	5,387	$	16,181	$	15,747
Depreciation and amortization expense									$	5,799	$	5,257	$	16,858	$	16,181
Repair and maintenance expenses		5,301		5,024		16,148		14,528		5,602		5,301		14,924		16,148

	March 31, 2019		June 24, 2018		March 29, 2020		June 30, 2019
Payroll and fringe benefits	$	7,128	$	10,833	$	8,861	$	9,775
Deferred revenue						2,624		516
Severance		1,764		362		225		2,058
Other		4,184		6,525		3,637		4,500
Total accrued expenses	$	13,076	$	17,720	$	15,347	$	16,849

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.10

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								Weighted Average
	Scheduled	Interest Rate as of	Principal Amounts as of						Scheduled	Interest Rate as of	Principal Amounts as of
	Maturity Date	March 31, 2019	March 31, 2019			June 24, 2018			Maturity Date	March 29, 2020	March 29, 2020			June 30, 2019
ABL Revolver	December 2023	3.7%	$	24,000		$	28,100		December 2023	2.2%	$	30,900		$	19,400
ABL Term Loan ⁽¹⁾	December 2023	3.3%		100,000			85,000		December 2023	3.1%		90,000			97,500
Capital lease obligations	(2)	3.9%		12,879			18,107
Finance lease obligations									(2)	3.6%		12,811			11,118
Total debt				136,879			131,207					133,711			128,018
Current portion of capital lease obligations				(6,054	)		(6,996	)
Current portion of other long-term debt				(10,000	)		(10,000	)
Current ABL Term Loan												(10,000	)		(10,000	)
Current portion of finance lease obligations												(4,112	)		(5,519	)
Unamortized debt issuance costs				(1,021	)		(658	)				(772	)		(958	)
Total long-term debt			$	119,804		$	113,553				$	118,827		$	111,541

On December 18, 2018, Unifi, Inc. and certain of its subsidiaries entered into a Third Amendment to Amended and Restated Credit Agreement and Second Amendment to Amended and Restated Guaranty and Security Agreement (the “2018 Amendment”). The 2018 Amendment amended the Amended and Restated Credit Agreement, dated as of March 26, 2015, by and among Unifi, Inc. and a syndicate of lenders, as previously amended (as further amended by the 2018 Amendment, the “Credit Agreement”). The Credit Agreement provides for a $200,000 senior secured credit facility (the “ABL Facility”), including 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 December 18, 2023.

The 2018 Amendment made the following changes to the Credit Agreement, among others: (i) extended the ~~Maturity Date~~maturity date from March 26, 2020 to December 18, 2023 and (ii) decreased the Applicable Margin (as defined in the Credit Agreement) pricing structure for Base Rate Loans (as defined in the Credit Agreement) and LIBOR Rate Loans (as defined in the Credit Agreement) by 25 basis points. In addition, in connection with the 2018 Amendment, the principal amount of the ABL Term Loan was reset from $80,000 to $100,000. Net proceeds from this ABL Term Loan reset were used to pay down the amount outstanding on the ABL Revolver.

In connection and concurrent with the sale of UNIFI’s 34% interest in PAL on April 29, 2020, UNIFI entered into the Fourth Amendment to Amended and Restated Credit Agreement (“Fourth Amendment”). The Fourth Amendment among other things: (i) revised the definition of permitted dispositions within the Credit Agreement to include the sale by Unifi Manufacturing, Inc. of its equity interest in PAL so long as the aggregate net cash proceeds received equaled or exceeded $60,000 and such sale occurred on or before May 15, 2020; (ii) revised the terms of the Credit Agreement to allow (a) the net cash proceeds from the sale of PAL to be applied to the outstanding principal amount of the ABL Revolver until paid in full and (b) remaining net cash proceeds held by UNIFI, so long as certain conditions are met; and (iii) revised the terms of the Credit Agreement to allow the lenders to make changes to the benchmark interest rate without further amendment should LIBOR temporarily or permanently cease to exist and a transition to a new benchmark interest rate such as the Secured Overnight Financing Rate (“SOFR”) be required for future ABL facility borrowings.

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

The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal ~~2019,~~2020, the following four fiscal years and thereafter:

	Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Thereafter		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Thereafter
ABL Revolver	$	—	$	—	$	—	$	—	$	—	$	24,000	$	—	$	—	$	—	$	—	$	30,900	$	—
ABL Term Loan		2,500		10,000		10,000		10,000		10,000		57,500		2,500		10,000		10,000		10,000		57,500		—
Capital lease obligations		1,704		5,559		2,633		2,417		90		476
Finance lease obligations														1,429		3,563		3,388		1,094		1,132		2,205
Total	$	4,204	$	15,559	$	12,633	$	12,417	$	10,090	$	81,976	$	3,929	$	13,563	$	13,388	$	11,094	$	89,532	$	2,205

~~Other primarily includes certain retiree and post-employment medical and disability liabilities, deferred revenue and deferred energy incentive credits.~~

On December 22, 2017, the U.S. government enacted comprehensive tax legislation H.R. 1, formerly known as the Tax Cuts and Jobs Act. H.R. 1 includes significant changes to existing tax law, including a permanent reduction to the U.S. federal corporate income tax rate from 35% to 21%, full expensing for investments in new and used qualified property, additional limitations on the deductions for executive compensation and interest expense, and the transition of the U.S. international tax system from a worldwide tax to a territorial tax system. As a fiscal-year taxpayer, certain provisions of H.R. 1 impacted UNIFI in fiscal 2018, including the change in the U.S. federal corporate income tax rate and the one-time transition tax (“toll charge”), while other provisions became effective for UNIFI at the beginning of fiscal 2019. The enactment of H.R. 1 resulted in recording a total provisional tax benefit of $396 for the period ending June 24, 2018. For a full description of the impact of H.R. 1 for the year ended June 24, 2018, refer to Note 14, “Income Taxes,” in the 2018 Form 10-K.

In the second quarter of fiscal 2019, UNIFI recorded an additional tax benefit of $1,734 related to the enactment of H.R. 1. In the third quarter of fiscal 2019, UNIFI recorded tax expense of $880 related to the enactment of H.R. 1, which increased the tax rate for the three-month period by 57.1%, for a total year-to-date benefit of $854. The total tax benefit related to the enactment of H.R. 1 was $1,322, primarily consisting of $3,997 of tax benefit related to the re-measurement of deferred tax balances, and $2,747 of tax expense related to the toll charge, net of foreign tax credits. Although UNIFI no longer considers these amounts to be provisional, the income tax effects of H.R. 1 may change following future legislation or further interpretation of H.R. 1 based on the publication of guidance from the U.S. Internal Revenue Service (the “IRS”) and state tax authorities.

~~The Global Intangible Low-Taxed Income (“GILTI”) provisions included in H.R. 1 require that certain income earned by foreign subsidiaries must be currently included in the gross income~~

Other long-term liabilities consists of the ~~U.S. shareholder. These provisions are~~following:

The provision for income taxes and effective ~~for UNIFI in fiscal 2019. The GILTI provisions are complex and subject to continuing regulatory interpretation by the IRS. UNIFI has elected to recognize GILTI~~tax rate were as a current-period expense. Under this policy, UNIFI has not provided deferred taxes related to temporary differences that, upon their reversal, will affect the amount of income subject to GILTI in the period.follows:

UNIFI’s provision for income taxes for the nine months ended March 29, 2020 and March 31, 2019 ~~and March 25, 2018 has been~~was calculated by applying an estimate of the annual effective tax rate for the full fiscal year to year-to-date ~~income.~~income from ordinary activity. Tax effects of significant and unusual, or infrequently occurring, items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

The effective tax rate for the three months and nine months ended March 29, 2020 was lower than the U.S. federal statutory rate primarily due to an increase in the valuation allowance for UNIFI’s investment in PAL as a result of the impairment charge, for which UNIFI does not expect to realize a future tax benefit.

The effective tax rate for the three months ended March 31, 2019 was higher than the U.S. federal statutory rate primarily due to ~~the effect of the GILTI provisions enacted in H.R. 1,~~U.S. tax on Global Intangible Low-Tax Income (“GILTI”), adjustments to enactment date tax reform impacts, losses in tax jurisdictions for which no tax benefit could be recognized, and foreign withholding taxes.

The effective tax rate for the nine months ended March 31, 2019 was higher than the U.S. federal statutory rate primarily due to ~~the effects of the~~U.S. tax on GILTI, ~~provisions enacted in H.R. 1,~~ losses in tax jurisdictions for which no tax benefit could be recognized, earnings taxed at higher rates in foreign jurisdictions, and foreign withholding taxes. These rate detriments were partially offset by adjustments to enactment date tax reform impacts.

The effective tax rate for the three months ended March 25, 2018 was higher than the U.S. federal statutory rate primarily due to an increase in the valuation allowance for the Company’s investment in PAL, the rate change impact on a U.S. net loss carryforward generated in that three-month period that will be used at a lower tax rate in the future, and additional limitations on the deductibility of compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “IRC”).

The effective tax rate for the nine months ended March 25, 2018 was lower than the U.S. federal statutory rate primarily due to the one-time 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 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 regularly assesses the outcomes of both completed and ongoing examinations to ensure that 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.

UNIFI regularly assesses whether it is more-likely-than-not that some portion or all 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 assessment is made on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law.

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

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at December 30, 2018

18,383

$
1,838

$
59,619

$
375,195

$
(42,725
)

$
393,927

Options exercised

6

—

29

—

—

29

Conversion of restricted stock units

24

3

(3
)

—

—

—

Stock-based compensation

9

1

(314
)

—

—

(313
)
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions

(11
)

(1
)

(243
)

—

—

(244
)
Other comprehensive loss, net of tax

—

—

—

—

(415
)

(415
)
Net loss

—

—

—

(1,529
)

—

(1,529
)
Balance at March 31, 2019

18,411

$
1,841

$
59,088

$
373,666

$
(43,140
)

$
391,455

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at June 24, 2018

18,353

$
1,835

$
56,726

$
371,753

$
(40,533
)

$
389,781

Options exercised

22

2

271

—

—

273

Conversion of restricted stock units

41

4

(4
)

—

—

—

Stock-based compensation

10

1

2,471

—

—

2,472

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

(15
)

(1
)

(376
)

—

—

(377
)
Other comprehensive loss, net of tax

—

—

—

—

(2,607
)

(2,607
)
Adoption of the New Revenue Recognition Guidance

—

—

—

459

—

459

Net income

—

—

—

1,454

—

1,454

Balance at March 31, 2019

18,411

$
1,841

$
59,088

$
373,666

$
(43,140
)

$
391,455

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at December 24, 2017

18,291

$
1,829

$
55,215

$
360,702

$
(31,457
)

$
386,289

Options exercised

17

1

(1
)

—

—

—

Conversion of restricted stock units

26

3

(3
)

—

—

—

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

(6
)

(1
)

(196
)

—

—

(197
)
Stock-based compensation

—

1

1,184

—

—

1,185

Other comprehensive income, net of tax

—

—

—

—

2,628

2,628

Net income

—

—

—

176

—

176

Balance at March 25, 2018

18,328

$
1,833

$
56,199

$
360,878

$
(28,829
)

$
390,081

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

71

7

212

—

—

219

Conversion of restricted stock units

29

3

(3
)

—

—

—

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

(6
)

(1
)

(196
)

—

—

(197
)
Stock-based compensation

4

1

4,263

—

—

4,264

Other comprehensive income, net of tax

—

—

—

—

4,051

4,051

Net income

—

—

—

20,938

—

20,938

Balance at March 25, 2018

18,328

$
1,833

$
56,199

$
360,878

$
(28,829
)

$
390,081

~~No dividends were paid during the nine months ended March 31, 2019 or in the two most recently completed fiscal years.~~

On April 23, 2014, UNIFI announced that its Board of Directors (the “Board”) ~~had~~ approved a ~~stock~~share repurchase program (the “2014 SRP”) under which UNIFI was authorized to acquire up to $50,000 of its common stock. ~~UNIFI made no repurchases of its shares of common stock during the nine months ended March 31, 2019.~~ Through October 31, 2018 (the date the 2014 SRP was terminated, as ~~discussed~~noted below), 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.

On October 31, 2018, UNIFI announced that the Board had terminated the 2014 SRP and approved a new ~~stock~~share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP, purchases will be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date.

AsThe following table summarizes UNIFI’s repurchases and retirements of ~~March 31, 2019, $50,000 remained available for repurchase~~its common stock under the 2018 ~~SRP.~~SRP for the fiscal periods noted:

~~14.~~Repurchased shares are retired and have the status of authorized and unissued shares. The cost of the repurchased shares is recorded as a reduction to common stock to the extent of the par value of the shares acquired and the remainder is allocated between capital in excess of par value and retained earnings, on a pro rata basis.

On October 23, 2013, UNIFI’s shareholders approved the Unifi, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan replaced the 2008 Unifi, Inc. Long-Term Incentive Plan (the “2008 LTIP”). No additional awards can be granted under the 2008 LTIP; however, prior awards outstanding under the 2008 LTIP remain subject to that plan’s provisions. The 2013 Plan authorized the issuance of 1,000 shares of common stock, subject to certain increases in the event outstanding awards under the 2008 LTIP expire, are forfeited or otherwise terminate unexercised.

The 2013 Plan expired in accordance with its terms on October 24, 2018, and the Unifi, Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Amended 2013 Plan”) became effective on that same day, upon approval by shareholders at UNIFI’s annual meeting of shareholders held on October 31, 2018. The Amended 2013 Plan increased the number of shares available for future issuance pursuant to awards granted under the Amended 2013 Plan to 1,250 (subject to certain increases in the event outstanding awards issued under the Amended 2013 Plan terminate unexercised) and removed provisions no longer applicable due to the recent changes to Section 162(m) of the ~~IRC.~~Internal Revenue Code of 1986, as amended. The material terms and provisions of the Amended 2013 Plan are otherwise similar to those of the 2013 Plan. No additional awards can be granted under the 2013 ~~Plan;~~Plan or the 2008 LTIP; however, ~~prior~~ awards outstanding ~~under the 2013 Plan~~ remain subject to ~~that~~each plan’s respective provisions.

The following table provides information as of March ~~31, 2019~~29, 2020 with respect to the number of securities remaining available for future issuance under the Amended 2013 Plan:

~~During the nine months ended March 31, 2019 and March 25, 2018, UNIFI~~Stock-based compensation units granted ~~stock options to purchase 223 and 73 shares of common stock, respectively.~~or issued was as follows:

~~During the nine months ended March 31, 2019 and March 25, 2018, UNIFI granted 74 and 116 restricted stock units, respectively.~~

~~During the nine months ended March 31, 2019 and March 25, 2018, UNIFI granted 47 and 0 vested share units, respectively.~~

~~During the nine months ended March 31, 2019 and March 25, 2018, UNIFI granted 10 and 4 shares of common stock, respectively.~~

~~15.~~16. 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 currently maintains three interest rate swaps that fix LIBOR at approximately 1.9% on $75,000 of variable-rate debt. UNIFI does not enter into derivative contracts for speculative purposes.

For the Three Months Ended

For the Nine Months Ended

March 31, 2019

March 25, 2018

March 31, 2019

March 25, 2018

Interest expense

$
1,256

$
1,187

$
4,078

$
3,562

Decrease (increase) in fair value of interest rate swaps

745

(1,142
)

1,689

(2,634
)
Impact of interest rate swaps on interest expense

(111
)

65

(217
)

319

	For the Three Months Ended					For the Nine Months Ended
	March 29, 2020		March 31, 2019			March 29, 2020			March 31, 2019
Interest expense	$	1,231	$	1,256		$	3,589		$	4,078
Decrease in fair value of interest rate swaps		1,883		745			1,922			1,689
Impact of interest rate swaps to increase (decrease) interest expense		41		(111	)		(7	)		(217	)

For the nine months ended March ~~31, 2019~~29, 2020 and March ~~25, 2018,~~31, 2019, 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.

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

A summary of the after-tax effects of the components of other comprehensive ~~(loss) income,~~loss, net for the three-month and nine-month periods ended March ~~31, 2019~~29, 2020 and March ~~25, 2018~~31, 2019 is included in the accompanying condensed consolidated statements of comprehensive ~~(loss) income.~~loss.

The components of the calculation of earnings ~~(loss)~~ per share (“EPS”) are as follows:

	For the Three Months Ended					For the Nine Months Ended				For the Three Months Ended						For the Nine Months Ended
	March 31, 2019			March 25, 2018		March 31, 2019		March 25, 2018		March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Net (loss) income	$	(1,529	)	$	176	$	1,454	$	20,938	$	(41,111	)	$	(1,529	)	$	(36,990	)	$	1,454
Basic weighted average shares		18,394			18,309		18,381		18,275		18,475			18,394			18,485			18,381
Net potential common share equivalents – stock options and stock units		—			392		361		342
Net potential common share equivalents											—			—			—			361
Diluted weighted average shares		18,394			18,701		18,742		18,617		18,475			18,394			18,485			18,742
Excluded from diluted weighted average shares:
Anti-dilutive common share equivalents		359			96		388		163		403			359			371			388

The calculation of EPS is based on the weighted average number of Unifi, Inc.’s common shares outstanding for the applicable period. The calculation of diluted EPS presents the effect of all potential dilutive common shares that were outstanding during the respective period, unless the effect of doing so is anti-dilutive.

~~18.~~19. Investments in Unconsolidated Affiliates and Variable Interest Entities

As of March 29, 2020, UNIFI ~~currently maintains~~maintained investments in three entities classified as unconsolidated affiliates: PAL; U.N.F. Industries, Ltd. (“UNF”); and UNF America LLC (“UNFA”). ~~As of March 31, 2019,~~ UNIFI’s investment in PAL was ~~$112,431~~$56,641 and UNIFI’s combined investments in UNF and UNFA were ~~$2,316,~~$2,213, each of which is reflected within investments in unconsolidated affiliates in the accompanying condensed consolidated balance sheets.

PAL is a limited liability company treated as a partnership for income tax reporting purposes. UNIFI ~~accounts~~has accounted for ~~its~~this 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 March ~~31, 2019,~~29, 2020, PAL had no futures contracts designated as cash flow hedges.

As of March 29, 2020, UNIFI owned a 34% interest in PAL (the “PAL Investment”) and Parkdale, Incorporated (“Parkdale”) owned the majority 66% interest. During March 2020, UNIFI commenced negotiations to sell the PAL Investment to Parkdale. Such negotiations indicated that the fair value of the PAL Investment was less than UNIFI’s carrying value and UNIFI no longer intended to hold the PAL Investment to allow recovery of the carrying value. UNIFI recorded an other-than-temporary impairment of $45,194 to adjust the PAL Investment to fair value.

In April 2020, UNIFI and Parkdale finalized negotiations to sell UNIFI’s PAL Investment to Parkdale for $60,000. The March 29, 2020 adjusted carrying value, after recording the other-than-temporary impairment of the PAL Investment, was comprised of (i) $56,641 reflected in investments in unconsolidated affiliates and (ii) $3,359 of cumulative translation adjustments reflected in other comprehensive loss, totaling the $60,000 fair value. The transaction closed on April 29, 2020 and UNIFI received $60,000 in cash.

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

Underlying equity as of March 31, 2019	$	130,522
Underlying equity as of March 29, 2020				$	119,926
Initial excess capital contributions		53,363			53,363
Impairment charge recorded by UNIFI in fiscal 2007		(74,106	)		(74,106	)
Anti-trust lawsuit against PAL in which UNIFI did not participate		2,652			2,652
Investment as of March 31, 2019	$	112,431
Impairment charge recorded by UNIFI in fiscal 2020					(45,194	)
Investment as of March 29, 2020				$	56,641

UNIFI evaluated the events relating to the PAL Investment under the guidance in ASC 205 – Presentation of Financial Statements. Disposition of the PAL Investment (i) did not represent a strategic shift for UNIFI and (ii) did not meet the criteria to be recorded as a discontinued operation. Accordingly, UNIFI continues to record the financial statement impacts of the PAL Investment in continuing operations.

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.

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 treated as a partnership for income tax reporting purposes located in Ridgeway, Virginia.

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 negotiated every six months, based on market rates. As of March ~~31, 2019,~~29, 2020, UNIFI’s open purchase orders related to this supply agreement were ~~$4,269.~~$807.

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

	For the Nine Months Ended				For the Nine Months Ended
	March 31, 2019		March 25, 2018		March 29, 2020		March 31, 2019
UNF	$	1,478	$	1,463	$	1,343	$	1,478
UNFA		17,199		16,291		13,219		17,199
Total	$	18,677	$	17,754	$	14,562	$	18,677

As of March ~~31, 2019~~29, 2020 and June ~~24, 2018,~~30, 2019, UNIFI had combined accounts payable due to UNF and UNFA of ~~$1,831~~$2,724 and ~~$2,301,~~$1,728, respectively.

UNIFI has determined that UNF and UNFA are variable interest entities and that UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement discussed above. As a result, these entities should be consolidated with UNIFI’s financial results. As UNIFI purchases substantially all of the output from the two entities, the two entities’ balance sheets constitute 3% or less of UNIFI’s current assets, total assets and total liabilities, and 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. 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) is presented in the tables below. PAL iswas defined as significant and its information is separately disclosed. PAL ~~does~~has not ~~meet~~met the criteria for segment reporting.

	As of March 31, 2019						As of June 24, 2018						As of March 29, 2020						As of June 30, 2019
	PAL		Other		Total		PAL		Other		Total		PAL		Other		Total		PAL		Other		Total
Current assets	$	298,563	$	6,860	$	305,423	$	289,683	$	7,598	$	297,281	$	258,113	$	6,716	$	264,829	$	299,610	$	7,218	$	306,828
Noncurrent assets		158,033		732		158,765		162,242		875		163,117
Non-current assets														151,720		583		152,303		158,304		696		159,000
Current liabilities		69,389		2,961		72,350		71,026		3,722		74,748		54,513		2,873		57,386		70,875		4,069		74,944
Noncurrent liabilities		3,321		—		3,321		3,389		—		3,389
Non-current liabilities														2,602		—		2,602		3,252		—		3,252
Shareholders’ equity and capital accounts		383,886		4,631		388,517		377,510		4,751		382,261		352,718		4,426		357,144		383,787		3,845		387,632

UNIFI’s portion of undistributed earnings		43,452		1,040		44,492		41,429		887		42,316		34,230		1,334		35,564		43,343		821		44,164

	For the Three Months Ended March 29, 2020						For the Three Months Ended March 31, 2019
	PAL		Other		Total		PAL		Other		Total
Net sales	$	170,854	$	4,076	$	174,930	$	225,160	$	6,217	$	231,377
Gross profit		12,182		392		12,574		8,638		1,149		9,787
Income from operations		7,747		8		7,755		3,868		733		4,601
Net income		9,811		74		9,885		4,142		740		4,882
Depreciation and amortization		8,647		23		8,670		9,285		48		9,333

Cash received by PAL under cotton rebate program		3,210		—		3,210		3,053		—		3,053
Earnings recognized by PAL for cotton rebate program		3,215		—		3,215		3,195		—		3,195

Distributions received		—		—		—		—		750		750

	For the Three Months Ended March 31, 2019						For the Three Months Ended March 25, 2018						For the Nine Months Ended March 29, 2020								For the Nine Months Ended March 31, 2019
	PAL		Other		Total		PAL		Other		Total		PAL			Other		Total			PAL		Other		Total
Net sales	$	225,160	$	6,217	$	231,377	$	199,473	$	5,764	$	205,237	$	531,669		$	14,212	$	545,881		$	626,812	$	19,256	$	646,068
Gross profit		8,638		1,149		9,787		6,078		1,001		7,079		13,067			1,745		14,812			18,841		3,587		22,428
Income from operations		3,868		733		4,601		80		601		681
(Loss) income from operations														(554	)		497		(57	)		5,663		2,284		7,947
Net income		4,142		740		4,882		1,409		611		2,020		3,893			581		4,474			6,334		2,381		8,715
Depreciation and amortization		9,285		48		9,333		9,081		48		9,129		30,671			113		30,784			30,576		143		30,719

Cash received by PAL under cotton rebate program		3,053		—		3,053		3,220		—		3,220		10,366			—		10,366			8,773		—		8,773
Earnings recognized by PAL for cotton rebate program		3,195		—		3,195		3,386		—		3,386		9,569			—		9,569			9,444		—		9,444

Distributions received		—		750		750		1,798		750		2,548		10,437			—		10,437			130		1,250		1,380

For the Nine Months Ended March 31, 2019

For the Nine Months Ended March 25, 2018

PAL

Other

Total

PAL

Other

Total

Net sales

$
626,812

$
19,256

$
646,068

$
578,841

$
18,213

$
597,054

Gross profit

18,841

3,587

22,428

22,167

3,583

25,750

Income from operations

5,663

2,284

7,947

8,114

2,295

10,409

Net income

6,334

2,381

8,715

8,357

2,327

10,684

Depreciation and amortization

30,576

143

30,719

29,566

142

29,708

Cash received by PAL under
cotton rebate program

8,773

—

8,773

10,162

—

10,162

Earnings recognized by PAL for
cotton rebate program

9,444

—

9,444

9,832

—

9,832

Distributions received

130

1,250

1,380

8,976

2,250

11,226

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.

On September 30, 2004, Unifi Kinston, LLC (“UK”), a subsidiary of Unifi, Inc., 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, UK 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 UK of any future responsibility for environmental remediation, other than participation with DuPont, if so called upon, with regard to UK’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.

UK continues to own property ~~(referred to as the~~(the “Kentec site”) acquired in the 2004 transaction with INVISTA that has contamination from DuPont’s prior operations and is monitored by DEQ. The Kentec 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 UK, DuPont and UK had a duty to monitor and report the environmental status of the Kentec site to DEQ. UK expected to assume that responsibility in the first half of calendar 2019 and was entitled to receive from DuPont seven years of monitoring and reporting costs, less certain adjustments. UK would then assume sole responsibility for any future remediation of the site.

Effective April 10, 2019, UK assumed sole remediator responsibility of the Kentec site pursuant to its contractual obligations with INVISTA and received $180 of net monitoring and reporting costs due from DuPont. In connection with monitoring, UK expects to sample and report to DEQ annually. UNIFI expects nominimal active site remediation ~~will~~may be required, ~~and~~but has no basis to determine any costs that may be associated with active remediation.

15For details regarding the nature of certain related party relationships, see Note 25, “Related Party Transactions,” to the consolidated financial statements in the 2019 Form 10-K.

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.

~~For details regarding the nature of certain related party relationships, see Note 24, “Related Party Transactions,” to the consolidated financial statements in the 2018 Form 10-K.~~

~~There were no related party receivables as of March 31, 2019 or June 24, 2018.~~

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

		For the Three Months Ended				For the Nine Months Ended					For the Three Months Ended				For the Nine Months Ended
Affiliated Entity	Transaction Type	March 31, 2019		March 25, 2018		March 31, 2019		March 25, 2018		Transaction Type	March 29, 2020		March 31, 2019		March 29, 2020		March 31, 2019
Salem Leasing Corporation	Transportation equipment costs and capital lease debt service	$	1,006	$	1,028	$	3,046	$	2,978	Transportation equipment costs and finance lease debt service	$	985	$	1,006	$	3,101	$	3,046
Salem Global Logistics, Inc.	Freight service income		—		35		—		127

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 ~~Principal Executive Officer,~~principal 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~~four reportable segments (the Polyester Segment, the Nylon Segment, the Brazil Segment and the ~~International~~Asia Segment) based on similarities between the operating segments’ economic characteristics, nature of products sold, type of customer, methods of distribution and regulatory environment.

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. For-hire transportation services revenue is derived from performing common carrier services utilizing UNIFI’s fleet of transportation equipment.

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, which represents segment gross profit plus segment depreciation expense. This measurement of segment profit 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,~~segment disclosures, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM.

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

For the Three Months Ended

For the Nine Months Ended

March 31, 2019

March 25, 2018

March 31, 2019

March 25, 2018

Polyester

$
3,524

$
4,815

$
12,221

$
22,304

Nylon

2,312

1,013

6,488

7,403

International

7,897

10,672

28,996

32,644

All Other

58

56

261

173

Segment gross profit

13,791

16,556

47,966

62,524

Selling, general and administrative expenses

11,439

13,846

40,672

41,335

Provision (benefit) for bad debts

218

27

381

(104
)
Other operating expense, net

1,359

1,100

1,218

1,763

Operating income

775

1,583

5,695

19,530

Interest income

(149
)

(182
)

(448
)

(444
)
Interest expense

1,256

1,187

4,078

3,562

Loss on extinguishment of debt

—

—

131

—

Equity in earnings of unconsolidated affiliates

(1,873
)

(544
)

(3,126
)

(3,842
)
Income before income taxes

$
1,541

$
1,122

$
5,060

$
20,254

	For the Three Months Ended March 29, 2020
	Polyester		Nylon		Brazil		Asia		All Other		Total
Net sales	$	89,767	$	20,567	$	21,060	$	38,621	$	979	$	170,994
Cost of sales		82,735		20,234		17,644		34,038		960		155,611
Gross profit		7,032		333		3,416		4,583		19		15,383
Segment depreciation expense		4,301		471		421		—		137		5,330
Segment Profit	$	11,333	$	804	$	3,837	$	4,583	$	156	$	20,713

	For the Three Months Ended March 31, 2019
	Polyester		Nylon		Brazil		Asia		All Other		Total
Net sales	$	95,745	$	25,563	$	25,110	$	32,571	$	1,000	$	179,989
Cost of sales		90,941		23,251		22,334		28,730		942		166,198
Gross profit		4,804		2,312		2,776		3,841		58		13,791
Segment depreciation expense		3,858		516		420		—		47		4,841
Segment Profit	$	8,662	$	2,828	$	3,196	$	3,841	$	105	$	18,632

	For the Nine Months Ended March 29, 2020
	Polyester		Nylon		Brazil		Asia		All Other		Total
Net sales	$	261,212	$	57,853	$	66,094	$	132,496	$	2,799	$	520,454
Cost of sales		239,725		56,296		55,089		118,114		2,739		471,963
Gross profit		21,487		1,557		11,005		14,382		60		48,491
Segment depreciation expense		12,525		1,465		1,153		—		300		15,443
Segment Profit	$	34,012	$	3,022	$	12,158	$	14,382	$	360	$	63,934

	For the Nine Months Ended March 31, 2019
	Polyester		Nylon		Brazil		Asia		All Other		Total
Net sales	$	281,665	$	76,159	$	76,257	$	92,014	$	3,216	$	529,311
Cost of sales		265,748		69,671		62,654		80,317		2,955		481,345
Gross profit		15,917		6,488		13,603		11,697		261		47,966
Segment depreciation expense		12,047		1,576		1,146		—		190		14,959
Segment Profit	$	27,964	$	8,064	$	14,749	$	11,697	$	451	$	62,925

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

	For the Three Months Ended						For the Nine Months Ended
	March 29, 2020			March 31, 2019			March 29, 2020			March 31, 2019
Polyester	$	7,032		$	4,804		$	21,487		$	15,917
Nylon		333			2,312			1,557			6,488
Brazil		3,416			2,776			11,005			13,603
Asia		4,583			3,841			14,382			11,697
All Other		19			58			60			261
Segment gross profit		15,383			13,791			48,491			47,966
Selling, general and administrative expenses		11,720			11,439			35,208			40,672
Provision for bad debts		580			218			331			381
Other operating (income) expense, net		(62	)		1,359			900			1,218
Operating income		3,145			775			12,052			5,695
Interest income		(173	)		(149	)		(595	)		(448	)
Interest expense		1,231			1,256			3,589			4,078
Equity in earnings of unconsolidated affiliates		(3,526	)		(1,873	)		(1,904	)		(3,126	)
Impairment of investment in unconsolidated affiliate		45,194			—			45,194			—
Loss on extinguishment of debt		—			—			—			131
(Loss) income before income taxes	$	(39,581	)	$	1,541		$	(34,232	)	$	5,060

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

	March 31, 2019		June 24, 2018		March 29, 2020		June 30, 2019
Polyester	$	291,625	$	284,261	$	295,192	$	287,608
Nylon		60,904		57,378		50,905		57,055
International		100,411		95,006
Brazil						54,040		67,490
Asia						45,530		35,219
Segment total assets		452,940		436,645		445,667		447,372
Other current assets		19,496		30,945		7,235		10,327
Other PP&E		19,091		17,373		24,412		18,664
Other non-current operating lease assets						1,599		—
Other non-current assets		2,516		4,205		5,275		1,468
Investments in unconsolidated affiliates		114,748		112,639		58,854		114,320
Total assets	$	608,791	$	601,807	$	543,042	$	592,151

	For the Nine Months Ended				For the Nine Months Ended
	March 31, 2019		March 25, 2018		March 29, 2020		March 31, 2019
Interest, net of capitalized interest of $178 and $137, respectively	$	4,053	$	3,254
Interest, net of capitalized interest of $86 and $178, respectively					$	3,535	$	4,053
Income tax payments, net		617		7,824		4,833		617

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

As of March 29, 2020 and June 30, 2019, $619 and $1,329, respectively, were included in accounts payable for unpaid capital expenditures. As of March 31, 2019 and June 24, 2018, $2,205 and $3,187, respectively, were included in accounts payable for unpaid capital expenditures. ~~As of March 25, 2018~~

Non-cash investing and ~~June 25, 2017, $2,308 and $3,234, respectively, were included~~financing activities related to leases have been disclosed in ~~accounts payable for unpaid capital expenditures.~~ Note 4, “Leases.”

OnGlobal demand declines and decreased economic activity caused by the COVID-19 pandemic led to a decline in demand for UNIFI products. Accordingly, during the fourth quarter of fiscal 2020, UNIFI’s manufacturing operations have been reduced from recent production levels to adjust for the change in demand. UNIFI’s facilities in El Salvador are currently not operational in connection with temporary government mandates in that country.

As further disclosed in Note 19, “Investment in Unconsolidated Affiliates and Variable Interest Entities,” in April ~~30, 2019,~~2020, UNIFI and Parkdale finalized negotiations to sell UNIFI’s PAL Investment to Parkdale for $60,000. The transaction closed on April 29, 2020 and UNIFI received $60,000 in cash.

As further disclosed in Note 11, “Long-Term Debt,” in connection and concurrent with the ~~Board approved an amendment~~sale of the PAL Investment, UNIFI entered into the Fourth Amendment to ~~UNIFI’s~~ Amended and Restated By-laws, effective as of that date, to change its fiscal year end from the last Sunday in the month of June to the Sunday in June or July nearest June 30 of each year. Because June 30, 2019 falls on a Sunday, UNIFI’s fiscal year end date for fiscal 2019 will remain June 30, 2019 as previously disclosed, and no transition report will be filed.

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 March ~~31, 2019,~~29, 2020, while a reference to the “prior period” refers to the three-month period ended March ~~25, 2018.~~31, 2019. A reference to the “current nine-month period” refers to the nine-month period ended March ~~31, 2019,~~29, 2020, while a reference to the “prior nine-month period” refers to the nine-month period ended March ~~25, 2018.~~31, 2019. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 ~~fiscal~~ weeks.

The current nine-month period ~~consisted of 40 fiscal weeks, while~~and the prior nine-month period consisted of 39 ~~fiscal weeks. UNIFI’s seasonal shutdown period for its operations in North~~weeks and Central America (which typically occurs around December 25 each year) (the “seasonal shutdown period”) occurred in the second quarter of fiscal 2019 but fell in the third quarter of fiscal 2018. Accordingly, both the current period and the current nine-month period include one additional shipping week compared to both the respective prior period and the prior nine-month period.40 weeks, respectively.

Our discussions in this Item 2 focus on our results during, or as of, the three months and nine months ended March ~~31, 2019~~29, 2020 and March ~~25, 2018,~~31, 2019, and, to the extent applicable, any material changes from the information discussed in the ~~2018~~2019 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the ~~2018~~2019 Form 10-K for more detailed and background information about our business, operations and financial condition. Discussion of unfavorable foreign currency translation is primarily associated with the weakening of the Brazilian Real (“BRL”) and the Chinese Renminbi (“RMB”) against the U.S. Dollar (“USD”).

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

Underlying Business and Operational Overview for the Nine Months Ending March 29, 2020

UNIFI’s business focuses on delivering 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 three supporting pillars: (1) engaging in strategic relationships with like-minded entities, (2) growing our existing portfolio of technologies and capabilities and (3) expanding our supply chain to best serve our direct and indirect ~~and direct~~ customers. ~~We refer to this three-pillared strategy as our “Partner, Innovate and Grow” strategy.~~ UNIFI remains committed to this strategy, which ~~it believes~~we believe will increase profitability and generate improved cash flows from operations.

UNIFI has ~~three~~four reportable segments for its operations – the Polyester Segment, the Nylon Segment, the Brazil Segment and the ~~International~~Asia Segment – as well as certain ancillary operations that include for-hire transportation services, which comprise an All Other category. The ancillary operations classified within All Other are insignificant for all periods presented; therefore, UNIFI’s discussion and analysis of those activities is generally limited to their impact on consolidated results, where appropriate. In discussion of its operating results in this report, UNIFI refers to its operations in the ~~“NACA~~“NACA” region,” which is the region comprised of the trade zones covered by NAFTA and CAFTA-DR. ~~In previous reports, we have referred to these regions as “the Region,” and we have referred to our operations within this region as our “Regional operations.”~~

Significant general matters for the current period and the current nine-month period include the following, each of which is addressed in more detail below:

~~Consistent with the market and financial trends that have affected its business in the last several quarters, UNIFI continued to experience a number of challenges in~~During the current ~~period. External pressures in~~nine-month period, (i) the ~~NACA business included elevated raw material costs and~~Polyester Segment faced suppressed demand for certain yarns ~~along~~across the industrial, automotive and apparel sectors, (ii) the Nylon Segment experienced lower revenues and gross margin in connection with ~~elevated levels of low-cost imports of polyester yarn from China into~~two customers shifting certain programs to overseas garment production during calendar 2019 and (iii) the ~~U.S. The volatile nature of these external pressures made navigating the NACA environment even more difficult. Internal pressures included the implementation of selling~~Brazil Segment experienced lower gross margin as market price increases that left us less competitive, elevated inventory levels, and the result of weaker leverage of our cost structure. The combination of these external and internal pressures caused weaker fixed cost absorption and lower operating margins.

~~UNIFI experienced rising~~declines in connection with declining raw material costs ~~throughout most of calendar 2018, which peaked~~outpaced inventory turnover.

However, UNIFI achieved favorable operating results and overall improvement compared to the prior nine-month period, despite one fewer sales week in ~~October 2018. By December 2018, UNIFI experienced~~the NACA region. The improvement was primarily attributable to (i) a ~~pullback in those costs and expected a slight decline in polyester~~declining raw material costs to favorably impact the current period. However, during the current period, raw material costs for UNIFI’s global operations had not retreated sufficiently enough to offset the ongoing gross margin pressure created by sustainedcost environment that benefited our Polyester Segment and ~~elevated levels of low-cost yarn imports into the U.S. textile market.~~

~~Amid these new and ongoing pressures, UNIFI has and is continuing to take actions to reduce costs. Prior to the current period, UNIFI’s annualized run-rate for~~(ii) lower selling, general and administrative expenses (“SG~~&A expenses”~~&A”) resulting from cost reduction efforts that began in the second half of fiscal 2019.

Additionally, UNIFI’s operating cash flows improved significantly during the current nine-month period primarily as a result of (i) comparatively less cash invested in inventories, which was ~~approaching $60,000. In connection with recent~~influenced by lower raw material costs and ~~ongoing cost~~(ii) $9,057 of increased distributions from equity affiliates.

~~reduction efforts, UNIFI is targeting a decrease of approximately 15% to that $60,000 annualized run-rate, such that fiscal 2020 SG&A expenses are expected to be approximately $50,000.~~

~~In addition,~~ UNIFI remains committed to pursuing relief from the competitive pressures that have resulted from the elevated levels of low-cost and subsidized polyester textured yarn entering the U.S. market from countries such as China and ~~India, which increased approximately 79% from 2013 to 2017 and which continued to grow during~~India. In connection with the ~~first half of 2018. Based on import data obtained prior to and subsequent to UNIFI’s filing of~~ anti-dumping and countervailing duties petitions we filed in October 2018, an increase of approximately 27% in polyester textured yarn imports from China into the U.S. placed even more pressure on UNIFI’s U.S. margins and competitiveness than had been anticipated in recent months. UNIFI believes this surge in imports was due to efforts to stockpile imported yarn before preliminary duties are imposed. Accordingly, we filed a “critical circumstances” allegation on April 2, 2019, asking the U.S. Department of Commerce ~~(“Commerce”) to apply any countervailing~~ and ~~antidumping duties applicable to Chinese imports on a retroactive basis. Commerce preliminarily granted this request on April 19, 2019,~~the U.S. International Trade Commission completed their investigations and ~~on April 29, 2019 announced preliminary countervailing~~began imposing associated final duties on imports, ~~of polyester textured yarn~~subsequent to preliminary duties that were in effect from ~~(i)~~April 2019 to December 2019. Accordingly, subject imports from China atand India are being assessed combined antidumping and countervailing duty rates of ~~32% or more~~97% and ~~(ii) India at rates~~higher and 18% and higher, respectively, in addition to normal course duties in effect. The positive developments in our pursuit of ~~7% or more. For Chinese~~relief from low-cost and subsidized imports these duties will apply retroactively dating 90 days prior to the date that the duties go into effect. Preliminary antidumping duty determinations are expected on June 26, 2019, and these duties will also apply retroactively for Chinese imports dating 90 days prior to the date that the duties go into effect. Final determinations of dumping, subsidization and injury are expected by the end of calendar 2019. These positive announcements are critical steps in ~~UNIFI’s~~our efforts to ~~better~~ compete against imported yarns that have flooded the U.S. market in recent years. UNIFI will continue to monitor whether polyester textured yarn from China or India is being shipped through third-party countries and then entering the U.S. market to avoid the increased duties.

In March 2020, the World Health Organization declared the current coronavirus disease (“COVID-19”) outbreak a global pandemic. Through the current period and current nine-month period, the COVID-19 pandemic had no significant adverse impact on UNIFI’s business, although sales growth for our Asia Segment was temporarily slowed by the extensive government shutdown in China during the current period.

Efforts to contain the spread of COVID-19 intensified during March and April 2020, especially in the U.S. Several states, including North Carolina, where UNIFI’s primary manufacturing and administrative operations are located, have declared states of emergency. A number of national, state, and local governments also enacted temporary business closures, issued quarantine orders and took other restrictive measures in response to the COVID-19 pandemic. The local and global measures have significantly reduced economic activity and demand, thereby reducing overall demand for UNIFI’s products.

UNIFI’s U.S. manufacturing has continued operating as an essential business, allowing UNIFI to continue to serve customers that remain operational. However, UNIFI’s global manufacturing operations have adjusted to the declines in economic activity and global demand by reducing production from recent levels. UNIFI’s facilities in El Salvador are currently not operational in connection with temporary government mandates in that country. In an effort to protect the health and safety of our employees, customers and communities, UNIFI has taken proactive, aggressive action from the earliest signs of the outbreak in the U.S. by adopting social distancing and travel restriction policies for all locations.

Global measures taken to reduce the spread of COVID-19 have generated a significant decline in global business activity in the immediate term that may have a lasting impact on the global economy and consumer demand. The duration of the COVID-19 pandemic and its related impact on our businesses are currently unknown. UNIFI anticipates that the global disruption caused by COVID-19 has and will continue to negatively impact overall global demand and business activity, including for textiles in both the Americas and Asia.

Significant restoration of consumer spending and retail activity levels will be critical to both our end-markets and an economic rebound. UNIFI anticipates a rebound in global economic activity when COVID-19 is demonstrably contained. The business impact of such a rebound will depend on the pace and effectiveness of the containment efforts deployed by various national, state, and local governments, along with the speed and effectiveness with which potential treatment and vaccine methods are deployed.

UNIFI will continue to monitor the COVID-19 pandemic, prioritizing the health and safety of employees, while delivering on customer demand, but we expect an adverse impact to the remainder of our fiscal 2020 and at least the first half of our fiscal 2021, based on the present factors and conditions.

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

EBITDA, Adjusted EBITDA, ~~and~~Adjusted Net Income (Loss), Adjusted EPS, 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 (a) items directly related to our asset base (primarily depreciation and amortization) and (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.~~operations. Equity in 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.

Management uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage ~~inventory~~inventories and receivables. ~~In the first quarter of fiscal 2019, in connection with changes~~

Management uses Net Debt as a liquidity and leverage metric to ~~balance sheet presentation required by the adoption of the New Revenue Recognition Guidance, UNIFI updated the definition of Adjusted Working Capital~~determine how much debt would remain if all cash and cash equivalents were used to include other current assets for current and historical calculations of the non-GAAP financial measure. Other current assets includes amounts capitalized for future conversion into inventory or receivables (e.g., vendor deposits and contract assets), and management believes that its inclusion in the definition of Adjusted Working Capital improves the understanding of UNIFI capital that is supporting production and sales activity.pay down debt principal.

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

For the Three Months Ended

For the Nine Months Ended

March 31, 2019

March 25, 2018

March 31, 2019

March 25, 2018

Net (loss) income

$
(1,529
)

$
176

$
1,454

$
20,938

Interest expense, net

1,107

1,005

3,630

3,118

Provision (benefit) for income taxes

3,070

946

3,606

(684
)
Depreciation and amortization expense

5,535

5,617

17,015

16,566

EBITDA

8,183

7,744

25,705

39,938

Equity in earnings of PAL

(1,409
)

(479
)

(2,154
)

(2,957
)
EBITDA excluding PAL

6,774

7,265

23,551

36,981

Other adjustments ⁽¹⁾

—

—

—

—

Adjusted EBITDA

$
6,774

$
7,265

$
23,551

$
36,981

Amounts presented in the reconciliations above may not be consistent with amounts included in the accompanying condensed consolidated financial statements. Any such inconsistencies are insignificant and are integral to the reconciliations.

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

Three Months Ended March ~~31, 2019~~29, 2020 Compared to Three Months Ended March ~~25, 2018~~31, 2019

The components of Net ~~(loss) income,~~loss, each component as a percentage of net sales and the percentage increase or decrease over the prior period amounts, are as follows:

	For the Three Months Ended															For the Three Months Ended
	March 31, 2019						March 25, 2018									March 29, 2020						March 31, 2019
				% of Net Sales						% of Net Sales			% Change						% of Net Sales						% of Net Sales			% Change
Net sales	$	179,989			100.0		$	165,867			100.0			8.5		$	170,994			100.0		$	179,989			100.0			(5.0	)
Cost of sales		166,198			92.3			149,311			90.0			11.3			155,611			91.0			166,198			92.3			(6.4	)
Gross profit		13,791			7.7			16,556			10.0			(16.7	)		15,383			9.0			13,791			7.7			11.5
Selling, general and administrative expenses		11,439			6.4			13,846			8.3			(17.4	)
SG&A																	11,720			6.9			11,439			6.4			2.5
Provision for bad debts		218			0.1			27			—		nm				580			0.3			218			0.1			166.1
Other operating expense, net		1,359			0.8			1,100			0.7			23.5
Other operating (income) expense, net																	(62	)		—			1,359			0.8			(104.6	)
Operating income		775			0.4			1,583			1.0			(51.0	)		3,145			1.8			775			0.4		nm
Interest expense, net		1,107			0.6			1,005			0.6			10.1			1,058			0.6			1,107			0.6			(4.4	)
Equity in earnings of unconsolidated affiliates		(1,873	)		(1.1	)		(544	)		(0.3	)	nm				(3,526	)		(2.1	)		(1,873	)		(1.1	)		88.3
Income before income taxes		1,541			0.9			1,122			0.7			37.3
Impairment of investment in unconsolidated affiliate																	45,194			26.4			—			—		nm
(Loss) income before income taxes																	(39,581	)		(23.1	)		1,541			0.9		nm
Provision for income taxes		3,070			1.7			946			0.6		nm				1,530			0.9			3,070			1.7			(50.2	)
Net (loss) income	$	(1,529	)		(0.8	)	$	176			0.1		nm
Net loss																$	(41,111	)		(24.0	)	$	(1,529	)		(0.8	)	nm

Consolidated net sales for the current period ~~increased~~decreased by ~~$14,122,~~$8,995, or ~~8.5%~~5.0%, as compared to the prior period, primarily due to (i) ~~an additional shipping week~~lower demand for our nylon products in the NACA ~~operations, caused by the timing of UNIFI’s seasonal shutdown period,~~region, (ii) ~~sales growth of PVA~~lower average selling prices for our polyester products in connection with lower polyester raw material costs and (iii) ~~increased sales pricing driven by higher raw material costs. This increase in net sales was partially offset by~~ unfavorable foreign currency ~~translation~~translation. However, PVA product sales growth remained strong for the Asia Segment, despite the adverse impact of ~~approximately $5,300.~~COVID-19 on that region’s production and distribution abilities.

Consolidated sales volumes ~~were 10.4% higher as compared~~increased 6.5%, primarily attributable to ~~the prior period. The increase in net~~continued sales ~~volumes was driven primarily by (i) the additional shipping week, (ii) continued~~ growth ~~in sales~~ of ~~Flake~~REPREVE^®-branded products, principally Chip and ~~Chip~~staple fiber in the ~~Polyester Segment and (iii) growth in sales of Chip and other PVA products in the International~~Asia Segment, partially offset by ~~competitive pressures~~lower yarn sales in the ~~U.S. and Brazil.~~Nylon Segment. Sales ~~continue~~in the Asia Segment continued to expand ~~in the International Segment~~ as our ~~PVA~~REPREVE^® portfolio resonates with our brand partners that are focused on sustainable solutions.

We believe the ~~softness~~incremental revenue generated in ~~the domestic environment and competition~~connection with our recently completed trade petitions relating to polyester textured yarn is helping to offset suppressed demand from ~~imports continue to be challenges for the domestic textile supply chain. Our~~certain market sectors. However, our Nylon Segment results ~~are also unfavorably impacted by~~reflect (i) two customers shifting certain programs to overseas garment production during calendar 2019 and (ii) the ~~ongoing~~current global trend of declining demand for nylon socks, ladies’ hosiery and intimate apparel.

Consolidated average sales prices decreased ~~1.8%~~11.5%, ~~as price increases made in calendar 2018 in response~~primarily attributable to ~~rising costs were more than offset by~~ (i) ~~unfavorable foreign currency translation and (ii) the disproportionate~~significant sales growth of ~~lower-priced Flake~~Chip and ~~Chip.~~staple fiber in the Asia Segment, which have lower average selling prices, (ii) a decline in higher-priced nylon product sales and (iii) sales price declines associated with polyester raw material cost changes and global pricing pressures.

PVA products at the end of the current period comprised ~~approximately 47%~~52% of consolidated net sales, up from ~~45%~~47% for fiscal 2019 and from 47% at the end of ~~fiscal 2018, and higher than the 44% ratio for~~ the prior period. ~~Within~~Even with the relative growth in the proportion of PVA ~~product category, our~~sales as a percentage of overall sales, customers ~~can~~may choose between various ~~solutions,~~PVA products, some of which carry higher margins than others. Accordingly, growth in PVA sales does not necessarily translate into higher margins or increased profitability on a consolidated basis.

~~Unfavorable foreign currency translation is primarily associated with the weakening of the Brazilian Real (“BRL”) and the Chinese Renminbi (“RMB”).~~

Gross profit for the current period ~~decreased~~increased by ~~$2,765,~~$1,592, or ~~16.7%~~11.5%, as compared to the prior period. ~~The~~

For the Polyester Segment, gross profit ~~decline is~~improved, primarily ~~attributable~~due to ~~(i)~~a more favorable sales mix and raw material cost environment during the current period. For the Asia Segment, gross profit increased as net sales increased but was partially offset by a greater mix of lower-priced product sales and the adverse impact of COVID-19 on that region’s production and distribution abilities.

For the Brazil Segment, gross profit increased primarily due to higher conversion margin from an improved sales mix and stabilized market pricing, partially offset by unfavorable foreign currency translation effects as the BRL weakened against the USD during the current period. For the Nylon Segment, gross profit decreased primarily due to lower revenues and weaker fixed cost absorption in ~~the Polyester Segment due~~connection with two customers shifting certain programs to lower textured yarn volumes, (ii) lower conversion margin in the International Segment, (iii) unfavorable foreign currency translation of approximately $1,100 and (iv) disproportionate growth of lower margin products.overseas garment production during calendar 2019.

~~Total SG&A expenses were lower for~~changed insignificantly from the prior period to the current period, ~~compared to the~~primarily as prior period ~~primarily as a result of significant~~SG&A benefited from compensation forfeitures ~~of share-based compensation and variable compensation in connection with~~due to executive officer departures ~~that occurred~~ in fiscal 2019. ~~The decrease was partially offset by higher fees paid to professional service providers, primarily for legal and audit services.~~

There iswas no significant activity reflected in the current period or the prior period for bad debts.

~~Other operating expense, net primarily reflects severance expense recorded~~There was no significant activity reflected in the current period for other operating (income) expense, net. The prior period primarily reflects executive officer severance charges and foreign currency transaction ~~losses recorded in the prior period.~~losses.

There iswas no significant change ~~for~~in interest expense, net from the prior period to the current period. The components of consolidated interest expense, net ~~are~~were as follows:

	For the Three Months Ended						For the Three Months Ended
	March 31, 2019			March 25, 2018			March 29, 2020			March 31, 2019
Interest and fees on the ABL Facility	$	1,073		$	952		$	977		$	1,073
Other interest		183			196			223			183
Subtotal of interest on debt obligations		1,256			1,148			1,200			1,256
Other components of interest expense		—			39			31			—
Total interest expense		1,256			1,187			1,231			1,256
Interest income		(149	)		(182	)		(173	)		(149	)
Interest expense, net	$	1,107		$	1,005		$	1,058		$	1,107

~~Consolidated~~As of March 29, 2020, UNIFI owned a 34% interest in PAL (the “PAL Investment”) and Parkdale, Incorporated (“Parkdale”) owned the majority 66% interest. During March 2020, UNIFI commenced negotiations to sell the PAL Investment to Parkdale. Such negotiations indicated that the fair value of the PAL Investment was less than UNIFI’s carrying value and UNIFI no longer intended to hold the PAL Investment to allow recovery of the carrying value. UNIFI recorded an other-than-temporary impairment of $45,194 to adjust the PAL Investment to fair value.

The components of equity in earnings of unconsolidated affiliates were as follows:

The comparative increase in earnings from ~~unconsolidated affiliates are~~PAL primarily reflects lower input costs and fixed costs. The comparative decrease in earnings from nylon joint ventures primarily reflects lower utilization in connection with lower sales volumes for the Nylon Segment.

~~The increase in equity earnings of unconsolidated affiliates was primarily attributable to improved operating leverage and, particularly for PAL, an improved raw material cost environment.~~

	For the Three Months Ended						For the Three Months Ended
	March 31, 2019			March 25, 2018			March 29, 2020			March 31, 2019
Provision for income taxes	$	3,070		$	946		$	1,530		$	3,070
Effective tax rate		199.2	%		84.3	%		(3.9	)%		199.2	%

The effective tax rate is subject to variation due to numerous factors, including variability in the amount of ~~pre-tax and taxable~~ income before income taxes, 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 ~~non-deductible expenses, and the tax on global intangible low taxed income is~~are greater when ~~pre-tax~~ income before income taxes is lower.

The significant change in the effective tax rate from the prior period to the current period is primarily attributable to (i) an impairment charge in the current period for which UNIFI does not expect to realize a future tax benefit, (ii) lower U.S. tax on GILTI in the current period and (iii) adjustments to enactment date tax reform impacts negatively impacting the prior period.

Net loss for the current period was higher than the U.S. federal statutory rate primarily due to the effect of the GILTI provisions enacted in H.R. 1, losses in tax jurisdictions for which no tax benefit could be recognized, and foreign withholding taxes. Tax expense for the current period also included $880 of expense related to the enactment of H.R. 1, which increased the effective tax rate by 57.1%.

The effective tax rate for the prior period was higher than the U.S. statutory tax rate primarily due to an increase in the valuation allowance for the Company’s investment in PAL, the rate change impact on a U.S. net loss carryforward generated in the prior period that would have been used at a lower tax rate in the future, and additional limitations on the deductibility of compensation under IRC Section 162(m).

~~Net (loss) income for the current period was $(1,529),~~$41,111, or ~~$(0.08)~~$2.23 per share, compared to ~~$176,~~a net loss of $1,529 or ~~$0.01~~$0.08 per share, for the prior period. The decrease was primarily attributable to ~~lower~~an impairment charge for the PAL Investment. Excluding the impairment charge, UNIFI achieved comparably higher gross profit and a ~~higher~~more favorable effective tax rate ~~partially offset by~~in the current period, while the prior period included executive officer severance charges and foreign currency transaction losses.

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

Adjusted EBITDA increased from the prior period to the current period, primarily as a result of (i) higher gross profit in the current period and (ii) executive officer severance charges and foreign currency transaction losses in the prior period.

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

	For the Three Months Ended March 29, 2020												For the Three Months Ended March 31, 2019
	Pre-tax (Loss) Income			Tax Impact			Net (Loss) Income			Basic EPS			Pre-tax Income		Tax Impact			Net Loss			Basic EPS
GAAP results	$	(39,581	)	$	(1,530	)	$	(41,111	)	$	(2.23	)	$	1,541	$	(3,070	)	$	(1,529	)	$	(0.08	)
Impairment of investment in unconsolidated affiliate ⁽¹⁾		45,194			—			45,194			2.45			—		—			—			—
Adjusted results	$	5,613		$	(1,530	)	$	4,083		$	0.22		$	1,541	$	(3,070	)	$	(1,529	)	$	(0.08	)

Weighted average common shares outstanding											18,475											18,394

Adjusted Net Income (Loss) and Adjusted EPS improved from the prior period to the current period, primarily as a result of (i) higher gross profit in the current period, (ii) executive officer severance charges and foreign currency transaction losses in the prior period, (iii) higher earnings from PAL ~~(ii) lower SG&A expenses and (iii) one additional shipping week~~ in the current period ~~for our NACA operations.~~and (iv) a more favorable effective tax rate in the current period.

Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current period.

As noted in the 2019 Form 10-K, segment gross profit includes the effect of certain technology-related expenses charged by the Polyester Segment to the Asia Segment. Such amounts are recorded as a benefit to cost of sales for the Polyester Segment and a charge to cost of sales for the Asia Segment, thereby impacting gross profit for each segment. The prior period segment results have been revised to reflect comparability for this change.

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 Segment, ~~are~~were as follows:

	For the Three Months Ended													For the Three Months Ended
	March 31, 2019					March 25, 2018								March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change						% of Net Sales					% of Net Sales		% Change
Net sales	$	95,745			100.0	$	88,763			100.0		7.9		$	89,767			100.0	$	95,745			100.0		(6.2	)
Cost of sales		92,221			96.3		83,948			94.6		9.9			82,735			92.2		90,941			95.0		(9.0	)
Gross profit		3,524			3.7		4,815			5.4		(26.8	)		7,032			7.8		4,804			5.0		46.4
Depreciation expense		3,858			4.0		4,022			4.6		(4.1	)		4,301			4.8		3,858			4.0		11.5
Segment Profit	$	7,382			7.7	$	8,837			10.0		(16.5	)	$	11,333			12.6	$	8,662			9.0		30.8

Segment net sales as a percentage of consolidated amounts		53.2	%				53.5	%							52.5	%				53.2	%
Segment Profit as a percentage of consolidated amounts		39.6	%				40.8	%							54.7	%				46.5	%

Net sales for the prior period	$	88,763		$	95,745
Increase due to an additional shipping week in the current period		6,032
Net change in average selling price and sales mix		1,633			(3,743	)
Decrease in underlying sales volumes		(683	)		(2,235	)
Net sales for the current period	$	95,745		$	89,767

The ~~increase~~decrease in net sales for the Polyester Segment from the prior period to the current period was primarily attributable to ~~(i) one additional shipping week in the current period due to the timing of the seasonal shutdown period for our NACA operations, (ii) higher~~lower average selling prices in ~~response to several months of~~connection with lower raw material ~~related price~~costs and moderate competitive pricing pressures. Textured yarn volume increases ~~during calendar 2018~~are recapturing market share from our recent trade actions, but such volume increases were offset by (i) weaker demand from certain customers in the industrial, automotive and ~~(iii) higher~~apparel sectors and (ii) lower sales of ~~dyed~~partially oriented yarn ~~in connection with the dyed yarn portfolio acquisition that closed in the fourth quarter of fiscal 2018, partially offset by (a) a weaker sales mix and (b) lower volumes of higher-priced~~due to greater internal consumption for conversion to textured ~~yarn products.~~yarn.

Segment Profit for the prior period	$	8,837		$	8,662
Net decrease in underlying margins		(2,135	)
Net increase in underlying margins					2,874
Decrease in underlying sales volumes		(66	)		(203	)
Increase due to an additional shipping week in the current period		746
Segment Profit for the current period	$	7,382		$	11,333

The ~~decrease~~increase in Segment Profit for the Polyester Segment from the prior period to the current period was primarily attributable to ~~(i) an unfavorable~~a more favorable sales mix ~~characterized by higher volumes of lower-margin products like Flake, Chip~~ and ~~certain dyed yarns and lower volumes of higher-margin products like textured yarn and (ii) weaker fixed~~raw material cost absorption due to lower textured yarn volumes. These decreases were partially offset by the additional shipping week in our NACA operations in the current period due to the timing of the seasonal shutdown period.environment.

~~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 Segment are as follows:~~

For the Three Months Ended

March 31, 2019

March 25, 2018

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
25,563

100.0

$
24,036

100.0

6.4

Cost of sales

23,251

91.0

23,023

95.8

1.0

Gross profit

2,312

9.0

1,013

4.2

128.2

Depreciation expense

516

2.1

560

2.3

(7.9
)
Segment Profit

$
2,828

11.1

$
1,573

6.5

79.8

Segment net sales as a percentage of
consolidated amounts

14.2
%

14.5
%

Segment Profit as a percentage of
consolidated amounts

15.2
%

7.3
%

The increase in net sales for the Nylon Segment from the prior period to the current period was primarily attributable to one additional shipping week in our NACA operations in the current period due to the timing of the seasonal shutdown period and raw material related price increases in the current period.

The increase in Segment Profit for the Nylon Segment from the prior period to the current period was primarily attributable to improved conversion margin based on the timing of raw material purchases and related price increases. Sales volumes impacts were insignificant to this comparison.

~~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:~~

For the Three Months Ended

March 31, 2019

March 25, 2018

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
57,681

100.0

$
51,989

100.0

10.9

Cost of sales

49,784

86.3

41,317

79.5

20.5

Gross profit

7,897

13.7

10,672

20.5

(26.0
)
Depreciation expense

420

0.7

436

0.9

(3.7
)
Segment Profit

$
8,317

14.4

$
11,108

21.4

(25.1
)

Segment net sales as a percentage of
consolidated amounts

32.0
%

31.3
%

Segment Profit as a percentage of
consolidated amounts

44.6
%

51.3
%

The increase in net sales for the International Segment from the prior period to the current period was primarily attributable to (i) higher sales volumes for our Asian subsidiaries due to growth in our REPREVE^® portfolios and (ii) higher pricing due to increased raw material costs, partially offset by unfavorable foreign currency translation primarily due to the weakening of the BRL and the RMB against the U.S. Dollar (“USD”) during the current period.

The RMB average exchange rate was 6.75 RMB/USD and 6.36 RMB/USD for the current period and the prior period, respectively. The BRL weighted average exchange rate was 3.77 BRL/USD and 3.25 BRL/USD for the current period and the prior period, respectively.

The decrease in Segment Profit for the International Segment was primarily attributable to lower conversion margin due to pressures from increased raw material costs and competition, along with unfavorable foreign currency translation effects as the BRL and the RMB were comparably weaker during the current period, partially offset by margins associated with overall higher sales volumes.

~~Nine Months Ended March 31, 2019 Compared to Nine Months Ended March 25, 2018~~

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

For the Nine Months Ended

March 31, 2019

March 25, 2018

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
529,311

100.0

$
497,587

100.0

6.4

Cost of sales

481,345

90.9

435,063

87.4

10.6

Gross profit

47,966

9.1

62,524

12.6

(23.3
)
Selling, general and administrative expenses

40,672

7.7

41,335

8.3

(1.6
)
Provision (benefit) for bad debts

381

0.1

(104
)

—

nm

Other operating expense, net

1,218

0.2

1,763

0.4

(30.9
)
Operating income

5,695

1.1

19,530

3.9

(70.8
)
Interest expense, net

3,630

0.7

3,118

0.6

16.4

Loss on extinguishment of debt

131

—

—

—

—

Equity in earnings of unconsolidated affiliates

(3,126
)

(0.6
)

(3,842
)

(0.8
)

(18.6
)
Income before income taxes

5,060

1.0

20,254

4.1

(75.0
)
Provision (benefit) for income taxes

3,606

0.7

(684
)

(0.1
)

nm

Net income

$
1,454

0.3

$
20,938

4.2

(93.1
)

Consolidated net sales for the current nine-month period increased by $31,724, or 6.4%, as compared to the prior nine-month period. For our NACA operations, the current nine-month period consisted of 40 fiscal weeks, while the prior nine-month period consisted of 39 fiscal weeks. Net sales were adversely impacted by unfavorable foreign currency translation of approximately $17,200.

Consolidated sales volumes increased 7.6%, attributable to continued growth in sales of Flake and Chip, along with higher sales of dyed yarn in connection with the dyed yarn portfolio acquisition that closed in the fourth quarter of fiscal 2018, in the Polyester Segment and growth in sales of REPREVE^® staple fiber and other PVA products in the International Segment. Sales continue to expand in the International Segment as our PVA portfolio resonates with our brand partners that are focused on sustainable solutions. We believe the softness in the domestic environment and competition from imports continue to be challenges for the domestic textile supply chain. Our Nylon Segment results are adversely impacted by the ongoing global trend of declining demand for nylon socks, ladies’ hosiery and intimate apparel.

Consolidated average sales prices decreased 1.1%, as price increases made in response to rising raw material costs during calendar 2018 were more than offset by (i) unfavorable foreign currency translation and (ii) the disproportionate growth of lower-priced Flake and Chip in the current nine-month period.

PVA products at the end of the current nine-month period comprised approximately 45% of consolidated net sales, equal to the 45% ratio at the end of fiscal 2018, and slightly higher than the 44% ratio for the prior nine-month period. Within the PVA product category, our customers can choose between various solutions, some of which carry higher margins than others. Accordingly, growth in PVA sales does not necessarily translate into higher margins or increased profitability on a consolidated basis.

~~Unfavorable foreign currency translation is primarily associated with the weakening of the BRL and RMB.~~

Gross profit for the current nine-month period decreased by $14,558, or 23.3%, as compared to the prior nine-month period. The gross profit decline is primarily attributable to (i) lower conversion margin in the Polyester and International Segments, in which the current nine-month period was unfavorably impacted by increasing raw material costs, (ii) unfavorable foreign currency translation of approximately $3,800, (iii) disproportionate growth of lower margin products and (iv) weaker fixed cost absorption.

Total SG&A expenses were lower for the current nine-month period compared to the prior nine-month period, primarily as a result of significant forfeitures of share-based compensation and variable compensation in connection with executive officer departures that occurred in fiscal 2019, partially offset by (i) an increase in fees paid to professional service providers for legal and audit services and (ii) an additional week in fiscal 2019.

~~There was no significant activity reflected in the current nine-month period or the prior nine-month period for bad debts.~~

~~Other operating expense, net primarily reflects severance expense recorded in the current nine-month period and foreign currency transaction losses recorded in the prior nine-month period.~~

Interest on debt obligations increased from the prior nine-month period to the current nine-month period primarily due to a general increase in market interest rates and principal on the variable rate portion of our debt. The components of consolidated interest expense, net are as follows:

UNIFI’s 34% share of PAL’s earnings decreased from $2,957 in the prior nine-month period to $2,154 in the current nine-month period. The decrease was primarily attributable to higher raw material costs and reduced operating leverage, most notably in the comparable first fiscal quarters of the current nine-month period and the prior nine-month period.

The effective tax rate is subject to variation due to numerous factors, including variability in the amount of pre-tax and taxable 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 items, non-deductible expenses, and the tax on global intangible low taxed income is greater when pre-tax income is lower.

The effective tax rate for the current nine-month period was higher than the U.S. federal statutory rate primarily due to the effects of the GILTI provisions enacted in H.R. 1, losses in tax jurisdictions for which no tax benefit could be recognized, earnings taxed at higher rates in foreign jurisdictions, and foreign withholding taxes. Tax expense for the current period also included $880 of expense related to the enactment of H.R. 1. These rate detriments were partially offset by benefits of approximately $2,045 for tax credits related to prior years.

The effective tax rate for the prior nine-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 $1,600 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 could be recognized.

Net income for the current nine-month period was $1,454, or $0.08 per share, compared to $20,938, or $1.12 per diluted share, for the prior nine-month period. The decrease was primarily attributable to (i) lower gross profit primarily relating to higher polyester raw material costs and competitive pressures contributing to weaker fixed cost absorption and a weaker sales mix and (ii) a higher effective tax rate.

~~Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current nine-month period.~~

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

For the Nine Months Ended

March 31, 2019

March 25, 2018

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
281,665

100.0

$
266,817

100.0

5.6

Cost of sales

269,444

95.7

244,513

91.6

10.2

Gross profit

12,221

4.3

22,304

8.4

(45.2
)
Depreciation expense

12,047

4.3

11,862

4.4

1.6

Segment Profit

$
24,268

8.6

$
34,166

12.8

(29.0
)

Segment net sales as a percentage of
consolidated amounts

53.2
%

53.6
%

Segment Profit as a percentage of
consolidated amounts

38.6
%

44.1
%

The increase in net sales for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) an additional week in the current nine-month period, (ii) higher sales volumes of Flake and Chip, (iii) higher sales volumes of dyed yarn in connection with the dyed yarn portfolio acquisition that closed in the fourth quarter of fiscal 2018 and (iv) higher selling prices in response to several months of raw material related price increases during calendar 2018. However, this favorability was partially offset by a weaker sales mix, characterized by lower textured yarn volumes.

~~The decrease in Segment Profit for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) lower conversion margin,~~ ~~in which the current nine-month period was unfavorably impacted by higher raw material costs,~~ ~~(ii) the unfavorable sales mix shift towards lower-margin products discussed above in the net sales analysis and (iii) weaker fixed cost absorption.~~

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 Segment were as follows:

	For the Three Months Ended
	March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change
Net sales	$	20,567			100.0	$	25,563			100.0		(19.5	)
Cost of sales		20,234			98.4		23,251			91.0		(13.0	)
Gross profit		333			1.6		2,312			9.0		(85.6	)
Depreciation expense		471			2.3		516			2.1		(8.7	)
Segment Profit	$	804			3.9	$	2,828			11.1		(71.6	)

Segment net sales as a percentage of consolidated amounts		12.0	%				14.2	%
Segment Profit as a percentage of consolidated amounts		3.9	%				15.2	%

The decrease in net sales for the Nylon Segment from the prior period to the current period was primarily attributable to (i) two customers shifting certain programs to overseas garment production during calendar 2019 and (ii) continued demand declines in certain nylon product categories.

The decrease in Segment Profit for the Nylon Segment from the prior period to the current period was primarily attributable to lower sales and weaker fixed cost absorption, as described in the net sales analysis above.

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 Brazil Segment were as follows:

	For the Three Months Ended
	March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change
Net sales	$	21,060			100.0	$	25,110			100.0		(16.1	)
Cost of sales		17,644			83.8		22,334			88.9		(21.0	)
Gross profit		3,416			16.2		2,776			11.1		23.1
Depreciation expense		421			2.0		420			1.6		0.2
Segment Profit	$	3,837			18.2	$	3,196			12.7		20.1

Segment net sales as a percentage of consolidated amounts		12.3	%				14.0	%
Segment Profit as a percentage of consolidated amounts		18.5	%				17.2	%

The decrease in net sales for the Brazil Segment from the prior period to the current period was primarily attributable to unfavorable foreign currency translation effects and lower selling prices due to lower raw material costs.

The BRL weighted average exchange rate was 4.44 BRL/USD and 3.77 BRL/USD for the current period and the prior period, respectively.

The increase in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to higher conversion margin from an improved sales mix and stabilized market pricing, partially offset by unfavorable foreign currency translation effects as the BRL weakened significantly against the USD during the current 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 Asia Segment were as follows:

	For the Three Months Ended
	March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change
Net sales	$	38,621			100.0	$	32,571			100.0		18.6
Cost of sales		34,038			88.1		28,730			88.2		18.5
Gross profit		4,583			11.9		3,841			11.8		19.3
Depreciation expense		—			—		—			—		—
Segment Profit	$	4,583			11.9	$	3,841			11.8		19.3

Segment net sales as a percentage of consolidated amounts		22.6	%				18.1	%
Segment Profit as a percentage of consolidated amounts		22.1	%				20.6	%

The increase in net sales for the Asia Segment from the prior period to the current period was primarily attributable to higher sales volumes of REPREVE^®-branded products, primarily Chip and staple fiber.

The RMB weighted average exchange rate was 6.98 RMB/USD and 6.75 RMB/USD for the current period and the prior period, respectively.

The increase in Segment Profit for the Asia Segment from the prior period to the current period was primarily attributable to the increase in sales volumes described in the net sales analysis above.

The components of Net (loss) income, each component as a percentage of net sales and the percentage increase or decrease over the prior nine-month period amounts, are as follows:

	For the Nine Months Ended
	March 29, 2020						March 31, 2019
				% of Net Sales						% of Net Sales			% Change
Net sales	$	520,454			100.0		$	529,311			100.0			(1.7	)
Cost of sales		471,963			90.7			481,345			90.9			(1.9	)
Gross profit		48,491			9.3			47,966			9.1			1.1
SG&A		35,208			6.8			40,672			7.7			(13.4	)
Provision for bad debts		331			—			381			0.1			(13.1	)
Other operating expense, net		900			0.2			1,218			0.2			(26.1	)
Operating income		12,052			2.3			5,695			1.1			111.6
Interest expense, net		2,994			0.6			3,630			0.7			(17.5	)
Equity in earnings of unconsolidated affiliates		(1,904	)		(0.4	)		(3,126	)		(0.6	)		(39.1	)
Impairment of investment in unconsolidated affiliate		45,194			8.7			—			—		nm
Loss on extinguishment of debt		—			—			131			—			(100.0	)
(Loss) income before income taxes		(34,232	)		(6.6	)		5,060			1.0		nm
Provision for income taxes		2,758			0.5			3,606			0.7			(23.5	)
Net (loss) income	$	(36,990	)		(7.1	)	$	1,454			0.3		nm

Consolidated net sales for the current nine-month period were slightly lower in comparison to the prior nine-month period, as the impacts of (i) one fewer week of sales in the current nine-month period for our NACA operations, (ii) lower nylon sales volumes, (iii) lower average selling prices and (iv) unfavorable foreign currency translation were offset by the sales growth of PVA products and the Asia Segment.

Consolidated sales volumes increased 13.4%, primarily attributable to continued sales growth of REPREVE^®-branded products, principally Chip and staple fiber in the Asia Segment, partially offset by (i) one fewer week of sales in the current nine-month period for our NACA operations and (ii) lower yarn sales in the Nylon Segment. Sales in the Asia Segment continued to expand, despite the adverse impacts from COVID-19, as our REPREVE^® portfolio resonates with our brand partners that are focused on sustainable solutions.

We believe the incremental revenue generated in connection with our recently completed trade petitions relating to polyester textured yarn is helping to offset suppressed demand from certain market sectors. However, our Nylon Segment results reflect (i) two customers shifting certain programs to overseas garment production during calendar 2019 and (ii) the current global trend of declining demand for nylon socks, ladies’ hosiery and intimate apparel.

Consolidated average sales prices decreased 15.1%, primarily attributable to (i) growth of Chip and staple fiber in the Asia Segment, which have lower average sales prices, (ii) a decline in higher-priced nylon product sales and (iii) sales price declines associated with lower polyester raw material costs.

PVA products at the end of the current nine-month period comprised 54% of consolidated net sales, up from 47% for fiscal 2019 and from 45% at the end of the prior nine-month period. Even with the relative growth in the proportion of PVA sales as a percentage of overall sales, customers may choose between various PVA products, some of which carry higher margins than others. Accordingly, growth in PVA sales does not necessarily translate into higher margins or increased profitability on a consolidated basis.

Gross profit for the current nine-month period increased by $525, or 1.1%, as compared to the prior nine-month period.

For the Polyester Segment, gross profit improved, primarily due to an improved conversion margin in connection with the comparative impact of (i) a declining raw material cost environment during the current nine-month period and (ii) an unfavorable raw material cost environment in the prior nine-month period. For the Asia Segment, gross profit increased as net sales increased, but was partially offset by a greater mix of lower-priced product sales.

For the Brazil Segment, gross profit decreased primarily due to (i) market price declines (in connection with declining raw material costs) outpacing inventory turnover and (ii) unfavorable foreign currency translation effects as the BRL weakened against the USD. For the Nylon Segment, gross profit decreased primarily due to weaker fixed cost absorption in connection with two customers shifting certain programs to overseas garment production during calendar 2019.

SG&A decreased from the prior nine-month period to the current nine-month period primarily as a result of (i) lower professional fees and marketing expenses primarily due to cost reduction efforts undertaken during the fourth quarter of fiscal 2019 and (ii) lower compensation expenses in connection with fewer executive officers in the current nine-month period as compared to the prior nine-month period.

There was no significant activity reflected in the current nine-month period or the prior nine-month period for bad debts.

Other operating expense, net primarily reflects severance expenses recorded in both the current nine-month period and the prior nine-month period.

Interest expense, net decreased from the prior nine-month period to the current nine-month period, primarily as a result of lower market interest rates on our variable-rate debt and a more favorable pricing structure on the ABL Facility in connection with the 2018 Amendment.

As of March 29, 2020, UNIFI owned a 34% interest in PAL (the “PAL Investment”) and Parkdale, Incorporated (“Parkdale”) owned the majority 66% interest. In April 2020, UNIFI and Parkdale finalized negotiations to sell UNIFI’s PAL Investment to Parkdale for $60,000. UNIFI recorded an impairment charge of $45,194 to adjust the PAL Investment to fair value. The transaction closed on April 29, 2020 and UNIFI received $60,000 in cash.

The components of equity in earnings of unconsolidated affiliates were as follows:

The performance decline for unconsolidated affiliates was primarily attributable to lower operating leverage and, particularly for PAL, comparably higher costs.

The effective tax rate is subject to variation due to numerous factors, including variability in the amount of income before income taxes, 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 greater when income before income taxes is lower.

Net loss for the current nine-month period was $(36,990), or $(2.00) per share, compared to net income of $1,454, or $0.08 per share, for the prior nine-month period. The decrease was primarily attributable to the impairment charge for the PAL Investment. Excluding the impairment charge, net income improved over the prior nine-month period primarily due to lower SG&A.

The reconciliations of the amounts reported under GAAP for Net income to EBITDA and Adjusted EBITDA were as follows:

Adjusted EBITDA increased from the prior nine-month period to the current nine-month period, primarily as a result of lower SG&A.

	For the Nine Months Ended March 29, 2020												For the Nine Months Ended March 31, 2019
	Pre-tax (Loss) Income			Tax Impact			Net (Loss) Income			Basic EPS			Pre-tax Income		Tax Impact			Net Income		Basic EPS
GAAP results	$	(34,232	)	$	(2,758	)	$	(36,990	)	$	(2.00	)	$	5,060	$	(3,606	)	$	1,454	$	0.08
Impairment of investment in unconsolidated affiliate ⁽¹⁾		45,194			—			45,194			2.44			—		—			—		—
Adjusted results	$	10,962		$	(2,758	)	$	8,204		$	0.44		$	5,060	$	(3,606	)	$	1,454	$	0.08

Weighted average common shares outstanding											18,485										18,381

Adjusted Net Income and Adjusted EPS increased from the prior period to the current period, primarily as a result of (i) lower SG&A and (ii) a more favorable effective tax rate in the current nine-month period.

Following is a discussion and analysis of the revenue and profitability performance of UNIFI’s reportable segments for the current nine-month period. As noted in the 2019 Form 10-K, segment gross profit includes the effect of certain technology-related expenses charged by the Polyester Segment to the Asia Segment. Such amounts are recorded as a benefit to cost of sales for the Polyester Segment and a charge to cost of sales for the Asia Segment, thereby impacting gross profit for each segment. The prior nine-month period segment results have been revised to reflect comparability for this change.

	For the Nine Months Ended
	March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change
Net sales	$	261,212			100.0	$	281,665			100.0		(7.3	)
Cost of sales		239,725			91.8		265,748			94.3		(9.8	)
Gross profit		21,487			8.2		15,917			5.7		35.0
Depreciation expense		12,525			4.8		12,047			4.2		4.0
Segment Profit	$	34,012			13.0	$	27,964			9.9		21.6

Segment net sales as a percentage of consolidated amounts		50.2	%				53.2	%
Segment Profit as a percentage of consolidated amounts		53.2	%				44.4	%

The decrease in net sales for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) lower average selling prices associated with polyester raw material cost changes, (ii) one fewer week of sales in the current nine-month period and (iii) lower sales of Flake due to increased internal consumption.

The increase in Segment Profit for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to an improved conversion margin in connection with the comparative impact of (i) a declining raw material cost environment during the current nine-month period and (ii) an unfavorable raw material cost environment in the prior nine-month period.

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

	For the Nine Months Ended													For the Nine Months Ended
	March 31, 2019					March 25, 2018								March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change						% of Net Sales					% of Net Sales		% Change
Net sales	$	76,159			100.0	$	75,966			100.0		0.3		$	57,853			100.0	$	76,159			100.0		(24.0	)
Cost of sales		69,671			91.5		68,563			90.3		1.6			56,296			97.3		69,671			91.5		(19.2	)
Gross profit		6,488			8.5		7,403			9.7		(12.4	)		1,557			2.7		6,488			8.5		(76.0	)
Depreciation expense		1,576			2.1		1,649			2.2		(4.4	)		1,465			2.5		1,576			2.1		(7.0	)
Segment Profit	$	8,064			10.6	$	9,052			11.9		(10.9	)	$	3,022			5.2	$	8,064			10.6		(62.5	)

Segment net sales as a percentage of consolidated amounts		14.4	%				15.3	%							11.1	%				14.4	%
Segment Profit as a percentage of consolidated amounts		12.8	%				11.7	%							4.7	%				12.8	%

Net sales for the prior nine-month period	$	75,966		$	76,159
Increase due to an additional week of sales in fiscal 2019		1,646
Decrease in underlying sales volumes					(15,407	)
Decrease due to an additional week of sales in fiscal 2019					(2,114	)
Net change in average selling price and sales mix		(839	)		(785	)
Decrease in underlying sales volumes		(614	)
Net sales for the current nine-month period	$	76,159		$	57,853

The ~~increase~~decrease in net sales for the Nylon Segment from the prior nine-month period to the current nine-month period was primarily attributable to ~~the~~(i) continued demand declines in certain nylon product categories, (ii) two customers shifting certain programs to overseas garment production during calendar 2019 and (iii) an additional week of sales in ~~fiscal 2019, partially offset by a lower-priced sales mix and global demand declines in certain nylon products.~~the prior nine-month period.

Segment Profit for the prior nine-month period	$	9,052		$	8,064
Net decrease in underlying margins		(1,064	)		(3,208	)
Net impact of additional fiscal week and underlying sales volumes decline		76
Decrease in underlying sales volumes					(1,637	)
Decrease due to an additional week of sales in fiscal 2019					(197	)
Segment Profit for the current nine-month period	$	8,064		$	3,022

The decrease in Segment Profit for the Nylon Segment from the prior nine-month period to the current nine-month period was primarily attributable to ~~a less profitable~~lower sales ~~mix~~ and weaker fixed cost ~~absorption.~~absorption, as described in the net sales analysis above.

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

	For the Nine Months Ended													For the Nine Months Ended
	March 31, 2019					March 25, 2018								March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change						% of Net Sales					% of Net Sales		% Change
Net sales	$	168,271			100.0	$	151,694			100.0		10.9		$	66,094			100.0	$	76,257			100.0		(13.3	)
Cost of sales		139,275			82.8		119,050			78.5		17.0			55,089			83.3		62,654			82.2		(12.1	)
Gross profit		28,996			17.2		32,644			21.5		(11.2	)		11,005			16.7		13,603			17.8		(19.1	)
Depreciation expense		1,146			0.7		1,249			0.8		(8.2	)		1,153			1.7		1,146			1.5		0.6
Segment Profit	$	30,142			17.9	$	33,893			22.3		(11.1	)	$	12,158			18.4	$	14,749			19.3		(17.6	)

Segment net sales as a percentage of consolidated amounts		31.8	%				30.5	%							12.7	%				14.4	%
Segment Profit as a percentage of consolidated amounts		47.9	%				43.7	%							19.0	%				23.4	%

The change in net sales for the ~~International~~Brazil Segment iswas as follows:

The ~~increase~~decrease in net sales for the ~~International~~Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to ~~(i) higher sales volumes for our Asian subsidiaries due to growth in our REPREVE~~^® ~~portfolios and (ii) higher pricing on a local currency basis due to increased raw material costs, partially offset by (a) lower sales volumes in Brazil due to a softer economic environment and (b)~~ unfavorable foreign currency translation ~~primarily attributable to the weakening of the BRL~~effects, along with lower selling prices associated with declining raw material costs and ~~the RMB against the USD during the current nine-month period.~~competitive pricing pressures.

~~The RMB average exchange rate was 6.82 RMB/USD and 6.55 RMB/USD for the current nine-month period and the prior nine-month period, respectively.~~ The BRL weighted average exchange rate was ~~3.85~~4.17 BRL/USD and ~~3.21~~3.85 BRL/USD for the current nine-month period and the prior nine-month period, respectively.

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

Segment Profit for the prior nine-month period	$	33,893		$	14,749
Net decrease in underlying margins		(4,303	)
Unfavorable foreign currency translation effects (primarily RMB and BRL)		(4,007	)
Decrease in underlying margins					(1,909	)
Unfavorable foreign currency translation effects					(899	)
Increase in sales volumes		4,559			217
Segment Profit for the current nine-month period	$	30,142		$	12,158

The decrease in Segment Profit for the ~~International~~Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to ~~(i) margin pressure from higher~~competitive pricing pressures during a declining raw material cost environment and unfavorable foreign currency translation. For the Brazil Segment, declining raw material costs place immediate downward market pressure on selling prices and, since the Brazil Segment’s supply chain is generally longer, average inventory costs decline slower than selling prices. Additionally, the Brazil Segment accelerated certain raw material purchases in the fourth quarter of fiscal 2019, which exacerbated the above impact.

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

	For the Nine Months Ended
	March 29, 2020					March 31, 2019
				% of Net Sales					% of Net Sales		% Change
Net sales	$	132,496			100.0	$	92,014			100.0		44.0
Cost of sales		118,114			89.1		80,317			87.3		47.1
Gross profit		14,382			10.9		11,697			12.7		23.0
Depreciation expense		—			—		—			—		—
Segment Profit	$	14,382			10.9	$	11,697			12.7		23.0

Segment net sales as a percentage of consolidated amounts		25.5	%				17.4	%
Segment Profit as a percentage of consolidated amounts		22.5	%				18.6	%

The increase in net sales for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to higher sales volumes of REPREVE^®-branded products, primarily Chip and staple fiber, partially offset by (i) the impact of lower-priced Chip and staple fiber sales on average selling price and sales mix and (ii) unfavorable foreign currency translation effects asdue to the ~~BRL~~comparable weakening of the RMB.

The RMB weighted average exchange rate was 7.02 RMB/USD and ~~the RMB weakened against the~~ 6.82 RMB/USD ~~during~~for the current nine-month period and ~~(iii) a less profitable sales mix~~the prior nine-month period, respectively.

The change in Segment Profit for the Asia ~~partially offset by~~Segment was as follows:

The increase in Segment Profit for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to the increase in sales volumes and related sales mix change described in the net sales analysis above.

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.~~Revolver of its credit facility. For the current nine-month period, cash ~~used in~~generated from operations was ~~$1,517,~~$32,105, and, at March ~~31, 2019,~~29, 2020, excess availability under the ABL Revolver was $62,735. As further described under “Cash (Used in) Provided by Operating Activities” below, the cash used in operating activities for the current nine-month period is attributable to several factors, including an increase in inventories due to domestic production rates that outpaced domestic sales during the current nine-month period, along with weaker cash-based earnings.$47,793.

As of March ~~31, 2019,~~29, 2020, all of UNIFI’s ~~$136,879~~$133,711 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 March ~~31, 2019~~29, 2020 for domestic ~~and~~operations compared to foreign operations:

	Domestic		Foreign		Total		Domestic		Foreign		Total
Cash and cash equivalents	$	14	$	27,884	$	27,898	$	347	$	33,046	$	33,393
Borrowings available under financing arrangements		62,735		—		62,735		47,793		—		47,793
Liquidity	$	62,749	$	27,884	$	90,633	$	48,140	$	33,046	$	81,186

Working capital	$	97,692	$	97,537	$	195,229	$	87,262	$	97,848	$	185,110
Total debt obligations	$	136,879	$	—	$	136,879	$	133,711	$	—	$	133,711

Because global economic activity slowed within a short period of time, the COVID-19 pandemic has introduced liquidity risk that was not present prior to calendar 2020. UNIFI believes that aggressive and prudent actions are necessary to preserve liquidity in the current economic environment, which is pressured by significant global demand declines that began in the current period and which are expected to continue for the remainder of calendar 2020 and potentially beyond. Accordingly, to minimize further disruption to operations, UNIFI has prioritized health and safety measures that include suspending travel and group meetings, enforcing social distancing and healthy habits, increased sanitation and disinfection and increased wellness monitoring. Additionally, the following aid in reducing risk and ensuring adequate cash is available to fund ongoing operations and obligations:

While we currently expect these measures to provide adequate liquidity under the currently anticipated pressures of the pandemic, should global demand and economic activity remain subdued beyond the short term, UNIFI maintains the ability to (i) utilize aid and lending programs from governmental entities, (ii) seek additional credit or financing arrangements or extensions and (iii) explore further cost reduction initiatives to preserve cash and secure the longevity of the business and operations. Further, we do not currently expect our cost of or access to capital and funding sources to materially change as a result of the COVID-19 pandemic.

On December 18, 2018, Unifi, Inc. and certain of its subsidiaries entered into the 2018 Amendment, which amended the Credit Agreement. The Credit Agreement provides for the ABL Facility, which is a $200,000 senior secured credit facility that includes the $100,000 ABL Revolver and the ABL Term Loan, which can be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions are met. The ABL Facility has a maturity date of December 18, 2023.

The 2018 Amendment made the following changes to the Credit Agreement, among others: (i) extended the ~~Maturity Date~~maturity date from March 26, 2020 to December 18, 2023 and (ii) decreased the Applicable Margin pricing structure for Base Rate Loans and LIBOR Rate Loans by 25 basis points. In addition, in connection with the 2018 Amendment, the principal amount of the ABL Term Loan was reset from $80,000 to $100,000. Net proceeds from this ABL Term Loan reset were used to pay down the amount outstanding on the ABL Revolver.

UNIFI currently utilizes variable-rate borrowings under the ABL Facility that are made with reference to USD LIBOR Rate Loans and is party to LIBOR-based interest rate swaps. Management recognizes the potential challenges posed by the previously announced termination of LIBOR. The Credit Agreement, as amended, includes fallback language to allow for a conversion of LIBOR Rate Loans to a mutually agreed upon alternative rate of interest, such as the Secured Overnight Financing Rate. Management will continue to monitor the potential termination of LIBOR and the potential impact on UNIFI’s operations. However, management does not expect (i) significant efforts are necessary to accommodate a termination of LIBOR or (ii) a significant impact to UNIFI’s operations upon a termination of LIBOR.

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

If excess availability under the ABL Revolver falls below the ~~defined~~ Trigger Level (as defined in the Credit Agreement), a financial covenant requiring the Loan Parties to maintain a ~~fixed charge coverage ratio~~Fixed Charge Coverage Ratio on a quarterly basis of at least 1.05 to 1.00 becomes effective. The Trigger Level as of March ~~31, 2019~~29, 2020 was ~~$25,000.~~$23,750. In addition, the ABL Facility contains restrictions on particular payments and investments, including certain restrictions on share repurchases and the payment of ~~dividends and share repurchases.~~dividends. 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”)~~LIBOR plus an ~~applicable margin~~Applicable Margin of 1.25% to 1.75%, or the Base Rate (as defined below) plus an ~~applicable margin~~Applicable Margin of 0.25% to 0.75%, with interest currently being paid on a monthly basis. The ~~applicable margin~~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 (as defined in the Credit Agreement) plus 0.5% and (c) LIBOR plus 1.0%. 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~~inventories 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 March ~~31, 2019,~~29, 2020, UNIFI was in compliance with all financial covenants in the Credit Agreement and the excess availability under the ABL Revolver was ~~$62,735.~~$47,793. At March ~~31, 2019,~~29, 2020, the ~~fixed charge coverage ratio~~Fixed Charge Coverage Ratio was ~~1.00~~0.94 to 1.00 and UNIFI had ~~$400~~$200 of standby letters of credit, none of which ~~have~~had been drawn upon. Management maintains the capability to quickly and easily improve the Fixed Charge Coverage Ratio utilizing existing cash and cash equivalents.

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

		Weighted Average								Weighted Average
	Scheduled	Interest Rate as of	Principal Amounts as of						Scheduled	Interest Rate as of	Principal Amounts as of
	Maturity Date	March 31, 2019	March 31, 2019			June 24, 2018			Maturity Date	March 29, 2020	March 29, 2020			June 30, 2019
ABL Revolver	December 2023	3.7%	$	24,000		$	28,100		December 2023	2.2%	$	30,900		$	19,400
ABL Term Loan ⁽¹⁾	December 2023	3.3%		100,000			85,000		December 2023	3.1%		90,000			97,500
Capital lease obligations	(2)	3.9%		12,879			18,107
Finance lease obligations									(2)	3.6%		12,811			11,118
Total debt				136,879			131,207					133,711			128,018
Current portion of capital lease obligations				(6,054	)		(6,996	)
Current portion of other long-term debt				(10,000	)		(10,000	)
Current ABL Term Loan												(10,000	)		(10,000	)
Current portion of finance lease obligations												(4,112	)		(5,519	)
Unamortized debt issuance costs				(1,021	)		(658	)				(772	)		(958	)
Total long-term debt			$	119,804		$	113,553				$	118,827		$	111,541

(2) Scheduled maturity dates for ~~capital~~finance lease obligations range from ~~August 2019~~June 2020 to November ~~2027.~~2027, as further outlined in Note 4, “Leases.”

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.

The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal ~~2019,~~2020, the following four fiscal years and thereafter:

	Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Thereafter		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Thereafter
ABL Revolver	$	—	$	—	$	—	$	—	$	—	$	24,000	$	—	$	—	$	—	$	—	$	30,900	$	—
ABL Term Loan		2,500		10,000		10,000		10,000		10,000		57,500		2,500		10,000		10,000		10,000		57,500		—
Capital lease obligations		1,704		5,559		2,633		2,417		90		476
Finance lease obligations														1,429		3,563		3,388		1,094		1,132		2,205
Total	$	4,204	$	15,559	$	12,633	$	12,417	$	10,090	$	81,976	$	3,929	$	13,563	$	13,388	$	11,094	$	89,532	$	2,205

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

	March 31, 2019			June 24, 2018			March 29, 2020			June 30, 2019
Cash and cash equivalents	$	27,898		$	44,890		$	33,393		$	22,228
Receivables, net		91,701			86,273			86,376			88,884
Inventories		130,981			126,311			124,146			133,781
Income tax receivable		13,039			10,291
Income taxes receivable								589			4,373
Other current assets		16,365			6,529			18,477			16,356
Accounts payable		(47,726	)		(48,970	)		(40,862	)		(41,796	)
Accrued expenses		(13,076	)		(17,720	)		(15,347	)		(16,849	)
Other current liabilities		(23,953	)		(18,313	)		(21,662	)		(16,088	)
Working capital	$	195,229		$	189,291		$	185,110		$	190,889

Less: Cash and cash equivalents		(27,898	)		(44,890	)		(33,393	)		(22,228	)
Less: Income tax receivable		(13,039	)		(10,291	)
Less: Income taxes receivable								(589	)		(4,373	)
Less: Other current liabilities		23,953			18,313			21,662			16,088
Adjusted Working Capital	$	178,245		$	152,423		$	172,790		$	180,376

Working capital ~~increased~~decreased from ~~$189,291~~$190,889 as of June ~~24, 2018~~30, 2019 to ~~$195,229~~$185,110 as of March ~~31, 2019,~~29, 2020, while Adjusted Working Capital ~~increased~~decreased from ~~$152,423~~$180,376 to ~~$178,245.~~$172,790.

The ~~decrease~~increase in cash and cash equivalents was driven by the ~~utilization of~~operating cash ~~to retire ABL Revolver debt in advance of UNIFI’s entering into the 2018 Amendment as described above.~~flows generated by our foreign operations. The ~~increase~~decrease in receivables, net was primarily attributable to the timing of cash receipts. The decrease in inventories was primarily attributable to the impact of lower raw material costs, partially offset by an increase in ~~days sales outstanding~~inventory units. The decrease in income taxes receivable was due to a general increase in customer payment terms. The increase in inventories was attributable to domestic finished goods production outpacing domestic sales and higher raw material costs. The increase in income tax receivable reflects the timing and magnitude of tax ~~payments and refunds.~~impacts recognized in the current period, primarily relating to changes in deferred taxes. The increase in other current assets ~~reflects~~was primarily due to the ~~addition~~timing of contract assets ~~that relate to products on hand that have been reflected in~~ revenue ~~but not yet shipped to the associated customer (in connection with the adoption of the New Revenue Recognition Guidance).~~recognition. The decrease in accounts payable was primarily ~~reflects weaker seasonal demand in~~attributable to the ~~current period, partially offset by more favorable vendor~~timing of purchase and payment ~~terms.~~activity. The decrease in accrued expenses was primarily attributable to (i) the ~~fiscal 2019 payment~~timing of payroll and variable compensation ~~earned~~accruals and payments and (ii) severance payments made during fiscal 2020, partially offset by an increase in ~~fiscal 2018 and comparatively lower accrued variable compensation~~deferred revenue for ~~fiscal 2019.~~increased sales activity in the Asia Segment. The ~~change~~increase in other current liabilities primarily reflects an increase in income taxes payable due to the timing and magnitude of tax ~~payments.~~impacts recognized in the current period.

During the current nine-month period, UNIFI invested ~~approximately $19,200~~$14,971 in capital projects, primarily relating to (i) further improvements in production capabilities and technology enhancements in the Americas and (ii) routine annual maintenance capital expenditures. ~~UNIFI will seek to ensure that maintenance~~Maintenance capital expenditures are ~~sufficient~~necessary to ~~allow continued production at high efficiencies.~~support UNIFI’s current operations, capacities and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life.

~~Through~~For the remainder of fiscal ~~2019, UNIFI expects~~2020 and in response to the adverse liquidity impacts of COVID-19, we have reduced our expected capital project outlay for fiscal 2020. We now expect to invest ~~an additional $5,800~~approximately $4,000 in capital projects ~~(for~~during the fourth quarter of fiscal 2020 for an aggregate ~~fiscal 2019~~annual estimate of ~~$25,000), which include (i) making further improvements in production capabilities~~approximately $19,000, with a priority on safety and ~~technology enhancements in the Americas and (ii) routine annual~~ maintenance capital expenditures to allow continued efficient production.

The total amount ultimately invested infor fiscal ~~2019~~2020 could be more or less than the ~~anticipated~~currently estimated amount depending on the timing and scale of contemplated initiatives and ~~other factors, and~~ is expected to be funded by a combination of cash flows from operations and borrowings under the ABL Revolver. UNIFI expects ~~the~~ recent and future 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 products 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 higher sales volumes and an improved mix from higher-margin products.

On April 23, 2014, UNIFI announced that the Board had approved the 2014 SRP under which UNIFI was authorized to acquire up to $50,000 of its common stock. UNIFI made no repurchases of its shares of common stock during the current nine-month period. Through October 31, 2018 (the date the 2014 SRP was terminated, as discussed below), UNIFI 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.

On October 31, 2018, ~~UNIFI announced that~~ the Board ~~had terminated the 2014 SRP and~~ approved the 2018 SRP under which UNIFI is authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP, purchases will be made from time to time in the open market at prevailing market prices or through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date.

As of March ~~31, 2019, $50,000~~29, 2020, UNIFI repurchased a total of 84 shares, at an average price of $23.72 (for a total of $1,994 inclusive of commission costs) pursuant to

the 2018 SRP. $48,008 remains available ~~for repurchase~~ under the 2018 ~~SRP.~~SRP as of March 29, 2020.

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 ~~flows from operations~~provided by operating activities, and borrowings available under the ABL Revolver will enable UNIFI to comply with the terms of its indebtedness and to meet its foreseeable liquidity requirements. Domestically, UNIFI’s existing 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 will provide the needed liquidity to fund its foreign operating activities and any foreign investing activities, such as future capital expenditures. However, ~~any significant~~ expansion of our foreign operations may require cash sourced from our domestic subsidiaries.

The significant components of net cash provided by (used in) ~~provided by~~ operating activities are summarized below. UNIFI analyzes net cash provided by (used in) ~~provided by~~ operating activities utilizing the major components of the statements of cash flows prepared under the indirect method.

	For the Nine Months Ended						For the Nine Months Ended
	March 31, 2019			March 25, 2018			March 29, 2020			March 31, 2019
Net income	$	1,454		$	20,938
Net (loss) income							$	(36,990	)	$	1,454
Equity in earnings of unconsolidated affiliates		(3,126	)		(3,842	)		(1,904	)		(3,126	)
Depreciation and amortization expense		17,242			16,844			17,685			17,242
Impairment of investment in unconsolidated affiliate								45,194			—
Non-cash compensation expense		2,758			4,878			2,510			2,758
Deferred income taxes		(190	)		(8,441	)		(10,029	)		(190	)
Subtotal		18,138			30,377			16,466			18,138

Distributions received from unconsolidated affiliates		1,380			11,226			10,437			1,380
Change in inventories		(13,409	)		(9,424	)		2,126			(13,409	)
Other changes in assets and liabilities		(7,626	)		(7,190	)		3,076			(7,626	)
Net cash (used in) provided by operating activities	$	(1,517	)	$	24,989
Net cash provided by (used in) operating activities							$	32,105		$	(1,517	)

The ~~decrease~~increase in net cash provided by (used in) ~~provided by~~ operating activities from the prior nine-month period ~~to the current nine-month period~~ was primarily due to (i) ~~the significant increase in inventories and other current assets as shown and discussed above under “Working Capital,” (ii) approximately $9,800 less in dividends~~$10,437 of distributions received from ~~unconsolidated affiliates and (iii) lower Adjusted EBITDA. The decrease was partially offset by approximately $8,900 of tax refunds received~~PAL in the current nine-month ~~period.~~period and (ii) the impact on working capital of a more favorable raw material cost environment.

Cash Used in Investing Activities and ~~(Used in) Provided by~~ Financing Activities

UNIFI utilized ~~$19,190~~$14,936 for investing activities and ~~was provided $4,128 (net) from~~utilized $3,092 for financing activities during the current nine-month period.

Investing activities include ~~$19,199~~$14,971 for capital expenditures, which primarily ~~relating~~relate to ongoing maintenance capital expenditures ~~and~~along with production capabilities and technology enhancements in the Americas.

~~Significant financing~~Financing activities include ~~borrowings~~net payments against the ABL Facility ~~primarily to fund capital expenditure activities.~~and finance leases during fiscal 2020 and $1,994 for share repurchases.

UNIFI has incurred various financial obligations and commitments in its normal 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.

Except for the finance leases that commenced during fiscal 2020, as ~~effected by the 2018 Amendment to the Credit Agreement described under “Debt Obligations” above,~~disclosed in Note 4. “Leases,” there have been no ~~further~~ 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 ~~2018~~2019 Form 10-K.

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.

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~~estimate from quarter to quarter could materially impact the presentation of the financial statements. UNIFI’s critical accounting policies are discussed in the ~~2018~~2019 Form 10-K. There were no material changes to these policies during the current nine-month period.

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.

UNIFI is exposed to interest rate risk through its borrowing activities. As of March ~~31, 2019,~~29, 2020, UNIFI had borrowings under its ABL Revolver and ABL Term Loan that totaled ~~$124,000~~$120,900 and contain variable rates of interest; however, UNIFI hedges a significant portion of such interest rate variability using interest rate swaps. After considering the variable rate debt obligations that have been hedged and UNIFI’s outstanding debt obligations with fixed rates of interest, UNIFI’s sensitivity analysis indicates that a 50-basis point increase in LIBOR as of March ~~31, 2019~~29, 2020 would result in an increase in annual interest expense of less than $300.

UNIFI conducts its business in various foreign countries and in various foreign currencies. Each 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. As of March ~~31, 2019,~~ 29, 2020, UNIFI had no outstanding foreign currency forward contracts.

A significant portion of raw materials purchased by UNIFI’s Brazilian subsidiary are denominated in USDs, requiring UNIFI to regularly exchange BRL. A significant portion of sales and asset balances for our Asian subsidiaries are denominated in USDs. During recent fiscal years, UNIFI was negatively impacted by a devaluation of the BRL. Also, the RMB experienced fluctuations in ~~the~~ value ~~of the RMB have~~at times during fiscal 2020 and 2019, which generated foreign currency ~~transaction impacts~~translation losses in certain fiscal quarters. Discussion and analysis surrounding the impact of ~~fluctuations~~the devaluation of the BRL and fluctuations in the value of 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 March ~~31, 2019,~~29, 2020, UNIFI’s foreign subsidiaries, ~~outside the United States,~~ whose functional currency is other than the USD, held approximately ~~16.7%~~18.5% of UNIFI’s consolidated total assets. UNIFI does not enter into foreign currency derivatives to hedge its net investment in its foreign operations.

As of March ~~31, 2019, $24,361,~~29, 2020, $27,398, or ~~87.3%~~82.0%, of UNIFI’s cash and cash equivalents was held outside the ~~United States,~~U.S., of which ~~$16,688~~$9,742 was held in ~~USDs, $1,152~~USD, $6,318 was held in ~~RMBs~~RMB and ~~$6,301~~$11,150 was held in ~~BRLs.~~BRL. Approximately $5,400 of USD were held inside the U.S. by a foreign subsidiary.

A significant portion of UNIFI’s raw 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 rise 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. UNIFI manages fluctuations in the cost of raw materials primarily by making corresponding adjustments to the prices charged to its customers. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of raw materials in the prior fiscal quarter. Pricing adjustments for other customers must be negotiated independently. ~~At times,~~ UNIFI ~~is unable~~attempts to pass on to its customers ~~rises~~increases in raw material costs, ~~and, when it~~but due to market pressures, this is not always possible. When price increases can be implemented, there is typically is a time lag that adversely affects UNIFI and its margins during one or more ~~periods.~~quarters. In ordinary market conditions in which raw material price increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one to two fiscal quarters of the raw material price increase for its index priced customers and within two fiscal quarters of the raw material price increase for its non-index priced customers.

During the first nine months of fiscal ~~2018,~~2020, UNIFI experienced a favorable, declining raw material cost environment, in contrast to a generally elevated ~~polyester~~raw material cost environment in fiscal 2019 and 2018. However, our raw material costs ~~in connection with heightened petroleum prices,~~remain subject to the volatility described above and, these costs continued to increase during the first four months of fiscal 2019 due to a tighter global supply of polyester and increased demand for polyester feedstock. In combination with a difficult operating environment characterized by lower textured yarn volumes in the domestic market, where sufficient corresponding price increases were difficult to achieve, these higher costs drove a decline in gross profit for the first six months of fiscal 2019. Further, UNIFI had expectedshould raw material costs spike unexpectedly, UNIFI’s results of operations and cash flows are likely to decline during the third quarter of fiscal 2019. However, those costs remained elevated, and UNIFI was unable to realize a more favorable raw material cost and selling price relationship during the third quarter of fiscal 2019.be adversely impacted.

UNIFI is also exposed to political 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.

As of March ~~31, 2019,~~29, 2020, 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 ~~the~~ principal financial officer. Based on that evaluation, UNIFI’s principal executive officer and principal financial officer concluded that UNIFI’s disclosure controls and procedures are effective to ensure that information required to be disclosed by UNIFI in 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 UNIFI files or submits under the Exchange Act is accumulated and communicated to UNIFI’s management, including its principal executive officer and 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 March ~~31, 2019~~29, 2020 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.

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.

In addition to the risk factors previously disclosed in the 2019 Form 10-K, the following risk factor was identified:

Catastrophic or extraordinary events, including epidemics or pandemics such as the recent coronavirus disease (“COVID-19”), could disrupt global economic activity and/or demand and negatively impact our financial performance and results of operations.

In March 2020, the World Health Organization declared the current coronavirus disease (“COVID-19”) outbreak a global pandemic.

Global measures taken to reduce the spread of COVID-19 have generated a significant decline in global business activity in the immediate term that may have a lasting impact on the global economy and consumer demand. The duration of the COVID-19 pandemic and its related impact on our businesses are currently unknown. UNIFI anticipates that the global disruption caused by COVID-19 has impacted and will continue to impact overall global demand and business activity negatively, especially for textiles in both the Americas and Asia.

UNIFI will continue to monitor the COVID-19 pandemic by prioritizing health and safety while delivering on customer demand, but we expect an adverse impact to the remainder of our fiscal 2020 and the first half of our fiscal 2021 based on the present factors and conditions.

(c) The following table summarizes UNIFI’s purchases of its common stock during the fiscal quarter ended March 29, 2020, all of which purchases were made under the 2018 SRP approved by the Board on October 31, 2018, under which UNIFI is authorized to acquire up to $50,000 of common stock. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date.

Repurchases are subject to applicable limitations and requirements set forth in the ABL Facility. For additional information, including information regarding limitations on payment of dividends and share repurchases, see Note 13, “Long-Term Debt” contained in UNIFI’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

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.

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)

PART I—FINANCIAL INFORMATION
		Page

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of March ~~31, 2019~~29, 2020 and June ~~24, 2018~~30, 2019	1

	Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended March ~~31, 2019~~29, 2020 and March ~~25, 2018~~31, 2019	2

	Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the Three Months and Nine Months Ended March ~~31, 2019~~29, 2020 and March ~~25, 2018~~31, 2019	3

	Condensed Consolidated Statements of Shareholders’ Equity for the Three Months and Nine Months Ended March 29, 2020 and March 31, 2019	34

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March ~~31, 2019~~29, 2020 and March ~~25, 2018~~31, 2019	45

	Notes to Condensed Consolidated Financial Statements	56

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3438

Item 4.	Controls and Procedures	3438

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3539

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 6.	Exhibits	3640

	Signatures	3741

Revenue earned in fourth quarter fiscal 2018 related to contracts open at June 24, 2018	$	8,593
Less associated cost of sales		7,992
Less associated income tax		142
Adjustment to retained earnings for contracts open at June 24, 2018	$	459

Classification	Balance Sheet Location	March 29, 2020
Lease Assets
Operating lease assets	Operating lease assets	$	6,084
Finance lease assets	Property, plant & equipment, net		23,257
Total lease assets		$	29,341

Lease Liabilities
Current operating lease liabilities	Current operating lease liabilities	$	1,709
Current finance lease liabilities	Current portion of long-term debt		4,112
Total current lease liabilities		$	5,821

Non-current operating lease liabilities	Non-current operating lease liabilities	$	4,481
Non-current finance lease liabilities	Long-term debt		8,699
Total non-current lease liabilities		$	13,180

Total lease liabilities		$	19,001

	For the Three		For the Nine
	Months Ended		Months Ended
Lease Cost	March 29, 2020		March 29, 2020
Operating lease cost	$	507	$	2,104
Variable lease cost		158		355
Finance lease cost:
Amortization of lease assets		669		1,874
Interest on lease liabilities		126		327
Short-term lease cost		316		863
Total lease cost	$	1,776	$	5,523


(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

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

	For the Nine
	Months Ended
Other Information	March 29, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used by operating leases	$	2,104
Financing cash flows used by finance leases	$	4,606
Non-cash activities:
Leased assets obtained in exchange for new operating lease liabilities	$	175
Leased assets obtained in exchange for new finance lease liabilities	$	6,301

Weighted Average Remaining Lease Term and Discount Rate	March 29, 2020
Weighted average remaining lease term (years):
Operating leases		4.2
Finance leases		4.2
Weighted average discount rate (percentage):
Operating leases		3.8	%
Finance leases		3.6	%

Maturity of Lease Liabilities	Finance Leases			Operating Leases
Fiscal 2020	$	1,560		$	495
Fiscal 2021		3,989			1,870
Fiscal 2022		3,684			1,425
Fiscal 2023		1,260			1,231
Fiscal 2024		1,307			1,086
Fiscal years thereafter		2,625			628
Total minimum lease payments	$	14,425		$	6,735
Less estimated executory costs		(588	)		—
Less imputed interest		(1,026	)		(545	)
Present value of net minimum lease payments		12,811			6,190
Less current portion of lease obligations		(4,112	)		(1,709	)
Long-term portion of lease obligations	$	8,699		$	4,481

	Capital Leases			Operating Leases
Fiscal 2020	$	5,917		$	3,164
Fiscal 2021		2,870			2,731
Fiscal 2022		2,565			1,492
Fiscal 2023		189			878
Fiscal 2024		189			755
Fiscal years thereafter		675			309
Total minimum lease payments	$	12,405		$	9,329
Less estimated executory costs		(644	)
Less interest		(643	)
Present value of net minimum capital lease payments		11,118
Less current portion of capital lease obligations		(5,519	)
Long-term portion of capital lease obligations	$	5,599

	For the Fiscal Year Ended
	June 30, 2019		June 24, 2018		June 25, 2017
Rental expenses	$	4,915	$	4,835	$	4,357

	March 29, 2020			June 30, 2019
Customer receivables	$	87,091		$	89,495
Allowance for uncollectible accounts		(2,397	)		(2,338	)
Reserves for quality claims		(1,231	)		(961	)
Net customer receivables		83,463			86,196
Other receivables		2,913			2,688
Total receivables, net	$	86,376		$	88,884

Financial Statement Line Item	Treatment under previous Revenue Recognition Guidance		Adjustments in connection with New Revenue Recognition Guidance			As reported under New Revenue Recognition Guidance
Revenue	$	528,414	$	897		$	529,311
Cost of sales	$	480,680	$	665		$	481,345
Gross profit (loss)	$	47,734	$	232		$	47,966
Inventory	$	139,610	$	(8,629	)	$	130,981
Contract assets	$	—	$	9,454		$	9,454

	March 31, 2019		June 24, 2018
Supplemental post-employment plan	$	2,674	$	3,045
Uncertain tax positions		1,121		131
Other		1,890		2,161
Total other long-term liabilities	$	5,685	$	5,337

	March 31, 2019			June 24, 2018
Investment in a former domestic unconsolidated affiliate	$	(3,942	)	$	(3,942	)
Equity-method investment in PAL		(1,443	)		(1,580	)
Certain losses carried forward ⁽¹⁾		(1,562	)		(1,562	)
State NOLs		(166	)		(169	)
Other foreign NOLs		(1,695	)		(2,460	)
Foreign tax credits		(15,113	)		(5,430	)
Disallowed interest expense		(382	)		—
Total deferred tax valuation allowance	$	(24,303	)	$	(15,143	)

	Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Average Price Paid per Share		Approximate Dollar Value that May Yet Be Repurchased Under Publicly Announced Plans or Programs
Fiscal 2019		—	$	—
Fiscal 2020 (through March 29, 2020)		84	$	23.72
Total		84	$	23.72	$	48,008

Authorized under the Amended 2013 Plan	1,250
Plus: Awards expired, forfeited or otherwise terminated unexercised	~~125~~156
Less: Awards granted to employees	(~~265~~425	)
Less: Awards granted to non-employee directors	(89117	)
Available for issuance under the Amended 2013 Plan	~~1,021~~864

	Foreign Currency Translation Adjustments			Changes in Interest Rate Swaps			Accumulated Other Comprehensive Loss
Balance at June 24, 2018	$	(42,268	)	$	1,735		$	(40,533	)
Other comprehensive loss, net of tax		(1,310	)		(1,297	)		(2,607	)
Balance at March 31, 2019	$	(43,578	)	$	438		$	(43,140	)

	For the Nine Months Ended March 31, 2019						For the Nine Months Ended March 25, 2018
	PAL		Other		Total		PAL		Other		Total
Net sales	$	626,812	$	19,256	$	646,068	$	578,841	$	18,213	$	597,054
Gross profit		18,841		3,587		22,428		22,167		3,583		25,750
Income from operations		5,663		2,284		7,947		8,114		2,295		10,409
Net income		6,334		2,381		8,715		8,357		2,327		10,684
Depreciation and amortization		30,576		143		30,719		29,566		142		29,708

Cash received by PAL under cotton rebate program		8,773		—		8,773		10,162		—		10,162
Earnings recognized by PAL for cotton rebate program		9,444		—		9,444		9,832		—		9,832

Distributions received		130		1,250		1,380		8,976		2,250		11,226

	March 29, 2020		June 30, 2019
Salem Leasing Corporation (included within accounts payable)	$	403	$	634
Salem Leasing Corporation (operating lease obligations)		1,578		—
Salem Leasing Corporation (finance lease obligations)		6,765		806
Total related party payables	$	8,746	$	1,440

SG&A expenses for the prior period	$	13,846
Decrease in compensation expenses		(2,672	)
Decrease due to foreign currency translation		(261	)
Other net decreases		(200	)
Increase in professional fees		726
SG&A expenses for the current period	$	11,439

Net sales for the prior period	$	24,036
Increase due to an additional shipping week in the current period		1,295
Net change in average selling price and sales mix		705
Decrease in underlying sales volumes		(473	)
Net sales for the current period	$	25,563

Segment Profit for the prior period	$	1,573
Net increase in underlying margins		1,255
Segment Profit for the current period	$	2,828

Net sales for the prior period	$	51,989
Increase in sales volumes		7,852
Net change in average selling price and sales mix		3,060
Unfavorable foreign currency translation effects (primarily RMB and BRL)		(5,220	)
Net sales for the current period	$	57,681

Segment Profit for the prior period	$	11,108
Net decrease in underlying margins		(3,294	)
Unfavorable foreign currency translation effects (primarily RMB and BRL)		(1,158	)
Increase in sales volumes		1,661
Segment Profit for the current period	$	8,317

SG&A expenses for the prior nine-month period	$	41,335
Decrease in compensation expenses		(2,805	)
Decrease due to foreign currency translation		(831	)
Increase in professional fees		1,423
Increase due to an additional week in fiscal 2019		841
Other net increases		709
SG&A expenses for the current nine-month period	$	40,672

Net sales for the prior nine-month period	$	266,817
Net change in average selling price and sales mix		9,135
Increase due to an additional week of sales in fiscal 2019		6,622
Decrease in underlying sales volumes		(909	)
Net sales for the current nine-month period	$	281,665

Segment Profit for the prior nine-month period	$	34,166
Net decrease in underlying margins		(9,950	)
Net impact of additional fiscal week and underlying sales volumes decline		52
Segment Profit for the current nine-month period	$	24,268

Segment Profit for the prior period	$	3,196
Increase in underlying margins		979
Increase in sales volumes		150
Unfavorable foreign currency translation effects		(488	)
Segment Profit for the current period	$	3,837

Net sales for the prior period	$	32,571
Increase in sales volumes of Chip and staple fiber		6,315
Change in average selling price and sales mix		1,161
Unfavorable foreign currency translation effects		(1,044	)
Change in sales volumes of other PVA products		(382	)
Net sales for the current period	$	38,621

Segment Profit for the prior period	$	3,841
Increase in underlying margins and sales mix		815
Increase in sales volumes of Chip and staple fiber		448
Change in sales volumes of other PVA products		(354	)
Unfavorable foreign currency translation effects		(167	)
Segment Profit for the current period	$	4,583

SG&A for the prior nine-month period	$	40,672
Decrease in professional fees and marketing expenses		(2,699	)
Decrease in salaries and fringe expenses		(2,159	)
Impact of an additional week in fiscal 2019		(841	)
Change in cash-based incentive compensation expense		1,932
Other net decreases		(1,697	)
SG&A for the current nine-month period	$	35,208

Net sales for the prior nine-month period	$	151,694
Net increase in sales volumes		20,675
Net change in average selling price and sales mix		12,981
Unfavorable foreign currency translation effects (primarily RMB and BRL)		(17,079	)
Net sales for the current nine-month period	$	168,271