Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Statements
On April 29, 2020, Unifi, Inc. (the “Company”) sold its 34% interest in Parkdale America, LLC (the “PAL Investment”) to the existing majority partner, Parkdale, Incorporated, and received $60.0 million in cash (collectively, the transaction is referred to as the “PAL Disposition”). The accompanying pro forma condensed consolidated financial statements illustrate the effect of the PAL Disposition on the Company’s financial position as of March 29, 2020 and its results of operations for the nine months ended March 29, 2020 and for the fiscal year ended June 30, 2019.
The unaudited pro forma condensed consolidated balance sheet as of March 29, 2020 gives effect to the PAL Disposition as if it had occurred at that date. The unaudited pro forma condensed consolidated statement of operations for the nine months ended March 29, 2020 give effect to the PAL Disposition as if it had occurred on July 1, 2019 (the first day of the interim period ended March 29, 2020). The unaudited pro forma condensed consolidated statement of operations for the fiscal year ended June 30, 2019 give effect to the PAL Disposition as if it had occurred on June 25, 2018 (the first day of the fiscal year ended June 30, 2019).
In accordance with SEC regulations, these unaudited pro forma condensed consolidated financial statements reflect adjustments to the extent they are directly attributable to the sale, are factually supportable and, for statement of operations purposes, are expected to have a continuing impact on the Company’s results of operations. The “As Reported” column in the unaudited pro forma condensed consolidated financial statements reflects the Company’s historical condensed consolidated financial statements for the periods presented and does not reflect any adjustments related to the PAL Disposition and related events.
These unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and are for informational purposes only. The unaudited pro forma condensed consolidated financial statements do not purport to indicate the results that would have been obtained had the PAL Disposition been completed on the assumed date, for the periods presented, or which may be realized in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10-K for the year ended June 30, 2019 and quarterly report on Form 10-Q for the quarter ended March 29, 2020.
UNIFI, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
AT MARCH 29, 2020
(In thousands)
| | As Reported | | | Pro Forma | | | Pro Forma | |
| | March 29, 2020 | | | Adjustments | | | March 29, 2020 | |
ASSETS | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 33,393 | | | $ | 26,100 | | (1) | $ | 59,493 | |
Receivables, net | | | 86,376 | | | | — | | | | 86,376 | |
Inventories | | | 124,146 | | | | — | | | | 124,146 | |
Income taxes receivable | | | 589 | | | | — | | | | 589 | |
Other current assets | | | 18,477 | | | | — | | | | 18,477 | |
Total current assets | | | 262,981 | | | | 26,100 | | | | 289,081 | |
Property, plant and equipment, net | | | 206,993 | | | | — | | | | 206,993 | |
Operating lease assets | | | 6,084 | | | | — | | | | 6,084 | |
Deferred income taxes | | | 5,943 | | | | — | | | | 5,943 | |
Investments in unconsolidated affiliates | | | 58,854 | | | | (56,641 | ) | (2) | | 2,213 | |
Other non-current assets | | | 2,187 | | | | — | | | | 2,187 | |
Total assets | | $ | 543,042 | | | $ | (30,541 | ) | | $ | 512,501 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | | | | | |
Accounts payable | | $ | 40,862 | | | $ | — | | | $ | 40,862 | |
Accrued expenses | | | 15,347 | | | | — | | | | 15,347 | |
Income taxes payable | | | 5,841 | | | | — | | | | 5,841 | |
Current operating lease liabilities | | | 1,709 | | | | — | | | | 1,709 | |
Current portion of long-term debt | | | 14,112 | | | | — | | | | 14,112 | |
Total current liabilities | | | 77,871 | | | | — | | | | 77,871 | |
Long-term debt | | | 118,827 | | | | (33,900 | ) | (3) | | 84,927 | |
Non-current operating lease liabilities | | | 4,481 | | | | — | | | | 4,481 | |
Other long-term liabilities | | | 8,029 | | | | — | | | | 8,029 | |
Deferred income taxes | | | 5 | | | | — | | | | 5 | |
Total liabilities | | | 209,213 | | | | (33,900 | ) | | | 175,313 | |
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Commitments and contingencies | | | | | | | | | | | | |
| | | | | | | | | | | | |
Common stock, $0.10 par value | | | 1,845 | | | | — | | | | 1,845 | |
Capital in excess of par value | | | 61,080 | | | | — | | | | 61,080 | |
Retained earnings | | | 335,971 | | | | — | | | | 335,971 | |
Accumulated other comprehensive loss | | | (65,067 | ) | | | 3,359 | | (4) | | (61,708 | ) |
Total shareholders’ equity | | | 333,829 | | | | 3,359 | | | | 337,188 | |
Total liabilities and shareholders’ equity | | $ | 543,042 | | | | (30,541 | ) | | $ | 512,501 | |
(1) | The adjustment of $26,100 to the pro forma condensed consolidated balance sheet gives effect to the amount of cash from the $60,000 cash proceeds received from the PAL Disposition after the application of the $33,900 of cash proceeds against the Company’s credit facility. |
(2) | The adjustment of $56,641 to the pro forma condensed consolidated balance sheet gives effect to the elimination of the PAL Investment. |
(3) | The adjustment of $33,900 to the pro forma condensed consolidated balance sheet gives effect to the application of cash proceeds received from the PAL Disposition against the Company’s credit facility. |
(4) | The adjustment of $3,359 to the pro forma condensed consolidated balance sheet gives effect to the elimination of the cumulative translation adjustments within accumulated other comprehensive loss that are directly attributable to the PAL Investment. |
UNIFI, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 29, 2020
(In thousands)
| | As Reported | | | | | | | Pro Forma | |
| | For the Nine Months Ended | | | Pro Forma | | | For the Nine Months Ended | |
| | March 29, 2020 | | | Adjustments | | | March 29, 2020 | |
Net sales | | $ | 520,454 | | | $ | — | | | $ | 520,454 | |
Cost of sales | | | 471,963 | | | | — | | | | 471,963 | |
Gross profit | | | 48,491 | | | | — | | | | 48,491 | |
Selling, general and administrative expenses | | | 35,208 | | | | — | | | | 35,208 | |
Provision for bad debts | | | 331 | | | | — | | | | 331 | |
Other operating expense, net | | | 900 | | | | — | | | | 900 | |
Operating income | | | 12,052 | | | | — | | | | 12,052 | |
Interest income | | | (595 | ) | | | — | | | | (595 | ) |
Interest expense | | | 3,589 | | | | (1,125 | ) | (1) | | 2,464 | |
Equity in earnings of unconsolidated affiliates | | | (1,904 | ) | | | 1,324 | | (2) | | (580 | ) |
Impairment of investment in unconsolidated affiliate | | | 45,194 | | | | (45,194 | ) | (3) | | — | |
(Loss) income before income taxes | | | (34,232 | ) | | | 44,995 | | | | 10,763 | |
Provision for income taxes | | | 2,758 | | | | 530 | | (4) | | 3,288 | |
Net (loss) income | | $ | (36,990 | ) | | $ | 44,465 | | | $ | 7,475 | |
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Net (loss) income per common share: | | | | | | | | | |
Basic | | $ | (2.00 | ) | | | | | | $ | 0.40 | |
Diluted | | $ | (2.00 | ) | | | | | | $ | 0.40 | |
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Weighted average common shares outstanding: | | | | | | | | | |
Basic | | | 18,485 | | | | | | | | 18,485 | |
Diluted | | | 18,485 | | | | | | | | 18,738 | |
(1) | The adjustment of $1,125 to the pro forma condensed consolidated statement of operations gives effect to the associated decline in interest expense resulting from the net reduction in long-term debt of $33,900. In calculating the adjustment to interest expense, the Company utilized the weighted average interest rate of its credit facility for the nine-month period ended March 29, 2020. |
(2) | The adjustment of $1,324 to the pro forma condensed consolidated statement of operations gives effect to the elimination of the Company’s equity in earnings of Parkdale America, LLC during the nine-month period ended March 29, 2020. |
(3) | The adjustment of $45,194 to the pro forma condensed consolidated statement of operations gives effect to the elimination of the impairment charge that was recorded during the nine-month period ended March 29, 2020 because such impairment charge relates to the facts and circumstances that were involved in selling the PAL Investment for $60,000. |
(4) | The adjustment of $530 to the pro forma condensed consolidated statement of operations gives effect to the elimination of the tax impact associated with the Company’s equity in earnings of Parkdale America, LLC during the nine month period ended March 29, 2020. The Company has reflected no tax adjustment associated with lower interest expense due to the applicable deductibility limits on interest expense.
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UNIFI, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED JUNE 30, 2019
(In thousands)
| | As Reported | | | Pro Forma | | | Pro Forma | |
| | Fiscal 2019 | | | Adjustments | | | Fiscal 2019 | |
Net sales | | $ | 708,804 | | | $ | — | | | $ | 708,804 | |
Cost of sales | | | 642,496 | | | | — | | | | 642,496 | |
Gross profit | | | 66,308 | | | | — | | | | 66,308 | |
Selling, general and administrative expenses | | | 52,690 | | | | — | | | | 52,690 | |
Provision for bad debts | | | 308 | | | | — | | | | 308 | |
Other operating expense, net | | | 2,350 | | | | — | | | | 2,350 | |
Operating income | | | 10,960 | | | | — | | | | 10,960 | |
Interest income | | | (628 | ) | | | — | | | | (628 | ) |
Interest expense | | | 5,414 | | | | (1,237 | ) | (1) | | 4,177 | |
Loss on extinguishment of debt | | | 131 | | | | — | | | | 131 | |
Equity in earnings of unconsolidated affiliates | | | (3,968 | ) | | | 2,561 | | (2) | | (1,407 | ) |
Income before income taxes | | | 10,011 | | | | (1,324 | ) | | | 8,687 | |
Provision for income taxes | | | 7,555 | | | | (721 | ) | (3) | | 6,834 | |
Net income | | $ | 2,456 | | | $ | (603 | ) | | $ | 1,853 | |
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Net income per common share: | | | | | | | | | | | | |
Basic | | $ | 0.13 | | | | | | | $ | 0.10 | |
Diluted | | | 0.13 | | | | | | | | 0.10 | |
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Weighted average common shares outstanding: | | | | | | | | | |
Basic | | | 18,395 | | | | | | | | 18,395 | |
Diluted | | | 18,695 | | | | | | | | 18,695 | |
(1) | The adjustment of $1,237 to the pro forma condensed consolidated statement of operations gives effect to the associated decline in interest expense resulting from the net reduction in long-term debt of $33,900. In calculating the adjustment to interest expense, the Company utilized the weighted average interest rate of its credit facility for the fiscal year ended June 30, 2019. |
(2) | The adjustment of $2,561 to the pro forma condensed consolidated statement of operations gives effect to the elimination of the Company’s equity in earnings of Parkdale America, LLC for the fiscal year ended June 30, 2019. |
(3) | The adjustment of $721 to the pro forma condensed consolidated statement of operations gives effect to the elimination of the tax impact associated with the Company’s equity in earnings of Parkdale America, LLC during the fiscal year ended June 30, 2019. The Company has reflected no tax adjustment associated with lower interest expense due to the applicable deductibility limits on interest expense. |
