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

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

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

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

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

As of ~~April 29,~~November 7, 2022, there were ~~18,477,791~~18,035,684 shares of the registrant’s common stock, par value $0.10 per share, outstanding.

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

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

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

	March 27, 2022			June 27, 2021			October 2, 2022			July 3, 2022
ASSETS
Cash and cash equivalents	$	52,972		$	78,253		$	47,200		$	53,290
Receivables, net		109,531			94,837			90,755			106,565
Inventories		163,380			141,221			165,063			173,295
Income taxes receivable		11,664			2,392			1,432			160
Other current assets		20,978			12,364			14,336			18,956
Total current assets		358,525			329,067			318,786			352,266
Property, plant and equipment, net		215,078			201,696			219,430			216,338
Operating lease assets		9,520			8,772			8,247			8,829
Deferred income taxes		2,670			1,208			2,422			2,497
Other non-current assets		7,389			14,625			8,940			8,788
Total assets	$	593,182		$	555,368		$	557,825		$	588,718

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	67,134		$	54,259		$	44,428		$	73,544
Income taxes payable		11,609			1,625			1,925			1,526
Current operating lease liabilities		2,293			1,856			2,075			2,190
Current portion of long-term debt		14,509			16,045			11,875			11,726
Other current liabilities		18,806			31,638			18,421			19,806
Total current liabilities		114,351			105,423			78,724			108,792
Long-term debt		82,505			70,336			114,919			102,309
Non-current operating lease liabilities		7,331			7,032			6,263			6,736
Deferred income taxes		5,015			6,686			4,935			4,983
Other long-term liabilities		6,715			7,472			4,685			4,449
Total liabilities		215,917			196,949			209,526			227,269

Commitments and contingencies

Common stock, $0.10 par value (500,000,000 shares authorized; 18,451,039 and 18,490,338 shares issued and outstanding as of March 27, 2022 and June 27, 2021, respectively)		1,845			1,849
Common stock, $0.10 par value (500,000,000 shares authorized; 18,011,873 and 17,979,362 shares issued and outstanding as of October 2, 2022 and July 3, 2022, respectively)								1,801			1,798
Capital in excess of par value		67,523			65,205			66,709			66,120
Retained earnings		354,693			344,797			345,302			353,136
Accumulated other comprehensive loss		(46,796	)		(53,432	)		(65,513	)		(59,605	)
Total shareholders’ equity		377,265			358,419			348,299			361,449
Total liabilities and shareholders’ equity	$	593,182		$	555,368		$	557,825		$	588,718

	For the Three Months Ended						For the Nine Months Ended							For the Three Months Ended
	March 27, 2022			March 28, 2021			March 27, 2022			March 28, 2021				October 2, 2022			September 26, 2021
Net sales	$	200,780		$	178,866		$	598,182		$	483,147			$	179,519		$	195,992
Cost of sales		181,636			153,271			536,051			417,057				172,956			169,895
Gross profit		19,144			25,595			62,131			66,090				6,563			26,097
Selling, general and administrative expenses		14,389			14,581			39,025			38,570				11,773			12,670
Benefit for bad debts		(169	)		(184	)		(489	)		(1,330	)
Provision (benefit) for bad debts															174			(80	)
Other operating (income) expense, net		(831	)		2,582			(2	)		4,236				(689	)		256
Operating income		5,755			8,616			23,597			24,614
Operating (loss) income															(4,695	)		13,251
Interest income		(492	)		(159	)		(944	)		(471	)			(547	)		(258	)
Interest expense		709			885			2,140			2,589				1,247			696
Equity in earnings of unconsolidated affiliates		(41	)		(528	)		(385	)		(751	)			(295	)		(280	)
Recovery of non-income taxes, net		815			—			815			—
Income before income taxes		4,764			8,418			21,971			23,247
(Loss) income before income taxes															(5,100	)		13,093
Provision for income taxes		2,698			3,660			10,296			7,593				2,734			4,413
Net income	$	2,066		$	4,758		$	11,675		$	15,654
Net (loss) income														$	(7,834	)	$	8,680

Net income per common share:
Net (loss) income per common share:													Net (loss) income per common share:
Basic	$	0.11		$	0.26		$	0.63		$	0.85			$	(0.44	)	$	0.47
Diluted	$	0.11		$	0.25		$	0.62		$	0.83			$	(0.44	)	$	0.46

For the Three Months Ended

For the Nine Months Ended

March 27, 2022

March 28, 2021

March 27, 2022

March 28, 2021

Net income

$
2,066

$
4,758

$
11,675

$
15,654

Other comprehensive income (loss):

Foreign currency translation adjustments

13,921

(4,996
)

5,833

734

Changes in interest rate swaps, net of tax of
$105, $77, $248 and $233, respectively

340

247

803

756

Other comprehensive income (loss), net

14,261

(4,749
)

6,636

1,490

Comprehensive income

$
16,327

$
9

$
18,311

$
17,144

	For the Three Months Ended
	October 2, 2022			September 26, 2021
Net (loss) income	$	(7,834	)	$	8,680
Other comprehensive (loss) income:
Foreign currency translation adjustments		(5,908	)		(6,926	)
Changes in interest rate swaps, net of tax of nil and $77, respectively		—			256
Other comprehensive loss, net		(5,908	)		(6,670	)
Comprehensive (loss) income	$	(13,742	)	$	2,010

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at December 26, 2021

18,498

$
1,850

$
67,006

$
353,393

$
(61,057
)

$
361,192

Options exercised

—

—

—

—

—

—

Conversion of restricted stock units

4

—

—

—

—

—

Stock-based compensation

—

—

721

—

—

721

Common stock repurchased and retired under
  publicly announced program

(50
)

(5
)

(181
)

(766
)

—

(952
)
Common stock withheld in satisfaction of tax
  withholding obligations under net share settle
  transactions

(1
)

—

(23
)

—

—

(23
)
Other comprehensive income, net of tax

—

—

—

—

14,261

14,261

Net income

—

—

—

2,066

—

2,066

Balance at March 27, 2022

18,451

$
1,845

$
67,523

$
354,693

$
(46,796
)

$
377,265

	Shares			Common Stock		Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at July 3, 2022		17,979		$	1,798	$	66,120		$	353,136		$	(59,605	)	$	361,449
Options exercised		3			—		17			—			—			17
Conversion of equity units		31			3		(3	)		—			—			—
Stock-based compensation		—			—		591			—			—			591
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(1	)		—		(16	)		—			—			(16	)
Other comprehensive loss, net of tax		—			—		—			—			(5,908	)		(5,908	)
Net loss		—			—		—			(7,834	)		—			(7,834	)
Balance at October 2, 2022		18,012		$	1,801	$	66,709		$	345,302		$	(65,513	)	$	348,299

	Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings			Accumulated Other Comprehensive Loss			Total Shareholders’ Equity			Shares			Common Stock			Capital in Excess of Par Value			Retained Earnings		Accumulated Other Comprehensive Loss			Total Shareholders’ Equity
Balance at June 27, 2021		18,490		$	1,849		$	65,205		$	344,797		$	(53,432	)	$	358,419			18,490		$	1,849		$	65,205		$	344,797	$	(53,432	)	$	358,419
Options exercised		9			1			(1	)		—			—			—			9			1			(1	)		—		—			—
Conversion of restricted stock units		68			6			(6	)		—			—			—
Conversion of equity units																				38			4			(4	)		—		—			—
Stock-based compensation		5			1			2,827			—			—			2,828			—			—			582			—		—			582
Common stock repurchased and retired under publicly announced program		(102	)		(10	)		(367	)		(1,779	)		—			(2,156	)
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions		(19	)		(2	)		(135	)		—			—			(137	)		(13	)		(2	)		(12	)		—		—			(14	)
Other comprehensive income, net of tax		—			—			—			—			6,636			6,636
Other comprehensive loss, net of tax																				—			—			—			—		(6,670	)		(6,670	)
Net income		—			—			—			11,675			—			11,675			—			—			—			8,680		—			8,680
Balance at March 27, 2022		18,451		$	1,845		$	67,523		$	354,693		$	(46,796	)	$	377,265
Balance at September 26, 2021																				18,524		$	1,852		$	65,770		$	353,477	$	(60,102	)	$	360,997

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at December 27, 2020

18,481

$
1,848

$
63,972

$
326,620

$
(57,567
)

$
334,873

Options exercised

—

—

—

—

—

—

Conversion of restricted stock units

7

—

—

—

—

—

Stock-based compensation

4

1

761

—

—

762

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

(2
)

—

(47
)

—

—

(47
)
Other comprehensive loss, net of tax

—

—

—

—

(4,749
)

(4,749
)
Net income

—

—

—

4,758

—

4,758

Balance at March 28, 2021

18,490

$
1,849

$
64,686

$
331,378

$
(62,316
)

$
335,597

Shares

Common Stock

Capital in Excess of Par Value

Retained Earnings

Accumulated Other Comprehensive Loss

Total Shareholders’ Equity

Balance at June 28, 2020

18,446

$
1,845

$
62,392

$
315,724

$
(63,806
)

$
316,155

Options exercised

1

—

—

—

—

—

Conversion of restricted stock units

45

4

(4
)

—

—

—

Stock-based compensation

4

1

2,409

—

—

2,410

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

(6
)

(1
)

(111
)

—

—

(112
)
Other comprehensive income, net of tax

—

—

—

—

1,490

1,490

Net income

—

—

—

15,654

—

15,654

Balance at March 28, 2021

18,490

$
1,849

$
64,686

$
331,378

$
(62,316
)

$
335,597

	For the Nine Months Ended						For the Three Months Ended
	March 27, 2022			March 28, 2021			October 2, 2022			September 26, 2021
Cash and cash equivalents at beginning of period	$	78,253		$	75,267		$	53,290		$	78,253
Operating activities:
Net income		11,675			15,654
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Net (loss) income								(7,834	)		8,680
Adjustments to reconcile net (loss) income to net cash used by operating activities:
Equity in earnings of unconsolidated affiliates		(385	)		(751	)		(295	)		(280	)
Distribution received from unconsolidated affiliate		750			—
Depreciation and amortization expense		19,176			19,007			6,740			6,365
Non-cash compensation expense		3,081			2,656			633			660
Deferred income taxes		(3,019	)		(1,826	)		(373	)		(3,463	)
Loss on disposal of assets		21			2,773
Other, net		(43	)		(356	)		324			(100	)
Changes in assets and liabilities:
Receivables, net		(13,537	)		(43,034	)		13,800			(9,462	)
Inventories		(20,170	)		(11,825	)		6,475			(12,190	)
Other current assets		(2,503	)		3,482			4,026			(1,056	)
Income taxes		670			4,277			(789	)		2,606
Accounts payable and other current liabilities		1,084			33,033			(28,615	)		(7,393	)
Other, net		1,137			2,620			16			(175	)
Net cash (used) provided by operating activities		(2,063	)		25,710
Net cash used by operating activities								(5,892	)		(15,808	)

Investing activities:
Capital expenditures		(30,094	)		(12,071	)		(11,198	)		(9,300	)
Purchases of intangible assets		—			(3,605	)
Other, net		(2,150	)		153			(222	)		31
Net cash used by investing activities		(32,244	)		(15,523	)		(11,420	)		(9,269	)

Financing activities:
Proceeds from ABL Revolver		80,300			—			65,500			—
Payments on ABL Revolver		(61,800	)		—			(52,300	)		—
Payments on ABL Term Loan		(7,500	)		(7,500	)		(2,500	)		(2,500	)
Proceeds from construction financing		2,340			—			2,449			882
Payments on finance lease obligations		(2,876	)		(2,727	)		(436	)		(927	)
Common stock repurchased and retired under publicly announced program		(2,156	)		—
Other, net		(345	)		(111	)		—			(222	)
Net cash provided (used) by financing activities		7,963			(10,338	)		12,713			(2,767	)

Effect of exchange rate changes on cash and cash equivalents		1,063			482			(1,491	)		(853	)
Net (decrease) increase in cash and cash equivalents		(25,281	)		331
Net decrease in cash and cash equivalents								(6,090	)		(28,697	)
Cash and cash equivalents at end of period	$	52,972		$	75,598		$	47,200		$	49,556

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

UNIFI maintains one of the textile industry’s most comprehensive product offerings ~~which includes~~that include a range of specialized, value-added and commodity solutions, with principal geographic markets in ~~the Americas,~~North America, Central America, South America, Asia, and Europe. UNIFI has direct manufacturing operations in 4four countries and participates in joint ventures with operations in Israel and the United States (“U.S.”).

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. As contemplated by the instructions of the SEC to Form 10-Q, the following notes have been condensed and, therefore, do not contain all disclosures required in connection with annual financial statements. Reference should be made to UNIFI’s year-end audited consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the fiscal year ended ~~June 27, 2021~~July 3, 2022 (the ~~“2021~~“2022 Form 10-K”).

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

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

The fiscal quarter for each of Unifi, Inc., its primary domestic operating subsidiaries and its subsidiary in El Salvador ended on ~~March 27,~~October 2, 2022. Unifi, Inc.’s remaining material operating subsidiaries’ fiscal quarter ended on ~~March 31,~~September 30, 2022. There were no significant transactions or events that occurred between Unifi, Inc.’s fiscal quarter end and such wholly owned subsidiaries’ ~~subsequent~~ fiscal quarter end. The three-month periods ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021 both consisted of 13 ~~weeks. The nine-month periods ended March 27, 2022 and March 28, 2021 both consisted of 39~~ weeks.

Based on UNIFI’s review of Accounting Standards Updates issued since the filing of the ~~2021~~2022 Form 10-K, there have been no newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a material impact on UNIFI’s consolidated financial statements.

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

	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended
	March 27, 2022		March 28, 2021		March 27, 2022		March 28, 2021		October 2, 2022		September 26, 2021
Third-party manufacturer	$	199,623	$	176,100	$	592,505	$	475,087	$	178,212	$	193,297
Service		1,157		2,766		5,677		8,060		1,307		2,695
Net sales	$	200,780	$	178,866	$	598,182	$	483,147	$	179,519	$	195,992

	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended
	March 27, 2022		March 28, 2021		March 27, 2022		March 28, 2021		October 2, 2022		September 26, 2021
REPREVE^® Fiber	$	71,930	$	61,651	$	225,360	$	175,794	$	49,179	$	71,906
All other products and services		128,850		117,215		372,822		307,353		130,340		124,086
Net sales	$	200,780	$	178,866	$	598,182	$	483,147	$	179,519	$	195,992

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

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

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

~~Beginning in the fourth quarter of fiscal 2021, as a result of its annual review of products meeting the~~ ~~REPREVE~~^® ~~Fiber~~ ~~definition, UNIFI began including certain product sales in the Asia Segment that were previously excluded from the~~ ~~REPREVE~~^® ~~Fiber~~ ~~sales metric. The prior periods have been adjusted to reflect such sales and the amount reclassed was not material.~~

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

Other receivables includes $8,346 and $13,391 of banker’s acceptance notes (“BANs”) as of March 27, 2022 and June 27, 2021, respectively, in connection with the settlement of certain customer receivables generated from trade activity in the Asia Segment. The BANs are redeemable upon maturity from the drawing financial institutions, or earlier at a discount.

Brazilian companies are subject to various taxes on business operations, including turnover taxes used to fund social security and unemployment programs, commonly referred to as PIS/COFINS taxes. UNIFI, along with numerous other companies in Brazil, challenged the constitutionality of certain state taxes historically included in the PIS/COFINS tax base.

On May 13, 2021, Brazil’s Supreme Federal Court (“SFC”) ruled in favor of taxpayers, and on July 7, 2021, the Brazilian Internal Revenue Service withdrew its existing appeal. Following the SFC decision, the federal government will not issue refunds for these taxes but will instead allow for the overpayments and associated interest to be applied as credits against future PIS/COFINS tax obligations.

There are no limitations or restrictions on UNIFI’s ability to recover the associated overpayment claims as future income is generated. In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of these non-income taxes in Brazil. During the quarter ended March 27, 2022, UNIFI (i) reduced the estimate based on additional clarity and review of the recovery process during the months following the associated SFC decision and (ii) updated the expected duration of claim recovery to the 12-month period following March 27, 2022. The remaining estimated recovery amount has been reclassed to current assets accordingly, with no amounts reflected in other non-current assets at March 27, 2022.

Other non-current assets were immaterial at March 27, 2022 and June 27, 2021. Included within Other non-current assets are UNIFI’s investments in unconsolidated affiliates: U.N.F. Industries, Ltd. (“UNF”); and UNF America LLC (“UNFA”) (collectively “UNFs”).

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

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

In conjunction with the formation of UNFA, UNIFI entered into a supply agreement with UNF and UNFA whereby UNIFI agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNFA. The supply agreement has no stated minimum purchase quantities and pricing is typically negotiated every six months, based on market rates. As of March 27, 2022, UNIFI’s open purchase orders related to this supply agreement were $2,079.

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

~~As of March 27, 2022 and June 27, 2021, UNIFI had combined accounts payable due to UNF and UNFA of $5,167 and $2,955, respectively.~~

substantially all of the output from the two entities; (ii) the two entities’ balance sheets constitute 3% or less of UNIFI’s current assets, total assets, and total liabilities at each of UNIFI’s fiscal year ends; and (iii) such balances are not expected to comprise a larger portion in the future, UNIFI has not included the accounts of UNF and UNFA in its consolidated financial statements. The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with UNIFI’s accounting policy. Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to either UNF or UNFA.

~~Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) are presented in the tables below.~~

For the Three Months Ended

For the Nine Months Ended

March 27, 2022

March 28, 2021

March 27, 2022

March 28, 2021

Net sales
$
8,816

$
5,983

$
22,301

$
13,847

Gross profit

487

1,047

1,059

2,580

Income (loss) from operations

60

629

(194
)

1,348

Net income (loss)

54

630

(199
)

1,353

Depreciation and amortization

29

38

93

116

Distributions received

750

—

750

—

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

		Weighted Average											Weighted Average
	Scheduled	Interest Rate as of				Principal Amounts as of						Scheduled	Interest Rate as of			Principal Amounts as of
	Maturity Date	March 27, 2022				March 27, 2022			June 27, 2021			Maturity Date	October 2, 2022			October 2, 2022			July 3, 2022
ABL Revolver	December 2023		2.0	%		$	18,500		$	—		December 2023		4.5	%	$	54,500		$	41,300
ABL Term Loan	December 2023		3.2	%	(1)		70,000			77,500		December 2023		4.1	%		62,500			65,000
Finance lease obligations	(2)		3.5	%			7,363			8,475		(1)		3.6	%		7,554			7,261
Construction financing	(3)		1.5	%			1,458			882		(2)		1.8	%		2,450			729
Total debt							97,321			86,857							127,004			114,290
Current ABL Term Loan							(12,500	)		(12,500	)						(10,000	)		(10,000	)
Current portion of finance lease obligations							(2,009	)		(3,545	)						(1,875	)		(1,726	)
Unamortized debt issuance costs							(307	)		(476	)						(210	)		(255	)
Total long-term debt						$	82,505		$	70,336						$	114,919		$	102,309

Since the filing of the 2022 Form 10-K, Unifi, Inc. entered into the Sixth Amendment to Amended and Restated Credit Agreement (the “Sixth Amendment”) on September 2, 2022. The Sixth Amendment modified the Trigger Level (as defined in the Prior Credit Agreement and which relates to, among other things, the requirement to maintain a Fixed Charge Coverage Ratio (as defined in the Prior Credit Agreement)) such that it occurs when Excess Availability (as defined in the Prior Credit Agreement) falls below (a) for the period beginning on September 2, 2022 through and including the date that is 60 days after such date, $16,500 and (b) at all other times, the greatest of (i) $10.0 million, (ii) 20% of the Maximum Revolver Amount (as defined in the Prior Credit Agreement), and (iii) 12.5% of the sum of the Maximum Revolver Amount plus the outstanding principal amount of the Term Loan (as defined in the Prior Credit Agreement).

On ~~December 18, 2018,~~October 28, 2022, Unifi, Inc. and certain of its subsidiaries entered into a ~~Third Amendment to~~Second Amended and Restated Credit Agreement ~~and Second Amendment to Amended and Restated Guaranty and Security Agreement~~ (the ~~“2018 Amendment”~~“2022 Credit Agreement”). with a syndicate of lenders. The ~~2018 Amendment amended the Amended and Restated~~2022 Credit Agreement ~~dated as~~provides for a $230,000 senior secured credit facility (the “2022 ABL Facility”), including a $115,000 revolving credit facility and a term loan that can be reset up to a maximum amount of ~~March 26, 2015, by and among~~$115,000, once per fiscal year, if certain conditions are met. The 2022 ABL Facility has a maturity date of October 28, 2027.

Prior to entering the 2022 Credit Agreement, Unifi, Inc. and certain of its subsidiaries maintained a ~~syndicate of lenders, as previously amended (together with all previous and subsequent amendments, the “Credit Agreement”). The Credit Agreement provides for~~similar credit agreement that established a $200,000 senior secured credit facility (the ~~“ABL~~“Prior ABL Facility”), including a $100,000 revolving credit facility (the ~~“ABL~~“Prior ABL Revolver”) and a term loan that ~~can~~could be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions ~~are~~were met (the ~~“ABL~~“Prior ABL Term Loan”). The Prior ABL Facility ~~has~~had a maturity date of December 18, 2023.

Borrowings under the2022 ABL Facility bear interest at SOFR plus 0.10% plus an applicable margin of 1.25% to 1.75%, or the Base Rate (as defined in the 2022 Credit Agreement) plus an applicable margin of 0.25% to 0.75%, with interest paid on a monthly basis. Prior ABL Facility borrowings ~~bear~~bore interest at LIBOR plus an applicable margin of 1.25% to 1.75%, or the Base Rate (as defined in the Prior Credit Agreement) plus an applicable margin of 0.25% to 0.75%, with interest ~~currently being~~ paid on a monthly basis.

UNIFI currently maintains 3 interest rate swaps as cash flow hedges intended to fix LIBOR at approximately 1.9% on $75,000 of variable-rate debt. Such swaps are scheduled to terminate in May 2022. During the quarter ended December 26, 2021, UNIFI’s outstanding variable-rate debt fell below the combined $75,000 notional amount. Accordingly, the $20,000 notional interest rate swap was de-designated from hedge accounting treatment. The impact of de-designation was not material.

In May 2021, UNIFI entered into an agreement with a third party lender that provides for construction-period financing for certain ~~eAFK Evo~~ texturing machinery included in our capital allocation plans. UNIFI records 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 SOFR plus 1.25%, and contains terms customary for a financing of this type.

Each borrowing under the agreement provides for 60 monthly payments, which will commence ~~in the form of a finance lease obligation~~ upon the completion of the construction period with an interest rate of approximately ~~3.4%~~4.4%. In connection with this construction financing arrangement, ~~we have~~UNIFI has borrowed a total of ~~$3,222~~$5,672 and transitioned ~~a total of $1,764~~$3,222 of completed asset costs to finance lease obligations as of ~~March 27,~~October 2, 2022.

The following table presents the scheduled maturities of UNIFI’s outstanding debt ~~obligations for the remainder of fiscal 2022, the following four fiscal years and thereafter:~~obligations:

	Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026		Thereafter		Fiscal 2023		Fiscal 2024		Fiscal 2025		Fiscal 2026		Fiscal 2027		Thereafter
ABL Revolver	$	—	$	—	$	18,500	$	—	$	—	$	—	$	—	$	54,500	$	—	$	—	$	—	$	—
ABL Term Loan		5,000		10,000		55,000		—		—		—		7,500		55,000		—		—		—		—
Finance lease obligations		820		1,592		1,648		1,553		1,102		648		1,400		1,926		1,843		1,406		890		89
Total ⁽¹⁾	$	5,820	$	11,592	$	75,148	$	1,553	$	1,102	$	648	$	8,900	$	111,426	$	1,843	$	1,406	$	890	$	89

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended
	March 27, 2022			March 28, 2021			March 27, 2022			March 28, 2021			October 2, 2022			September 26, 2021
Provision for income taxes	$	2,698		$	3,660		$	10,296		$	7,593		$	2,734		$	4,413
Effective tax rate		56.6	%		43.5	%		46.9	%		32.7	%		(53.6	)%		33.7	%

On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to global intangible low-tax income (“GILTI”) that allow certain U.S. taxpayers to elect to exclude foreign income that is subject to a high effective tax rate from their GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available for tax years beginning after December 31, 2017. The three-month and nine-month periods ended March 28, 2021 includes a discrete tax expense (benefit) of $273 and $(4,874), respectively, related to this election.

UNIFI regularly assesses whether it is more-likely-than-not that some portion or all of its deferred tax assets will not be realized. UNIFI considers the scheduled reversal of taxable temporary differences, taxable income in carryback years, projected future taxable income and tax planning strategies in making this assessment. Since UNIFI operates in multiple jurisdictions, the assessment is made on a jurisdiction-by-jurisdiction basis, taking into consideration the effects of local tax law. The three-month and nine-month periods ended March 28, 2021 includes discrete tax (benefit) expense of $(133) and $1,508, respectively, for a change in valuation allowance related to the GILTI regulations enacted during that period.

UNIFI’s provision for income taxes for the ~~nine~~three months ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021 was calculated by applying the estimated annual effective tax rate to year-to-date pre-tax book income and adjusting for discrete items that occurred during the period.

The effective tax rate for the three months ~~and nine months~~ ended ~~March 27,~~October 2, 2022 was ~~higher~~lower than the U.S. federal statutory rate primarily due to an increase in the valuation allowance for deferred tax assets ~~earnings taxed at higher rates in foreign jurisdictions,~~ and ~~deferred~~current U.S. tax on ~~unremitted earnings.~~global intangible low-tax income (“GILTI”).

The effective tax rate for the three months ended ~~March 28,~~September 26, 2021 was higher than the U.S. federal statutory rate primarily due to ~~current U.S. tax on GILTI and~~ earnings taxed at higher rates in foreign jurisdictions. These rate impacts were partially offset by additional research credits claimed during the period. The effective tax rate for the nine months ended March 28, 2021 was higher than the U.S. federal statutory rate primarily due to current U.S.jurisdictions, deferred tax on ~~GILTI, the change in valuation allowance for deferred tax assets,~~unremitted earnings, and ~~earnings taxed at higher rates in~~ foreign ~~jurisdictions. These rate impacts were partially offset by the retroactive GILTI high-tax exclusion for prior periods, and additional R&D credits claimed during the current period.~~withholding taxes.

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

On October 31, 2018, UNIFI announced that its Board of Directors (the “Board”) approved a share repurchase program (the “2018 SRP”) under which UNIFI is authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP, purchases may be made from time to time in the open market at prevailing market prices, through private transactions or block trades. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date. Repurchases, if any, are expected to be financed through cash generated from operations and borrowings under the ABL Revolver, and are subject to applicable limitations and restrictions as set forth in the ABL Facility. UNIFI may discontinue repurchases at any time that management determines additional purchases are not beneficial or advisable.

The following table summarizes UNIFI’s repurchases and retirements of its common stock under the 2018 SRP for the fiscal periods noted:

	Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Average Price Paid per Share		Approximate Dollar Value that May Yet Be Repurchased Under Publicly Announced Plans or Programs		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs		Average Price Paid per Share		Approximate Dollar Value that May Yet Be Repurchased Under Publicly Announced Plans or Programs
Fiscal 2019		—	$	—	$	50,000		—	$	—	$	50,000
Fiscal 2020		84	$	23.72	$	48,008		84	$	23.72	$	48,008
Fiscal 2021		—	$	—	$	48,008		—	$	—	$	48,008
Fiscal 2022 (through March 27, 2022)		102	$	21.22	$	45,854
Fiscal 2022								617	$	14.84	$	38,859
Fiscal 2023 (through October 2, 2022)								—	$	—	$	38,859
Total		186	$	22.35	$	45,854		701	$	15.90	$	38,859

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

On October 29, 2020, UNIFI’s shareholders approved the Unifi, Inc. Second Amended and Restated 2013 Incentive Compensation Plan (the “2020 Plan”). The 2020 Plan set the number of shares available for future issuance pursuant to awards granted under the 2020 Plan to 850. No additional awards can be granted under prior plans; however, awards outstanding under a respective prior plan remain subject to that plan’s provisions.

The following table provides the number of awards remaining available for future issuance under the 2020 Plan as of ~~March 27,~~October 2, 2022:

On October 27, 2021, UNIFI’s shareholders approved the Unifi, Inc. Employee Stock Purchase Plan (the “ESPP”) as described in Unifi, Inc.’s ~~definitive proxy statement~~Definitive Proxy Statement on Schedule 14A filed with the SEC on September 2, 2021. The ESPP reserved 100 Company shares, is intended to be a qualified plan under applicable tax law, and allows eligible employees to purchase Company shares at a 15% discount from market value. ESPP activity is reflected as options exercised in the condensed consolidated statements of shareholders’ equity.

~~16.~~9. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities

The UNIFI, Inc. Deferred Compensation Plan (the “DCP”), established in fiscal 2022, is an unfunded non-qualified deferred compensation plan in which certain key employees are eligible to participate. The fair value of the investment assets held by the grantor trust established in connection with the DCP were approximately $2,523 and $2,196 as of October 2, 2022 and July 3, 2022, respectively, and are classified as trading securities within Other non-current assets. The grantor trust assets have readily-available market values and are classified as Level 1 trading securities in the fair value hierarchy. Trading gains and losses associated with these investments are recorded to Other operating (income) expense, net. The associated DCP liability is recorded within Other long-term liabilities, and any increase or decrease in the liability is also recorded in Other operating (income) expense, net. During fiscal 2023, we recorded losses on investments held by the trust of $49.

UNIFI uses derivative financial instruments such as foreign currency forward contracts or interest rate swaps to reduce its ongoing business exposures to fluctuations in foreign currency exchange rates or interest rates. UNIFI does not enter into derivative contracts for speculative purposes. As of October 2, 2022, there were no outstanding derivative instruments.

~~The following table presents details regarding UNIFI’s hedging activities:~~

For the ~~nine~~three months ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021, there were no significant changes to UNIFI’s assets and liabilities measured at fair value, and there were 0no transfers into or out of the levels of the fair value hierarchy.

As described in Note 11, “Long Term Debt,” UNIFI de-designated a $20,000 interest rate swap from hedge accounting treatment during the quarter ended December 26, 2021. The impact of de-designation was not material.

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

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

A summary of the after-tax effects of the components of other comprehensive ~~income,~~loss, net for the three-month ~~and nine-month periods~~period ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021 is included in the accompanying condensed consolidated statements of comprehensive (loss) income.

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

	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended
	March 27, 2022		March 28, 2021		March 27, 2022		March 28, 2021		October 2, 2022			September 26, 2021
Net income	$	2,066	$	4,758	$	11,675	$	15,654
Net (loss) income									$	(7,834	)	$	8,680
Basic weighted average shares		18,473		18,485		18,500		18,465		18,001			18,515
Net potential common share equivalents		469		482		474		331		—			482
Diluted weighted average shares		18,942		18,967		18,974		18,796		18,001			18,997
Excluded from the calculation of common share equivalents:
Anti-dilutive common share equivalents		443		287		330		557		618			287
Excluded from the calculation of diluted shares:
Unvested stock options that vest upon achievement of certain market conditions		333		333		333		333		333			333

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

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

On September 30, 2004, Unifi Kinston, LLC (“UK”), a subsidiary of Unifi, Inc., completed its acquisition of polyester filament manufacturing assets located in Kinston, North Carolina (“Kinston”) from Invista S.a.r.l. (“INVISTA”). The land for the Kinston site was leased pursuant to a 99-year ground lease (the “Ground Lease”) with E.I. DuPont de Nemours (“DuPont”). Since 1993, DuPont has been investigating and cleaning up the Kinston site under the supervision of the U.S. Environmental Protection Agency and the North Carolina Department of Environmental Quality (“DEQ”) pursuant to the Resource Conservation and Recovery Act Corrective Action program. The program requires DuPont to identify all potential areas of environmental concern (“AOCs”), assess the extent of containment at the identified AOCs and remediate the AOCs to comply with applicable regulatory standards. Effective March 20, 2008, UK entered into a lease termination agreement associated with conveyance of certain assets at the Kinston site to DuPont. This agreement terminated the Ground Lease and relieved UK of any future responsibility for environmental remediation, other than participation with DuPont, if so called upon, with regard to UK’s period of operation of the Kinston site, which was from 2004 to 2008. At this time, UNIFI has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potential liability for the same. UK continues to own property (the “Kentec site”) acquired in the 2004 transaction with INVISTA that has contamination from DuPont’s prior operations and is monitored by DEQ. The Kentec site has been remediated by DuPont, and DuPont has received authority from DEQ to discontinue further remediation, other than natural attenuation. Prior to transfer of responsibility to UK, DuPont and UK had a duty to monitor and report the environmental status of the Kentec site to DEQ. Effective April 10, 2019, UK assumed sole remediator responsibility of the Kentec site pursuant to its contractual obligations with INVISTA and received $180 of net monitoring and reporting costs due from DuPont. In connection with monitoring, UK expects to sample and report to DEQ annually. At this time, UNIFI does not expect any active site remediation will be required but expects that any costs associated with active site remediation, if ever required, would likely be immaterial.

There were 0no related party receivables as of ~~March 27,~~October 2, 2022 or ~~June 27, 2021.~~July 3, 2022.

Related party payables for Salem Leasing Corporation consisted of the following:

	March 27, 2022		June 27, 2021		October 2, 2022		July 3, 2022
Accounts payable	$	455	$	469	$	396	$	432
Operating lease obligations		890		1,133		732		811
Finance lease obligations		5,242		6,149		4,624		4,933
Total related party payables	$	6,587	$	7,751	$	5,752	$	6,176

UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s principal executive officer, who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources. Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates, and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

In the fourth quarter of fiscal 2022, UNIFI realigned its operating and reportable segments to correspond with changes to its operating model, management structure, and organizational responsibilities, reflecting the manner in which business performance is evaluated, resources are allocated, and financial statement users can best understand the results of operations. Accordingly, UNIFI is now reporting the Americas Segment, Brazil Segment, and Asia Segment. The Americas Segment represents the combination of the previously reported Polyester Segment, Nylon Segment, and All Other category. There are no changes to the composition of the historical Brazil Segment and Asia Segment. Comparative prior period disclosures have been updated to conform to the new presentation.

In addition to UNIFI’s reportable segments, an All Other category is included in the tables below. All Other consists primarily of for-hire transportation services. For-hire transportation services revenue is derived from performing common carrier services utilizing UNIFI’s fleet of transportation equipment.

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

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

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

	For the Three Months Ended March 27, 2022												For the Three Months Ended October 2, 2022
	Polyester		Asia		Brazil		Nylon		All Other		Total		Americas			Brazil		Asia		Total
Net sales	$	93,924	$	51,277	$	29,767	$	24,689	$	1,123	$	200,780	$	107,644		$	38,879	$	32,996	$	179,519
Cost of sales		90,043		43,900		23,784		22,925		984		181,636		112,513			32,092		28,351		172,956
Gross profit		3,881		7,377		5,983		1,764		139		19,144
Gross (loss) profit														(4,869	)		6,787		4,645		6,563
Segment depreciation expense		4,642		—		382		441		143		5,608		5,480			470		—		5,950
Segment Profit	$	8,523	$	7,377	$	6,365	$	2,205	$	282	$	24,752	$	611		$	7,257	$	4,645	$	12,513

For the Three Months Ended March 28, 2021

Polyester

Asia

Brazil

Nylon

All Other

Total

Net sales

$
82,668

$
48,483

$
25,704

$
20,778

$
1,233

$
178,866

Cost of sales

75,446

41,330

15,106

20,341

1,048

153,271

Gross profit

7,222

7,153

10,598

437

185

25,595

Segment depreciation expense

5,036

—

299

441

161

5,937

Segment Profit

$
12,258

$
7,153

$
10,897

$
878

$
346

$
31,532

For the Nine Months Ended March 27, 2022

Polyester

Asia

Brazil

Nylon

All Other

Total

Net sales

$
275,809

$
161,817

$
91,106

$
65,863

$
3,587

$
598,182

Cost of sales

263,194

138,958

67,657

63,187

3,055

536,051

Gross profit

12,615

22,859

23,449

2,676

532

62,131

Segment depreciation expense

13,668

—

1,042

1,320

458

16,488

Segment Profit

$
26,283

$
22,859

$
24,491

$
3,996

$
990

$
78,619

For the Nine Months Ended March 28, 2021

Polyester

Asia

Brazil

Nylon

All Other

Total

Net sales

$
228,440

$
130,898

$
72,563

$
47,815

$
3,431

$
483,147

Cost of sales

205,691

112,639

49,375

46,318

3,034

417,057

Gross profit

22,749

18,259

23,188

1,497

397

66,090

Segment depreciation expense

13,909

—

1,050

1,321

489

16,769

Segment Profit

$
36,658

$
18,259

$
24,238

$
2,818

$
886

$
82,859

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

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended
	March 27, 2022			March 28, 2021			March 27, 2022			March 28, 2021			October 2, 2022			September 26, 2021
Polyester	$	3,881		$	7,222		$	12,615		$	22,749
Americas													$	(4,869	)	$	9,186
Brazil														6,787			9,940
Asia		7,377			7,153			22,859			18,259			4,645			6,971
Brazil		5,983			10,598			23,449			23,188
Nylon		1,764			437			2,676			1,497
All Other		139			185			532			397
Segment gross profit		19,144			25,595			62,131			66,090			6,563			26,097
Selling, general and administrative expenses		14,389			14,581			39,025			38,570			11,773			12,670
Benefit for bad debts		(169	)		(184	)		(489	)		(1,330	)
Provision (benefit) for bad debts														174			(80	)
Other operating (income) expense, net		(831	)		2,582			(2	)		4,236			(689	)		256
Operating income		5,755			8,616			23,597			24,614
Operating (loss) income														(4,695	)		13,251
Interest income		(492	)		(159	)		(944	)		(471	)		(547	)		(258	)
Interest expense		709			885			2,140			2,589			1,247			696
Equity in earnings of unconsolidated affiliates		(41	)		(528	)		(385	)		(751	)		(295	)		(280	)
Recovery of non-income taxes, net		815			—			815			—
Income before income taxes	$	4,764		$	8,418		$	21,971		$	23,247
(Loss) income before income taxes													$	(5,100	)	$	13,093

There have been no material changes in segment assets during fiscal ~~2022.~~2023.

Included within Other non-current assets are UNIFI’s investments in unconsolidated affiliates: U.N.F. Industries, Ltd. (“UNF”); and UNF America LLC (“UNFA”) (collectively “UNFs”).

In conjunction with the formation of UNFA, UNIFI entered into a supply agreement with UNF and UNFA whereby UNIFI agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNFA. The supply agreement has no stated minimum purchase quantities and pricing is typically negotiated every six months, based on market rates. As of October 2, 2022, UNIFI’s open purchase orders related to this supply agreement were $1,180.

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

As of October 2, 2022 and July 3, 2022, UNIFI had combined accounts payable due to UNF and UNFA of $5,190 and $5,565, respectively.

UNIFI has determined that UNF and UNFA are variable interest entities and that UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement discussed above. As a result, these entities should be consolidated with UNIFI’s financial results. As (i) UNIFI purchases substantially all of the output from the two entities, (ii) the two entities’ balance sheets constitute 3% or less of UNIFI’s current assets and total assets, and (iii) such balances are not expected to comprise a larger portion in the future, UNIFI has not included the accounts of UNF and UNFA in its consolidated financial statements and instead is accounting for these entities as equity investments. As of October 2, 2022, UNIFI’s combined investments in UNF and UNFA were $2,246. The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with UNIFI’s accounting policy. Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to either UNF or UNFA.

Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) are presented in the tables below.

	For the Nine Months Ended				For the Three Months Ended
	March 27, 2022		March 28, 2021		October 2, 2022		September 26, 2021
Interest, net of capitalized interest of $322 and $145, respectively	$	1,980	$	2,395
Interest, net of capitalized interest of $87 and $106, respectively					$	767	$	644
Income tax payments, net		11,626		4,039		2,928		5,091

Cash payments for taxes shown above consist primarily of income and withholding tax payments made by UNIFI in both U.S. and foreign jurisdictions, net of refunds. The ~~nine~~three months ended ~~March 27, 2022~~September 26, 2021 includes an income tax payment of ~~$3,749~~$2,125 related to the recovery of non-income taxes ~~described~~ in ~~Note 7, “Other Current Assets.”~~Brazil.

As of ~~March 27,~~October 2, 2022 and July 3, 2022, $1,449 and $2,456, respectively, were included in accounts payable for unpaid capital expenditures. As of September 26, 2021 and June 27, 2021, ~~$1,981~~$1,524 and $2,080, respectively, were included in accounts payable for unpaid capital expenditures. As

During the three months ended October 2, 2022 and September 26, 2021, UNIFI recorded non-cash activity relating to finance leases of ~~March 28, 2021~~$729 and ~~June 28, 2020, $1,241 and $630, respectively, were included in accounts payable for unpaid capital expenditures.~~$0, respectively.

Select balance sheet information is presented in the ~~nine months ended March 27, 2022 and March 28, 2021, UNIFI recorded non-cash activity relating to finance leases of $1,764 and $740, respectively.~~following table.

	October 2, 2022			July 3, 2022
Receivables, net:
Customer receivables	$	86,183		$	99,963
Allowance for uncollectible accounts		(1,632	)		(1,498	)
Reserves for quality claims		(746	)		(860	)
Net customer receivables		83,805			97,605
Banker's acceptance notes		5,792			7,849
Other receivables		1,158			1,111
Total receivables, net	$	90,755		$	106,565

Inventories:
Raw materials	$	65,609		$	69,994
Supplies		11,963			11,953
Work in process		9,702			10,358
Finished goods		81,500			84,477
Gross inventories		168,774			176,782
Net realizable value adjustment		(3,711	)		(3,487	)
Total inventories	$	165,063		$	173,295

Other current assets:
Recovery of non-income taxes, net	$	4,762		$	6,770
Vendor deposits		4,508			6,910
Prepaid expenses and other		2,615			3,004
Value-added taxes receivable		1,963			1,987
Contract assets		488			285
Total other current assets	$	14,336		$	18,956

Property, plant and equipment, net:
Land	$	3,145		$	3,160
Land improvements		16,443			16,443
Buildings and improvements		165,565			164,252
Assets under finance leases		11,498			10,921
Machinery and equipment		638,747			635,699
Computers, software and office equipment		25,630			25,348
Transportation equipment		10,447			10,591
Construction in progress		18,556			20,397
Gross property, plant and equipment		890,031			886,811
Less: accumulated depreciation		(666,337	)		(666,569	)
Less: accumulated amortization – finance leases		(4,264	)		(3,904	)
Total property, plant and equipment, net	$	219,430		$	216,338

Other non-current assets:
Grantor trust	$	2,523		$	2,196
Investments in unconsolidated affiliates		2,246			2,072
Intangible assets, net		2,154			2,500
Other		2,017			2,020
Total other non-current assets	$	8,940		$	8,788

Other current liabilities:
Payroll and fringe benefits	$	10,830		$	9,414
Utilities		2,010			2,287
Deferred revenue		1,716			1,694
Incentive compensation		559			3,916
Property taxes and other		3,306			2,495
Total other current liabilities	$	18,421		$	19,806

Other long-term liabilities:
Nonqualified deferred compensation plan obligation	$	2,395		$	1,982
Uncertain tax positions		1,751			1,575
Other		539			892
Total other long-term liabilities	$	4,685		$	4,449

The following is management’s discussion and analysis of certain significant factors that have affected UNIFI’s operations, along with material changes in financial condition, during the periods included in the accompanying condensed consolidated financial statements. A reference to a “note” in this section refers to the accompanying notes to condensed consolidated financial statements. A reference to the “current period” refers to the three-month period ended ~~March 27,~~October 2, 2022, while a reference to the “prior period” refers to the three-month period ended March 28, 2021. A reference to the “current nine-month period” refers to the nine-month period ended March 27, 2022, while a reference to the “prior nine-month period” refers to the nine-month period ended March 28,September 26, 2021. Such references may be accompanied by certain phrases for added clarity. The current period and the prior period each consisted of 13 weeks. ~~The current nine-month period and the prior nine-month period each consisted of 39 weeks.~~

Our discussions in this Item 2 focus on our results during, or as of, the three months ~~and nine months~~ ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021, and, to the extent applicable, any material changes from the information discussed in the ~~2021~~2022 Form 10-K or other important intervening developments or information. These discussions should be read in conjunction with the ~~2021~~2022 Form 10-K for more detailed and background information about our business, operations, and financial condition. Discussion of foreign currency translation is primarily associated with changes in the Brazilian Real (“BRL”) and changes in the Chinese Renminbi (“RMB”) versus the U.S. Dollar (“USD”). ~~In discussion of operating results in this report, we refer to our operations in~~The BRL weighted average exchange rate was 5.25 BRL/USD and 5.24 BRL/USD for the ~~“NACA” region, which is~~current period and the ~~region comprised of~~prior period, respectively. The RMB weighted average exchange rate was 6.85 RMB/USD and 6.47 RMB/USD for the ~~trade zones covered by USMCA, NAFTA~~current period and ~~CAFTA-DR.~~the prior period, respectively.

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

UNIFI focuses on delivering products and solutions to direct customers and brand partners throughout the world, leveraging our internal manufacturing capabilities and an enhanced global supply chain that delivers a diverse range of synthetic and recycled fibers and polymers. Our strategic initiatives include (i) leveraging our competitive advantages to grow market share in each of the major geographies we serve, (ii) expanding our presence in non-apparel markets with additional REPREVE^® products, (iii) advancing the development and commercialization of innovative and sustainable solutions, and (iv) increasing brand awareness for REPREVE^®. We believe our strategic initiatives will increase revenue and profitability and generate improved cash flows from operations.

~~UNIFI has four reportable segments for its operations – the Polyester Segment, the Asia Segment, the Brazil Segment~~COVID-19 Pandemic and the Nylon Segment – as well as certain ancillary operations that include for-hire transportation services, which comprise an All Other category. The ancillary operations classified within All Other are insignificant for all periods presented; therefore, UNIFI’s discussion and analysisCurrent Economic Environment

UNIFI was able to navigate the negative effects of ~~those activities is generally limited to their impact on consolidated results, where appropriate.~~

~~The~~the COVID-19 pandemic ~~had no significant pervasive~~to minimize the overall impact to ~~either~~UNIFI for fiscal 2022 and the first quarter of fiscal 2023. However, the current ~~or prior nine-month periods~~economic environment and significant decrease in textile product demand has adversely impacted our consolidated sales and profitability during the current period. In addition to the current unfavorable economic environment and the inventory destocking measures taken ~~as a whole. On average, global demand~~by brands and retailers, the following pressures have continued from fiscal 2022 into fiscal 2023: (i) the impact of inflation on consumer spending, ~~were predominantly restored over~~(ii) rising interest rates, (iii) the ~~prior nine-month period~~Russia-Ukraine conflict, (iv) global input cost volatility, and ~~such economic levels did not decline within~~(v) supply chain disruption and unpredictability. UNIFI will continue to monitor these and other aspects of the current ~~nine-month period.~~

~~UNIFI remains committed~~economic environment, and work closely with stakeholders to ~~pursuing relief from the elevated levels of low-cost~~ensure business continuity and subsidized polyester textured yarn (“Subject Imports”) entering the U.S. market from foreign countries. Trade petition efforts to slow Subject Imports from China and India were successful during calendar 2019.

Due to the continued pressure from Subject Imports on our Polyester Segment revenues and gross margins in the U.S. market, UNIFI petitioned the United States Department of Commerce (“Commerce Department”) and the United States International Trade Commission (“ITC”) relating to Subject Imports from Indonesia, Malaysia, Thailand, and Vietnam (the “Subject Countries”). In November 2021, the ITC determined that the U.S. textile industry was materially injured by reason of imports of polyester textured yarn from Subject Countries, and in December 2021, the Commerce Department issued unanimous final antidumping duty orders on such imports.

We believe both trade petitions on Subject Imports are necessary to normalize the U.S. polyester market for fair pricing and competition and will aid in generating incremental revenue and gross margins for the Polyester Segment.liquidity.

~~The prior nine-month period benefited from stable, comparatively low raw material costs and restoration~~In addition to the escalation of ~~global demand levels. As fiscal 2021 concluded, global economic recovery, domestic weather events, supply constraints and general inflationary pressures led to higher~~ input costs in fiscal ~~2022. Rising input costs and a tighter labor pool in the U.S. have placed meaningful pressure on our domestic gross profit performance during the current nine-month period.~~

In the past, selling price adjustments were associated primarily with changes in the price of polyester and nylon raw materials, but in the current environment, selling price adjustments are required to accommodate significant increases in all categories of input costs including packaging, supplies, additives, and labor. For the majority of our portfolio, we have been able to implement selling price adjustments to protect gross margins in the current nine-month period. However, some selling price adjustments in the U.S. and Central America were not realized rapidly enough to avoid temporary gross margin declines in certain portions of our portfolio. While we have navigated the dynamic cost environment better than in recent prior years, elevated levels of input costs and the weakening of labor productivity in our manufacturing operations remain short-term headwinds to our underlying domestic performance.

~~In order to address these input cost and labor headwinds, we have (i) instituted responsive selling price adjustments, including most recently in January and March~~ 2022, ~~and (ii) prioritized more focused training and retention initiatives with our manufacturing workforce. We expect both actions to improve our Polyester Segment profitability in future periods.~~

~~In addition to the recent escalation of input costs,~~ UNIFI ~~is experiencing~~experienced inefficiencies in the global supply chain in connection with (i) freight costs and logistics slowdowns in foreign markets; (ii) a tighter labor pool in the U.S.; and (iii) suppressed productivity from our business partners resulting from pandemic-related lockdowns in certain regions, particularly Asia. Despite significant improvement in ~~Asia. While our businesses are not currently materially impacted by these adverse events~~input and ~~circumstances,~~freight costs and a more stable labor pool during the current period, the global demand volatility and uncertainty that began in late fiscal 2022 has continued into the first quarter of fiscal 2023, as the threat of recession continues to create uncertainty for calendar 2022 and 2023. The existing challenges and future uncertainty, particularly for rising input costs, labor productivity, and ~~pandemic-related closures,~~global demand, could worsen and/or ~~occur~~continue for prolonged periods, materially impacting our consolidated sales and ~~materially~~gross profit. Also, the need for future selling price adjustments in connection with inflationary costs could impact our ~~Polyester~~ability to retain current customer programs and ~~Asia Segments.~~

Furthermore, we recognize the disruption to global markets and supply chains caused by the Russia-Ukraine conflict. While volatility and uncertainty continue, we have no significant customers or supply chains establishedcompete successfully for new programs in the conflicted region, and we have not been directly impacted. Indirectly, we recognize that additional or prolonged impacts to the petroleum or other global markets could cause further inflationary pressures to our raw material costs or unforeseen adverse impacts.certain regions.

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

EBITDA, Adjusted EBITDA, Adjusted Net (Loss) Income, Adjusted EPS, Adjusted Working Capital, and Net Debt (collectively, the “non-GAAP financial measures”) are not determined in accordance with GAAP and should not be considered a substitute for performance measures determined in accordance with GAAP. The calculations of the non-GAAP financial measures are subjective, based on management’s belief as to which items should be included or excluded in order to provide the most reasonable and comparable view of the underlying operating performance of the business. We may, from time to time, modify the amounts used to determine our non-GAAP financial measures. When applicable, management’s discussion and analysis includes specific consideration for items that comprise the reconciliations of its non-GAAP financial measures. We believe that these non-GAAP financial measures better reflect UNIFI’s underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets, among otherwise comparable companies.

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

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

Management uses Adjusted Working Capital as an indicator of UNIFI’s production efficiency and ability to manage inventories and receivables. ~~Adjusted Working Capital is a metric used in the determination of variable compensation.~~

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

Three Months Ended ~~March 27,~~October 2, 2022 Compared to Three Months Ended ~~March 28,~~September 26, 2021

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

	For the Three Months Ended															For the Three Months Ended
	March 27, 2022						March 28, 2021									October 2, 2022						September 26, 2021
				% of Net Sales						% of Net Sales			% Change						% of Net Sales						% of Net Sales			% Change
Net sales	$	200,780			100.0		$	178,866			100.0			12.3		$	179,519			100.0		$	195,992			100.0			(8.4	)
Cost of sales		181,636			90.5			153,271			85.7			18.5			172,956			96.3			169,895			86.7			1.8
Gross profit		19,144			9.5			25,595			14.3			(25.2	)		6,563			3.7			26,097			13.3			(74.9	)
SG&A		14,389			7.2			14,581			8.2			(1.3	)		11,773			6.6			12,670			6.4			(7.1	)
Benefit for bad debts		(169	)		(0.1	)		(184	)		(0.1	)		(8.2	)
Provision (benefit) for bad debts																	174			0.1			(80	)		—		nm
Other operating (income) expense, net		(831	)		(0.4	)		2,582			1.4			(132.2	)		(689	)		(0.4	)		256			0.1		nm
Operating income		5,755			2.8			8,616			4.8			(33.2	)
Operating (loss) income																	(4,695	)		(2.6	)		13,251			6.8			(135.4	)
Interest expense, net		217			0.1			726			0.4			(70.1	)		700			0.4			438			0.2			59.8
Equity in earnings of unconsolidated affiliates		(41	)		—			(528	)		(0.3	)		(92.2	)		(295	)		(0.2	)		(280	)		(0.1	)		5.4
Recovery of non-income taxes, net		815			0.4			—			—			—
Income before income taxes		4,764			2.3			8,418			4.7			(43.4	)
(Loss) income before income taxes																	(5,100	)		(2.8	)		13,093			6.7			(139.0	)
Provision for income taxes		2,698			1.3			3,660			2.0			(26.3	)		2,734			1.6			4,413			2.3			(38.0	)
Net income	$	2,066			1.0		$	4,758			2.7			(56.6	)
Net (loss) income																$	(7,834	)		(4.4	)	$	8,680			4.4			(190.3	)

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

	For the Three Months Ended				For the Three Months Ended
	March 27, 2022		March 28, 2021		October 2, 2022			September 26, 2021
Net income	$	2,066	$	4,758
Net (loss) income					$	(7,834	)	$	8,680
Interest expense, net		217		726		700			438
Provision for income taxes		2,698		3,660		2,734			4,413
Depreciation and amortization expense ⁽¹⁾		6,433		6,761		6,697			6,308
EBITDA		11,414		15,905		2,297			19,839

Recovery of non-income taxes, net ⁽²⁾		815		—
Other adjustments ⁽²⁾						—			—
Adjusted EBITDA	$	12,229	$	15,905	$	2,297		$	19,839

~~The tables below set forth reconciliations of (i) Income before~~For the current and the prior period, there were no adjustments necessary to reconcile Net (loss) income ~~taxes (“Pre-tax Income”), Provision for income taxes (“Tax Impact”) and Net Income~~ to Adjusted Net (Loss) Income ~~and (ii) Diluted EPS to~~or Adjusted EPS.

For the Three Months Ended March 27, 2022

For the Three Months Ended March 28, 2021

Pre-tax Income

Tax Impact

Net Income

Diluted EPS

Pre-tax
Income

Tax Impact

Net Income

Diluted EPS

GAAP results

$
4,764

$
(2,698
)

$
2,066

$
0.11

$
8,418

$
(3,660
)

$
4,758

$
0.25

Recovery of non-income taxes, net ⁽¹⁾

815

(257
)

558

0.03

—

—

—

—

Adjusted results

$
5,579

$
(2,955
)

$
2,624

$
0.14

$
8,418

$
(3,660
)

$
4,758

$
0.25

Weighted average common shares outstanding

18,942

18,967

Consolidated net sales for the current period ~~increased~~decreased by ~~$21,914,~~$16,473, or ~~12.3%~~8.4%, and consolidated sales volumes decreased ~~7.0%, and consolidated weighted average sales prices increased 19.3%~~21.6%, compared to the prior period. The ~~changes~~decreases occurred primarily due to lower volumes in the Americas and Asia Segments as a result of lower global demand, in addition to pandemic-related lockdowns in Asia, partially offset by higher selling prices in response to increasing raw material and input costs.

Consolidated weighted average sales prices increased 13.2%, primarily attributable to higher selling prices in response to ~~increasing input costs, partially offset by volume declines in (i) the U.S. due to labor challenges and (ii) Asia and Brazil due to comparably softer market conditions.~~higher raw material costs.

REPREVE^® Fiber products for the current period comprised ~~36%~~27%, or $49,179, of consolidated net sales, ~~compared to 34%~~down from 37%, or $71,906, for the prior period. The lower volumes and net sales in the Asia Segment, which has the highest portion of REPREVE^® Fiber sales as a percentage of segment net sales, was the main driver for the lower REPREVE^® Fiber sales.

Gross profit for the current period decreased by ~~$6,451,~~$19,534, or ~~25.2%~~74.9%, compared to the prior period. Gross profit ~~performance was lower than anticipated~~decreased as a result of ~~labor~~the decline in net sales, combined with weak fixed cost absorption for the Americas Segment, where utilization and ~~input cost challenges, primarily~~productivity are materially impactful to gross profit. Although raw material costs for ~~our Polyester~~the Americas Segment decreased meaningfully in the current period, the associated benefit was muted by low production levels, weak demand, and ~~Nylon Segments.~~higher priced raw material inventory purchased in the fourth quarter of 2022.

SG&A ~~was comparable~~for the current period decreased compared to the prior period, asprimarily due to (i) lower incentive compensation infor the current period ~~was partially offset by higher~~and (ii) lower discretionary ~~expenses.~~expenses, including marketing and advertising.

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

The current period and prior period include foreign currency transaction (gains) losses of $(725) and $233, respectively.

Interest expense, net increased in connection with higher debt principal following continued capital investments and higher interest rates.

The current period and prior period primarily reflect net foreign currency transaction (gains) losses of $(895) and $4, respectively. In addition, the prior period reflects a predominantly non-cash loss on the disposal of assets of $2,559 primarily relating to the removal of existing texturing machinery to allow for the future installation of new eAFK Evo texturing machinery.

~~Interest expense, net decreased in connection with greater interest income in the current period, primarily generated from foreign cash on deposit.~~

~~The performance decrease from the prior period to the current period is primarily attributable to higher raw material costs.~~

In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of non-income taxes related to over-taxation in Brazil. During the current period, UNIFI reduced the estimate by $815 based on additional clarity and precedent surrounding the recovery process during the months following the associated SFC decision.

	For the Three Months Ended						For the Three Months Ended
	March 27, 2022			March 28, 2021			October 2, 2022			September 26, 2021
Provision for income taxes	$	2,698		$	3,660		$	2,734		$	4,413
Effective tax rate		56.6	%		43.5	%		(53.6	)%		33.7	%

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

The ~~increase~~decrease in the effective tax rate from the prior period to the current period is primarily attributable to ~~(i)~~ an increase in the valuation allowance for deferred tax assets in the current period ~~(ii) additional research credits claimed during the prior period,~~ and ~~(iii) foreign earnings taxed at a higher rate in the current period. These increases are partially offset by lower~~increased U.S. tax on GILTI in the current period.

~~Net income for the current period was $2,066, or $0.11 per diluted share, compared to net income of $4,758 or $0.25 per diluted share, for the prior period.~~ The decrease in net (loss) income was primarily attributable to ~~lower~~the decrease in Americas gross profit and the associated ~~increase in~~adverse impact of lower U.S. earnings on the effective tax ~~rate in the current period, partially offset by the favorable change in other operating (income) expense, net.~~rate.

Adjusted EBITDA decreased ~~from the prior period to the current period,~~ primarily ~~due to~~in connection with lower gross ~~profit, partially offset by the favorable change in other operating (income) expense, net.~~profit.

Adjusted Net (Loss) Income and Adjusted EPS decreased from the prior period to the current period, commensurate with the ~~decline~~decrease in net (loss) income.

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

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

	For the Three Months Ended													For the Three Months Ended
	March 27, 2022					March 28, 2021								October 2, 2022						September 26, 2021
				% of Net Sales					% of Net Sales		% Change						% of Net Sales						% of Net Sales		% Change
Net sales	$	93,924			100.0	$	82,668			100.0		13.6		$	107,644			100.0		$	110,826			100.0		(2.9	)
Cost of sales		90,043			95.9		75,446			91.3		19.3			112,513			104.5			101,640			91.7		10.7
Gross profit		3,881			4.1		7,222			8.7		(46.3	)
Gross (loss) profit															(4,869	)		(4.5	)		9,186			8.3		(153.0	)
Depreciation expense		4,642			5.0		5,036			6.1		(7.8	)		5,480		5.1				5,075			4.6		8.0
Segment Profit	$	8,523			9.1	$	12,258			14.8		(30.5	)	$	611			0.6		$	14,261			12.9		(95.7	)

Segment net sales as a percentage of consolidated amounts		46.8	%				46.2	%							60.0	%					56.5	%
Segment Profit as a percentage of consolidated amounts		34.4	%				38.9	%							4.9	%					45.2	%

The ~~increase~~change in net sales for the ~~Polyester~~Americas Segment from the prior period to the current period was primarily attributable to lower sales volumes following weaker global textile demand, and the change was partially offset by higher average selling prices in response to higher input ~~costs, partially offset by lower sales volume due to labor challenges.~~costs.

The change in Segment Profit for the ~~Polyester~~Americas Segment was as follows:

Segment Profit for the prior period	$	12,258		$	14,261
Net decrease in underlying margins		(2,734	)
Change in underlying margins and sales mix					(10,692	)
Decrease in sales volumes		(1,001	)		(2,958	)
Segment Profit for the current period	$	8,523		$	611

The decrease in Segment Profit for the ~~Polyester~~Americas Segment from the prior period to the current period was primarily attributable to ~~(i)~~ ~~higher-than-expected input costs, primarily~~lower production volumes driving weaker fixed cost absorption along with lower sales volumes.

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

	For the Three Months Ended
	October 2, 2022					September 26, 2021
				% of Net Sales					% of Net Sales		% Change
Net sales	$	38,879			100.0	$	33,738			100.0		15.2
Cost of sales		32,092			82.5		23,798			70.5		34.9
Gross profit		6,787			17.5		9,940			29.5		(31.7	)
Depreciation expense		470		1.2			383			1.1		22.7
Segment Profit	$	7,257			18.7	$	10,323			30.6		(29.7	)

Segment net sales as a percentage of consolidated amounts		21.7	%				17.2	%
Segment Profit as a percentage of consolidated amounts		58.0	%				32.7	%

The increase in net sales for the Brazil Segment from the prior period to the current period ~~due~~was primarily attributable to ~~inflationary pressures, along with (ii) weaker labor productivity.~~higher sales volumes during strong market conditions in Brazil.

The decrease in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to an overall decrease in gross margin following the expected normalization of the competitive environment in Brazil, which was highly favorable for the Brazil Segment during fiscal 2022.

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

	For the Three Months Ended												For the Three Months Ended
	March 27, 2022					March 28, 2021							October 2, 2022					September 26, 2021
				% of Net Sales					% of Net Sales		% Change					% of Net Sales					% of Net Sales		% Change
Net sales	$	51,277			100.0	$	48,483			100.0		5.8	$	32,996			100.0	$	51,428			100.0		(35.8	)
Cost of sales		43,900			85.6		41,330			85.2		6.2		28,351			85.9		44,457			86.4		(36.2	)
Gross profit		7,377			14.4		7,153			14.8		3.1		4,645			14.1		6,971			13.6		(33.4	)
Depreciation expense		—			—		—			—		—		—			—		—			—		—
Segment Profit	$	7,377			14.4	$	7,153			14.8		3.1	$	4,645			14.1	$	6,971			13.6		(33.4	)

Segment net sales as a percentage of consolidated amounts		25.5	%				27.1	%						18.4	%				26.2	%
Segment Profit as a percentage of consolidated amounts		29.8	%				22.7	%						37.1	%				22.1	%

The ~~increase~~decrease in net sales for the Asia Segment from the prior period to the current period was primarily attributable to ~~(i) the continued momentum of REPREVE~~^®~~-branded products contributing to underlying~~weaker global demand and pandemic-related lockdowns driving lower sales ~~growth~~volumes, and ~~sales mix and (ii) favorable foreign currency translation effects,~~such decrease was partially offset by ~~the beginning of pandemic-related lockdowns in China during March 2022.~~

~~The RMB weighted average exchange rate was 6.35 RMB/USD and 6.49 RMB/USD for the current period and the prior period, respectively.~~ a strong sales mix.

Segment Profit for the prior period	$	7,153		$	6,971
Decrease in sales volumes					(2,754	)
Unfavorable foreign currency translation effects					(369	)
Change in underlying margins and sales mix		467			797
Favorable foreign currency translation effects		145
Decrease in sales volumes		(388	)
Segment Profit for the current period	$	7,377		$	4,645

The ~~increase~~decrease in Segment Profit for the Asia Segment from the prior period to the current period ~~was primarily attributable to~~follows the decline in net sales ~~mix improvement in~~and sales volumes discussed above, as the ~~current period, partially offset by lower~~comparable gross margin rate for the Asia Segment improved with a strong sales ~~volumes.~~mix.

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

For the Three Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
29,767

100.0

$
25,704

100.0

15.8

Cost of sales

23,784

79.9

15,106

58.8

57.4

Gross profit

5,983

20.1

10,598

41.2

(43.5
)
Depreciation expense

382

1.3

299

1.2

27.8

Segment Profit

$
6,365

21.4

$
10,897

42.4

(41.6
)

Segment net sales as a percentage of
consolidated amounts

14.8
%

14.4
%

Segment Profit as a percentage of
consolidated amounts

25.7
%

34.6
%

~~The increase in net sales for the Brazil Segment from the prior period~~Note 5, “Long-Term Debt” to the ~~current period was primarily attributable to (i) higher selling prices in response to increasing input costs~~condensed consolidated financial statements includes the detail of UNIFI’s debt obligations and ~~(ii) favorable foreign currency translation effects. These benefits were partially offset by lower sales volumes in connection~~terms and conditions thereof along with ~~a more normalized market share position following the pandemic-related rebound in product demand that benefited our market share in the prior period.~~

~~The BRL weighted average exchange rate was 5.20 BRL/USD and 5.47 BRL/USD for the current period and the prior period, respectively.~~

The decrease in Segment Profit for the Brazil Segment from the prior period to the current period was primarily attributable to the unmatched, exceptional sales and production volume levels achieved in the prior period following the pandemic-related rebound in product demand in Brazil. The current period includes a more normalized performance for the Brazil Segment.

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

For the Three Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
24,689

100.0

$
20,778

100.0

18.8

Cost of sales

22,925

92.9

20,341

97.9

12.7

Gross profit

1,764

7.1

437

2.1

303.7

Depreciation expense

441

1.8

441

2.1

—

Segment Profit

$
2,205

8.9

$
878

4.2

151.1

Segment net sales as a percentage of
consolidated amounts

12.3
%

11.6
%

Segment Profit as a percentage of
consolidated amounts

8.9
%

2.8
%

The increase in net sales for the Nylon Segment from the prior period to the current period was primarily attributable to higher selling prices in connection with higher raw material costs, partially offset by lower sales volumes.

~~The increase in Segment Profit for the Nylon Segment from the prior period was primarily due to productivity and sales mix improvements, partially offset by input cost and labor challenges.~~

~~Nine Months Ended March 27, 2022 Compared to Nine Months Ended March 28, 2021~~

~~Following the tables is a~~scheduled debt maturities. Further discussion and analysis of ~~the significant components of net income.~~

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
598,182

100.0

$
483,147

100.0

23.8

Cost of sales

536,051

89.6

417,057

86.3

28.5

Gross profit

62,131

10.4

66,090

13.7

(6.0
)
SG&A

39,025

6.6

38,570

8.0

1.2

Benefit for bad debts

(489
)

(0.1
)

(1,330
)

(0.3
)

(63.2
)
Other operating (income) expense, net

(2
)

—

4,236

0.9

(100.0
)
Operating income

23,597

3.9

24,614

5.1

(4.1
)
Interest expense, net

1,196

0.2

2,118

0.5

(43.5
)
Equity in earnings of unconsolidated affiliates

(385
)

(0.1
)

(751
)

(0.2
)

(48.7
)
Recovery of non-income taxes, net

815

0.1

—

—

—

Income before income taxes

21,971

3.7

23,247

4.8

(5.5
)
Provision for income taxes

10,296

1.7

7,593

1.6

35.6

Net income

$
11,675

2.0

$
15,654

3.2

(25.4
)

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

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

For the Nine Months Ended March 27, 2022

For the Nine Months Ended March 28, 2021

Pre-tax Income

Tax Impact

Net Income

Diluted EPS

Pre-tax Income

Tax Impact

Net Income

Diluted EPS

GAAP results

$
21,971

$
(10,296
)

$
11,675

$
0.62

$
23,247

$
(7,593
)

$
15,654

$
0.83

Recovery of non-income taxes, net ⁽¹⁾

815

(257
)

558

0.02

—

—

—

—

Adjusted results

$
22,786

$
(10,553
)

$
12,233

$
0.64

$
23,247

$
(7,593
)

$
15,654

$
0.83

Weighted average common shares outstanding

18,974

18,796

Consolidated net sales for the current nine-month period increased by $115,035, or 23.8%, and consolidated sales volumes increased 4.3%, compared to the prior nine-month period. The increases occurred primarily due to (i) higher selling prices in response to increasing raw material costs and (ii) underlying sales growth led by the Asia Segment and REPREVE^® ~~products.~~

~~Consolidated weighted average sales prices increased 19.5%, primarily attributable to higher selling prices in response to increasing raw material costs.~~

~~REPREVE~~^® ~~Fiber products for the current nine-month period comprised 38% of consolidated net sales, up from 36% for the prior nine-month period.~~

Gross profit for the current nine-month period decreased by $3,959, or 6.0%, compared to the prior nine-month period. Although we experienced a significant increase in net sales, input cost and labor challenges muted our domestic gross profit, primarily in the second and third quarters of fiscal 2022.

SG&A was generally flat, primarily due to (i) higher discretionary expenses, including marketing and advertising, and (ii) higher amortization from customer list assets acquired in fiscal 2021 in the current nine-month period, both of which were partially offset by (iii) lower incentive compensation for the current nine-month period.

The current nine-month period benefit for bad debts reflects no material activity. The prior nine-month period reflects a benefit for general improvement in customer payment frequency following the adverse effects of the COVID-19 pandemic on customer financial health.

The current nine-month period and prior nine-month period include foreign currency transaction (gains) losses of $(365) and $610, respectively, along with $346 and $837 of severance costs, respectively. In addition, the prior period reflects a predominantly non-cash loss on the disposal of assets of $2,773 primarily relating to the removal of existing texturing machinery to allow for the future installation of new eAFK Evo texturing machinery.

~~Interest expense, net decreased in connection with greater interest income in the current nine-month period, primarily generated from foreign cash on deposit.~~

~~There was no material activity for the current nine-month period or the prior nine-month period.~~

In fiscal 2021, UNIFI recognized an estimated benefit from the expected recovery of non-income taxes related to over-taxation in Brazil. During the current nine-month period, UNIFI reduced the estimate by $815 based on additional clarity and precedent surrounding the recovery process during the months following the associated SFC decision.

The effective tax rate is subject to variation due to a number of factors, including variability in pre-tax book income, the mix of income by jurisdiction, changes in deferred tax valuation allowances and changes in statutes, regulations and case law. Additionally, the impacts of discrete and other rate impacting items are greater when income before income taxes is lower.

The increase in the effective tax rate from the prior nine-month period to the current nine-month period is primarily attributable to (i) an increase in the valuation allowance in the current nine-month period and (ii) a discrete benefit in the prior nine-month period for the retroactive GILTI high-tax exclusion. These increases are partially offset by lower U.S. tax on GILTI in in the current period.

Net income for the current nine-month period was $11,675, or $0.62 per diluted share, compared to net income of $15,654 or $0.83 per diluted share, for the prior nine-month period. The decrease in net income was primarily attributable to the increase in the effective tax rate in the current nine-month period.

~~Adjusted EBITDA exhibited no material change from the prior nine-month period to the current nine-month period, consistent with gross profit.~~

~~Adjusted Net Income and Adjusted EPS decreased from the prior nine-month period to the current nine-month period, commensurate with the decrease in net income.~~

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

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
275,809

100.0

$
228,440

100.0

20.7

Cost of sales

263,194

95.4

205,691

90.1

28.0

Gross profit

12,615

4.6

22,749

9.9

(44.5
)
Depreciation expense

13,668

4.9

13,909

6.1

(1.7
)
Segment Profit

$
26,283

9.5

$
36,658

16.0

(28.3
)

Segment net sales as a percentage of
consolidated amounts

46.1
%

47.3
%

Segment Profit as a percentage of
consolidated amounts

33.4
%

44.2
%

~~The increase in net sales for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to~~ ~~higher average selling prices in response to higher polyester raw material costs.~~

The decrease in Segment Profit for the Polyester Segment from the prior nine-month period to the current nine-month period was primarily attributable to the adverse impacts of higher input costs outpacing selling price adjustments and weaker labor productivity that began in the quarter ending December 26, 2021.

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
161,817

100.0

$
130,898

100.0

23.6

Cost of sales

138,958

85.9

112,639

86.1

23.4

Gross profit

22,859

14.1

18,259

13.9

25.2

Depreciation expense

—

—

—

—

—

Segment Profit

$
22,859

14.1

$
18,259

13.9

25.2

Segment net sales as a percentage of
consolidated amounts

27.1
%

27.1
%

Segment Profit as a percentage of
consolidated amounts

29.1
%

22.0
%

~~The increase in net sales for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) the continued momentum of REPREVE~~^®~~-branded products contributing to underlying sales growth and (ii) favorable foreign currency translation effects.~~

~~The RMB weighted average exchange rate was 6.40 RMB/USD and 6.65 RMB/USD for the current nine-month period and the prior nine-month period, respectively.~~

The increase in Segment Profit for the Asia Segment from the prior nine-month period to the current nine-month period was primarily attributable to higher sales volumes in the current nine-month period.

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
91,106

100.0

$
72,563

100.0

25.6

Cost of sales

67,657

74.3

49,375

68.0

37.0

Gross profit

23,449

25.7

23,188

32.0

1.1

Depreciation expense

1,042

1.2

1,050

1.4

(0.8
)
Segment Profit

$
24,491

26.9

$
24,238

33.4

1.0

Segment net sales as a percentage of
consolidated amounts

15.2
%

15.0
%

Segment Profit as a percentage of
consolidated amounts

31.2
%

29.3
%

The increase in net sales for the Brazil Segment from the prior nine-month period to the current nine-month period was primarily attributable to higher selling prices in response to increasing input costs, partially offset by lower sales volumes due to a more normalized market share position following a significant but temporary improvement in market share and competitive position during fiscal 2021.

~~The BRL weighted average exchange rate was 5.32 BRL/USD and 5.43 BRL/USD for the current nine-month period and the prior nine-month period, respectively.~~

Segment Profit for the Brazil Segment was generally flat, primarily attributable to strong sales mix and conversion margin amid rising market prices, partially offset by the softer market environment described in the net sales analysis above.

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

% of
Net Sales

% of
Net Sales

%
Change

Net sales

$
65,863

100.0

$
47,815

100.0

37.7

Cost of sales

63,187

95.9

46,318

96.9

36.4

Gross profit

2,676

4.1

1,497

3.1

78.8

Depreciation expense

1,320

2.0

1,321

2.8

(0.1
)
Segment Profit

$
3,996

6.1

$
2,818

5.9

41.8

Segment net sales as a percentage of
consolidated amounts

11.0
%

9.9
%

Segment Profit as a percentage of
consolidated amounts

5.1
%

3.4
%

The increase in net sales for the Nylon Segment from the prior nine-month period to the current nine-month period was primarily attributable to (i) higher selling prices in response to increasing raw material costs and (ii) higher sales volumes in connection with demand recovery.

~~The increase in Segment Profit for the Nylon Segment was primarily attributable to a more favorable sales and production mix, partially offset by input cost and labor challenges.~~

UNIFI’s primary capital requirements are for working capital, capital expenditures, debt service and share repurchases. UNIFI’s primary sources of capital are cash generated from operations and borrowings available under the ABL Revolver of its credit facility. For the current ~~nine-month~~ period, cash used by operations was ~~$2,063,~~$5,892, and, at ~~March 27,~~October 2, 2022, excess availability under the ABL Revolver was ~~$64,795.~~$26,243.

As of ~~March 27,~~October 2, 2022, all of UNIFI’s ~~$97,321~~$127,004 of debt obligations were guaranteed by certain of its domestic operating subsidiaries, while ~~nearly 100%~~approximately 93% of UNIFI’s cash and cash equivalents were held by its foreign subsidiaries. Cash and cash equivalents held by foreign subsidiaries may not be presently available to fund UNIFI’s domestic capital requirements, including its domestic debt obligations. UNIFI employs a variety of strategies to ensure that its worldwide cash is available in the locations where it is needed.

The following table presents a summary of cash and cash equivalents, borrowings available under financing arrangements, liquidity, working capital, and total debt obligations as of ~~March 27,~~October 2, 2022 for domestic operations compared to foreign operations:

	Domestic		Foreign		Total		Domestic		Foreign		Total
Cash and cash equivalents	$	307	$	52,665	$	52,972	$	3,342	$	43,858	$	47,200
Borrowings available under financing arrangements		64,795		—		64,795		26,243		—		26,243
Liquidity	$	65,102	$	52,665	$	117,767	$	29,585	$	43,858	$	73,443

Working capital	$	84,009	$	160,165	$	244,174	$	104,197	$	135,865	$	240,062
Total debt obligations	$	97,321	$	—	$	97,321	$	127,004	$	—	$	127,004

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

~~Throughout~~UNIFI navigated the impact on liquidity of the COVID-19 pandemic by diligently managing the balance sheet and operational spending, in addition to utilizing cash received from a minority interest divestiture in April 2020. Following the COVID-19 pandemic, global demand recovery allowed for strong results and cash generation in fiscal 2021. However, inflation and demand uncertainty in fiscal 2022 and during the current period have introduced new pressures to liquidity.

Currently, and following the establishment of the 2022 Credit Agreement, UNIFI’s cash and liquidity positions are sufficient to sustain its operations and meet its long-term financial targets. However, further degradation in the macroeconomic environment could introduce additional liquidity risk and require UNIFI to limit cash outflows for capital expenditures and discretionary activities while further utilizing available and additional forms of credit. Since the onset of the COVID-19 pandemic and the ~~Russia-Ukraine conflict, UNIFI has not experienced any (i) substantial, prolonged issues relating to liquidity; (ii) outbreaks~~date of COVID-19 among employees that significantly affected the Company’s operations; or (iii) other extensive disruptions to ongoing operations. The following are a reflection of UNIFI’s strong liquidity position and access to capital resources:this report, we have not:

~~We expect our available borrowings to continue to provide adequate liquidity in the current environment. As~~Although short-term global demand appears ~~to remain strong,~~uncertain, we do not currently anticipate that any adverse events or circumstances will place critical pressure on ~~(i)~~ our liquidity ~~position; (ii)~~position or our ability to fund our operations, capital expenditures, and expected business ~~growth; or (iii) the financial targets we have set for fiscal 2025.~~growth. Should global demand, economic activity, or input availability decline considerably for a prolonged period of time, ~~(for example, in connection with the Russia-Ukraine conflict),~~ UNIFI maintains the ability to (i) seek additional credit or financing ~~arrangements or extensions of existing~~ arrangements and/or (ii) re-implement cost reduction initiatives to preserve cash and secure the longevity of the business and operations.

AsAdditionally, UNIFI considers opportunities to deploy existing cash to preserve or enhance liquidity. In August 2022, we ~~anticipate strong textile demand~~repatriated approximately $14,000 from our operations in Asia to ~~continue through~~the U.S. via an existing intercompany note and, after remitting the appropriate withholding taxes, utilized the cash to reduce our outstanding revolver borrowings, thereby increasing the availability.

For the remainder of ~~fiscal 2022 and into~~ fiscal 2023, we expect the majority of our capital will be deployed to (i) upgrade the machinery in our U.S., El Salvador, and Brazil manufacturing facilities via capital expenditures and (ii) support ~~further~~ working capital needs associated with ~~increased~~recovering demand and product sales.

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

The following ~~table presents~~outlines the ~~total balances outstanding for UNIFI’s debt obligations, their scheduled maturity dates~~attributes relating to our credit facility as of October 2, 2022 (the fiscal quarter end date while the Prior Credit Agreement remained effective) and October 28, 2022 (the day after the ~~weighted average interest rates for borrowings as well as the applicable current portion of long-term debt:~~

Weighted Average

Scheduled

Interest Rate as of

Principal Amounts as of

Maturity Date

March 27, 2022

March 27, 2022

June 27, 2021

ABL Revolver

December 2023

2.0
%

$
18,500

$
—

ABL Term Loan

December 2023

3.2
%
(1)

70,000

77,500

Finance lease obligations

(2)

3.5
%

7,363

8,475

Construction financing

(3)

1.5
%

1,458

882

Total debt

97,321

86,857

Current ABL Term Loan

(12,500
)

(12,500
)
Current portion of finance lease obligations

(2,009
)

(3,545
)
Unamortized debt issuance costs

(307
)

(476
)
Total long-term debt

$
82,505

$
70,336

UNIFI currently maintains three interest rate swaps as cash flow hedges intended to fix LIBOR at approximately 1.9% on $75,000 of variable-rate debt. Such swaps are scheduled to terminate in May 2022. During the quarter ended December 26, 2021, UNIFI’s outstanding variable-rate debt fell below the combined $75,000 notional amount. Accordingly, the $20,000 notional interest rate swap was de-designated from hedge accounting treatment. The impact of de-designation was not material to the consolidated financial statements.

Management will continue to monitor the expected termination of LIBOR and its impact on UNIFI’s operations. However, the Credit Agreement currently includes fallback language that allows for a seamless transition to a secured overnight financing rate and management does not expect (i) significant efforts to accommodate a termination of LIBOR or (ii) a significant impact to UNIFI’s operations upon a termination of LIBOR.

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

~~In May 2021,~~ UNIFI ~~entered into an agreement with a third party lender~~has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements, and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that ~~provides for construction-period financing for certain eAFK Evo texturing machinery included in our capital allocation plans.~~its existing cash balances, cash provided by operating activities, and credit facility will enable UNIFI ~~records project costs~~ to ~~construction in progress~~meet its foreseeable liquidity requirements. Domestically, UNIFI’s cash balances, cash provided by operating activities 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 SOFR plus 1.25%, and contains terms customary for a financing of this type.

~~Each borrowing~~borrowings available under the ~~agreement provides~~ABL Revolver continue to be sufficient to fund UNIFI’s domestic operating activities as well as cash commitments for ~~60 monthly payments, which~~its investing and financing activities. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities and available foreign financing arrangements will ~~commence~~provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI’s foreign operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the ~~form~~strong operating results of a finance lease obligation upon the completion of the construction period with an interest rate of approximately 3.4%. In connection with this construction financing arrangement, UNIFI has borrowed a total of $3,222 and transitioned a total of $1,764 of completed asset costs to finance lease obligations as of March 27, 2022.each subsidiary.

~~The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the remainder of fiscal 2022, the following four fiscal years and thereafter:~~

	March 27, 2022		June 27, 2021		October 2, 2022		July 3, 2022
Long-term debt	$	82,505	$	70,336	$	114,919	$	102,309
Current portion of long-term debt		14,509		16,045		11,875		11,726
Unamortized debt issuance costs		307		476		210		255
Debt principal		97,321		86,857		127,004		114,290
Less: cash and cash equivalents		52,972		78,253		47,200		53,290
Net Debt	$	44,349	$	8,604	$	79,804	$	61,000

There was no significant change in Net Debt in connection with the establishment of the 2022 Credit Agreement.

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

	March 27, 2022			June 27, 2021			October 2, 2022			July 3, 2022
Cash and cash equivalents	$	52,972		$	78,253		$	47,200		$	53,290
Receivables, net		109,531			94,837			90,755			106,565
Inventories		163,380			141,221			165,063			173,295
Income taxes receivable		11,664			2,392			1,432			160
Other current assets		20,978			12,364			14,336			18,956
Accounts payable		(67,134	)		(54,259	)		(44,428	)		(73,544	)
Other current liabilities		(18,806	)		(31,638	)		(18,421	)		(19,806	)
Income taxes payable		(11,609	)		(1,625	)		(1,925	)		(1,526	)
Current operating lease liabilities		(2,293	)		(1,856	)		(2,075	)		(2,190	)
Current portion of long-term debt		(14,509	)		(16,045	)		(11,875	)		(11,726	)
Working capital	$	244,174		$	223,644		$	240,062		$	243,474

Less: Cash and cash equivalents		(52,972	)		(78,253	)		(47,200	)		(53,290	)
Less: Income taxes receivable		(11,664	)		(2,392	)		(1,432	)		(160	)
Less: Income taxes payable		11,609			1,625			1,925			1,526
Less: Current operating lease liabilities		2,293			1,856			2,075			2,190
Less: Current portion of long-term debt		14,509			16,045			11,875			11,726
Adjusted Working Capital	$	207,949		$	162,525		$	207,305		$	205,466

~~Working~~When comparing from July 3, 2022 to October 2, 2022, working capital ~~increased from $223,644 as of June 27, 2021 to $244,174 as of March 27, 2022,~~decreased while Adjusted Working Capital ~~increased from $162,525 to $207,949.~~increased.

The decrease in cash and cash equivalents was primarily driven by (i) the increase in receivables, net and inventories, (ii) the routine payment of incentive compensation earned in fiscal 2021, (iii) capital expenditures and (iv) scheduled debt service. The increase in receivables, net was primarily due ~~primarily~~ to ~~an increase in sales pricing as a result of higher raw material costs in the current nine-month period, partially offset by~~(i) a decrease in ~~BANs~~sales following lower global demand and (ii) a decrease in banker’s acceptance notes held by our Asia Segment. The ~~increase~~decrease in inventories was primarily attributable to ~~higher~~a decline in raw material purchases and costs in the current ~~nine-month~~ period. The ~~increase~~decrease in other current assets was primarily due to ~~the reclassification~~utilization of Brazil’s recovery of non-income taxes ~~from long-term to current based on an accelerated recovery timeline.~~and lower vendor deposits. The ~~increase~~decrease in accounts payable ~~was consistent~~followed a decline in days payables outstanding, along with ~~higher raw material costs~~the decrease in sales and production activity in the current ~~nine-month~~ period. The ~~decrease~~changes in other current liabilities, ~~was primarily attributable to the payment~~current operating lease liabilities, current portion of ~~incentive compensation earned in fiscal 2021. The increase in~~long-term debt, income taxes receivable, and income taxes payable were insignificant.

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

	For the Three Months Ended
	October 2, 2022			September 26, 2021
Net (loss) income	$	(7,834	)	$	8,680
Equity in earnings of unconsolidated affiliates		(295	)		(280	)
Depreciation and amortization expense		6,740			6,365
Non-cash compensation expense		633			660
Deferred income taxes		(373	)		(3,463	)
Subtotal		(1,129	)		11,962

Receivables, net		13,800			(9,462	)
Inventories		6,475			(12,190	)
Accounts payable and other current liabilities		(28,615	)		(7,393	)
Other changes		3,577			1,275
Net cash used by operating activities	$	(5,892	)	$	(15,808	)

The improvement in net cash used by operating activities was primarily ~~reflects the impact of the interim tax provision. The~~due to changes in working capital associated with fluctuations in raw material costs and a decline in overall business activity in the current ~~operating lease liabilities and current portion of long-term debt were insignificant.~~period.

During the current ~~nine-month~~ period, UNIFI invested ~~$30,094~~$11,198 in capital projects, primarily relating to (i) eAFK Evo texturing machinery, (ii) further improvements in production capabilities and technology enhancements in the Americas, and (iii) routine annual maintenance capital expenditures. Maintenance capital expenditures are necessary to support UNIFI’s current operations, capacities, and capabilities and exclude expenses relating to repairs and costs that do not extend an asset’s useful life.

For the ~~remainder~~second quarter of fiscal ~~2022,~~2023, we expect to invest up$10,000 to ~~an additional $11,900~~$12,000 in capital projects, ~~for an aggregate annual estimate of $40,000 to $42,000,~~ to include (i) continuing the purchase and installation of new eAFK Evo texturing machines, (ii) making further improvements in production capabilities and technology enhancements in the Americas, and (iii) annual maintenance capital expenditures.

The total amount ultimately invested for fiscal ~~2022~~2023 could be more or less than the currently estimated amount depending on the timing and scale of contemplated initiatives and is expected to be funded primarily by cash provided by operating activities and ~~other~~available borrowings. UNIFI expects recent and future capital projects to provide benefits to future profitability. The additional assets from these capital projects consist primarily of machinery and equipment.

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

As of March 27, 2022, UNIFI repurchased a total of 186 shares since October 2018, at an average price of $22.35 (for a total of $4,150 inclusive of commission costs) pursuant to the 2018 SRP, leaving $45,854 available for repurchase under the 2018 SRP.

UNIFI has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements and other operating needs from its cash flows from operations and available borrowings. UNIFI believes that its existing cash balances, cash provided by operating activities and borrowings available under the ABL Revolver will enable UNIFI to comply with the terms of its indebtedness and meet its foreseeable liquidity requirements. Domestically, UNIFI’s cash balances, cash provided by operating activities and borrowings available under the ABL Revolver continue to be sufficient to fund

UNIFI’s domestic operating activities as well as cash commitments for its investing and financing activities. For its foreign operations, UNIFI expects its existing cash balances, cash provided by operating activities and available foreign financing arrangements to provide the needed liquidity to fund the associated operating activities and investing activities, such as future capital expenditures. UNIFI’s foreign operations in Asia and Brazil are in a position to obtain local country financing arrangements due to the strong operating results of each subsidiary.

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

For the Nine Months Ended

March 27, 2022

March 28, 2021

Net income

$
11,675

$
15,654

Equity in earnings of unconsolidated affiliates

(385
)

(751
)
Depreciation and amortization expense

19,176

19,007

Non-cash compensation expense

3,081

2,656

Deferred income taxes

(3,019
)

(1,826
)
Subtotal

30,528

34,740

Distribution received from unconsolidated affiliate

750

—

Receivables, net

(13,537
)

(43,034
)
Inventories

(20,170
)

(11,825
)
Accounts payable and other current liabilities

1,084

33,033

Other changes

(718
)

12,796

Net cash (used) provided by operating activities

$
(2,063
)

$
25,710

The decrease in net cash (used) provided by operating activities from the prior nine-month period to the current nine-month period was primarily due to a greater increase in working capital associated with (i) higher raw material costs and consolidated sales activity and (ii) lower other current liabilities resulting from the payment of incentive compensation earned in fiscal 2021.

~~Investing activities primarily includes $30,094 for capital expenditures, as previously described in~~ ~~Capital Projects~~ ~~above.~~

Financing activities primarily include (i) scheduled payments against the ABL Term Loan and finance leases, (ii) proceeds and payments on the ABL Revolver, and (iii) proceeds from construction financing ~~and (iv) $2,156 for~~during the period.

As described in Note 7, “Shareholders’ Equity,” no share repurchases ~~during the current nine-month period.~~have been completed in fiscal 2023.

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

~~There~~After considering the changes generated by the 2022 Credit Agreement, there have been no further material changes in the scheduled maturities of UNIFI’s contractual obligations as disclosed under the heading “Contractual Obligations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the ~~2021~~2022 Form 10-K.

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

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as those involving accounting estimates that require management to make assumptions about matters that are highly uncertain at the time and where different reasonable estimates or changes in the accounting estimate from quarter to quarter could materially impact the presentation of the financial statements. UNIFI’s critical accounting policies are discussed in the ~~2021~~2022 Form 10-K. There ~~were~~have been no ~~material~~ changes to ~~these~~UNIFI’s critical accounting policies ~~during the current nine-month period.~~

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

UNIFI is exposed to interest rate risk through its borrowing activities. As of ~~March 27,~~October 2, 2022, UNIFI had borrowings under its ABL Facility that totaled ~~$88,500. After considering the variable rate debt obligations that have been hedged and UNIFI’s outstanding debt obligations with fixed rates of interest,~~$117,000. UNIFI’s sensitivity analysis indicates that a 50-basis point interest rate increase ~~in LIBOR~~ as of ~~March 27,~~October 2, 2022 would result in an increase in annual interest expense of approximately ~~$100.~~$600.

~~UNIFI conducts its business in various foreign countries and in various foreign currencies. Each~~A complete discussion of UNIFI’s subsidiaries may enter into transactions (sales, purchases, fixed purchase commitments, etc.) that are denominated in currencies other than the subsidiary’s functional currency and thereby expose UNIFI to foreign currency exchange rate risk. UNIFI may enter into foreign currency forward contracts to hedge this exposure. UNIFI may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. risk is included in the 2022 Form 10-K and is supplemented by the following disclosures.

As of ~~March 27,~~October 2, 2022, UNIFI had no outstanding foreign currency forward contracts.

A significant portion of raw materials purchased by the Brazil Segment are denominated in USDs, requiring UNIFI to regularly exchange BRL. A significant portion of sales and asset balances for the Asia Segment are denominated in USDs. During recent fiscal years, UNIFI has been negatively impacted by fluctuations of the BRL and the RMB. Discussion and analysis surrounding the impact of fluctuations of the BRL and the RMB on UNIFI’s results of operations are included above in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” UNIFI does not enter into foreign currency derivatives to hedge its net investment in its foreign operations.

As of ~~March 27,~~October 2, 2022, foreign currency exchange rate risk concepts included the following:

	Approximate Amount or Percentage			Approximate Amount or Percentage
Percentage of total consolidated assets held by UNIFI's subsidiaries outside the U.S. whose functional currency is not the USD		31.7	%		28.1	%

Cash and cash equivalents held outside the U.S.:
Denominated in USD	$	10,387		$	10,107
Denominated in RMB		31,993			21,335
Denominated in BRL		8,717			10,247
Denominated in other foreign currencies		141			324
Total cash and cash equivalents held outside the U.S.	$	51,238		$	42,013
Percentage of total cash and cash equivalents held outside the U.S.		96.7	%		89.0	%

Cash and cash equivalents held inside the U.S. in USD by foreign subsidiaries	$	1,427		$	1,845

A ~~significant portion~~complete discussion of ~~UNIFI’s~~ raw material and energy costs are derived from petroleum-based chemicals. The prices for petroleum and petroleum-related products and related energy costs are volatile and dependent on global supply and demand dynamics, including certain geo-political risks. A sudden risecommodity cost risks is included in the ~~price of petroleum~~2022 Form 10-K and petroleum-based products could have a material impact on UNIFI’s profitability. UNIFI does not use financial instruments to hedge its exposure to changes in these costs as management has concluded thatis supplemented by the overall cost of hedging petroleum exceeds the potential risk mitigation. The costs of the primary raw materials that UNIFI uses throughout all of its operations are generally based on USD pricing, and such materials are purchased at market or at fixed prices that are established with individual vendors as part of the purchasing process for quantities expected to be consumed in the ordinary course of business. UNIFI manages fluctuations in the cost of raw materials primarily by making corresponding adjustments to the prices charged to its customers. Certain customers are subject to an index-based pricing model in which UNIFI’s prices are adjusted based on the change in the cost of raw materials in the prior quarter. Pricing adjustments for other customers must be negotiated independently. UNIFI attempts to quickly pass on to its customers increases in raw material costs, but due to market conditions, this is not always possible. When price increases can be implemented, there is typically a time lag that adversely affects UNIFI’s margins during one or more quarters. In ordinary market conditions in which raw material price increases have stabilized and sales volumes are consistent with traditional levels, UNIFI has historically been successful in implementing price adjustments within one to two fiscal quarters of the raw material price increase for its index-priced customers and within two fiscal quarters of the raw material price increase for its non-index-priced customers.following disclosures.

As fiscal ~~2021~~2022 concluded, UNIFI experienced cost increases for raw materials ~~primarily~~ related to ~~(i) increases in petroleum prices~~inflationary pressures and ~~(ii) supply chain disruptions that occurred in Texas during February 2021 due~~competing alternatives to ~~abnormally cold weather. Our~~U.S. polyester production. Following the recent global demand deterioration, raw material costs ~~remain elevated~~have declined in fiscal ~~2022. However, we~~2023. We have been able to implement responsive selling price adjustments for the majority of our ~~portfolio.~~portfolio throughout fiscal 2022 and 2023. While our underlying gross margin ~~has been~~is predominantly pressured ~~somewhat during fiscal 2022,~~by lower textile demand, we expect the impact of recent selling price adjustments to ~~improve margins in~~aid margin improvement throughout the remainder of ~~the~~ fiscal ~~year.~~2023. Nonetheless, ~~such~~input costs remain subject to ~~the~~ volatility, ~~described above~~ and, should ~~raw material~~inputs costs increase unexpectedly, UNIFI’s results of operations and cash flows are likely to be adversely impacted.

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

~~The risks associated with climate change, localized energy management initiatives, and other environmental impacts could negatively affect UNIFI’s business and operations.~~

UNIFI’s business is susceptible to risks associated with climate change, including, but not limited to, disruptions to our supply chain, which could potentially impact the production and distribution of our products and availability and pricing of raw materials. Increased frequency and intensity of weather events due to climate change could lead to supply chain disruption, energy and resource rationing, or an adverse event at one of our manufacturing facilities. For example, the February 2021 winter storm in Texas impacted our U.S. supply chain and led to non-routine fees and surcharges being applied to routine business activities and products. Further, the recent energy management initiatives in China temporarily constrained global supply chains and reduced supplier and customer activity. UNIFI remains focused on diversifying our product portfolio and manufacturing footprint while utilizing fewer resources to help address the risks associated with climate change. Nonetheless, the associated risks could adversely impact our results of operations and cash flows.

As of ~~March 27,~~October 2, 2022, an evaluation of the effectiveness of UNIFI’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) was performed under the supervision and with the participation of UNIFI’s management, including the principal executive officer and principal financial officer. Based on that evaluation, UNIFI’s principal executive officer and principal financial officer concluded that UNIFI’s disclosure controls and procedures are effective to ensure that information required to be disclosed by UNIFI in its reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that information required to be disclosed by UNIFI in the reports UNIFI files or submits under the Exchange Act is accumulated and communicated to UNIFI’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in UNIFI’s internal control over financial reporting during the three months ended ~~March 27,~~October 2, 2022 that have materially affected, or are reasonably likely to materially affect, UNIFI’s internal control over financial reporting.

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

(c) The following table summarizes UNIFI’s purchases of its common stock during the fiscal quarter ended March 27, 2022, all of which purchases were made under the 2018 SRP approved by the Board on October 31, 2018, under which UNIFI is authorized to acquire up to $50,000 of common stock. The timing and amount of repurchases will depend on market conditions, share price, applicable legal requirements and other factors. The share repurchase authorization is discretionary and has no expiration date.

Repurchases are subject to applicable limitations and requirements set forth in the ABL Facility. For additional information, including information regarding limitations on payment of dividends and share repurchases, s~~ee Note 12,~~ ~~“Long-Term Debt” contained in UNIFI’s Annual Report on Form 10-K for the fiscal year ended June 27, 2021.~~

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

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

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

PART I—FINANCIAL INFORMATION
		Page

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets as of ~~March 27,~~October 2, 2022 and ~~June 27, 2021~~July 3, 2022	1

	Condensed Consolidated Statements of ~~Income~~Operations for the Three Months ~~and Nine Months~~ Ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021	2

	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months ~~and Nine Months~~ Ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021	3

	Condensed Consolidated Statements of Shareholders’ Equity for the Three Months ~~and Nine Months~~ Ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021	4

	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~March 27,~~October 2, 2022 and ~~March 28,~~September 26, 2021	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1715

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3424

Item 4.	Controls and Procedures	3524

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	3625

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3625

Item 6.	Exhibits	3725

	Signatures	3826

	March 27, 2022			June 27, 2021
Land	$	3,200		$	3,184
Land improvements		16,443			16,372
Buildings and improvements		161,557			160,122
Assets under finance leases		22,882			22,000
Machinery and equipment		622,758			609,414
Computers, software and office equipment		25,717			24,848
Transportation equipment		10,542			10,461
Construction in progress		24,568			17,834
Gross PP&E		887,667			864,235
Less: accumulated depreciation		(665,100	)		(656,576	)
Less: accumulated amortization – finance leases		(7,489	)		(5,963	)
Total PP&E, net	$	215,078		$	201,696

	March 27, 2022		June 27, 2021
Current assets	$	9,263	$	7,931
Non-current assets		634		659
Current liabilities		6,969		3,967
Non-current liabilities		—		—
Shareholders’ equity and capital accounts		2,928		4,623

UNIFI’s portion of undistributed earnings		1,715		2,100

	March 27, 2022		June 27, 2021
Payroll and fringe benefits	$	8,830	$	10,204
Incentive compensation		3,283		12,356
Deferred revenue		2,810		2,691
Interest rate swaps		168		1,234
Current portion of supplemental post-employment plan		20		1,087
Other		3,695		4,066
Total other current liabilities	$	18,806	$	31,638


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



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

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

Authorized under the 2020 Plan	850
Plus: Awards expired, forfeited or otherwise terminated unexercised	1
Less: Awards granted to employees	(209	)
Less: Awards granted to non-employee directors	(4142	)
Available for issuance under the 2020 Plan	~~601~~600

	Foreign Currency Translation Adjustments			Changes in Interest Rate Swaps			Accumulated Other Comprehensive Loss
Balance at June 27, 2021	$	(52,480	)	$	(952	)	$	(53,432	)
Other comprehensive income		5,833			803			6,636
Balance at March 27, 2022	$	(46,647	)	$	(149	)	$	(46,796	)

		For the Three Months Ended
Affiliated Entity	Transaction Type	October 2, 2022		September 26, 2021
Salem Leasing Corporation	Payments for transportation equipment costs and finance lease debt service	$	1,199	$	1,028

	For the Three Months Ended September 26, 2021
	Americas		Brazil		Asia		Total
Net sales	$	110,826	$	33,738	$	51,428	$	195,992
Cost of sales		101,640		23,798		44,457		169,895
Gross profit		9,186		9,940		6,971		26,097
Segment depreciation expense		5,075		383		—		5,458
Segment Profit	$	14,261	$	10,323	$	6,971	$	31,555

	For the Three Months Ended March 27, 2022									For the Three Months Ended March 28, 2021
	Pre-tax Income		Tax Impact			Net Income		Diluted EPS		Pre-tax Income		Tax Impact			Net Income		Diluted EPS
GAAP results	$	4,764	$	(2,698	)	$	2,066	$	0.11	$	8,418	$	(3,660	)	$	4,758	$	0.25
Recovery of non-income taxes, net ⁽¹⁾		815		(257	)		558		0.03		—		—			—		—
Adjusted results	$	5,579	$	(2,955	)	$	2,624	$	0.14	$	8,418	$	(3,660	)	$	4,758	$	0.25

Weighted average common shares outstanding									18,942									18,967

Net sales for the prior period	$	82,668
Net change in average selling price and sales mix		18,007
Decrease in sales volumes		(6,751	)
Net sales for the current period	$	93,924

Net sales for the prior period	$	33,738
Increase in sales volumes		5,604
Decrease in average selling price and change in sales mix		(463	)
Net sales for the current period	$	38,879

Segment Profit for the prior period	$	10,323
Decrease in underlying margins		(4,782	)
Increase in sales volumes		1,716
Segment Profit for the current period	$	7,257

Net sales for the prior period	$	48,483
Change in average selling price and sales mix		4,459
Favorable foreign currency translation effects		964
Net decrease in sales volumes		(2,629	)
Net sales for the current period	$	51,277

Net sales for the prior period	$	25,704
Increase in average selling price		4,906
Favorable foreign currency translation effects		1,298
Decrease in sales volumes		(2,141	)
Net sales for the current period	$	29,767

Segment Profit for the prior period	$	10,897
Decrease in underlying unit margins		(4,201	)
Decrease in sales volumes		(910	)
Favorable foreign currency translation effects		579
Segment Profit for the current period	$	6,365

Net sales for the prior period	$	20,778
Net change in average selling price and sales mix		5,494
Decrease in sales volumes		(1,583	)
Net sales for the current period	$	24,689

Segment Profit for the prior period	$	878
Net increase in underlying margins		1,409
Decrease in sales volumes		(82	)
Segment Profit for the current period	$	2,205

Net sales for the prior nine-month period	$	228,440
Net change in average selling price and sales mix		47,113
Increase in sales volumes		256
Net sales for the current nine-month period	$	275,809

Segment Profit for the prior nine-month period	$	36,658
Change in underlying margins and sales mix		(10,416	)
Increase in sales volumes		41
Segment Profit for the current nine-month period	$	26,283

Net sales for the prior nine-month period	$	130,898
Net increase in sales volumes		20,605
Change in average selling price and sales mix		5,438
Favorable foreign currency translation effects		4,876
Net sales for the current nine-month period	$	161,817

Net sales for the prior nine-month period	$	72,563
Increase in average selling price and change in sales mix		24,361
Favorable foreign currency translation effects		1,184
Decrease in sales volumes		(7,002	)
Net sales for the current nine-month period	$	91,106

Segment Profit for the prior nine-month period	$	24,238
Increase in underlying margins		2,159
Favorable foreign currency translation effects		437
Decrease in sales volumes		(2,343	)
Segment Profit for the current nine-month period	$	24,491

Net sales for the prior nine-month period	$	47,815
Net change in average selling price and sales mix		9,434
Increase in sales volumes		8,614
Net sales for the current nine-month period	$	65,863

Segment Profit for the prior nine-month period	$	2,818
Net increase in underlying margins		687
Increase in sales volumes		491
Segment Profit for the current nine-month period	$	3,996

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
12/27/21 – 1/27/22		—	$	—		—	$	46,805
1/28/22 – 2/27/22		45	$	19.04		45		45,948
2/28/22 – 3/27/22		5	$	18.93		5		45,854
Total		50	$	19.03		50

Exhibit No.		Description

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

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

3.3		Declaration of Amendment to the Amended and Restated By-laws of Unifi, Inc. effective April 30, 2019 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed May 1, 2019 (File No. 001-10542)).

4.1		Second Amended and Restated Credit Agreement, dated as of October 28, 2022, by and among Unifi Manufacturing, Inc. and certain of its domestic affiliates, as borrowers, Wells Fargo Bank, National Association, as administrative agent, sole lead arranger and sole book runner, and the lenders party thereto. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed November 3, 2022 (File No. 001-10542)). Certain portions of the exhibit that include immaterial and confidential information have been omitted.

4.2		Second Amended and Restated Guaranty and Security Agreement, dated as of October 28, 2022, by and among the grantors from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent. (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed November 3, 2022 (File No. 001-10542)). Certain portions of the exhibit that include immaterial and confidential information have been omitted.
31.1⁺		Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2⁺		Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	UNIFI, INC.
	(Registrant)

Date: ~~May 4,~~November 9, 2022	By:	/s/ CRAIG A. CREATURO
		Craig A. Creaturo
		Executive Vice President & Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)