UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 30, 1997
Unifi, Inc.
(Exact name of registrant as specified in its charter)
New York 1-10542 11-2165495
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) No.)
P.O. Box 19109-7201 West Friendly Avenue, Greensboro, North Carolina 27419
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 910-294-4410
(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On June 30, 1997, Unifi, Inc. ("Unifi") entered into a Contribution Agreement
(the "Agreement") with Parkdale Mills, Inc. ("Parkdale") that set forth the
terms and conditions by which Parkdale and Unifi will each contribute all of
the assets of their spun cotton yarn operations utilizing open-end and air
jet spinning technologies to a newly created limited liability company named
Parkdale America, LLC (the "LLC"). The Agreement specified that each
entity's inventory, owned real and tangible personal property and
improvements thereon and Unifi, Inc.'s leased real property associated with
these operations were to be contributed to the LLC. Additionally, Unifi is
required to contribute cash to the LLC as follows: $32.9 million on June 30,
1997, $10.0 million on June 30, 1998 and $10.0 million on June 30, 1999,
whereas Parkdale is required to contribute cash of $51.6 million on June 30,
1997. The LLC will assume certain long-term debt obligations of Unifi and
Parkdale in the amounts of $23.5 million and $46.0 million, respectively.
In exchange for the assets contributed to the LLC and the liabilities assumed
by the LLC Unifi received a 34% ownership interest in the LLC and Parkdale
received a 66% ownership interest in the LLC.
Item 7. Financial Statements and Exhibits.
(b) Pro forma Financial Information (Unaudited)
Pro forma condensed Balance Sheet as of March 30, 1997
Pro forma condensed Statements of Income for the nine months ended March
30, 1997 and for the fiscal year ended June 30, 1996
(c) Exhibits
Exhibit No. Description
(2) Contribution Agreement by and Among
Parkdale Mills, Incorporated Unifi, Inc. Unifi
Manufacturing, Inc. and Parkdale America, LLC Dated:
June 30, 1997
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information sets forth the
results of operations and the financial position of Unifi, Inc. ("Unifi")
after giving effect to the contribution of the spun cotton yarn assets and
other consideration to and the assumption of liabilities by Parkdale America,
LLC (the "LLC") (a) as of the end of the most recent period presented for the
Balance Sheet and (b) as of the beginning of each period presented in the
Statements of Income.
The unaudited pro forma financial information reflects the Balance Sheet of
Unifi at March 30, 1997, and the Statements of Income of Unifi for the nine
months ended March 30, 1997, and the fiscal year ended June 30, 1996, after
giving effect to the contribution of Unifi's spun cotton yarn assets to and
the assumption of certain liabilities by the LLC. The pro forma adjustments
to the Statements of Income for the contribution of Unifi's spun cotton yarn
operations to the LLC include only those revenues and direct operating
expenses associated with such spun cotton yarn business.
The following pro forma data are not necessarily indicative of the financial
position or results of operations that would actually have been reported had
the spun yarn asset contribution been effected during those periods or that
may be reported in the future. The pro forma data should be read in
conjunction with the respective historical Consolidated Financial Statements
and Notes thereto of Unifi.
PRO FORMA BALANCE SHEET (UNAUDITED)
Unifi, Inc.
(Amounts in 000's) March 30, March 30,
1997 Pro Forma 1997
Historical Adjustments Pro Forma
Assets:
Current assets:
Cash and cash equivalents $22,951 (1)$(32,902) $ --
(2) 9,951
Accounts receivable, net 221,799 -- 221,799
Inventories 126,672 (1) (21,399) 105,273
Other current assets 4,420 -- 4,420
Total current assets 375,842 (44,350) 331,492
Property, plant and 586,246 (1)(133,389) 452,857
equipment, net
Investment in affiliate -- (4) 180,490 180,490
Other noncurrent assets 41,564 -- 41,564
Total assets $1,003,652 $2,751 $1,006,403
Liabilities and
shareholders' equity:
Current liabilities:
Accounts payable $101,761 $ -- $101,761
Accrued expenses 38,914 -- 38,914
Income taxes 19,056 -- 19,056
Total current liabilities 159,731 -- 159,731
Long-term debt 235,000 (1)(23,500) 221,451
(2) 9,951
Due to Parkdale America, LLC -- (1) 20,000 20,000
Deferred income taxes 44,156 (3) (3,700) 40,456
Total liabilities 438,887 2,751 441,638
Shareholders' equity:
Common stock 6,228 -- 6,228
Capital in excess of par -- -- --
value
Retained earnings 557,537 -- 557,537
Cumulative translation 1,000 -- 1,000
adjustment
Total shareholders' equity 564,765 -- 564,765
Total liabilities and $1,003,652 $2,751 $1,006,403
shareholders' equity
Explanation of pro forma adjustments:
(1) Reflects Unifi's contribution of assets to and the liabilities assumed
by the LLC.
(2) To record additional borrowings required to fund the cash payment of
$32.9 million on the closing date.
(3) To adjust deferred income taxes for the tax effect of the difference
between the initial financial statement carrying value of its investment
in the LLC and its 34.0% ownership in the tax basis of the underlying net
assets of the LLC.
(4) To record the initial financial statement carrying value of Unifi's
34.0% ownership in the LLC.
PRO FORMA STATEMENTS OF INCOME (UNAUDITED)
Unifi, Inc.
(Amounts in 000's, Nine Months Ended March 30, 1997 Fiscal Year Ended June 30, 1996
except per share (1)Pro forma (1)Pro forma
amounts) Historical Adjustments Pro forma Historical Adjustments Pro forma
Net sales $1,272,312 (2) $(222,898) $1,049,414 $1,603,280 (2)$(303,390) $1,299,890
Cost and expenses:
Cost of sales 1,101,701 (2) (212,307) 889,394 1,407,608 (2) (296,022) 1,111,586
Selling, general
and administrative 33,704 (2) (1,833) 31,871 45,084 (2) (2,379) 42,705
expense
Interest expense 8,900 (3) (595) 8,305 14,593 (3) (763) 13,830
Interest income (1,675) -- (1,675) (6,757) -- (6,757)
Other (income) 1,779 -- 1,779 (4,390) -- (4,390)
expense
Equity in
(earnings) losses
of affiliate -- (4) (13,960) (13,960) -- (4) (6,126) (6,126)
Non-recurring -- -- -- 23,826 -- 23,826
charge
Income before
income taxes and
extraordinary item 127,903 5,797 133,700 123,316 1,900 125,216
Provision for 43,691 (5) 2,290 45,981 44,939 (5) 751 45,690
income taxes
Income before
extraordinary
item $84,212 $3,507 $87,719 $78,377 $1,149 $79,526
Per share data:
Income before
extraordinary item $ 1.31 $ 1.36 $ 1.18 $ 1.20
Fully diluted $ 1.31 $ 1.36 $ 1.18 $ 1.20
Weighted average
shares outstanding:
Primary 64,518 -- 64,518 66,211 -- 66,211
Fully diluted 64,563 -- 64,563 66,251 -- 66,251
<FN>
Explanation of pro forma adjustments:
(1) The pro forma adjustments to the Statements of Income for the
contribution of Unifi's spun cotton yarn operations to the LLC include only
those revenues and direct operating expenses associated with such business.
In addition to the direct manufacturing and direct selling, general and
administrative expenses eliminated in (2) below, Unifi on a historical basis
had allocated $7.8 million and $11.3 million of such corporate costs to the
spun yarn operations for the nine months ended March 30, 1997 and fiscal year
ended June 30, 1996, respectively. These corporate allocated costs have not
been included in the pro forma adjustments, however Management of Unifi is in
the process of implementing a formal plan that should eliminate certain of
these costs. A reasonable estimate of these cost reductions is not currently
available.
(2) To record the elimination of revenues and direct manufacturing costs
and direct selling, general and administrative expenses associated with the
contribution of Unifi's spun yarn operations to the LLC.
(3) To reduce the interest expense at the rate of 5.85% for the nine
months ended March 30, 1997 and 5.63% for the fiscal year ended June 30, 1996
related to the $23.5 million of Unifi debt assumed by the LLC, net of
additional required borrowings of $9.95 million.
(4) To reflect Unifi's 34.0% ownership equity in the pro forma earnings of
the LLC. The pro forma earnings of the LLC for the nine months ended March
30, 1997 and the fiscal year ended June 30, 1996 combine the historical
operating results of the Unifi spun yarn business for the respective nine and
twelve month periods with the historical operating results of the open-end
and air jet spinning business of Parkdale for the nine months ended June 30,
1997 and the year ended September 30, 1996, respectively, net of the
amortization of the excess of Unifi's investment in the LLC over the
underlying net assets.
(5) For purposes of the pro forma adjustments, the statutory rate of 39.5% is used in the provision for income
tax calculations.
</FN>
SIGNATURES
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 hereunto duly authorized.
Unifi, Inc.
WILLIS C. MOORE, III
Willis C. Moore, III
Vice President and Chief Financial Officer
Date July 15, 1997
UNIFI, INC.
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
Exhibit No. Description
(2) Contribution Agreement by and Among Parkdale Mills,
Incorporated Unifi, Inc. Unifi Manufacturing, Inc. and
Parkdale America, LLC Dated: June 30, 1997