UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File
June 29, 199728, 1998 Number 1-10542
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UNIFI, INC.
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(Exact name of Registrant as specified in its charter)
New York 11-2165495
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7201 West Friendly Avenue
Greensboro, North Carolina 27410
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including a/c: (910)area code: (336) 294-4410
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Class On Which Registered
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Common Stock, par value $.10 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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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 X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
Aggregate market value of the voting stock held by nonaffiliatesnon-affiliated of the
Registrant as of August 5, 1997,14, 1998, based on a closing price of $38.4375$23.875 per
share: $2,270,298,464.53$1,427,674,599.87
Number of shares outstanding as of August 5, 1997: 61,143,83814, 1998: 61,355,386
Documents Incorporated By Reference
Portions of the Annual Report to Shareholders of Unifi, Inc. for the fiscal
year ended June 29, 1997,28, 1998, are incorporated by reference into Parts I and II
hereof.
Portions of the definitive proxy statement for the Annual Meeting of the
Shareholders of Unifi, Inc., to be held on October 23, 1997,22, 1998, are incorporated
by reference into Part III.
Exhibits, Financial Statement Schedules and Reports on Form 8-K index is
located on pages IV-1 through IV-6.
PART I
Item 1. Business:
Unifi, Inc., a New York corporation formed in 1969, together with its
subsidiaries, hereinafter set forth, (the "Company" or "Unifi"), is one of the
largest and most diversified processors of polyester and nylon yarns in the
world. The Company is engaged
predominantly in the business of processing yarns by: texturing of synthetic
filament polyester and
nylon fiber;filament fiber to produce polyester and spinningnylon yarns, dyed yarns and
spandex yarns covered with nylon and polyester. The Company sells its
products to knitters and weavers that produce fabrics for the apparel,
automotive upholstery, hosiery, home furnishings, industrial and other end use
markets.
Texturing polyester and nylon filament fiber involves the processing of cotton and cotton blend
fibers.
The Company's texturing operation mainly involves purchasing
partially oriented yarn (POY)("POY"), which is either raw polyester or nylon
filament fiber purchased from chemical manufacturers, to give it greater bulk,
strength, stretch, consistent dyeability and usinga softer feel, thereby making it
suitable for use in knitting and weaving of fabrics. The texturing process
involves the use of high speed machines to draw, heat and twist the POY to
produce yarnsyarn having various physical characteristics, depending uponon its
ultimate end use.
The Company's cotton spinning operation
mainly involves the spinning on open-end spindles of cotton, cotton and undyed
synthetic blends, and cotton and pre-dyed polyester blends into yarns of
different strengths and thickness.
The Company currently sells textured polyester yarns, nylon yarns, dyed
yarns, covered yarns, spun yarns made of cotton, cotton and undyed synthetic
blends, pre-dyed cotton blends, and cotton and pre-dyed polyester blends
domestically and internationally to weavers and knitters who produce fabrics
for the apparel, industrial, hosiery, home furnishing, auto upholstery,
activewear, and underwear markets.
The Company, internationally, has manufacturing facilities in
Letterkenny, County Donegal, Republic of Ireland, which texturizes polyester,
as well as producing its own POY.
On June 30, 1997, Unifithe Company and Parkdale Mills, Inc. ("Parkdale")
entered intocontributed cash, assets and certain liabilities associated with their
respective open-end and air jet spun cotton yarn operations to a newly formed
joint venture, combining allParkdale America, LLC ("Parkdale America"). As a result, the
Company and Parkdale own a 34.0% and 66.0% equity interest in Parkdale
America, respectively. Parkdale America is one of Unifi'sthe largest and most
diversified processors of spun cotton spinningyarns in the world. The Company
believes that its equity ownership in Parkdale America provides it with an
opportunity to partner with the leading manufacturer in the cotton yarn
industry and to increase the profitability of these operations through
economies of scale and elimination of redundant overhead costs.
On November 14, 1997, the Company completed its $55.8 million acquisition
of SI Holding Company ("SI Holding"), a manufacturer of covered nylon yarns
operating under the "Spanco" name, generating approximately $85.0 million in
annual sales.
On May 29, 1998, the Company and Burlington Industries, Inc. ("BI")
contributed certain assets associated with certain of Parkdale's spuntheir respective textured polyester
yarn assets intobusinesses to a newnewly formed limited liability company, named "Parkdale
America, LLC" (the "LLC"Unifi Textured
Polyester, LLC ("UTP"). ParkdaleUnifi contributed its textured polyester yarn
facilities in Yarkinville, North Carolina and BI contributed its textured
yarn operation in Mayodan, North Carolina. Unifi is the majority owner of the
LLCnew entity (approximately 85%) and manages the day-to-day operationsbusiness, while BI holds a
minority interest. All yarn products are sold under the Unifi label. The
Company's polyester texturing facility in Reidsville, North Carolina, which
processes textured products for yarn dyeing, was not contributed to UTP.
I-1
The information included under "Year 2000 Compliance Status" on pages 35
and 36 of the LLC. For further information on this
matter, reference is made to Unifi's Form 8-K datedAnnual Report of the company for fiscal year ended June 30, 1997, and filed
with the Securities and Exchange Commission (the "SEC" or "Commission") on
July 15, 1997, which28,
1998, is incorporated herein by reference.
All further
reference to Unifi's cotton spinning operations in this report should be read
in light of the Parkdale transaction.
SOURCES AND AVAILABILITY OF RAW MATERIALS:
A. POY.
The primary suppliers of POY to the Company are E. I. DuPont de Nemours
and Company, Hoechst Celanese Corporation, Wellman Industries, Cookson Fibers,
Inc., and Nan Ya Plastics Corp. of America with the majority of the Company's
POY being supplied by DuPont. In addition, the Company has POY manufacturing
facilities in Ireland, and recently began full-scale operation in its newly
constructed, state-of-the-art manufacturing facility in Yadkinville, North
Carolina, designed to further vertically integrate the Company's domestic
polyester operations. Management expects this facility to provide
approximately 25% of its total domestic POY supply needs. Management expects
that all polyester fiber manufactured by this facility will be used by the
Company. Although the Company is heavily dependent upon a limited number of
suppliers, the Company has not had and does not anticipate any material
difficulty in obtaining its raw POY.
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B. Cotton. The Company buys its cotton, which is a commodity and is
traded on established markets, from brokers such as Staple Cotton Coop.,
Dunavant Enterprises, Conti-Cotton, HoHenBerg Brothers Co., Allenberg Cotton
Co., and Carolina Cotton Growers. The Company has not had and does not
anticipate any material difficulty in obtaining cotton.
PATENTS AND LICENSES: The Company currently has several patents and
registered trademarks, none of which it considers material to its business as a
whole.
CUSTOMERS: The Company in fiscal year ended June 29, 1997,28, 1998, sold texturedits
polyester and spunnylon yarns to approximately 1,4001,260 customers, no one
customer's purchases exceeded 10% of net sales during said period, the ten
largest customers accounted for approximately 29%32% of total net sales and thesales. The
Company does not believe that it is dependent on any one customer.
BACKLOG: The Company, other than in connection with certain foreign
sales and for textured yarns that are package dyed according to customers'
specifications, does not manufacture to order. The Company's products can be
used in many ways and can be thought of in terms of a commodity subject to
the laws of supply and demand and, therefore, does not have what is considered
a backlog of orders. In addition, the Company does not consider its products
to be seasonal ones.
COMPETITIVE CONDITIONS: The textile industry in which the Company
currently operates is keenly competitive. The Company processes and sells
high-volume commodity products, pricing is highly competitive with product
quality and customer service being essential for differentiating the
competitors within the industry. Product quality insures manufacturing
efficiencies for the customer. The Company's polyester and nylon yarns, dyed
yarns, covered yarns and cotton and cotton blendcovered yarns compete with a number of other domestic producers of
such yarns. In the sale of polyester filament yarns, major competitors are
AtlasDillon Yarn Company, Inc., Burlington Industries, Inc., and Milliken & Company;Company and in the sale of nylon
yarns, dyed yarns, and covered yarns, major competitors are Jefferson Mills,
Inc., Spanco Yarns,Worldtex, Inc.,
Regal Manufacturing Company, and Spectrum Dyed Yarns, Inc.; and in the sale
of cotton and cotton blend yarns, major competitors are Parkdale Mills, Inc.,
Avondale Mills, Inc., Harriett & Henderson, Mayo Yarns, Inc., and TNS Mills,
Inc.Inc..
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RESEARCH AND DEVELOPMENT: The estimated amount spent during each of the
last three fiscal years on Company-sponsored and Customer-sponsored research
and development activities is considered immaterial.
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COMPLIANCE WITH CERTAIN GOVERNMENT REGULATIONS: Management of the
Company believes that the operation of the Company's production facilities and
the disposal of waste materials are substantially in compliance with
applicable laws and regulations.
EMPLOYEES: The number of full-time employees of the Company is
approximately 7,000.Approximately 6,400.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC INTERNATIONAL
OPERATIONS AND EXPORT SALES: The information included under the heading
"Business Segments, Foreign Operations and Concentrations of Credit Risk"
on Page 2628 of the Annual Report of the Company to the Shareholders for the
fiscal year ended June 29, 1997,28, 1998, is incorporated herein by reference.
Item 2. Description of Property:
The Company currently maintains a total of 2124 manufacturing and
warehousing facilities and one central distribution center in North Carolina,
one manufacturing and related warehousing facility in Staunton, Virginia, one
central distribution center in Fort Payne, Alabama, and onetwo manufacturing
and related warehousing facilityoperations in Letterkenny, County of Donegal,
Republic of Ireland and two warehousing locations in Carrickfergus, Northern
Ireland. All of these facilities, which contain approximately 7,922,9537,992,513
square feet of floor space, with the exception of the six (6)one (1) plant facilitiesfacility
leased from NationsBancNationsBank Leasing &and R.E. CorporationCorp. pursuant to a sales-leaseback agreementSales-leaseback
Agreement entered on May 20, 1997, as amended, and two warehouses in
Carrickfergus, Northern Ireland, are owned in fee; and management believes they
are in good condition, well maintained, and are suitable and adequate for
present production.
The Company leases sales offices and/or apartments in New York,
Coleshill, England, Oberkotzau, Germany, and Lyon, France, and has a
representative office in Tokyo, Japan.
The Company also leases its corporate headquarters building at 7201 West
Friendly Avenue, Greensboro, North Carolina, which consists of a building
containing approximately 121,125 square feet located on a tract of land
containing approximately 8.99 acres. This property is leased from
NationsBank,Merrill Lynch Trust Company of North Carolina, Trustee under the Unifi, Inc.
Profit Sharing Plan and Trust, and Wachovia Bank & Trust Company, N.A.,
Independent Trustee. On May 20, 1996, the Company exercised its option to
extend the term of the lease on this property for five (5) years, through
March 13, 2002. Reference is made to a copy of the lease agreement attached
to the Registrant's Annual Report on Form 10-K as Exhibit (10d) for the fiscal
year ended June 28, 1987, which is by reference incorporated herein.
I-3
The information included under "Leases and Commitments"
on Page 2527 of the Annual Report of the Company to Shareholders for fiscal
year ended June 29, 1997,28, 1998, is incorporated herein by reference.
I-3
Item 3. Legal Proceedings:
The Company is not currently involved in any litigation which is
considered material, as that term is used in Item 103 of Regulation S-K.
Item 4. Submission of Matters to a Vote of Security Holders:
No matters were submitted to a vote of security holders during the fourth
quarter for the fiscal year ended June 29, 1997.28, 1998.
I-4
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
(a)(c) PRICE RANGE OF COMMON STOCK AND DIVIDENDS PAID.
The information included under the heading "Market and Dividend
Information (Unaudited)" on Page 3231 of the Annual Report of the Company to
Shareholders for the fiscal year ended June 29, 1997,28, 1998, is incorporated herein
by reference.
(b) Approximate Number of Equity Security Holders:
Title of Class Number of Record Holders
(as of August 5, 1997)14, 1998)
Common Stock, $.10 par value 1,065929
(c) CASH DIVIDEND POLICY. In April 1990,Effective July 16, 1998, the Board of
Directors of the Company adopted a resolution that it intended to pay aterminated its previously-established policy of
April, 1990 of paying cash dividend in
quarterly installmentsdividends equal to approximately thirty percent (30%)30% of the
earningsCompany's after taxes of the Companytax earnings for the previous year payable as
hereafter declared by the Boardand authorized management
of Directors. Prior to this action by the
Board of Directors, the Company had since 1978 followed ato utilize cash equal to said 30% of previous year's earnings
to purchase shares of the Company's stock, as, management deems advisable up
to ten (10) million shares. Under said April 1990 cash dividend policy, of retaining
earnings for working capital, acquisitions, capital expansion and
modernization of existing facilities. Thethe
Company paid a quarterly dividend of $.11$.14 per share on its common stock for
each quarter of the 19971998 fiscal year. The Board of Directors in July, 1997, declared a cash dividend in the
amount of $.14 per share on each issued and outstanding share of the common
stock of the Company, payable on August 8, 1997, to shareholders of record at
the close of business on August 1, 1997.
Item 6. Selected Financial Data:
The financial data for the five fiscal years included under the heading
"Summary of Selected Financial Data" on Page 3130 of the Annual Report of the
Company to Shareholders for the fiscal year ended June 29, 1997,28, 1998, is
incorporated herein by reference.
II-1
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
The information included under the heading "Management's Review and
Analysis of Operations and Financial Position" beginning on Pages 28, 29Page 32 and 30ending
on Page 36 of the Annual Report of the Company to Shareholders for the fiscal
year ended June 29, 1997,28, 1998, is incorporated herein by reference.
II-1
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The information included under the heading "Derivative Financial
Instruments and Fair Value of Financial Instruments" on Pages 26 and 27Page 28 of
the Annual Report of the Company to Shareholders for the fiscal year ended
June 29, 1997,28, 1998, is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data:
The report of independent auditors, consolidated financial statements and
notes beginning on Page 1617 and ending on Page 2729 and the information included
under the heading "Quarterly Results (Unaudited)" on Page 31 of the Annual
Report of the Company to Shareholders for the fiscal year ended June 29, 1997,28, 1998,
are incorporated herein by reference.
Item 9. Change in and Disagreements With Accountants on Accounting and
Financial Disclosure:
The Company has not changed accountants nor are there any disagreements
with its accountants, Ernst & Young LLP, on accounting and financial
disclosure that should be reported pursuant to Item 304 of Regulation S-K.
II-2
PART III
Item 10. Directors and Executive Officers of Registrant and Compliance with
Section 16(a) of the Exchange Act:
(a) Directors of Registrant: The information included under the headings
"Election of Directors", "Nominees for Election as Directors", "Security
HoldingsHolding of Directors, Nominees, and Executive Officers", "Directors'
Compensation", and "Committees of the Board of Directors", and compliance with
Section 16(a) of The Securities and Exchange Act, beginning on Page 2 and
ending on Page 6 and on page 12 of the definitive proxy statement filed with
the Commission since the close of the Registrant's fiscal year ended June 29,
1997,28,
1998, and within 120 days after the close of said fiscal year, are
incorporated herein by reference.
(b) Identification of Executive Officers:
Chairman of The Board of Directors
G. Allen Mebane, IV Mr. Mebane is 68 and has been an Executive Officer
and member of the Board of Directors of the Company since 1971, and served as
President and Chief Executive Officer of the Company, relinquishing these
positions in 1980 and 1985, respectively. He was the Chairman of the Board of
Directors for many years, Chairman of the Executive Committee from 1974 to
1995, and was elected as one of the three members of the Office of Chairman on
August 8, 1991. On October 22, 1992, Mr. Mebane was again elected as Chairman
of the Board of Directors.
President and Chief Executive Officer
William T. Kretzer Mr. Kretzer is 5152 and served as a Vice President or
Executive Vice President from 1971 until 1985. He has been the President and
Chief Executive Officer since 1985. He has been a member of the Board of
Directors since 1985 and has been Chairman of the Executive Committee since
1995.
Executive Vice Presidents
Jerry W. Eller Mr. Eller is 5657 and has been a Vice President or
Executive Vice President since 1975. He has been a member of the Board of
Directors since 1985 and is a member of the Executive Committee.
G. Alfred Webster Mr. Webster is 4950 and has been a Vice President or
Executive Vice President since 1979. He has been a member of the Board of
Directors since 1986 and is a member of the Executive Committee.
III-1
Senior Vice Presidents
Kenneth L. Huggins Mr. Huggins is 53,55, had been an employee of Macfield,
Inc. since 1970 and, at the time of the Macfield merger with Unifi, was
serving as a Vice President of Macfield and President of Macfield's Dyed Yarn
Division. He was a Director of Macfield from 1989 until August 8, 1991, when
Macfield, Inc. merged into and with Unifi. He is Senior Vice President and
also Assistant to the President.
Raymond W. Maynard Mr. Maynard is 5455 and has been a Vice President of
the Company since June 27, 1971, and a Senior Vice President since October 22,
1992.
Willis C. Moore, III Mr. Moore is 45 and had been a Partner with Ernst
& Young LLP, or its predecessors from 1985 until December, 1994, when he
became employed by the Company as its Chief Financial Officer. Mr. Moore was
elected as a Vice President of the Company on October 19, 1995, and is
currently serving as a Senior Vice President and Chief Financial Officer.
Vice Presidents
James W. Brown, Jr. Mr. Brown is 4546 and was an employee of Macfield
from 1973 until the Macfield merger on August 8, 1991, when he became an
employee of the Company. He became a Vice President of the Company on October
22, 1992, and he is currently serving as President of the Nylon/Covered Yarn
Division of the Company.
Stewart Q.O. Little Mr. Little is 4345 and has been a Vice President of
the Company since October 24, 1985. He is currently serving as President of
the Polyester Division of the Company.
Willis C. Moore, IIIRalph D. Mayes Mr. MooreMayes is 4449 and had been a Partner with Ernst &
Young, LLP, or its predecessorsVice President and Chief
Information Officer of the Leggett Group from 19851992 until December,September, 1994 when
he became employed by the Company as its Chief FinancialInformation Officer. Mr. MooreMayes
was elected as a Vice President of the Company on October 19, 1995,20, 1994, and is currently serving
as Vice President and Chief FinancialInformation Officer.
These officers were elected by the Board of Directors of the Registrant
at the Annual Meeting of the Board of Directors held on October 24, 1996.23, 1997.
Each officer was elected to serve until the next Annual Meeting of the Board
of Directors or until his successor was elected and qualified.
(c) Family Relationship: Mr. Mebane, Chairman of the Board, and Mr. C.
Clifford Frazier, Jr., the Secretary of the Registrant, are first cousins.
Except for this relationship, there is no family relation between any of the
Officers.
(d) Compliance with Section 16(a) of the Exchange Act: Based solely upon
the review of the Form 3's and 4's and amendments thereto, furnished to the
Company during the most recent fiscal year, no Form 3's or Form 4's were
filed late by a director, officer, or beneficial owner of more than ten
percent of any class of equity securities of the Company. The Company
received written representation from reporting persons that Form 5's were
not required.
III-2
Item 11. Executive Compensation:
The information set forth under the headings "Compensation and Option
Committees Interlocks and Insider Participation in Compensation Decisions",
"Executive Officers and Their Compensation", "Employment and Termination
Agreements", "Options Granted", "Option Exercises and Option/SAR Values", the
"Report of the Compensation and Incentive Stock Option Committees on Executive
Compensation", and the "Performance Graph-Shareholder Return on Common Stock"
beginning on Page 6 and ending on Page 11 of the Company's definitive proxy
statement filed with the Commission since the close of the Registrant's fiscal
year ended June 29, 1997,28, 1998, and within 120 days after the close of said fiscal
year, are incorporated herein by reference.
For additional information regarding executive compensation reference is
made to Exhibits (10l)(101), (10m), (10n), (10q) and (10n)(10r) of this Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management:
Security ownership of certain beneficial owners and management is the
same as reported under the heading "Information Relating to Principal Security
Holders" on Page 2 of the definitive proxy statement and under the heading
"Security HoldingsHolding of Directors, Nominees and Executive Officers" on Page 4
and Page 5 of the definitive proxy statement filed with the Commission
pursuant to Regulation 14(a) within 120 days after the close of the fiscal
year ended June 29, 1997,28, 1998, which are hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions:
The information included under the heading "Compensation and Option
Committees Interlocks and Insider Participation In Compensation Decisions",
on Page 6 of the definitive proxy statement filed with the Commission since
the close of the Registrant's fiscal year ended June 29, 1997,28, 1998, and within 120
days after the close of said fiscal year, is incorporated herein by
reference.
III-3
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
UNIFI, INC.
September 26, 199728, 1998 BY: WILLIAM T. KRETZER
------------------------------______________________________
William T. Kretzer, President
and
Chief(Chief Executive OfficerOfficer)
September 26, 199728, 1998 BY: WILLIS C. MOORE, III
------------------------------______________________________
Willis C. Moore,III, Sr Vice President
and Chief(Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
September 26, 1997 Chairman G. ALLEN MEBANE, IV
September 28, 1998 Chairman __________________________
and Director ------------------------------ G. Allen Mebane, September 26, 1997 President, ChiefIV
WILLIAM T. KRETZER
September 28, 1998 President, Chief __________________________
Executive Officer ------------------------------William T. Kretzer
and Director
William T. KrezterROBERT A. WARD
September 26, 1997 Executive Vice28, 1998 Senior Advisor ___________________________
to President and Robert A. Ward
Director
JERRY W. ELLER
September 28, 1998 Executive Vice ___________________________
President and ------------------------------
Director Jerry W. Eller
September 26, 1997 Executive ViceDirector
G. ALFRED WEBSTER
September 28, 1998 Executive Vice ___________________________
President and ------------------------------
Director G. Alfred Webster
September 26, 1997 Senior Advisor ROBERT A. WARD
to President and ------------------------------
Director Robert A. Ward
September 26, 1997
Director
CHARLES R. CARTER
------------------------------September 28, 1998 Director ___________________________
Charles R. Carter
KENNETH G. LANGONE
September ___, 199728, 1998 Director -------------------------------___________________________
Kenneth G. Langone
September 26, 1997 Director DONALD F. ORR
-------------------------------September 28, 1998 Director ___________________________
Donald F. Orr
J.B. DAVIS
September 26, 199728, 1998 Director ___________________________
J. B. DAVIS
-------------------------------
J. B. Davis
September 26, 1997 Director
R. WILEY BOURNE, JR.
-------------------------------September 28, 1998 Director ___________________________
R. Wiley Bourne, Jr.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
The following financial statements and report of independent auditors included
in the Annual Report of Unifi, Inc. to its Shareholders for the fiscal year
ended June 29, 1997,28, 1998, are incorporated herein by reference. With the exception
of the aforementioned information and the information incorporated by
reference in Items 1, 2, 5, 6, 7 7A and 8 herein, the 19971998 Annual Report to
shareholders is not deemed to be filed as part of this report.
Annual
Report
Pages
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Consolidated Balance Sheets at June 28, 1998
and June 29, 1997 and June 30, 1996 1718
Consolidated Statements of Income for the
Years Ended June 28, 1998, June 29, 1997,
and June 30, 1996 and June 25, 1995 1819
Consolidated Statements of Changes in
Shareholders' Equity for the Years Ended
June 28, 1998, June 29, 1997 and June 30,
1996 and June 25,
1995 1920
Consolidated Statements of Cash Flows for
the Years Ended June 28, 1998, June 29,
1997 and June 30, 1996 and June 25, 1995 2021
Notes to Consolidated Financial Statements 2122 - 2729
Management's Review and Analysis of Operations and
Financial Position 32 - 36
Report of Independent Auditors 1617
(a) 2. Financial Statement Schedules
Form 10-K
Pages
Schedules for the three years ended June 29, 1997:28, 1998:
II - Valuation and Qualifying Accounts IV-6
IV-1
Schedules other than those above are omitted because they are not
required, are not applicable, or the required information is given in the
consolidated financial statements or notes thereto.
IV-1
Individual financial statements of the Registrant have been omitted
because it is primarily an operating company and all subsidiaries included in
the consolidated financial statements being filed, in the aggregate, do not
have minority equity interest and/or indebtedness to any person other than
the Registrant or its consolidated subsidiaries in amounts which together
exceed 5% of the total assets as shown by the most recent year-endyear end
consolidated balance sheet.
(a) 3. Exhibits
(2a-1) Form of Agreement and Plan of Merger, dated as of May 24, 1991, by and
between Unifi, Inc. and Macfield, Inc., including exhibits, filed as
Exhibit 2.1 to Unifi, Inc.'s Registration Statement on Form S-4
(Registration No. 33-40828), which is incorporated herein by reference.
(2a-2) Form 8-K, filed by Unifi, Inc. in relation to the confirmation of the
merger of Macfield, Inc. with and into Unifi, Inc. and related
exhibits, filed with the Securities and Exchange Commission on August
8, 1991, which is incorporated herein by reference.
(2a-3) Form of Agreement and Reverse Triangular Merger, dated February 10,
1993, by and between Unifi, Inc. and Vintage Yarns, Inc., filed as
Exhibit 2.1 to Unifi, Inc.'s Registration Statement on Form S-4
(Registration No. 33-58282), which is incorporated herein by reference.
(2a-4) Form 8-K, filed by Unifi, Inc. in relation to the confirmation of the
Reverse Triangular Merger, where Vintage Yarns, Inc. became a wholly-
owned subsidiary of Unifi, and related exhibits, filed with the
Securities and Exchange Commission on May 10, 1993, which is
incorporated herein by reference.
(2a-5) Form of Agreement and Plan of Triangular Merger, dated July 15, 1993,
by and between Unifi, Inc. and Pioneer Yarn Mills, Inc., Pioneer
Spinning, Inc., Edenton Cotton Mills, Inc., and Pioneer Cotton Mills,
Inc., (the "Pioneer Corporations"), filed as Exhibit 2.1 to Unifi,
Inc.'s Registrations Statement on Form S-4 (Registration No.
33-65454), which is incorporated herein by reference.
(2a-6) Form 8-K, filed by Unifi, Inc. for the purpose of reporting the
Pioneer Corporations' Interim Combined Financial Statements
(Unaudited) and Unifi, Inc.'s, and the Pioneer Corporations' Proforma
Combined Interim Financial Information (Unaudited), and related
Exhibits, filed with the Securities and Exchange Commission on
September 2, 1993, which is incorporated herein by reference.
(2a-7) Form 8-K, filed by Unifi, Inc. for the purpose of reporting the
Pioneer Corporations' merger with and into USY, and related exhibits
filed with the Securities and Exchange Commission on November 5, 1993,
which is incorporated herein by reference.
IV-2
(2a-8) Contribution Agreement, dated June 30, 1997, by and between
Parkdale Mills, Inc., Unifi, Inc., UNIFI Manufacturing, Inc., and Parkdale
America, LLC, filed as Exhibit (2) to Unifi's Form 8-K filed with the
Commission on July 15, 1997, which is incorporated herein by reference.
(3a) Restated Certificate of Incorporation of Unifi, Inc., dated July 21,
1994, (filed as Exhibit (3a) with the Company's Form 10-K for the fiscal year
ended June 26, 1994), which is incorporated herein by reference.
(3b) Restated By-Laws of Unifi, Inc., filed herewith.(filed as Exhibit (3b) with the
Company's Form 10-K for the fiscal year ended June 29, 1997), which is
incorporated herein by reference.
(4a) Specimen Certificate of Unifi, Inc.'s common stock, filed as Exhibit
4(a) to the Registration Statement on Form S-1, (Registration No. 2-45405),
which is incorporated herein by reference.
(4b) Unifi, Inc.'s Registration Statement for the 6 1/2% Notes due 2008,
Series B, filed on Form S-4 (Registration No. 333-49243), which is
incorporated herein by reference.
(10a) *Unifi, Inc. 1982 Incentive Stock Option Plan, as amended, filed as
Exhibit 28.2 to the Registration Statement on Form S-8, (Registration No.
33-23201), which is incorporated herein by reference.
(10b) *Unifi, Inc. 1987 Non-Qualified Stock Option Plan, as amended, filed
as Exhibit 28.3 to the Registration Statement on Form S-8, (Registration No.
33-23201), which is incorporated herein by reference.
(10c) *Unifi, Inc. 1992 Incentive Stock Option Plan, effective July 16,
1992, (filed as Exhibit (10c) with the Company's Form 10-K for the fiscal year
ended June 27, 1993), and included as Exhibit 99.2 to the Registration
Statement on Form S-8 (Registration No. 33-53799), which are incorporated
herein by reference.
IV-2
(10d) *Unifi, Inc.'s Registration Statement for selling Shareholders, who
are Directors and Officers of the Company, who acquired the shares as stock
bonuses from the Company, filed on Form S-3 (Registration No. 33-23201),
which is incorporated herein by reference.
(10e) Unifi Spun Yarns, Inc.'s 1992 Employee Stock Option Plan filed as
Exhibit 99.3 to the Registration Statement on Form S-8 (Registration No.
33-53799), which is incorporated herein by reference.
(10f) *Unifi, Inc.'s 1996 Incentive Stock Option Plan (filed as Exhibit
10(f) with the Company's Form 10-K for the fiscal year-endedyear ended June 30, 1996),
which is incorporated herein by reference.
(10g) *Unifi, Inc.'s 1996 Non-Qualified Stock Option Plan (filed as
Exhibit 10(g) with the Company's Form 10-K for the fiscal year-endedyear ended June 30,
1996), which is incorporated herein by reference.
IV-3
(10h) Lease Agreement, dated March 2, 1987, between NationsBank, Trustee
under the Unifi, Inc. Profit Sharing Plan and Trust, Wachovia Bank and Trust
Co., N.A., Independent Fiduciary, and Unifi, Inc., (filed as Exhibit (10d)
with the Company's Form 10-K for the fiscal year ended June 28, 1987), which
is incorporated herein by reference.
(10i) Factoring Contract and Security Agreement and a Letter Amendment
thereto, all dated as of May 25, 1994, by and between Unifi, Inc. and the CIT
Group/DCC, Inc., (filed as Exhibit (10g) with the Company's Form 10-K for the
fiscal year ended June 26, 1994), which are incorporated herein by
reference.
(10j) Factoring Contract and Security Agreement, dated as of May 2, 1988,
between Macfield, Inc., and First Factors Corp., and First Amendment thereto,
dated September 28, 1990, (both filed as Exhibit (10g) with the Company's Form
10-K for the fiscal year ended June 30, 1991), and Second Amendment to the
Factoring Contract and Security Agreement, dated March 1, 1992, (filed as
Exhibit (10g) with the Company's Form 10-K for the fiscal year ended June 28,
1992), and Letter Agreement dated August 31, 1993 and Amendment to Factoring
Contract and Security Agreement dated January 5, 1994, (filed as Exhibit (10h)
with the Company's Form 10-K for the fiscal year ended June 26, 1994), which
are incorporated herein by reference.
(10k) Factoring Agreement dated August 23, 1995, and a Letter Amendment
thereto dated October 16, 1995, by and between Unifi, Inc. and Republic
Factors Corp., (filed as Exhibit (10k)10(k) with the Company's Form 10-K for the
fiscal year ended June 30, 1996), which is incorporated herein by reference.
IV-3
(10l) *Employment Agreement between Unifi, Inc. and G. Allen Mebane, dated
July 19, 1990, (filed as Exhibit (10h) with the Company's Form 10-K for the
fiscal year ended June 30, 1991), which is incorporated herein by reference.
(10m) *Employment Agreement between Unifi, Inc. and William T. Kretzer,
dated July 19, 1990, (filed as Exhibit (10i) with the Company's Form 10-K for
the fiscal year ended June 30, 1991), and Amendment to Employment Agreement
between Unifi, Inc. and William T. Kretzer, dated October 22, 1992 (filed as
Exhibit (10j) with the Company's Form 10-K for fiscal year ended June 27,
1993), which are incorporated herein by reference.
(10n) *Severance Compensation Agreement between Unifi, Inc. and William T.
Kretzer, dated July 20, 1996, expiring on July 19, 1999 (similar agreements
were signed with G. Allen Mebane, Robert A. Ward, Jerry W. Eller and G. Alfred
Webster), (filed(filed as Exhibit (10n) with the Company's Form 10-K for fiscal year
ended June 30, 1996), which is incorporated herein by reference.
IV-4
(10o) Credit Agreement, dated April 15, 1996, by and between Unifi, Inc.
and The Several Lenders from Time to Time Party thereto and NationsBank, N.A.
as agent, (filed as Exhibit (10o) with the Company's Form 10-K for the fiscal
year ended June 30, 1996), which is incorporated herein by reference.
(10p) Lease*Deferral Agreement, dated May 20,November 21, 1997, by and between NationsBanc
Leasing & R.E. CorporationUnifi,
Inc. and UNIFI Manufacturing,William T. Kretzer, filed herewith.
.
(10q) *Severance Compensation Agreement between Unifi, Inc. and Willis C.
Moore, III, dated July 16, 1998, expiring on July 20, 2001 (similar agreements
were signed with James W. Brown, Jr., Kenneth L. Huggins, Stewart Q. Little,
Ralph D. Mayes, and Raymond W. Maynard), filed herewith.
(11) Computation of Earnings per share.
(13a) Portions of Unifi, Inc.'s 19971998 Annual Report to Shareholders which
are incorporated herein by reference, as a part of this Form 10-K for fiscal
year ended June 29, 1997,28, 1998, filed herewith.
(13b-1)Report of Independent Auditors/Ernst & Young LLP - on the Consolidated
Financial Statements of Unifi, Inc. as of June 29, 199728, 1998, and each of the three
years in the period ended June 29, 1997.28, 1998.
(21) Subsidiaries of Unifi, Inc.
(23) Consent of Ernst & Young LLP.LLP
(27) Financial Data Schedule
IV-4
(b) Reports on Form 8-K
(i) Form 8-K dated June 30, 1997, and filed with the commission on
July 15, 1997, was filed to report the Company's entering into a
Contribution Agreement with Parkdale Mills, Inc. concerning its
cotton spinning operations.None.
* NOTE: These Exhibits are management contracts or compensatory plans or
arrangements required to be filed as an exhibit to this Form 10-K pursuant to
Item 14(c) of this report.
IV-5
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
UNIFI, INC. AND SUBSIDIARIES
JUNE 28, 1998
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------- --------- ----------- ---------- ---------
Additions
-------------------
Balance Charged Charged to Balance
at to Other at
Beginning of Costs and Accounts- Deductions- End of
Description Period Expenses Describe Describe Period
- ----------- ----------- -------- --------- ----------- ---------
Allowance for doubtful accounts:
Year ended
June 28, 1998 $5,462 $3,917 $3,665(a) $(4,819) (b) $ 8,225
Year ended
June 29, 1997 (in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------ --------- ------------------------- -------- --------
Additions
--------------
Balance Charged Charged to Balance
at to Other at
Beginning of Costs and Accounts- Deductions- End of
Description Period Expenses Describe Describe Period
- ------------------------ ----------- ---------- ----------- ----------- -------
Allowance for doubtful accounts:
Year ended June 29, 1997 $ 6,595 $ 4,390 $ -- $ (5,523) (a) $ 5,462
Year ended June 30, 1996 6,452 3,660 -- (3,517) (a) 6,595
Year ended June 25, 1995 4,302 5,524 -- (3,374) (a) 6,452
(a) Included uncollectible accounts written off and customer claims paid, net of
certain recoveries.
Unrealized (gains)/losses on certain investments:
Year ended June 29, 1997 $ -- $ -- $ -- $ -- $ --
Year ended June 30, 1996 (1,835) -- 1,835 (b) -- --
Year ended June 25, 1995 1,445 -- (3,280)(c) -- (1,835)
(b Represents the change in fair market value of the related investment
securities and the entry to reflect the dispostion6,595 4,390 - (5,523) (b) 5,462
Year ended
June 30, 1996 6,452 3,660 - (3,517) (b) 6,595
(a) Primarily represents acquisition related adjustment to write-down acquired
accounts receivable to fair market value.
(b) Includes uncollectible accounts written off and customer claims paid, net
of certain recoveries.
Unrealized (gains)/losses on certain investments:
Year ended
June 28, 1998 $ - $ - $ - $ - $ -
Year ended
June 29, 1997 - - - - -
Year ended
June 30, 1996 (1,835) - 1,835 (c) - -
(c) Represents the change in fair market value of the related investment
securities and the entry to reflect the disposition of the underlying
investments.
(c) Represents the change in fair market value of the related investment
securities.
IV-6