3. Recent Accounting Pronouncements

During the current fiscal quarter, the Company early adopted Accounting Standards Update (“ASU”) 2015-17,Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The ASU eliminates the existing requirement for entities to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Instead, upon adoption, entities are required to classify all deferred tax assets and liabilities as noncurrent. Adopting this ASU provides simplification in the presentation of deferred tax assets and liabilities and alignment with International Financial Reporting Standards.

The Condensed Consolidated Balance Sheets as of December 27, 2015 and June 28, 2015 presented within this Quarterly Report on Form 10-Q reflect the revised presentation requirements of ASU 2015-17, as outlined in the table below.

	June 28, 2015 As Previously Reported		AdjustmentsDue to Adoption of ASU 2015-17			June 28, 2015 As Adjusted

Deferred income taxes (within total current assets)	$	2,383	$	(2,383	)	$	—
Total current assets		215,347		(2,383	)		212,964

Deferred income taxes (within non-current assets)		1,539		2,383			3,922
Total assets		476,372		—			476,372

Deferred income taxes (within non-current liabilities)		90		—			90
Total liabilities		177,279		—			177,279

There have been no other newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on the Company's financial statements.

~~Unifi, Inc.~~

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

4. Receivables, Net

Receivables, net consists of the following:

	September 27, 2015			June28, 2015			December 27, 2015			June 28, 2015
Customer receivables	$	87,285		$	85,731		$	80,847		$	85,731
Allowance for uncollectible accounts		(1,932	)		(1,596	)		(2,363	)		(1,596	)
Reserves for yarn quality claims		(732	)		(581	)		(719	)		(581	)
Net customer receivables		84,621			83,554			77,765			83,554
Related party receivables		41			75			79			75
Other receivables		298			234			305			234
Total receivables, net	$	84,960		$	83,863		$	78,149		$	83,863

Other receivables consist primarily of receivables for duty drawback and refunds due from vendors.

The changes in the Company’s allowance for uncollectible accounts ~~and reserves for yarn quality claims~~ were as follows:

	Allowance for Uncollectible Accounts			Reserves for Yarn Quality Claims			Allowance for Uncollectible Accounts
Balance at June 28, 2015	$	(1,596	)	$	(581	)	$	(1,596	)
Charged to costs and expenses		(613	)		(503	)		(1,172	)
Charged to other accounts		175			30			159
Deductions		102			322			246
Balance at September 27, 2015	$	(1,932	)	$	(732	)
Balance at December 27, 2015							$	(2,363	)

Amounts charged to costs and expenses for the allowance for uncollectible accounts are reflected in provision for bad debts and deductions represent amounts written off which were deemed to not be collectible, net of any recoveries. Amounts charged to costs and expenses for the reserves for yarn quality claims are primarily reflected as a reduction of net sales and deductions represent adjustments to either increase or decrease claims based on negotiated amounts or actual versus estimated claim differences. Amounts charged to other accounts primarily include the impact of translating the activity of the Company’s foreign affiliates from their respective local currencies to the U.S. Dollar.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements5 (Continued).

5. Inventories

Inventories consists of the following:

	September 27, 2015			June28, 2015			December 27, 2015			June 28, 2015
Raw materials	$	42,345		$	42,526		$	38,819		$	42,526
Supplies		4,850			5,404			5,120			5,404
Work in process		8,118			7,546			5,685			7,546
Finished goods		58,126			56,844			60,265			56,844
Gross inventories		113,439			112,320			109,889			112,320
Inventory reserves		(661	)		(705	)		(914	)		(705	)
Total inventories	$	112,778		$	111,615		$	108,975		$	111,615

The cost for the majority of the Company’s inventories is determined using the first-in, first-out method. Certain foreign inventories and limited categories of supplies of ~~$24,037~~$25,210 and ~~$28,548~~$28,426 as of ~~September~~December 27, 2015 and June 28, 2015, respectively, were valued under the average cost method.

6~~. Other Current Assets~~

~~Other current assets consists of the following:~~

September 27, 2015

June28, 2015

Prepaid expenses
$ 1,931 $ 1,647
Vendor deposits
1,040 1,743
Funds held by qualified intermediary
— 1,390
Value added taxes receivable
613 1,220
Other
13 22
Total other current assets
$ 3,597 $ 6,022

~~Unifi, Inc.~~

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

Vendor deposits primarily relate to down payments made toward the purchase of raw materials by the Company’s U.S., Brazilian and Chinese operations. Value added taxes receivable are recoverable taxes associated with sales and purchase activities of the Company’s foreign operations. Prepaid expenses consist of advance payments for insurance, professional fees, membership dues, subscriptions, non-income related tax payments, marketing and information technology services.

During June 2015, the Company sold certain land and building assets historically utilized for warehousing in the Polyester Segment to an unrelated third party. Net proceeds from the sale of $1,390 were remitted directly to a qualified intermediary in anticipation of an exchange under section 1031 of the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”). Such funds were utilized during August 2015 to complete an exchange and purchase certain land and building assets for use in the Polyester Segment from an unrelated third party.

7. Property, Plant and Equipment, Net

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

	September 27, 2015			June28, 2015			December 27, 2015			June 28, 2015
Land	$	3,048		$	2,413		$	3,055		$	2,413
Land improvements		11,687			11,709			12,017			11,709
Buildings and improvements		141,680			141,259			142,443			141,259
Assets under capital leases		21,525			17,371			21,525			17,371
Machinery and equipment		525,280			531,225			527,439			531,225
Computers, software and office equipment		16,578			16,782			16,871			16,782
Transportation equipment		4,558			4,736			4,529			4,736
Construction in progress		14,947			6,710			25,454			6,710
Gross property, plant and equipment		739,303			732,205			753,333			732,205
Less: accumulated depreciation		(588,700	)		(595,094	)		(592,336	)		(595,094	)
Less: accumulated amortization – capital leases		(1,328	)		(889	)		(1,787	)		(889	)
Total property, plant and equipment, net	$	149,275		$	136,222		$	159,210		$	136,222

Assets under capital leases consists of the following:

	September 27, 2015		June 28, 2015		December 27, 2015		June 28, 2015
Machinery and equipment	$	14,745	$	12,804	$	14,745	$	12,804
Transportation equipment		5,927		3,714		5,927		3,714
Building improvements		853		853		853		853
Gross assets under capital leases	$	21,525	$	17,371	$	21,525	$	17,371

During the ~~first quarter of fiscal year 2016,~~six months ended December 27, 2015, the Company entered into ~~three~~ capital leases for machinery and transportation equipment with an aggregate present value of $4,154.

~~Internal software development costs within PP&E consist of the following:~~

September 27, 2015

June 28, 2015

Internal software development costs
$ 2,499 $ 2,473
Accumulated amortization
(2,259 ) (2,221 )
Net internal software development costs
$ 240 $ 252

Depreciation expense ~~including the amortization of assets under capital leases, internal software development costs amortization,~~and repairs and maintenance expenses ~~and capitalized interest~~ were as follows:

For the Three Months Ended

September 27, 2015

September 28, 2014

Depreciation expense
$ 3,804 $ 3,828
Internal software development costs amortization
38 34
Repair and maintenance expenses
4,496 4,658
Capitalized interest
76 47

	For the Three Months Ended				For the Six Months Ended
	December 27, 2015		December 28, 2014		December 27, 2015		December 28, 2014
Depreciation expense	$	3,756	$	3,829	$	7,598	$	7,691
Repairs and maintenance expenses		4,005		4,290		8,501		8,948

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements – (Continued)

87. Intangible Assets, Net

Intangible assets, net consists of the following:

September 27, 2015

June28, 2015

Customer lists
$ 23,615 $ 23,615
Non-compete agreements
4,293 4,293
Licenses, trademarks and other
844 837
Total intangible assets, gross
28,752 28,745

Accumulated amortization - customer lists
(19,740 ) (19,432 )
Accumulated amortization - non-compete agreements
(3,618 ) (3,537 )
Accumulated amortization – licenses, trademarks and other
(431 ) (388 )
Total accumulated amortization
(23,789 ) (23,357 )
Total intangible assets, net
$ 4,963 $ 5,388

In fiscal year 2007, the Company purchased the texturing operations of Dillon Yarn Corporation (“Dillon”), included in the Company’s Polyester Segment. The valuation of the customer list acquired ($22,000) was determined by estimating the discounted net earnings attributable to the customer relationships that were purchased after considering items such as possible customer attrition. Based on the length and trend of the projected cash flows, an estimated useful life of thirteen years was determined. The customer list is amortized through December 2019, in a manner which reflects the expected economic benefit that will be received over its thirteen-year life. The non-compete agreement (with a gross basis of $4,000) is amortized through December 2017, using the straight-line method over the period currently covered by the agreement.

On December 2, 2013, the Company acquired certain draw winding assets and the associated business from Dillon, included in the Company’s Polyester Segment. A customer list (with a gross basis of $1,615) and a non-compete agreement (with a gross basis of $50) were recorded in connection with the business combination, utilizing similar valuation methods as described above for the fiscal year 2007 transaction. The customer list is amortized over a nine-year estimated useful life based on the expected economic benefit. The non-compete agreement is amortized using the straight line method over the five-year term of the agreement.

In fiscal year 2012, the Company acquired a controlling interest (and continues to hold such 60% membership interest) in Repreve Renewables, LLC (“Renewables”), an agricultural company focused on the development, production and commercialization of dedicated biomass feedstock for use in the animal bedding, bio energy and bio-based products markets. A non-compete agreement (with a gross basis of $243) for Renewables is amortized using the straight-line method over the five-year term of the agreement. The FREEDOM^® Giant Miscanthus (“FGM”) license held by Renewables is amortized using the straight-line method over its estimated useful life of eight years. The FGM license is exclusive through April 26, 2020 and non-exclusive thereafter. The term of the license agreement is through March 5, 2030, which is the term of the related patent. Renewables may elect to extend the exclusive license rights through the term of the agreement by making a one-time payment to Mississippi State University (“MSU”) equal to 25% of the royalties paid to MSU attributable to the ninth year of the agreement.

~~The Company capitalizes costs incurred to register trademarks for REPREVE~~^® ~~and other PVA products in various countries. The Company has determined that these trademarks have varying useful lives of up to three years and are being amortized using the straight-line method.~~

	December 27, 2015			June28, 2015
Customer lists	$	23,615		$	23,615
Non-compete agreements		4,293			4,293
Licenses, trademarks and other		864			837
Total intangible assets, gross		28,772			28,745

Accumulated amortization - customer lists		(20,049	)		(19,432	)
Accumulated amortization - non-compete agreements		(3,698	)		(3,537	)
Accumulated amortization – licenses, trademarks and other		(471	)		(388	)
Total accumulated amortization		(24,218	)		(23,357	)
Total intangible assets, net	$	4,554		$	5,388

Amortization expense for intangible assets consists of the following:

For the Three Months Ended

September 27, 2015

September 28, 2014

Customer lists
$ 308 $ 399
Non-compete agreements
81 80
Licenses, trademarks and other
43 39
Total amortization expense
$ 432 $ 518

	For the Three Months Ended				For the Six Months Ended
	December 27, 2015		December 28, 2014		December 27, 2015		December 28, 2014
Total amortization expense	$	429	$	519	$	861	$	1,037

~~Unifi, Inc.~~

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

9~~. Other Non-Current Assets~~

~~Other non-current assets consists of the following:~~

September 27, 2015

June28, 2015

Biomass foundation and feedstock, net
$ 2,318 $ 2,151
Debt financing fees
1,525 1,611
Other
211 213
Total other non-current assets
$ 4,054 $ 3,975

Biomass foundation and feedstock are currently being developed and propagated by Renewables for potential markets in the animal bedding and bioenergy industries and are reflected net of accumulated depreciation of $75 and $55 at September 27, 2015 and June 28, 2015, respectively. Other consists primarily of vendor deposits.

108. Accrued Expenses

Accrued expenses consists of the following:

	September 27, 2015		June28, 2015		December 27, 2015		June28, 2015
Payroll and fringe benefits	$	8,090	$	11,258	$	6,038	$	11,258
Utilities		2,906		2,823		1,986		2,823
Property taxes		1,170		790		1,563		790
Contingent consideration		563		634		394		634
Other		919		1,135		1,273		1,135
Total accrued expenses	$	13,648	$	16,640	$	11,254	$	16,640

See note 14 for further information regarding the contingent consideration. Other consists primarily of employee-related claims and payments, interest, marketing expenses, freight expenses, rent, deferred incentives and other non-income related taxes.

119. Long-Term Debt

Debt Obligations

The following table presents the total balances outstanding for the Company’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
Principal Amounts as of

Scheduled
Maturity Date

Interest Rate as of
September 27, 2015 (1)
September 27, 2015 June 28, 2015
ABL Revolver
March 2020 1.7% $ 28,000 $ 5,000
ABL Term Loan
March 2020 2.2% 79,875 82,125
Renewables’ promissory note
September 2020 3.0% 135 —
Term loan from unconsolidated affiliate
August 2016 3.0% 1,250 1,250
Capital lease obligations
(2) (3) 18,965 15,735
Total debt
128,225 104,110
Current portion of capital lease obligations
(4,240 ) (3,385 )
Current portion of long-term debt
(10,275 ) (9,000 )
Total long-term debt
$ 113,710 $ 91,725

			Principal Amounts as of
	Scheduled Maturity Date	Weighted Average Interest Rate as of December 27, 2015 (1)	December 27, 2015			June 28, 2015
ABL Revolver	March 2020	2.3%	$	16,200		$	5,000
ABL Term Loan	March 2020	2.2%		95,000			82,125
Renewables’ promissory note	September 2020	3.0%		135			—
Renewables’ term loan	August 2022	3.5%		4,000			—
Term loan from unconsolidated affiliate	August 2016	3.0%		1,250			1,250
Capital lease obligations	(2)	(3)		17,917			15,735
Construction financing	(4)	(4)		2,385			—
Total debt				136,887			104,110
Current portion of capital lease obligations				(4,274	)		(3,385	)
Current portion of long-term debt				(10,776	)		(9,000	)
Total long-term debt			$	121,837		$	91,725

(1)

The weighted average interest rate as of ~~September~~December 27, 2015 for the ABL Term Loan includes the effects of the interest rate swap with a notional balance of $50,000.

(2)

Scheduled maturity dates for capital lease obligations range from January 2017 to November 2027.

(3)

Interest rates for capital lease obligations range from 2.3% to 4.6%.

(4)

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

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

On March 26, 2015, the Company and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated Credit Agreement ~~(the~~(as subsequently amended, the “Amended Credit Agreement”) for a $200,000 senior secured credit facility (the “ABL Facility”) with a syndicate of lenders. The ABL Facility consists of a $100,000 revolving credit facility (the “ABL Revolver”) and a term loan that can be reset up to a maximum amount of $100,000, once per fiscal year, if certain ~~future~~ conditions are met (the “ABL Term Loan”). Such a principal increase occurred during the quarter ended December 27, 2015, as described below under the subheading “—Second Amendment”. The ABL Facility has a maturity date of March 26, 2020. ~~The Company paid $750 to the lenders in connection with the Amended Credit Agreement.~~

The Amended Credit Agreement replaced a previous senior secured credit facility dated May 24, 2012 with a similar syndicate of lenders, which, after multiple amendments, would have matured on March 28, 2019 and consisted of a $100,000 revolving credit facility and a $90,000 term loan. As used herein, the terms “ABL Facility,” “ABL Revolver” and “ABL Term Loan” shall mean the senior secured credit facility, the revolving credit facility or the term loan, respectively, under the Amended Credit Agreement or the previous senior secured credit facility, as applicable.

~~Unifi, Inc.~~

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

ABL Facility

The ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with proceeds and products) of Unifi, Inc., Unifi Manufacturing, Inc. and certain subsidiary guarantors (the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of certain ~~first tier~~first-tier controlled foreign corporations, as required by the lenders) of the stock of (or other ownership interests in) each of the Loan Parties (other than the Company) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof.

If excess availability under the ABL Revolver falls below the defined Trigger Level, a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a monthly basis of at least 1.05 to 1.0 becomes effective. The Trigger Level as of ~~September~~December 27, 2015 was ~~$22,484.~~$24,375. In addition, the ABL Facility contains restrictions on certain payments and investments, including restrictions on the payment of dividends and share repurchases. Subject to certain provisions, the ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at the Company’s discretion.

ABL Facility borrowings bear interest at the London Interbank Offer Rate (“LIBOR”) plus an applicable margin of 1.50% to 2.00%, or the Base Rate plus an applicable margin of 0.50% to 1.00%, with interest currently being paid on a monthly basis. The applicable margin is based on (a) the excess availability under the ABL Revolver and (b) the consolidated leverage ratio, calculated by fiscal quarter. The Base Rate means the greater of (i) the prime lending rate as publicly announced from time to time by Wells Fargo, (ii) the Federal Funds Rate plus 0.5%, and (iii) LIBOR plus 1.0%. The Company’s ability to borrow under the ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventory and is subject to certain conditions and limitations. There is also a monthly unused line fee under the ABL Revolver of 0.25%.

The ABL Term Loan is currently subject to quarterly amortizing payments of $2,250. Additionally, principal increases are available at the Company’s discretion, resetting the loan balance up to a maximum amount of $100,000, once per fiscal year upon satisfaction of certain conditions, beginning October 1, 2015.

As of ~~September~~December 27, 2015, the Company was in compliance with all financial ~~covenants;~~covenants and the excess availability under the ABL Revolver was ~~$57,089; the consolidated leverage ratio was 1.9 to 1.0;~~$65,125. At December 27, 2015 the fixed charge coverage ratio was ~~2.7~~2.8 to ~~1.0;~~1.0 and the Company had ~~$235~~$210 of standby letters of credit, none of which have been drawn upon.

~~First~~Second Amendment

On ~~June 26,~~November 19, 2015, the Company entered into the ~~First~~Second Amendment to Amended and Restated Credit Agreement dated March 26, 2015 (“~~First~~Second Amendment”). The ~~First~~Second Amendment ~~modified~~increased the ~~composition~~percentage applied to real estate valuations, on a one-time basis, from 60% to 75%, for purposes of ~~subsidiary guarantors in connection with an internal reorganization completed during~~calculating the ~~fourth quarter of fiscal year 2015. There was no impact~~Term Loan collateral. Simultaneous to entering into the Second Amendment, the Company entered into the Fourth Amended and Restated Term Note, thereby resetting the ABL Term Loan balance to $95,000. Pursuant to the ~~consolidated financial statements as a result~~Second Amendment, the ABL Term Loan is subject to quarterly amortizing payments of ~~the First Amendment.~~$2,375.

Renewables’ Promissory Note

In September 2015, Renewables delivered a promissory note in the amount of $135, and cash, to an unrelated third party for the purchase of certain land, consisting of thirty-seven acres located in Seven Springs, North Carolina, valued at $191. Such promissory note bears fixed interest at 3.0%, with principal and interest payable annually over a five-year period.Recourse does not extend beyond the assets of Renewables.

Renewables’ Term Loan

In September 2015, Renewables entered into a secured debt financing arrangement consisting of a master loan agreement and corresponding term loan supplement, with unrelated parties, with a borrowing capacity of up to $4,000. In October 2015, Renewables borrowed $4,000. The agreements include representations and warranties made by Renewables, financial covenants, affirmative and negative covenants and events of default that are usual and customary for financings of this type. ~~Lender recourse does not extend beyond the assets of Renewables.~~ Borrowings ~~will~~ bear interest at LIBOR plus an applicable margin of 3.25%, payable monthly in arrears.

~~Term Loan from Unconsolidated Affiliate~~

On August 30, 2012, a foreign subsidiary of the Company entered into an unsecured loan agreement under which it borrowed $1,250 from the Company’s unconsolidated affiliate, U.N.F. Industries Ltd. The loan Lender recourse does not ~~amortize and bears interest at 3%, payable semi-annually. The entire principal balance is due August 30, 2016,~~extend beyond the ~~revised maturity date.~~assets of Renewables.

Capital Lease Obligations

During the ~~three~~six months ended ~~September~~December 27, 2015, the Company entered into capital leases with an aggregate present value of $4,154. Fixed interest rates for these capital leases range from 3.4% to 3.8%, with maturity dates in August 2020.

Unifi, Inc.

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

Construction Financing

In December 2015, the Company entered into an agreement with a third party lender that provides for construction-period financing for certain build-to-suit assets. The Company will record project costs to construction in progress and the corresponding liability to construction financing (within long-term debt). The agreement provides for monthly, interest-only payments during the construction period, at a rate of 3.5%, and contains terms customary for a financing of this type.

The agreement provides for 60 monthly payments, which will commence at the earlier of the completion of the construction period or July 1, 2017, with an interest rate of 3.2%.

In connection with this construction financing arrangement, during the quarter ended December 27, 2015, the Company (i) recorded $210 of deferred financing fees and (ii) recorded long-term debt of $2,385 (to reflect $790 of proceeds for construction financing and $1,595 for construction in progress paid by the third party lender).

Scheduled Debt Maturities

The following table presents the scheduled maturities of the Company’s outstanding debt obligations for the remainder of fiscal year 2016 and the fiscal years thereafter:

	Scheduled Maturities on a Fiscal Year Basis
	2016		2017		2018		2019		2020		Thereafter
ABL Revolver	$	—	$	—	$	—	$	—	$	16,200	$	—
ABL Term Loan		4,750		9,500		9,500		9,500		61,750		—
Renewables’ promissory note		—		25		26		27		28		29
Renewables’ term loan		—		—		—		—		1,111		2,889
Term loan from unconsolidated affiliate		—		1,250		—		—		—		—
Capital lease obligations		2,120		4,261		4,128		4,058		2,542		808
Total⁽¹⁾	$	6,870	$	15,036	$	13,654	$	13,585	$	81,631	$	3,726

Scheduled Maturities on a Fiscal Year Basis

2016

2017

2018

2019

2020

Thereafter

ABL Revolver
$ — $ — $ — $ — $ 28,000 $ —
ABL Term Loan
6,750 9,000 9,000 9,000 46,125 —
Renewables’ promissory note
— 25 26 27 28 29
Capital lease obligations
3,167 4,261 4,128 4,058 2,542 809
Term loan from unconsolidated affiliate
— 1,250 — — — —
Total
$ 9,917 $ 14,536 $ 13,154 $ 13,085 $ 76,695 $ 838

(1)

Total reported here excludes $2,385 for construction financing, described above.

~~Debt Financing Fees~~

~~Debt financing fees are classified within other non-current assets and consist of the following:~~

Balance at June 28, 2015
$ 1,611
Additions
14
Amortization charged to interest expense
(100 )
Balance at September 27, 2015
$ 1,525

~~Interest Expense~~

~~Interest expense consists of the following:~~

For the Three Months Ended

September 27, 2015

September 28, 2014

Interest on ABL Facility
$ 613 $ 860
Other
212 48
Subtotal of interest on debt obligations
825 908
Reclassification adjustment for interest rate swap
19 104
Amortization of debt financing fees
100 112
Mark-to-market adjustment for interest rate swap
116 (258 )
Interest capitalized to property, plant and equipment, net
(76 ) (47 )
Subtotal of other components of interest expense
159 (89 )
Total interest expense
$ 984 $ 819

120. Other Long-Term Liabilities

Other long-term liabilities consists of the following:

September 27, 2015

June28, 2015

Uncertain tax positions
$ 4,052 $ 3,980
Supplemental post-employment plan
3,479 3,690
Contingent consideration
1,219 1,573
Interest rate swap
396 280
Other
1,297 1,217
Total other long-term liabilities
$ 10,443 $ 10,740

	December 27, 2015		June28, 2015
Uncertain tax positions	$	3,737	$	3,980
Supplemental post-employment plan		3,677		3,690
Contingent consideration		1,180		1,573
Deferred rent		800		—
Interest rate swap		197		280
Other		1,276		1,217
Total other long-term liabilities	$	10,867	$	10,740

~~Unifi, Inc.~~

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

The Company maintains an unfunded supplemental post-employment plan for certain management employees. Each employee’s account is credited annually based upon a percentage of the participant’s base salary, with each participant’s balance adjusted quarterly to reflect returns based upon a stock market index. Amounts are paid to participants only after termination of employment. (Income) expenses recorded for this plan for the quarters ended September 27, 2015 and September 28, 2014 were $(211) and $99, respectively.

~~Contingent consideration represents the present value of the long-term portion of contingent payments associated with the Company’s December 2013 acquisition of Dillon’s draw winding business.~~ See ~~“Note 16. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities”~~note 14 for further ~~discussion.~~

information regarding the contingent consideration. Other primarily includes certain retiree and post-employment medical and disability liabilities, and deferred energy incentive credits.

~~13.~~11. Income Taxes

The ~~effective~~provision for income tax rates for the three months ended September 27, 2015 and September 28, 2014 were based upon the estimated effective income tax rate applicable for the full year after giving effect to any significant items related specifically to interim periods. The effective income tax rate can be impacted over the course of the fiscal year by the mix and timing of actual earnings from our U.S. and foreign sources versus annual projections and changes in foreign currency exchange rates in relation to the U.S. Dollar. As a result, the Company’s effective tax rate may fluctuate significantly on a quarterly basis.taxes was as follows:

	For the Three Months Ended						For theSix Months Ended
	December 27, 2015			December 28, 2014			December 27, 2015			December 28, 2014
Provision for income taxes	$	2,088		$	3,193		$	6,028		$	7,354
Effective tax rate		25.2	%		25.9	%		30.1	%		31.8	%

The Company’s income tax provision for the three months ended September 27, 2015 and September 28, 2014 resulted in tax expense of $3,940 and $4,161 with an effective tax rate of 33.6% and 38.4%, respectively.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The effective ~~income~~ tax rate for the ~~current quarter~~periods presented above is lower than the U.S. statutory rate due to (i) a decrease in the valuation allowance reflecting the recognition of lower taxable income versus book income for the Company’s investment in Parkdale America, LLC (for which the Company maintains a full valuation allowance), which was partially offset by an increase in the valuation allowance for net operating losses, including Renewables (for which no tax benefit could be recognized); (ii) a lower overall effective tax rate for the Company’s foreign earnings (reflecting free-trade zone sales in El Salvador and lower statutory tax rates in both Brazil and China) and (iii) the domestic production activities deduction. These items were partially offset by ~~(i)~~(a) state and local taxes net of the assumed federal benefit and ~~(ii)~~(b) losses in tax jurisdictions for which no tax benefit could be recognized.

The ~~effective income tax rate for the prior year quarter is higher than the U.S. statutory rate due to the impact of state and local taxes, the timing~~audit of the ~~Company’s recognition of higher taxable versus book income for Parkdale America, LLC and losses in~~2013 tax ~~jurisdictions for which no tax benefit could be recognized, partially offset~~year by the ~~domestic production activities deduction.~~

~~Components of the Company’s deferred tax valuation allowance are as follows:~~

September 27, 2015

June 28, 2015

Investment in a former domestic unconsolidated affiliate
$ (6,400 ) $ (6,503 )
Equity-method investment in Parkdale America, LLC
(3,009 ) (3,261 )
Foreign tax credits
(1,680 ) (1,680 )
Book versus tax basis difference in Renewables
(1,300 ) (1,359 )
NOLs related to Renewables
(2,963 ) (2,803 )
Total deferred tax valuation allowance
$ (15,352 ) $ (15,606 )

~~There have been no~~Internal Revenue Service was closed in December 2015 and did not generate a significant ~~changes~~change in ~~the Company’s liability for~~ uncertain tax positions ~~since June 28, 2015. The Company’s estimate~~ for the potential outcome for any uncertain tax issue is highly judgmental. Management believes that any reasonably foreseeable outcomes related to these matters have been adequately provided for. However, future results may include favorable or unfavorable adjustments to estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire.

The Company and its domestic subsidiaries file a consolidated federal income tax return, as well as income tax returns in numerous state and foreign jurisdictions. The tax years subject to examination vary by jurisdiction.six months ended December 27, 2015. The Company regularly assesses the outcomes of both completed and ongoing examinations to ensure that the Company’s provision for income taxes is sufficient. ~~Currently, the Company is subject~~Certain returns that remain open to income tax examinations for U.S. federal income taxes for tax years 2011 through 2015, for foreign income taxes for tax years 2008 through 2015, and for state and local income taxes for tax years 2009 through 2015. The U.S. federal tax returns and state tax returns filed or to-be-filed for the 2011 through 2015 tax yearsexamination have utilized carryforward tax attributes generated in prior tax years, including net operating losses, which could potentially be revised upon examination.

~~Unifi, Inc.~~

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

~~14. Shareholders’ Equity~~

During ~~fiscal year 2014,~~the three months ended December 27, 2015, the Company ~~completed~~utilized a foreign tax credit as a deduction by amending its repurchase of shares under its $50,000 stock repurchase program that had been approved by the Board on January 22, 2013 (the “2013 SRP”). On April 23, 2014, the Board approved a new stock repurchase program (“2014 SRP”) to acquire up to an additional $50,0002011 federal return. Components of the Company’s common stock. Under the 2014 SRP (as was the case under the 2013 SRP), the Company has been authorized to repurchase shares at prevailing market prices, through open market purchases or privately negotiated transactions at such times and prices and in such mannerdeferred tax valuation allowance are as determined by management, subject to market conditions, applicable legal requirements, contractual obligations and other factors. Repurchases, if any, are expected to be financed through cash generated from operations and borrowings under the Company’s ABL Revolver, and are subject to applicable limitations and restrictions as set forth in the ABL Facility. The 2014 SRP has no stated expiration or termination date, and there is no time limit or specific time frame otherwise for repurchases. The Company may discontinue repurchases at any time that management determines additional purchases are not beneficial or advisable.follows:

	December 27, 2015			June 28, 2015
Investment in a former domestic unconsolidated affiliate	$	(6,399	)	$	(6,503	)
Equity-method investment in Parkdale America, LLC		(2,666	)		(3,261	)
Foreign tax credits		—			(1,680	)
Book versus tax basis difference in Renewables		(1,210	)		(1,359	)
Net Operating Losses related to Renewables		(3,313	)		(2,803	)
Total deferred tax valuation allowance	$	(13,588	)	$	(15,606	)

12. Shareholders’ Equity

The following table summarizes the Company’s repurchases and retirements of its common stock under Board-approved stock repurchase programs for the ~~2013 SRP and the 2014 SRP.~~fiscal periods noted.

Total Number of Shares
Repurchased as Part of
Publicly Announced Plansor Programs

Average Price Paid
per Share

Maximum Approximate
Dollar Value that May
Yet Be Repurchased
Under the 2014 SRP

Fiscal year 2013
1,068 $ 18.08
Fiscal year 2014
1,524 $ 23.96
Fiscal year 2015
349 $ 29.72
Fiscal year 2016(through September 27, 2015)
179 $ 30.36
Total
3,120 $ 22.96 $ 28,376

All repurchased shares have been 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. The portion of the remainder that is allocated to capital in excess of par value is limited to a pro rata portion of capital in excess of par value.

	Total Number of Shares Repurchased as Part of Publicly Announced Plansor Programs		Average Price Paid per Share		Maximum Approximate Dollar Value that May Yet Be Repurchased Under Publicly Announced Plans or Programs
Fiscal year 2013		1,068	$	18.08
Fiscal year 2014		1,524	$	23.96
Fiscal year 2015		349	$	29.72
Fiscal year 2016(through December 27, 2015)		206	$	30.13
Total		3,147	$	23.01	$	27,603

No dividends were paid during the ~~three~~six months ended ~~September~~December 27, 2015 or in the two most recent fiscal years.

~~15.~~13. Stock-based Compensation

On October 23, 2013, the Company’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 (“2008 LTIP”). No additional awards ~~will~~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.

As of December 27, 2015, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:

Authorized under the 2013 Plan	1,000
Plus: Awards expired, forfeited or otherwise terminated unexercised from the 2008 LTIP or 2013 Plan	22
Less: Service-condition options granted	(237	)
Less: RSUs granted to non-employee directors	(63	)
Available for issuance under the 2013 Plan	722

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Stock options

During the ~~quarters~~six months ended ~~September~~December 27, 2015 and ~~September~~December 28, 2014, the Company granted stock options to purchase 82 and 150 shares of common stock, respectively, to certain key employees. The stock options vest ratably over the required three-year service period and have ten-year contractual terms. For the ~~quarters~~six months ended ~~September~~December 27, 2015 and ~~September~~December 28, 2014, the weighted average exercise price of the options was $32.36 and $27.38 per share, respectively. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $20.27 and $17.31 per share, respectively.

~~For options granted, the valuation models used the following assumptions:~~

For the Three Months Ended

September 27, 2015

September 28, 2014

Expected term (years)
7.6 7.3
Risk-free interest rate
2.1 % 2.2 %
Volatility
60.5 % 62.6 %
Dividend yield
— —

~~Unifi, Inc.~~

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

The Company uses historical data to estimate the expected term and volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant for periods corresponding with the expected term of the options.

~~A summary of stock option activity for the quarter ended September 27, 2015 is as follows:~~

Stock Options

Weighted
Average
Exercise Price

Weighted
Average
Remaining Contractual Life (Years)

Aggregate
Intrinsic Value

Outstanding at June 28, 2015
934 $ 12.63
Granted
82 $ 32.36
Exercised
(5 ) $ 12.02
Forfeited
— $ —
Expired
— $ —
Outstanding at September 27, 2015
1,011 $ 14.24 5.7 $ 15,547
Vested and expected to vest as of September 27, 2015
1,003 $ 14.13 5.7 $ 15,534
Exercisable at September 27, 2015
796 $ 10.38 4.8 $ 15,124

As of September 27, 2015, all options subject to a market condition were vested. During fiscal year 2015, 10 options subject to a market condition vested when the closing price of the Company’s common stock on the New York Stock Exchange was at least $30 per share for thirty consecutive trading days.

~~At September 27, 2015, the remaining unrecognized compensation cost related to unvested stock options was $2,397, which is expected to be recognized over a weighted average period of 2.4 years.~~

For the quarter ended September 27, 2015, the total intrinsic value of options exercised was $107. The amount of cash received from the exercise of options was $60 and the tax benefit realized from stock options exercised was $15 for the quarter ended September 27, 2015.

Restricted stock units

During the six months ended December 27, 2015 and December 28, 2014, the Company granted 21 and 17 restricted stock units (“RSUs”), respectively, to the Company’s non-employee directors. The director RSUs became fully vested on the grant date. The director RSUs convey no rights of ownership in shares of Company stock until such director RSUs have been distributed to the grantee in the form of Company stock. The vested director RSUs will be converted into an equivalent number of shares of Company common stock and distributed to the grantee following the grantee’s termination of service as a member of the Board. The grantee may elect to defer receipt of the shares of stock in accordance with the deferral options provided under the Unifi, Inc. Director Deferred Compensation Plan. The Company estimated the weighted average fair value of such awards granted during the six months ended December 27, 2015 and December 28, 2014 to be $29.12 and $28.58 per director RSU, respectively.

The Company also may issue, from time to time, ~~restricted stock units (“RSUs”)~~RSUs to ~~the Company’s non-employee directors or~~ certain key employees. See “Note 16. Stock-Based Compensation” included in the 2015 Form 10-K for further information regarding the Company’s RSUs. No RSUs were granted during the three months ended September 27, 2015 and September 28, 2014.

The Company estimates the fair value of RSUs based on the market price of the Company’s common stock at the award grant date. See note 16 included in the 2015 Form 10-K for further information regarding the Company’s RSUs.

~~A summary of the RSU activity for the quarter ended September 27, 2015 is as follows:~~

Non-vested

Weighted
Average
Grant Date
Fair Value

Vested

Total

Weighted
Average
Grant Date
Fair Value

Outstanding at June 28, 2015
20 $ 18.35 167 187 $ 15.35
Granted
— $ — — — $ —
Vested
(14 ) $ 16.52 14 — $ 16.52
Converted
— $ — — — $ —
Forfeited
— $ — — — $ —
Outstanding at September 27, 2015
6 $ 22.08 181 187 $ 15.35

At September 27, 2015, the number of RSUs vested and expected to vest was 187 with an aggregate intrinsic value of $5,513. The aggregate intrinsic value of the 181 vested RSUs at September 27, 2015 was $5,312.

~~Unifi, Inc.~~

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

~~Summary~~

~~The total cost charged against income related to all stock-based compensation arrangements is as follows:~~

For the Three Months Ended

September 27, 2015

September 28, 2014

Stock options
$ 475 $ 464
RSUs
20 62
Total compensation cost
$ 495 $ 526

~~The total income tax benefit recognized for stock-based compensation was $93 and $101 for the quarters ended September 27, 2015 and September 28, 2014, respectively.~~

As of September 27, 2015, total unrecognized compensation costs related to all unvested stock-based compensation arrangements was $2,438. The weighted average period over which these costs are expected to be recognized is 2.4 years.

~~As of September 27, 2015, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows:~~

~~Authorized under the 2013 Plan~~	~~1,000~~
~~Plus: Awards expired, forfeited or otherwise terminated unexercised from the 2008 LTIP~~	1
~~Less: Service-condition options granted~~	~~(237~~	)
~~Less: RSUs granted to non-employee directors~~	~~(42~~	)
~~Available for issuance under the 2013 Plan~~	~~722~~

~~16.~~14. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities

The Company 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. The Company does not enter into derivative contracts for speculative purposes.

Foreign currency forward contracts

The Company may enter into foreign currency forward contracts as economic hedges for exposures related to certain sales, inventory purchases and equipment purchases which are denominated in currencies that are not its functional currency. Foreign currency forward contracts are not designated as hedges by the Company and are marked to market each period and offset by the foreign exchange (gains) losses included in other operating expense (income) ~~expense,~~, net resulting from the underlying exposures of the foreign currency denominated assets and liabilities. As of ~~September~~December 27, 2015, there were no outstanding foreign currency forward contracts.

Interest rate swap

On May 18, 2012, the Company entered into a five year, $50,000 interest rate swap with Wells Fargo to provide a hedge against the variability of cash flows related to LIBOR-based variable rate borrowings under the Company’s ABL Facility. It increased to $85,000 in May 2013 (when certain other interest rate swaps terminated) and has decreased $5,000 per quarter since August 2013 to the current notional balance of $50,000, where it will remain through the life of the instrument. This interest rate swap allows the Company to fix LIBOR at 1.06% and terminates on May 24, 2017.

On November 26, 2012, the Company de-designated the interest rate swap as a cash flow hedge. See ~~“Note 17. Accumulated Other Comprehensive Loss”~~note 15 for ~~detail~~information regarding the reclassifications of amounts from accumulated other comprehensive loss related to the interest rate swap.

Contingent consideration

On December 2, 2013, the Company acquired certain draw-winding assets in a business combination ~~with Dillon~~ and recorded a contingent consideration liability. The fair value of the contingent consideration is measured at each reporting period using a discounted cash flow methodology, based on inputs not observable in the market (Level 3 classification in the fair value hierarchy). The inputs to the discounted cash flow model include the estimated payments through the term of the agreement, based on an agreed-upon definition and schedule, adjusted to risk-neutral estimates using a market price of risk factor that considers relevant metrics of comparable entities, discounted using an observable cost of debt over the term of the estimated payments. Any change in the fair value from either the passage of time or events occurring after the acquisition date is recorded in other operating ~~(income)~~ expense (income), net. ~~There~~While adjustments have been made to reflect lower-than-expected results for draw-winding operations during fiscal year 2016, there have been no significant changes to the other inputs or assumptions used to develop the fair value measurement since the acquisition date.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements – (Continued)

A reconciliation of the changes in the fair value follows:

Contingent consideration as of June 28, 2015
$ 2,207
Changes in fair value
32
Payments
(457 )
Contingent consideration as of September 27, 2015
$ 1,782

~~Based on the present value of the expected future payments, $563 is reflected in accrued expenses and $1,219 is reflected in other long-term liabilities.~~

Contingent consideration as of June 28, 2015	$	2,207
Changes in fair value		(157	)
Payments		(476	)
Contingent consideration as of December 27, 2015	$	1,574

The Company’s financial assets and liabilities accounted for at fair value on a recurring basis and the level within the fair valuehierarchy used to measure these items are as follows:

As of September 27, 2015	Notional Amount				USD Equivalent	BalanceSheet Location	Fair Value Hierarchy		Fair Value
As of December 27, 2015												Notional Amount		USD Equivalent		Balance Sheet Location	Fair Value Hierarchy	Fair Value

Interest rate swap	USD	$	50,000	$	50,000	Other long-term liabilities	Level 2	$	(396	)	USD	$	50,000	$	50,000	Other long-term liabilities	Level 2	$	(197	)

Contingent consideration			—		—	Accrued expenses and other long-term liabilities	Level 3	$	(1,782	)			—		—	Accrued expenses and other long-term liabilities	Level 3	$	(1,574	)

As of June 28, 2015	Notional Amount				USD Equivalent	Balance Sheet Location	Fair Value Hierarchy		Fair Value			Notional Amount			USD Equivalent	Balance Sheet Location	Fair Value Hierarchy	Fair Value

Interest rate swap	USD	$	50,000	$	50,000	Other long-term liabilities	Level 2	$	(280	)	USD	$	50,000	$	50,000	Other long-term liabilities	Level 2	$	(280	)

Contingent consideration			—		—	Accrued expenses and other long-term liabilities	Level 3	$	(2,207	)			—		—	Accrued expenses and other long-term liabilities	Level 3	$	(2,207	)

Estimates for the fair value of the interest rate swap are obtained from month-end market quotes for contracts with similar terms.

By entering into derivative instrument contracts, the Company exposes itself to counterparty credit risk. The Company attempts to minimize this risk by selecting counterparties with investment grade credit ratings, limiting the amount of exposure to any single counterparty and regularly monitoring its market position with each counterparty. The Company’s derivative instruments do not contain any credit-risk-related contingent features.

The Company believes that there have been no significant changes to its credit risk profile or the interest rates available to the Company for debt issuances with similar terms and average maturities, and the Company 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 due to their short-term nature.

There were no transfers into or out of the levels of the fair value hierarchy for the ~~three~~six months ended ~~September~~December 27, 2015 and ~~September~~December 28, 2014.

~~18. Computation of~~16. Earnings Per Share

The ~~computation~~components of ~~basic and diluted~~the calculation of earnings per share (“EPS”) isare as follows:

For the Three Months Ended

September 27, 2015

September 28, 2014

Basic EPS

Net income attributable to Unifi, Inc.
$ 8,025 $ 7,077
Weighted average common shares outstanding
17,921 18,289
Basic EPS
$ 0.45 $ 0.39

Diluted EPS

Net income attributable to Unifi, Inc.
$ 8,025 $ 7,077

Weighted average common shares outstanding
17,921 18,289
Net potential common share equivalents – stock options and RSUs
629 601
Adjusted weighted average common shares outstanding
18,550 18,890
Diluted EPS
$ 0.43 $ 0.37

Excluded from the calculation of common share equivalents:

Anti-dilutive common share equivalents
155 177

Excluded from the calculation of diluted shares:

Unvested options that vest upon achievement of certain market conditions
— 13

	For the Three Months Ended				For the Six Months Ended
	December 27, 2015		December 28, 2014		December 27, 2015		December 28, 2014

Net income attributable to Unifi, Inc.	$	6,464	$	9,418	$	14,489	$	16,495

Basic weighted average shares		17,823		18,180		17,872		18,235
Net potential common share equivalents – stock options and RSUs		634		602		631		600
Diluted weighted average shares		18,457		18,782		18,503		18,835

Excluded from diluted weighted average shares:
Anti-dilutive common share equivalents		143		177		143		177
Unvested market condition stock options		—		10		—		10

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

~~Unifi, Inc.~~

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

~~19. Other Operating (Income) Expense, Net~~

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

For the Three Months Ended

September 27, 2015

September 28, 2014

Foreign currency transaction (gains) losses
$ (90 ) $ 313
Net (gain) loss on sale or disposal of assets
(64 ) 141
Other, net
8 146
Other operating (income) expense, net
$ (146 ) $ 600

~~20.~~17. Investments in Unconsolidated Affiliates and Variable Interest Entities

The Company currently maintains investments in three entities classified as unconsolidated affiliates: Parkdale America, LLC (“PAL”); U.N.F. Industries Ltd. (“UNF”); and UNF America LLC (“UNFA”). As of December 27, 2015, the Company’s investment in PAL was $110,059 and the Company’s combined investments in UNF and UNFA were $3,651, reflected within investments in unconsolidated affiliates in the consolidated balance sheets.

Parkdale America, LLC

~~In June 1997, the~~PAL is a limited liability company treated as a partnership for income tax reporting purposes. The Company and Parkdale Mills, Inc. (“Mills”) entered into a Contribution Agreement that set forth the terms and conditions by which the two companies contributed all of the assets of their spun cotton yarn operations utilizing open-end and air-jet spinning technologies to create Parkdale America, LLC (“PAL”). In exchange for its contribution, the Company receivedhas a 34% ownership interest in PAL, which is accounted for using the equity method of accounting. ~~Effective January 1, 2012, Mills’ interest in PAL was assigned to Parkdale Incorporated. PAL is a limited liability company treated as a partnership for income tax reporting purposes.~~ PAL is a producer of cotton and synthetic yarns for sale to the textile industry and apparel market, both foreign and domestic. PAL ~~has 16 manufacturing facilities located primarily~~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 ~~the southeast region~~raw material prices. The derivative instruments used are listed and traded on an exchange and are thus valued using quoted prices classified within Level 1 of the ~~U.S. and in Mexico. According~~fair value hierarchy. As of December 2015, PAL had no futures contracts designated as cash flow hedges.

Unifi, Inc.

Notes to ~~its most recently issued audited financial statements, PAL’s five largest customers accounted for approximately 76% of total revenues and 78% of total gross accounts receivable outstanding.~~ Condensed Consolidated Financial Statements (Continued)

As PAL’s fiscal year end is the Saturday nearest to December 31 and its results are considered significant (in accordance with Regulation S-X Rule 3-09), the Company files an amendment to each Annual Report on Form 10-K on or before 90 days subsequent to PAL’s fiscal year end to provide PAL’s audited financial statements for PAL’s most recent fiscal year. The Company filed an amendment to its 2014 Annual Report on Form 10-K for the fiscal year ended June 29, 2014 on April 2, 2015 to provide PAL’s audited financial statements for PAL’s fiscal year ended January 3, 2015. The Company expects to file an amendment to the 2015 Form 10-K on or before April 1, 2016 to provide PAL’s audited financial statements for PAL’s fiscal year ~~ending~~ended January 2, 2016.

The federal government maintains a program providing economic adjustment assistance to domestic users of upland cotton (the “EAP program”). The EAP program offers a subsidy for cotton consumed in domestic production, and the subsidy is paid the month after the eligible cotton is consumed. The subsidy must be used within eighteen months after the marketing year in which it is earned to purchase qualifying capital expenditures in the U.S. for production of goods from upland cotton. The marketing year is from August 1 to July 31. The program provides a subsidy of up to three cents per pound. In February 2014, the federal government extended the EAP program for five years. The cotton subsidy will remain at three cents per pound for the life of the program. PAL recognizes its share of income for the cotton subsidy when the cotton has been consumed and the qualifying assets have been acquired, with an appropriate allocation methodology considering the dual criteria of the subsidy.

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 in order to protect the gross margin of fixed-priced yarn sales. The derivative instruments used are listed and traded on an exchange and are thus valued using quoted prices classified within Level 1 of the fair value hierarchy. As of September 2015, PAL had no futures contracts designated as cash flow hedges.

As of September 27, 2015, the Company’s investment in PAL was $110,538 and reflected within investments in unconsolidated affiliates in the Consolidated Balance Sheets. The reconciliation between the Company’s share of the underlying equity of PAL and its investment is as follows:

Underlying equity as of September 27, 2015
$ 128,859
Initial excess capital contributions
53,363
Impairment charge recorded by the Company in 2007
(74,106 )
Anti-trust lawsuit against PAL in which the Company did not participate
2,652
EAP adjustments
(230 )
Investment as of September 27, 2015
$ 110,538

On August 28, 2014, PAL acquired the remaining 50% ownership interest in a yarn manufacturer and related entities based in Mexico (referred to as the Summit Entities). The acquisition increases PAL’s regional manufacturing capacity and expands its product offerings and customer base. PAL accounted for the transaction as a business combination under the acquisition method, recognizing the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The Company and PAL concluded that the acquisition did not represent a material business combination. Upon completion of purchase accounting, PAL recognized a bargain purchase gain of $4,430 and recorded acquired net assets of $23,644, as reflected in PAL’s audited financial statements for PAL’s fiscal year ended January 3, 2015.

~~Unifi, Inc.~~

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

On February 27, 2015, PAL purchased two manufacturing facilities, plus inventory, for approximately $13,000 cash, and entered into a yarn supply agreement with the seller. PAL has accounted for the transaction as a business combination under the acquisition method, recognizing the assets acquired and liabilities assumed at their respective provisional fair values as of the acquisition date. The Company and PAL concluded that the acquisition did not represent a material business combination. PAL has recognized a provisional bargain purchase gain of approximately $9,381 in its initial accounting for the acquisition for all identified assets and liabilities. The Company and PAL will continue to review the acquisition accounting during the measurement period, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the assets or liabilities initially recognized, as well as any additional assets or liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts. The acquisition accounting is incomplete, primarily pending final asset valuations.

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

Underlying equity as of December 27, 2015	$	128,364
Initial excess capital contributions		53,363
Impairment charge recorded by the Company in 2007		(74,106	)
Anti-trust lawsuit against PAL in which the Company did not participate		2,652
Cotton rebate program adjustments		(214	)
Investment as of December 27, 2015	$	110,059

U.N.F. Industries Ltd.

In September 2000, the Company and Nilit Ltd. (“Nilit”) formed a 50/50 joint venture, U.N.F. Industries Ltd. (“UNF”), for the purpose of operating nylon extrusion assets to manufacture nylon POY. Raw material and production services for UNF are provided by ~~Nilit~~the Company’s 50% joint venture partner under separate supply and services agreements. UNF’s fiscal year end is December 31 and it is a registered Israeli private company located in Migdal Ha-Emek, Israel.

UNF America LLC

In October 2009, the Company and Nilit America Inc. (“Nilit America”) formed a 50/50 joint venture, UNF America LLC (“UNF America”), for the purpose of operating a nylon extrusion facility that manufactures nylon POY. Raw material and production services for ~~UNF America~~UNFA are provided by ~~Nilit America~~the Company’s 50% joint venture partner under separate supply and services agreements. ~~UNF America’s~~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 ~~UNF America,~~UNFA, the Company entered into a supply agreement with UNF and ~~UNF America~~UNFA whereby the Company agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or ~~UNF America.~~UNFA. The agreement has no stated minimum purchase quantities and pricing is negotiated every six months, based on market rates. As of ~~September~~December 27, 2015, the Company’s open purchase orders related to this agreement were ~~$1,868.~~$3,192.

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

	For the Three Months Ended				For the Six Months Ended
	September 27, 2015		September 28, 2014		December 27, 2015		December 28, 2014
UNF	$	1,021	$	788	$	1,356	$	1,817
UNF America		7,142		6,768
UNFA						13,441		14,274
Total	$	8,163	$	7,556	$	14,797	$	16,091

As of ~~September~~December 27, 2015 and June 28, 2015, the Company had combined accounts payable due to UNF and ~~UNF America~~UNFA of ~~$3,193~~$2,565 and $4,038, respectively.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

The Company has determined that UNF and ~~UNF America~~UNFA are variable interest entities (“VIEs”) and has also determined that the Company is the primary beneficiary of these entities, based on the terms of the supply agreement. As a result, these entities should be consolidated in the Company’s financial results. As the Company purchases substantially all of the output from the two entities, the two entities’ balance sheets constitute 3% or less of the Company’s current assets, total assets and total liabilities (when excluding reciprocal balances), and because such balances are not expected to comprise a larger portion in the future, the Company has not included the accounts of UNF and ~~UNF America~~UNFA in its consolidated financial statements. ~~As of September 27, 2015, the Company’s combined investments in UNF and UNF America were $3,910 and are shown within investments in unconsolidated affiliates in the consolidated balance sheets.~~ The financial results of UNF and ~~UNF America~~UNFA are included in the Company’s financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with the Company’s accounting policy. Other than the supply agreement discussed above, the Company does not provide any other commitments or guarantees related to either UNF or ~~UNF America.~~

~~Unifi, Inc.~~

~~Notes to Condensed Consolidated Financial Statements~~ ~~– (Continued)~~UNFA.

Condensed balance sheet and income statement information for the Company’s unconsolidated affiliates (including reciprocal balances) is presented in the following tables. As PAL is defined as significant, its information is separately disclosed.

	As of September 27, 2015						As of December 27, 2015
	PAL		Other		Total		PAL		Other		Total
Current assets	$	234,290	$	13,250	$	247,540	$	218,948	$	10,070	$	229,018
Noncurrent assets		219,738		1,139		220,877		211,053		1,110		212,163
Current liabilities		56,291		4,567		60,858		43,751		3,937		47,688
Noncurrent liabilities		18,739		—		18,739		8,708		—		8,708
Shareholders’ equity and capital accounts		378,998		9,822		388,820		377,542		7,243		384,785

The Company’s portion of undistributed earnings		41,138		1,574		42,712		40,741		1,335		42,076

	As of June 28, 2015
	PAL		Other		Total
Current assets	$	250,699	$	9,273	$	259,972
Noncurrent assets		216,708		3,676		220,384
Current liabilities		61,243		4,985		66,228
Noncurrent liabilities		28,935		—		28,935
Shareholders’ equity and capital accounts		377,229		7,964		385,193

	For the Three Months Ended September 27, 2015						For the Three Months Ended December 27, 2015
	PAL		Other		Total		PAL			Other		Total
Net sales	$	224,065	$	9,349	$	233,414	$	183,426		$	7,264	$	190,690
Gross profit		7,387		2,330		9,717		2,917			1,852		4,769
Income from operations		3,561		1,849		5,410
Net income		5,729		1,858		7,587
(Loss) income from operations								(1,437	)		1,389		(48	)
Net (loss) income								(1,170	)		1,420		250
Depreciation and amortization		9,694		37		9,731		11,169			37		11,206

Cash received by PAL under EAP program		3,184		—		3,184
Earnings recognized by PAL for EAP program		4,354		—		4,354
Cash received by PAL under cotton rebate program								5,676			—		5,676
Earnings recognized by PAL for cotton rebate program								3,574			—		3,574

Distributions received		947		1,000		1,947		—			1,000		1,000

As of the end of PAL’s fiscal ~~September~~December 2015 period, PAL’s amount of deferred revenues related to the ~~EAP~~cotton rebate program was $0.

	For the Three Months Ended September 28, 2014						For the Three Months Ended December 28, 2014
	PAL		Other		Total		PAL		Other		Total
Net sales	$	206,236	$	7,360	$	213,596	$	192,243	$	8,955	$	201,198
Gross profit		10,969		655		11,624		12,063		1,007		13,070
Income from operations		6,814		293		7,107		6,909		655		7,564
Net income		9,964		339		10,303		9,039		685		9,724
Depreciation and amortization		7,208		25		7,233		8,161		25		8,186

Cash received by PAL under EAP program		4,301		—		4,301
Earnings recognized by PAL for EAP program		4,901		—		4,901
Cash received by PAL under cotton rebate program								4,153		—		4,153
Earnings recognized by PAL for cotton rebate program								3,854		—		3,854

Distributions received		—		—		—		—		—		—

As of the end of PAL’s fiscal ~~September~~December 2014 period, PAL’s amount of deferred revenues related to the ~~EAP~~cotton rebate program was $0.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements – (Continued)

	For the Six Months Ended December 27, 2015
	PAL		Other		Total
Net sales	$	407,491	$	16,613	$	424,104
Gross profit		10,304		4,182		14,486
Income from operations		2,124		3,238		5,362
Net income		4,559		3,278		7,837
Depreciation and amortization		20,863		74		20,937

Cash received by PAL under cotton rebate program		8,860		—		8,860
Earnings recognized by PAL for cotton rebate program		7,928		—		7,928

Distributions received		947		2,000		2,947

	For the Six Months Ended December 28, 2014
	PAL		Other		Total
Net sales	$	398,479	$	16,315	$	414,794
Gross profit		23,032		1,662		24,694
Income from operations		13,723		948		14,671
Net income		19,003		1,024		20,027
Depreciation and amortization		15,369		50		15,419

Cash received by PAL under cotton rebate program		8,454		—		8,454
Earnings recognized by PAL for cotton rebate program		8,755		—		8,755

Distributions received		—		—		—

2118. Commitments and Contingencies

Collective Bargaining Agreements

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

Environmental

On September 30, 2004, the Company completed its acquisition of the 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 (“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 (“EPA”) and the North Carolina Department of Environment and Natural Resources (“DENR”) pursuant to the Resource Conservation and Recovery Act Corrective Action program. The Corrective Action program requires DuPont to identify all potential areas of environmental concern (“AOCs”), assess the extent of containment at the identified AOCs and to clean it up to comply with applicable regulatory standards. Effective March 20, 2008, the Company entered into a Lease Termination Agreement associated with conveyance of certain assets at Kinston to DuPont. This agreement terminated the Ground Lease and relieved the Company of any future responsibility for environmental remediation, other than participation with DuPont, if so called upon, with regard to the Company’s period of operation of the Kinston site which was from 2004 to 2008. However, the Company continues to own a satellite service facility acquired in the INVISTA transaction that has contamination from DuPont’s operations and is monitored by DENR. This site has been remediated by DuPont, and DuPont has received authority from DENR to discontinue remediation, other than natural attenuation. DuPont’s duty to monitor and report to DENR will be transferred to the Company in the future, at which time DuPont must pay the Company for seven years of monitoring and reporting costs and the Company will assume responsibility for any future remediation and monitoring of the site. At this time, the Company has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potential liability for the same.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

Operating Leases

The Company 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. In addition, Renewables leases farm land for use in growing giant miscanthus. In connection with the expansion of growing crop fields, Renewables has entered into multiple operating leases for land during the six months ended December 27, 2015, many of which have lease terms of ten years with cancellation terms of one year. Currently, the Company does not sub-lease any of its leased property.

Other Commitments

The Company has assumed various financial obligations and commitments in the normal course of its operations and financing activities. Financial obligations are considered to represent known future cash payments that the Company is required to make under existing contractual arrangements. During the ~~current quarter,~~six months ended December 27, 2015, the Company entered into certain agreements to purchase assets in connection with the construction of a plastic bottle processing plant for the Polyester Segment. Unpaid amounts relating to these agreements total approximately ~~$12,670,~~$7,150, and relate to equipment not yet received by the Company.

In October 2015, the Company entered into a commitment to construct assets for future use in conversion of third party product. While the subject assets are being financed by a construction financing arrangement (described in note 9), in the course of facilitating construction, the Company will incur commitments to equipment vendors and contractors. As of December 27, 2015, such commitments total approximately $6,600.

~~22.~~19. Related Party Transactions

For details regarding the nature of certain related party relationships, see ~~“Note 25. Related Party Transactions”~~note 25 included in the 2015 Form 10-K. ~~There were no new related party transactions during the three months ended September 27, 2015.~~

Related party receivables consist of the following:

	September 27, 2015		June 28, 2015		December 27, 2015		June 28, 2015
Cupron, Inc.	$	26	$	72	$	71	$	72
Salem Global Logistics, Inc.		15		3		8		3
Total related party receivables (included within receivables, net)	$	41	$	75	$	79	$	75

Related party payables consist of the following:

	September 27, 2015		June 28, 2015		December 27, 2015		June 28, 2015
Cupron, Inc.	$	574	$	506	$	520	$	506
Salem Leasing Corporation		263		277		367		277
Total related party payables (included within accounts payable)	$	837	$	783	$	887	$	783

Related party transactions consist of the following:

		For the Three Months Ended					For the Three Months Ended
Affiliated Entity	Transaction Type	September 27, 2015		September 28, 2014		Transaction Type	December 27, 2015		December 28, 2014
Salem Leasing Corporation	Transportation equipment costs	$	945	$	950	Transportation equipment costs	$	931	$	947
Salem Global Logistics, Inc.	Freight service income		62		69	Freight service income		81		63

Cupron, Inc.	Sales		105		341	Sales		147		208

Invemed Associates LLC	Brokerage services		4		2
Cupron, Inc.						Yarn purchases		8		210

		For the Six Months Ended
Affiliated Entity	Transaction Type	December 27, 2015		December 28, 2014
Salem Leasing Corporation	Transportation equipment costs	$	1,876	$	1,897
Salem Global Logistics, Inc.	Freight service income		143		132

Cupron, Inc.	Sales		252		549
Cupron, Inc.	Yarn Purchases		8		210

Invemed Associates LLC	Brokerage services		4		2

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

From time to time, the Company exchanges equipment or extends the term of operating leases for certain transportation equipment under a master lease agreement with Salem Leasing Corporation. During the six months ended December 27, 2015, the Company exchanged multiple power units pursuant to such master lease agreement, with terms extending over the next four to six years. The increase to the existing obligation approximates $6,500.

Through April 24, 2015, Mr. Mitchel Weinberger was a member of the Company’s ~~Board and President and Chief Operating Officer of Dillon.~~Board. Related party transaction amounts ~~disclosed in prior periods~~for entities affiliated with Mr. Weinberger are omitted from current disclosures as such entities ~~affiliated with Mr. Weinberger~~ no longer constitute related parties of the Company.

~~Unifi, Inc.~~

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

2320. Business Segment Information

The Company has three reportable segments. Operations and revenues for each segment are described below:

●

The Polyester Segment manufactures Chip, POY, textured, dyed, twisted, beamed and draw wound yarns, both virgin and recycled, with sales primarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive upholstery, home furnishings, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the U.S. and El Salvador.

●

The Nylon Segment manufactures textured yarns (both nylon and polyester) and spandex covered yarns, with sales to knitters and weavers that produce fabric primarily for the apparel and hosiery markets. The Nylon Segment consists of sales and manufacturing operations in the U.S. and Colombia.

●

The International Segment’s products primarily include textured polyester and various types of resale yarns and staple fiber. The International Segment sells its yarns to knitters and weavers that produce fabric for the apparel, automotive upholstery, home furnishings, industrial and other end-use markets primarily in the South American and Asian regions. This segment includes a manufacturing location and sales offices in Brazil and a sales office in China.

In addition to its reportable segments, the Company’s selected financial information includes an All Other category. All Other consists primarily of Renewables (an operating segment that does not meet quantitative thresholds for reporting), for-hire transportation services and consulting services. Revenue for Renewables is primarily derived from (i) facilitating the use of miscanthus grass as bio-fuel through service agreements and (ii) delivering harvested miscanthus grass to poultry producers for animal bedding. For-hire transportation services revenues are derived from performing common carrier services utilizing the Company’s fleet of transportation equipment. Revenues for consulting services are derived from providing process improvement and change management consulting services to entities across various industries.

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

The Company 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 or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the chief operating decision maker.

In fiscal year 2015, the Company evaluated the operating performance of its segments based upon a different metric, referred to as Segment Adjusted Profit, which was defined as segment gross profit, plus segment depreciation and amortization, less segment SG&A expenses, plus segment other adjustments. SG&A expenses and other adjustments are no longer significant to the segment evaluations performed by the chief operating decision maker. The Company is providing current and comparative selected financial information below under the current method of evaluating segment profitability.

The accounting policies for the segments are consistent with the Company’s accounting policies. Intersegment sales are omitted from the below financial information, as they are (i) insignificant to the Company’s segments and consolidated operations and (ii) excluded from segment evaluations performed by the chief operating decision maker.

Unifi, Inc.

Notes to Condensed Consolidated Financial Statement (Continued)

Selected financial information is presented below. As described in note 2, certain amounts previously reported, which comprise operating income for the three and six months ended ~~September~~December 28, 2014, have been revised to reflect reclassification into the All Other category.

	For the Three Months Ended September 27, 2015											For the Three Months EndedDecember 27, 2015
	Polyester		Nylon		International		All Other			Total		Polyester		Nylon		International		All Other			Total
Net sales	$	90,568	$	40,676	$	29,371	$	1,550		$	162,165	$	89,814	$	40,367	$	24,812	$	1,343		$	156,336
Cost of sales		81,279		34,494		23,780		1,628			141,181		78,001		34,653		20,431		1,438			134,523
Gross profit (loss)		9,289		6,182		5,591		(78	)		20,984		11,813		5,714		4,381		(95	)		21,813
Segment depreciation expense		2,811		518		221		152			3,702		2,736		515		192		162			3,605
Segment Profit	$	12,100	$	6,700	$	5,812	$	74		$	24,686	$	14,549	$	6,229	$	4,573	$	67		$	25,418

	For the Three Months EndedDecember 28, 2014
	Polyester		Nylon		International		All Other			Total
Net sales	$	90,431	$	39,212	$	33,506	$	1,273		$	164,422
Cost of sales		78,099		33,584		28,429		1,381			141,493
Gross profit (loss)		12,332		5,628		5,077		(108	)		22,929
Segment depreciation expense		2,442		470		658		109			3,679
Segment Profit	$	14,774	$	6,098	$	5,735	$	1		$	26,608

~~Unifi, Inc.~~

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

For the Three Months Ended September 28, 2014

Polyester

Nylon

International

All Other

Total

Net sales
$ 92,978 $ 44,710 $ 36,494 $ 1,379 $ 175,561
Cost of sales
82,702 39,561 31,181 1,667 155,111
Gross profit (loss)
10,276 5,149 5,313 (288 ) 20,450
Segment depreciation expense
2,414 462 727 110 3,713
Segment Profit (Loss)
$ 12,690 $ 5,611 $ 6,040 $ (178 ) $ 24,163

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

For the Three Months Ended

September 27, 2015

September 28, 2014

Polyester
$ 2,811 $ 2,414
Nylon
518 462
International
221 727
All Other category 152 110
Segment depreciation expense
3,702 3,713
Other depreciation expense
149 149
Consolidated depreciation expense
$ 3,851 $ 3,862

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

	For the Three Months Ended						For the Three Months Ended
	September 27, 2015			September 28, 2014			December 27, 2015			December 28, 2014
Polyester	$	9,289		$	10,276		$	11,813		$	12,332
Nylon		6,182			5,149			5,714			5,628
International		5,591			5,313			4,381			5,077
All Other category		(78	)		(288	)		(95	)		(108	)
Segment gross profit		20,984			20,450			21,813			22,929
SG&A expenses		10,830			11,649			12,419			12,971
Provision for bad debts		613			584			559			62
Other operating (income) expense, net		(146	)		600
Other operating expense (income), net								206			(38	)
Operating income		9,687			7,617			8,629			9,934
Interest income		(163	)		(317	)		(166	)		(309	)
Interest expense		984			819			816			1,209
Equity in earnings of unconsolidated affiliates		(2,860	)		(3,721	)		(303	)		(3,281	)
Income before income taxes	$	11,726		$	10,836		$	8,282		$	12,315

	For theSix Months EndedDecember 27, 2015
	Polyester		Nylon		International		All Other			Total
Net sales	$	180,382	$	81,043	$	54,183	$	2,893		$	318,501
Cost of sales		159,280		69,147		44,211		3,066			275,704
Gross profit (loss)		21,102		11,896		9,972		(173	)		42,797
Segment depreciation expense		5,547		1,033		413		314			7,307
Segment Profit	$	26,649	$	12,929	$	10,385	$	141		$	50,104

	For theSix Months EndedDecember 28, 2014
	Polyester		Nylon		International		All Other			Total
Net sales	$	183,409	$	83,922	$	70,000	$	2,652		$	339,983
Cost of sales		160,801		73,145		59,610		3,048			296,604
Gross profit (loss)		22,608		10,777		10,390		(396	)		43,379
Segment depreciation expense		4,856		932		1,385		219			7,392
Segment Profit (Loss)	$	27,464	$	11,709	$	11,775	$	(177	)	$	50,771

Unifi, Inc.

Notes to Condensed Consolidated Financial Statements (Continued)

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

	For theSix Months Ended
	December 27, 2015			December 28, 2014
Polyester	$	21,102		$	22,608
Nylon		11,896			10,777
International		9,972			10,390
All Other category		(173	)		(396	)
Segment gross profit		42,797			43,379
SG&A expenses		23,249			24,620
Provision for bad debts		1,172			646
Other operating expense (income), net		60			562
Operating income		18,316			17,551
Interest income		(329	)		(626	)
Interest expense		1,800			2,028
Equity in earnings of unconsolidated affiliates		(3,163	)		(7,002	)
Income before income taxes	$	20,008		$	23,151

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

	For the Three Months Ended				For the Six Months Ended
	September 27, 2015		September 28, 2014		December 27, 2015		December 28, 2014
Polyester	$	13,973	$	6,602	$	23,437	$	12,026
Nylon		563		194		996		475
International		512		506		891		735
All Other category		513		—	1,716		43
Segment capital expenditures		15,561		7,302		27,040		13,279
Other capital expenditures		314		81		379		163
Capital expenditures	$	15,875	$	7,383	$	27,419	$	13,442

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

	September 27, 2015		June 28, 2015		December 27, 2015		June 28, 2015
Polyester	$	219,680	$	203,574	$	222,835	$	203,574
Nylon		75,138		71,332		76,033		71,332
International		53,238		63,031		54,648		63,031
Segment total assets		348,056		337,937		353,516		337,937
Other current assets		3,920		5,844		8,898		4,687
Other PP&E		16,164		13,544		17,156		13,544
Other non-current assets		4,709		5,146		4,461		6,303
Investments in unconsolidated affiliates		114,448		113,901		113,710		113,901
Total assets	$	487,297	$	476,372	$	497,741	$	476,372

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

~~Geographic information for net sales based on the operating locations from where the items were produced or distributed, is as follows:~~

Significant financing activities include ~~$20,750~~$24,075 for net borrowings onagainst the ABL Facility and ~~$5,439~~$6,211 for stock repurchases.

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

Changes to the Company’s obligations under various debt and financing arrangements during the ~~current quarter~~six months ended December 27, 2015 have been outlined in ~~“Note 11. Long-Term Debt” to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q,~~note 9, with supplemental discussions above in this Item 2.

During the ~~current~~first quarter of fiscal year 2016, the Company entered into certain agreements to purchase assets in connection with the construction of a plastic bottle processing plant (as previously discussed) for the Polyester Segment. ~~Unpaid~~At December 27, 2015, unpaid amounts relating to these agreements total approximately ~~$12,670,~~$7,150, and relate to equipment not yet received by the Company.

From time to time, the Company exchanges equipment or extends the term of operating leases for certain transportation equipment under a master lease agreement. During the ~~current quarter,~~six months ended December 27, 2015, the Company ~~also purchased certain land~~exchanged multiple power units pursuant to such master lease agreement, with terms extending over the next four to six years. The increase to the existing obligation approximates $6,500.

In October 2015, the Company entered into a commitment to construct assets for future use in connection with a contract-manufacturing project for a third-party. While the subject assets are being financed by a construction financing arrangement (described above), in the course of facilitating construction, the Company will incur commitments to equipment vendors and ~~building assets that were previously under an operating lease with monthly payments~~contractors. As of ~~$55.~~December 27, 2015, such commitments total approximately $6,600.

There have been no further material changes in the scheduled maturities of the Company’s contractual obligations as disclosed in the table under the subheading “Contractual Obligations” of Item 7 in the 2015 Form 10-K.

The Company 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 the Company’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 from quarter to quarter could materially impact the presentation of the financial statements. The Company’s critical accounting policies are discussed in ~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in~~ the 2015 Form 10-K. There have been no material changes to these policies during the current period.

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

The Company is exposed to interest rate risk through its borrowing activities. As of ~~September~~December 27, 2015, the Company had borrowings under its ABL Revolver and ABL Term Loan that totaled ~~$107,875~~$111,200 and contained variable rates of interest; however, the Company hedges a significant portion of such interest rate variability using an interest rate swap. After considering the variable rate debt obligations that have been hedged and the Company’s outstanding debt obligations with fixed rates of interest, the Company’s sensitivity analysis shows that a 50-basis point increase in LIBOR as of ~~September~~December 27, 2015 would result in an increase of ~~$289~~$326 in annual interest expense.

The Company conducts its business in various foreign countries and in various foreign currencies. Each of the Company’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 the Company to foreign currency exchange risk. The Company may enter into foreign currency forward contracts to hedge this exposure. The Company may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. As of ~~September~~December 27, 2015, the Company had no outstanding foreign forward currency contracts.

A significant portion of raw materials purchased by the Company’s Brazilian subsidiary ~~are~~is denominated in U.S. Dollars, requiring the Company to regularly exchange Brazilian Real. During recent years, and most notably in fiscal year 2015, the Company has been negatively impacted by a devaluation of the Brazilian Real. ~~For~~During fiscal year 2015, the Brazilian Real declined approximately 40% in relation to the U.S. Dollar, thereby reducing the utility of cash and cash equivalents held by the Company’s Brazilian subsidiary. Further devaluation of the Brazilian Real versus the U.S. Dollar occurred during the first ~~quarter~~six months of fiscal year 2016. Predicting fluctuations in the Brazilian Real is impracticable. Discussion and analysis surrounding the impact of the devaluation of the Brazilian Real on the Company’s results of operations is included above in ~~“Item~~Item 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations”.~~

As of ~~September~~December 27, 2015, the Company’s subsidiaries outside the U.S., whose functional currency is other than the U.S. Dollar, held approximately 11.4% of the Company’s consolidated total assets. The Company does not enter into foreign currency derivatives to hedge its net investment in its foreign operations.

As of ~~September~~December 27, 2015, ~~$7,464,~~$10,886, or ~~75.0%~~56.1%, of the Company’s cash and cash equivalents were held outside the U.S., of which approximately ~~$1,132~~$1,985 were held in U.S. Dollar equivalents.

More information regarding the Company’s derivative financial instruments as of ~~September~~December 27, 2015 is provided in ~~“Note 16. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities” to the Condensed Consolidated Financial Statements included in this Form 10-Q.~~note 14.

A significant portion of the Company’s raw materials 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. The Company does not use financial instruments to hedge its exposure to changes in these costs. The costs of the primary raw materials that the Company uses throughout all of its operations are generally based on U.S. Dollar 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.

The Company 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.

Evaluation of disclosure controls and procedures. As of ~~September~~December 27, 2015, an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 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 the Company's management, including the Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company 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 Securities and Exchange Commission rules and forms, and that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. During the Company’s ~~first~~second quarter of fiscal year 2016, there was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

There are no pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party or to which any of its property is the subject.

There are no material changes to the Company's risk factors set forth under “Item 1A. Risk Factors” in the 2015 Form 10-K.

(c) The following table summarizes the Company’s purchases of its common stock during the fiscal quarter ended ~~September~~December 27, 2015, all of which purchases were made under the stock repurchase program approved by the Board on April 23, 2014, under which the Company is authorized to acquire up to $50,000 of common stock. The repurchase program has no stated expiration or termination date, and there is no time limit or specific time frame for repurchases.

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

7201 West Friendly Avenue	~~Greensboro, NC~~	27419-9109
Greensboro, NC		(Zip Code)
(Address of principal executive offices)	~~(Zip Code~~)

Large accelerated filer [ ]	Accelerated filer [X]	Non-accelerated filer [ ]	Smaller reporting company [ ]
		(Do not check if a smaller reporting company)

	For The Three Months Ended
	September 27, 2015			September 28, 2014
Net income including non-controlling interest	$	7,786		$	6,675
Other comprehensive (loss) income:
Foreign currency translation adjustments		(11,038	)		(7,041	)
Foreign currency translation adjustments for an unconsolidated affiliate		(399	)		—
Reclassification adjustments on interest rate swap		19			104
Other comprehensive loss, net		(11,418	)		(6,937	)

Comprehensive loss including non-controlling interest		(3,632	)		(262	)
Less: comprehensive (loss) attributable to non-controlling interest		(239	)		(402	)
Comprehensive (loss) income attributable to Unifi, Inc.	$	(3,393	)	$	140

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Unifi, Inc. Shareholders’ Equity			Non-controlling Interest			Total Shareholders’ Equity

Balance at June 28, 2015		18,007		$	1,801		$	44,261		$	278,331		$	(26,899	)	$	297,494		$	1,599		$	299,093
Options exercised		5			—			60			—			—			60			—			60
Stock-based compensation		—			—			495			—			—			495			—			495
Common stock repurchased and retired under publicly announced programs		(179	)		(18	)		(443	)		(4,978	)		—			(5,439	)		—			(5,439	)
Other comprehensive loss, net		—			—			—			—			(11,418	)		(11,418	)		—			(11,418	)
Contributions from non-controlling interest		—			—			—			—			—			—			480			480
Net income (loss)		—			—			—			8,025			—			8,025			(239	)		7,786
Balance at September 27, 2015		17,833		$	1,783		$	44,373		$	281,378		$	(38,317	)	$	289,217		$	1,840		$	291,057

	For the Three Months Ended						For the Six Months Ended
	December 27, 2015			December 28, 2014			December 27, 2015			December 28, 2014
Net income including non-controlling interest	$	6,194		$	9,122		$	13,980		$	15,797
Other comprehensive income (loss):
Foreign currency translation adjustments		515			(5,483	)		(10,523	)		(12,524	)
Foreign currency translation adjustments for an unconsolidated affiliate		(97	)		(371	)		(496	)		(371	)
Reclassification adjustments on interest rate swap		19			89			38			193
Other comprehensive income (loss), net		437			(5,765	)		(10,981	)		(12,702	)

Comprehensive income including non-controlling interest		6,631			3,357			2,999			3,095
Less: comprehensive (loss) attributable to non-controlling interest		(270	)		(296	)		(509	)		(698	)
Comprehensive income attributable to Unifi, Inc.	$	6,901		$	3,653		$	3,508		$	3,793

Part I. FINANCIAL INFORMATION
				Page

Item 1.		Financial Statements:		3

		Condensed Consolidated Balance Sheets as of ~~September~~December 27, 2015 and June 28, 2015		3

		Condensed Consolidated Statements of Income for the Three Months and Six Months Ended ~~September~~December 27, 2015 and ~~September~~December 28, 2014		4

		Condensed Consolidated Statements of Comprehensive ~~(Loss)~~ Income for the Three Months and Six Months Ended ~~September~~December 27, 2015 and ~~September~~December 28, 2014		5

	~~Condensed Consolidated Statement of Shareholders’ Equity for the Three Months Ended September 27, 2015~~	6

		Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~September~~December 27, 2015 and ~~September~~December 28, 2014	7	6

		Notes to Condensed Consolidated Financial Statements	8	7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	28	25

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	41	44

Item 4.		Controls and Procedures	42	45


Part II. OTHER INFORMATION


Item 1.		Legal Proceedings	43	46

Item 1A.		Risk Factors	43	46

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	43	46

Item 3.		Defaults Upon Senior Securities	43	46

Item 4.		Mine Safety Disclosures	43	46

Item 5.		Other Information	43	46

Item 6.		Exhibits	44	47

		Signatures	45	48

		Exhibit Index	46	49

	December 27, 2015			June28, 2015
ASSETS
Cash and cash equivalents	$	19,417		$	10,013
Receivables, net		78,149			83,863
Inventories		108,975			111,615
Income taxes receivable		4,190			1,451
Other current assets		3,572			6,022
Total current assets		214,303			212,964

Property, plant and equipment, net		159,210			136,222
Deferred income taxes		1,467			3,922
Intangible assets, net		4,554			5,388
Investments in unconsolidated affiliates		113,710			113,901
Other non-current assets		4,497			3,975
Total assets	$	497,741		$	476,372

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	36,455		$	45,023
Accrued expenses		11,254			16,640
Income taxes payable		655			676
Current portion of long-term debt		15,050			12,385
Total current liabilities		63,414			74,724
Long-term debt		121,837			91,725
Other long-term liabilities		10,867			10,740
Deferred income taxes		3,241			90
Total liabilities		199,359			177,279
Commitments and contingencies

Common stock, $0.10 par value (500,000,000 shares authorized,17,822,065 and 18,007,749 shares outstanding)		1,782			1,801
Capital in excess of par value		45,371			44,261
Retained earnings		287,139			278,331
Accumulated other comprehensive loss		(37,880	)		(26,899	)
Total Unifi, Inc. shareholders’ equity		296,412			297,494
Non-controlling interest		1,970			1,599
Total shareholders’ equity		298,382			299,093
Total liabilities and shareholders’ equity	$	497,741		$	476,372

	September 27, 2015		June28, 2015
Prepaid expenses	$	1,931	$	1,647
Vendor deposits		1,040		1,743
Funds held by qualified intermediary		—		1,390
Value added taxes receivable		613		1,220
Other		13		22
Total other current assets	$	3,597	$	6,022

	September 27, 2015			June 28, 2015
Internal software development costs	$	2,499		$	2,473
Accumulated amortization		(2,259	)		(2,221	)
Net internal software development costs	$	240		$	252

	September 27, 2015		June28, 2015
Biomass foundation and feedstock, net	$	2,318	$	2,151
Debt financing fees		1,525		1,611
Other		211		213
Total other non-current assets	$	4,054	$	3,975

		Weighted Average		Principal Amounts as of
	Scheduled Maturity Date	Interest Rate as of September 27, 2015 (1)		September 27, 2015			June 28, 2015
ABL Revolver	March 2020		1.7%	$	28,000		$	5,000
ABL Term Loan	March 2020		2.2%		79,875			82,125
Renewables’ promissory note	September 2020		3.0%		135			—
Term loan from unconsolidated affiliate	August 2016		3.0%		1,250			1,250
Capital lease obligations	(2)		(3)		18,965			15,735
Total debt					128,225			104,110
Current portion of capital lease obligations					(4,240	)		(3,385	)
Current portion of long-term debt					(10,275	)		(9,000	)
Total long-term debt				$	113,710		$	91,725

Balance at June 28, 2015	$	1,611
Additions		14
Amortization charged to interest expense		(100	)
Balance at September 27, 2015	$	1,525

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at June 28, 2015		934		$	12.63
Granted		82		$	32.36
Exercised		(5	)	$	12.02
Forfeited		—		$	—
Expired		—		$	—
Outstanding at September 27, 2015		1,011		$	14.24		5.7	$	15,547
Vested and expected to vest as of September 27, 2015		1,003		$	14.13		5.7	$	15,534
Exercisable at September 27, 2015		796		$	10.38		4.8	$	15,124

	Non-vested			Weighted Average Grant Date Fair Value		Vested		Total		Weighted Average Grant Date Fair Value
Outstanding at June 28, 2015		20		$	18.35		167		187	$	15.35
Granted		—		$	—		—		—	$	—
Vested		(14	)	$	16.52		14		—	$	16.52
Converted		—		$	—		—		—	$	—
Forfeited		—		$	—		—		—	$	—
Outstanding at September 27, 2015		6		$	22.08		181		187	$	15.35

	Foreign Currency Translation Adjustments			Unrealized (Loss) Gain On Interest Rate Swap			Accumulated Other Comprehensive Loss			Foreign Currency Translation Adjustments			Unrealized (Loss) Gain On Interest Rate Swap			Accumulated Other Comprehensive Loss
Balance at June 28, 2015	$	(26,752	)	$	(147	)	$	(26,899	)	$	(26,752	)	$	(147	)	$	(26,899	)
Other comprehensive (loss) income, net of tax		(11,437	)		19			(11,418	)		(11,019	)		38			(10,981	)
Balance at September 27, 2015	$	(38,189	)	$	(128	)	$	(38,317	)
Balance at December 27, 2015										$	(37,771	)	$	(109	)	$	(37,880	)

	For the Three Months Ended September 27, 2015						For the Three Months Ended						For theSix Months Ended
	Pre-tax			After-tax			December 27, 2015			December 28, 2014			December 27, 2015			December 28, 2014
Other comprehensive (loss) income:
Other comprehensive income (loss):
Foreign currency translation adjustments	$	(11,038	)	$	(11,038	)	$	515		$	(5,483	)	$	(10,523	)	$	(12,524	)
Foreign currency translation adjustments for an unconsolidated affiliate		(399	)		(399	)		(97	)		(371	)		(496	)		(371	)
Reclassification adjustment on interest rate swap		19			19			19			89			38			193
Other comprehensive loss, net	$	(11,418	)	$	(11,418	)
Other comprehensive income (loss), net							$	437		$	(5,765	)	$	(10,981	)	$	(12,702	)

	For the Three Months Ended September 28, 2014
	Pre-tax			After-tax
Other comprehensive (loss) income:
Foreign currency translation adjustments	$	(7,041	)	$	(7,041	)
Reclassification adjustment on interest rate swap		104			104
Other comprehensive loss, net	$	(6,937	)	$	(6,937	)

Underlying equity as of September 27, 2015	$	128,859
Initial excess capital contributions		53,363
Impairment charge recorded by the Company in 2007		(74,106	)
Anti-trust lawsuit against PAL in which the Company did not participate		2,652
EAP adjustments		(230	)
Investment as of September 27, 2015	$	110,538

	September 27, 2015		June 28, 2015
U.S.	$	257,235	$	242,042
Brazil		6,420		8,207
Remaining Foreign		9,085		9,237
Total	$	272,740	$	259,486

	For the Three Months Ended September 27, 2015
	Income Before Income Taxes			Net Income			Basic EPS
GAAP results	$	11,726		$	8,025		$	0.45
Change in uncertain tax positions		—			72			—
Net gain on sale or disposal of assets		(64	)		(39	)		—
Adjusted results	$	11,662		$	8,058		$	0.45

Weighted average common shares outstanding								17,921

Net sales for the first quarter of fiscal year 2015	$	92,978
Net sales for the second quarter of fiscal year 2015				$	90,431
Decrease in average selling price		(3,508	)		(1,505	)
Increase in sales volumes		1,098			888
Net sales for the first quarter of fiscal year 2016	$	90,568
Net sales for the second quarter of fiscal year 2016				$	89,814

Segment Profit for the first quarter of fiscal year 2015	$	12,690
Decrease in underlying gross margins		(740	)
Increase in sales volumes		150
Segment Profit for the first quarter of fiscal year 2016	$	12,100

Segment Profit for the second quarter of fiscal year 2015	$	14,774
Decrease in underlying margins		(370	)
Increase in sales volumes		145
Segment Profit for the second quarter of fiscal year 2016	$	14,549

Net sales for the first quarter of fiscal year 2015	$	44,710
Decrease in sales volumes		(3,124	)
Decrease in average selling price and change in sales mix		(910	)
Net sales for the first quarter of fiscal year 2016	$	40,676

Segment Profit for the first quarter of fiscal year 2015	$	5,611
Improvement in underlying gross margins		1,481
Decrease in sales volumes		(392	)
Segment Profit for the first quarter of fiscal year 2016	$	6,700

Net sales for the first quarter of fiscal year 2015	$	36,494
Net sales for the second quarter of fiscal year 2015				$	33,506
Unfavorable currency translation effects		(10,802	)		(9,090	)
Decrease in sales volumes		(2,108	)		(2,677	)
Improvement in average selling price and change in sales mix		5,787			3,073
Net sales for the first quarter of fiscal year 2016	$	29,371
Net sales for the second quarter of fiscal year 2016				$	24,812

Segment Profit for the first quarter of fiscal year 2015	$	6,040
Improvements in underlying gross margins		1,965
Unfavorable currency translation effects		(1,844	)
Decrease in sales volumes		(349	)
Segment Profit for the first quarter of fiscal year 2016	$	5,812

Selling, general and administrative expenses for the first quarter of fiscal year 2015	$	11,649
Decrease in non-cash compensation expense		(341	)
Decrease in sales commissions and service fees		(120	)
Selling, general and administrative expenses for the second quarter of fiscal year 2015				$	12,971
Decrease in variable compensation expenses					(394	)
Decrease in professional fees		(115	)		(176	)
Decrease in depreciation and amortization expenses		(82	)		(76	)
Increase in consumer marketing and branding expenses		283			259
Other, net		(444	)		(165	)
Selling, general and administrative expenses for the first quarter of fiscal year 2016	$	10,830
Selling, general and administrative expenses for the second quarter of fiscal year 2016				$	12,419

	For theThree Months Ended						For theThree Months Ended
	September 27, 2015			September 28, 2014			December 27, 2015			December 28, 2014
Interest on ABL Facility	$	613		$	860
Other		212			48
Interest and fees on the ABL Facility							$	840		$	925
Other interest								205			43
Subtotal of interest on debt obligations		825			908			1,045			968
Reclassification adjustment for interest rate swap		19			104			19			89
Amortization of debt financing fees		100			112			101			146
Mark-to-market adjustment for interest rate swap		116			(258	)		(199	)		12
Interest capitalized to property, plant and equipment, net		(76	)		(47	)
Interest capitalized								(150	)		(6	)
Subtotal of other components of interest expense		159			(89	)		(229	)		241
Total interest expense		984			819			816			1,209
Interest income		(163	)		(317	)		(166	)		(309	)
Interest expense, net	$	821		$	502		$	650		$	900

Net sales for the year-to-date period of fiscal year 2015	$	183,409
Decrease in average selling price		(5,014	)
Increase in sales volumes		1,987
Net sales for the year-to-date period of fiscal year 2016	$	180,382

Segment Profit for the year-to-date period of fiscal year 2015	$	27,464
Decrease in underlying margins		(1,113	)
Increase in sales volumes		298
Segment Profit for the year-to-date period of fiscal year 2016	$	26,649

Segment Profit for the year-to-date period of fiscal year 2015	$	11,709
Improvement in underlying margins		1,482
Decrease in sales volumes		(262	)
Segment Profit for the year-to-date period of fiscal year 2016	$	12,929

	For theSix Months Ended
	December 27, 2015			December 28, 2014
Interest and fees on the ABL Facility	$	1,453		$	1,785
Other interest		417			91
Subtotal of interest on debt obligations		1,870			1,876	��
Reclassification adjustment for interest rate swap		38			193
Amortization of debt financing fees		201			258
Mark-to-market adjustment for interest rate swap		(83	)		(246	)
Interest capitalized		(226	)		(53	)
Subtotal of other components of interest expense		(70	)		152
Total interest expense		1,800			2,028
Interest income		(329	)		(626	)
Interest expense, net	$	1,471		$	1,402

	U.S.		Brazil		All Others⁽¹⁾		Total		U.S.		Brazil		Renewables⁽²⁾		Others		Total
Cash and cash equivalents	$	13	$	2,647	$	7,294	$	9,954	$	14	$	5,281	$	3,339	$	10,783	$	19,417
Borrowings available under ABL Revolver		57,089		—		—		57,089
Borrowings available under financing arrangements⁽¹⁾										65,125		—		—		—		65,125
Liquidity	$	57,102	$	2,647	$	7,294	$	67,043	$	65,139	$	5,281	$	3,339	$	10,783	$	84,542

Working capital	$	90,781	$	30,507	$	20,357	$	141,645	$	94,983	$	29,754	$	3,485	$	22,667	$	150,889
Total debt obligations	$	126,840	$	—	$	1,385	$	128,225	$	131,502	$	—	$	4,135	$	1,250	$	136,887

		Weighted Average		Principal Amounts as of							Weighted Average		Principal Amounts as of
	Scheduled Maturity Date	Interest Rate as of September 27, 2015 (1)		September 27, 2015			June 28, 2015			Scheduled Maturity Date	Interest Rate as of December 27, 2015 (1)		December 27, 2015			June 28, 2015
ABL Revolver	March 2020		1.7%	$	28,000		$	5,000		March 2020		2.3%	$	16,200		$	5,000
ABL Term Loan	March 2020		2.2%		79,875			82,125		March 2020		2.2%		95,000			82,125
Renewables’ promissory note	September 2020		3.0%		135			—		September 2020		3.0%		135			—
Renewables’ term loan										August 2022		3.5%		4,000			—
Term loan from unconsolidated affiliate	August 2016		3.0%		1,250			1,250		August 2016		3.0%		1,250			1,250
Capital lease obligations	(2)		(3)		18,965			15,735		(2)		(3)		17,917			15,735
Construction financing										(4)		(4)		2,385			—
Total debt					128,225			104,110						136,887			104,110
Current portion of capital lease obligations					(4,240	)		(3,385	)					(4,274	)		(3,385	)
Current portion of long-term debt					(10,275	)		(9,000	)					(10,776	)		(9,000	)
Total long-term debt				$	113,710		$	91,725					$	121,837		$	91,725