FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 23, 2001
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[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-10542
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UNIFI, INC.
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(Exact name of registrant as specified in its charter)
New York 11-2165495
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 19109 - 7201 West Friendly Avenue
Greensboro, NC 27419
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(Address of principal executive offices) (Zip Code)
(336) 294-4410
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(Registrant's telephone number, including area code)
Same
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Class Outstanding at October 28, 2001
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Common stock, par value $.10 per share 53,825,533 Shares
Part I. Financial Information
UNIFI, INC.
Condensed Consolidated Balance Sheets
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September 23, June 24,
2001 2001
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(Unaudited) (Note)
(Amounts in Thousands)
ASSETS:
Current assets:
Cash and cash equivalents $ 11,713 $ 6,634
Receivables 157,978 171,744
Inventories:
Raw materials and supplies 60,189 47,374
Work in process 12,003 12,527
Finished goods 65,860 64,533
Other current assets 2,853 6,882
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Total current assets 310,596 309,694
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Property, plant and equipment 1,214,478 1,209,927
Less: accumulated depreciation 667,981 647,614
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546,497 562,313
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Investments in unconsolidated affiliates 179,962 173,502
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Other noncurrent assets 91,344 91,810
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Total assets $ 1,128,399 $ 1,137,319
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 77,370 $ 100,086
Accrued expenses 57,081 59,866
Income taxes payable 4,009 72
Current maturities of long-term debt and
other current liabilities 93,953 85,962
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Total current liabilities 232,413 245,986
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Long-term debt and other liabilities 258,468 259,188
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Deferred income taxes 80,270 80,307
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Minority interests 12,126 11,295
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Shareholders' equity:
Common stock 5,382 5,382
Retained earnings 592,026 589,360
Unearned compensation (1,054) (1,203)
Accumulated other comprehensive loss (51,232) (52,996)
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Total shareholders' equity 545,122 540,543
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Total liabilities and shareholders' equity $ 1,128,399 $ 1,137,319
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Note: The balance sheet at June 24, 2001, has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
UNIFI, INC.
Condensed Consolidated Statements of Income
(Unaudited)
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For the Quarters Ended
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September 23, September 24,
2001 2000
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(Amounts in Thousands)
Net sales $ 223,026 $ 319,163
Cost of goods sold 200,788 281,503
Selling, general & admin. expense 11,578 16,032
Interest expense 6,199 8,307
Interest income 765 1,121
Other (income) expense (1,657) 4,512
Equity in losses of unconsolidated
affiliates 325 1,431
Minority interests 861 2,759
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Income before income taxes 5,697 5,740
Provision for income taxes 3,031 2,857
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Net income $ 2,666 $ 2,883
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Earnings per common share - basic $ .05 $ .05
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Earnings per common share -
assuming dilution $ .05 $ .05
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See Accompanying Notes to Condensed Consolidated Financial Statements.
3
UNIFI, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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For the Quarters Ended
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September 23, September 24,
2001 2000
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(Amounts in Thousands)
Cash and cash equivalents provided by
operating activities $ 2,519 $ 1,920
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Investing activities:
Capital expenditures (2,402) (12,028)
Acquisitions -- (2,466)
Investments in unconsolidated equity affiliates (5,830) (1,254)
Investment of foreign restricted cash (1,175) (4,881)
Proceeds from sale of capital assets 3,315 89
Other 488 (521)
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Net investing activities (5,604) (21,061)
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Financing activities:
Borrowing of long-term debt 54,000 61,391
Repayment of long-term debt (44,142) (30,922)
Purchase and retirement of Company
common stock -- (16,494)
Distributions to minority interest shareholders -- (3,000)
Other (756) (1,438)
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Net financing activities 9,102 9,537
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Currency translation adjustment (938) 1,311
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Net increase (decrease) in cash and cash
equivalents 5,079 (8,293)
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Cash and cash equivalents - beginning 6,634 18,778
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Cash and cash equivalents - ending $ 11,713 $ 10,485
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See Accompanying Notes to Condensed Consolidated Financial Statements.
4
UNIFI, INC.
Notes to Condensed Consolidated Financial Statements
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(a) Basis of Presentation
The information furnished is unaudited and reflects all adjustments which
are, in the opinion of management, necessary to present fairly the
financial position at September 23, 2001, and the results of operations and
cash flows for the periods ended September 23, 2001, and September 24,
2000. Such adjustments consisted of normal recurring items. Interim results
are not necessarily indicative of results for a full year. It is suggested
that the condensed consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
latest annual report on Form 10-K.
(b) Income Taxes
Deferred income taxes have been provided for the temporary differences
between financial statement carrying amounts and tax basis of existing
assets and liabilities.
The difference between the statutory federal income tax rate and the
effective tax rate is primarily due to the nonrecognition of any income tax
benefit for the losses of foreign subsidiaries.
(c) Comprehensive Income (Loss)
Comprehensive income (loss) amounted to $4.4 million for the first quarter
of fiscal 2002 and ($7.6) million for the first quarter of fiscal 2001, and
was comprised of net income and foreign currency translation adjustments
for both periods. In addition, the prior year period comprehensive loss
also included unrealized losses on foreign currency derivative contracts
totaling $2.6 million. The Company does not provide income taxes on the
impact of currency translations as earnings from foreign subsidiaries are
deemed to be permanently invested.
(d) Earnings per Share
The following table sets forth the reconciliation of the numerators and
denominators of the basic and diluted earnings per share computations
(amounts in thousands):
For the Quarters Ended
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September 23, September 24,
2001 2000
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Numerator:
Net income $ 2,666 $ 2,883
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5
For the Quarters Ended
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September 23, September 24,
2001 2000
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Denominator:
Denominator for basic
earnings per share -
Weighted average shares 53,676 54,443
Effect of dilutive securities:
Stock options 9 11
Restricted stock awards 0 42
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Dilutive potential common
shares denominator for
diluted earnings per
share-Adjusted weighted
average shares and
assumed conversions 53,685 54,496
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(e) Recent Accounting Pronouncements
In September 2000, the Emerging Issues Task Force (EITF) issued EITF
Abstract 00-10 "Accounting for Shipping and Handling Fees and Costs." EITF
00-10 requires that any amounts billed to a customer for a sales
transaction related to shipping or handling should be classified as
revenues. The Company was required to adopt EITF 00-10 in the fourth
quarter of fiscal year 2001. Before adoption of this Standard, the Company
included revenues earned for shipping and handling in the net sales line
item in the Condensed Consolidated Statements of Income. Costs to provide
this service were either historically included in net sales, for shipping
costs, or in cost of sales, for handling expenses. Upon the adoption of
EITF 00-10 the Company has reclassified the presentation of shipping costs
from net sales to cost of sales and restated all prior periods. Adopting
EITF 00-10 had no impact on the Company's net results of operations or
financial position.
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141).
SFAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Use of the
pooling-of-interests method is prohibited after this date. SFAS 141 also
includes guidance on the initial recognition and measurement of goodwill
and other intangible assets acquired in a business combination completed
after June 30, 2001. The Company adopted SFAS 141 on July 1, 2001.
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets" (SFAS 142). As allowed under the Standard, the Company has early
adopted SFAS 142 as of June 25, 2001. SFAS 142 requires goodwill and
intangible assets with indefinite useful lives to no longer be amortized,
but instead be tested for impairment at least annually.
6
With the adoption of SFAS 142, the Company reassessed the useful lives and
residual values of all acquired intangible assets to make any necessary
amortization period adjustments. Based on that assessment, only goodwill
was determined to have an indefinite useful life and no other adjustments
were made to the amortization period or residual values of other intangible
assets.
SFAS 142 provides a six-month transitional period from the effective date
of adoption for the Company to perform an assessment of whether there is an
indication that goodwill is impaired. To the extent that an indication of
impairment exists, the Company must perform a second test to measure the
amount of the impairment. The second test must be performed as soon as
possible, but no later than the end of the Company's 2002 fiscal year. Any
impairment measured as of the date of adoption will be recognized as the
cumulative effect of a change in accounting principle. Because of the
extensive effort needed to complete this assessment, the Company has not
determined whether there is any indication that goodwill is impaired or
estimated the amount of any potential impairment.
At September 23, 2001, the Company had goodwill of $59.8 million (net of
accumulated amortization of $18.1 million), which is being assessed for
impairment. The Company anticipates completing its initial assessment of
impairment by December 23, 2001. Should an indication of impairment exist,
the Company will perform the second test under SFAS 142 to measure and
record the amount of impairment, if any.
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143 "Accounting for Asset Retirement
Obligations" (SFAS 143). This standard applies to all entities and
addresses legal obligations associated with the retirement of tangible
long-lived assets that result from the acquisition, construction,
development or normal operation of a long-lived asset. SFAS 143 requires
that the fair value of a liability for an asset retirement obligation be
recognized in the period in which it is incurred if a reasonable estimate
of fair value can be made. Additionally, any associated asset retirement
costs are to be capitalized as part of the carrying amount of the
long-lived asset and expensed over the life of the asset. SFAS 143 is
effective for financial statements issued for fiscal years beginning after
June 15, 2002. The Company has not yet assessed the financial impact that
adopting SFAS 143 will have on the consolidated financial statements.
In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 supercedes SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of" (SFAS 121). The provisions of this statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The Company has not yet assessed the financial impact
that adopting SFAS 144 will have on the consolidated financial statements.
7
(f) Segment Disclosures
Statement of Financial Accounting Standards No. 131, "Disclosures About
Segments of an Enterprise and Related Information," (SFAS 131) established
standards for public companies for the reporting of financial information
from operating segments in annual and interim financial statements as well
as related disclosures about products and services, geographic areas and
major customers. Operating segments are defined in SFAS 131 as components
of an enterprise about which separate financial information is available to
the chief operating decision-maker for purposes of assessing performance
and allocating resources. Following is the Company's selected segment
information for the quarters ended September 23, 2001, and September 24,
2000 (amounts in thousands):
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All
Polyester Nylon Other Total
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Quarter ended September 23, 2001:
Net sales to external customers $ 156,155 $ 66,871 $ -- $ 223,026
Intersegment net sales 8 -- -- 8
Segment operating income 6,369 3,239 -- 9,608
Depreciation and amortization 12,787 4,673 -- 17,460
Total assets 593,308 304,393 5,306 903,007
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Quarter ended September 24, 2000:
Net sales to external customers $ 220,286 $ 92,954 $ 5,923 $ 319,163
Intersegment net sales 41 -- 2,957 2,998
Segment operating income (loss) 17,492 6,261 (1,617) 22,136
Depreciation and amortization 14,914 5,641 274 20,829
Total assets 676,548 379,753 18,740 1,075,041
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For the Quarters Ended
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September 23, 2001 September 24, 2000
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Operating income:
Reportable segments operating income $ 9,608 $ 22,136
Net standard cost adjustment to LIFO 1,080 2
Unallocated operating expense (28) (510)
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Consolidated operating income $ 10,660 $ 21,628
====================================
For purposes of internal management reporting, segment operating income
(loss) represents net sales less cost of goods sold and selling, general
and administrative expenses. Certain indirect manufacturing and selling,
general and administrative costs are allocated to the operating segments
based on activity drivers relevant to the respective costs.
The primary differences between the segmented financial information of the
operating segments, as reported to management, and the Company's
consolidated reporting relates to intersegment transfers of yarn, fiber
costing, the provision for bad debts and capitalization of property, plant
and equipment costs.
Domestic operating divisions' fiber costs are valued on a standard cost
basis, which approximates first-in, first-out accounting. For those
components of inventory valued utilizing the last-in, first-out (LIFO)
method, an adjustment is made at the corporate level to record the
difference between standard cost and LIFO. Segment operating income
excludes
8
$1.0 million and $2.5 million of provision for bad debts in the
current and prior year quarters, respectively. For significant capital
projects, capitalization is delayed for management segment reporting until
the facility is substantially complete. However, for consolidated
management financial reporting, assets are capitalized into construction in
progress as costs are incurred or carried as unallocated corporate fixed
assets if they have been placed in service but have not as yet been moved
for management segment reporting.
The total assets for the polyester segment decreased from $608.6 million at
June 24, 2001 to $593.3 million at September 23, 2001 due mainly to
domestic assets decreasing by $11.7 million (accounts receivable and fixed
assets decreased by $8.0 million and $8.2 million, respectively, offset by
an increase in inventories of $4.5 million). The total assets for the nylon
segment increased from $292.4 million at June 24, 2001 to $304.4 million at
September 23, 2001 due mainly to domestic assets increasing by $12.8
million (accounts receivable and inventories increased by $5.1 million and
$11.9 million, respectively, offset by a decrease in fixed assets of $4.2
million). The fixed asset reductions for polyester and nylon are primarily
associated with depreciation. The total assets for the "All Other" segment
of $5.3 million at September 23, 2001 is comparable with the amount at June
24, 2001 of $5.1 million.
(g) Derivative Financial Instruments
Effective June 26, 2000, the Company began accounting for derivative
contracts and hedging activities under Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" which requires all derivatives to be recorded on the balance
sheet at fair value. There was no cumulative effect adjustment of adopting
this accounting standard in fiscal 2001. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the
hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in
fair value will be immediately recognized in earnings. The Company does not
enter into derivative financial instruments for trading purposes.
The Company conducts its business in various foreign currencies. As a
result, it is subject to the transaction exposure that arises from foreign
exchange rate movements between the dates that foreign currency
transactions are recorded (export sales and purchases commitments) and the
dates they are consummated (cash receipts and cash disbursements in foreign
currencies). The Company utilizes some natural hedging to mitigate these
transaction exposures. The Company also enters into foreign currency
forward contracts for the purchase and sale of European, Canadian and other
currencies to hedge balance sheet and income statement currency exposures.
These contracts are principally entered into for the purchase of inventory
and equipment and the sale of Company products into export markets.
Counterparties for these instruments are major financial institutions.
Currency forward contracts are entered to hedge exposure for sales in
foreign currencies based on specific sales orders with customers or for
anticipated sales activity for a future time period. Generally, 60-80% of
the sales value of these orders are covered by forward contracts. Maturity
dates of the forward contracts attempt to match anticipated receivable
collections. The Company marks the outstanding accounts receivable and
forward contracts to market at month end and any realized and unrealized
gains or losses are
9
recorded as other income and expense. The Company also enters currency
forward contracts for committed or anticipated equipment and inventory
purchases. Generally, 50-75% of the asset cost is covered by forward
contracts although 100% of the asset cost may be covered by contracts in
certain instances. Forward contracts are matched with the anticipated date
of delivery of the assets and gains and losses are recorded as a component
of the asset cost for purchase transactions the Company is firmly
committed. For anticipated purchase transactions, gains or losses on hedge
contracts are accumulated in Other Comprehensive Income (Loss) and
periodically evaluated to assess hedge effectiveness. In the prior year
quarter, the Company recorded and subsequently wrote off approximately $1.6
million of accumulated losses on hedge contracts associated with the
anticipated purchase of machinery that was later canceled. The contracts
outstanding for anticipated purchase commitments that were subsequently
canceled were unwound by entering into sales contracts with identical
remaining maturities and contract values. These purchase and sales
contracts continue to be marked to market with offsetting gains and losses.
The latest maturity for all outstanding purchase and sales foreign currency
forward contracts are October 15, 2001 and March 21, 2002, respectively.
The dollar equivalent of these forward currency contracts and their related
fair values are detailed below:
Sept. 23, 2001 June 24, 2001
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Foreign currency purchase contracts:
Notional amount $ 3,600 $ 14,400
Fair value 3,223 12,439
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Net (gain) loss $ 377 $ 1,961
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Foreign currency sales contracts:
Notional amount $ 18,602 $ 28,820
Fair value 18,560 29,369
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Net (gain) loss $ (42) $ 549
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For the quarters ended September 23, 2001 and September 24, 2000, the total
impact of foreign currency related items on the Condensed Consolidated
Statements of Income, including transactions that were hedged and those
that were not hedged, was a pre-tax loss of $0.2 million and $2.1 million,
respectively.
(h) Joint Ventures
On September 13, 2000, the Company and SANS Fibres of South Africa formed a
50/50 joint venture (UNIFI - SANS Technical Fibers, LLC or UNIFI-SANS) to
produce low-shrinkage high tenacity nylon 6.6 light denier industrial (LDI)
yarns in North Carolina. Sales from this entity are expected to be
primarily to customers in the NAFTA and CBI markets. UNIFI-SANS will also
incorporate the two-stage light denier industrial nylon yarn business of
Solutia, Inc. (Solutia) which was purchased by SANS Fibres. Solutia will
exit the two-stage light denier industrial yarn business transitioning
production from its Greenwood, South Carolina site to the UNIFI-SANS
Stoneville, North Carolina facility, a former Unifi manufacturing location.
The UNIFI-SANS facility is scheduled to begin production in January 2002.
Until such time, UNIFI-SANS will continue to purchase yarn from Solutia to
meet market demand. Unifi will manage the day-to-day production and
shipping of the LDI produced in North Carolina and SANS Fibres will handle
technical
10
support and sales. Annual LDI production capacity from the joint venture is
estimated to be approximately 9.6 million pounds.
On September 27, 2000, Unifi and Nilit Ltd., located in Israel, formed a
50/50 joint venture named U.N.F. Industries Ltd. The joint venture produces
approximately 25.0 million pounds of nylon POY at Nilit's manufacturing
facility in Migdal Ha - Emek, Israel. Production and shipping of POY from
this facility began in March 2001. The nylon POY is utilized in the
Company's nylon texturing and covering operations.
(i) Debt Refinancing
The Company has access to financing through unused capacity under an
unsecured $150 million revolving bank credit facility (the "Credit
Facility") that is scheduled to mature in December 2003 and a $100 million
trade receivables financing agreement (the "Receivables Agreement") which
is secured by certain domestic and foreign accounts receivable. Amounts
outstanding under the Credit Facility and the Receivables Agreement as of
September 23, 2001 were $5.0 million and $80.1 million, respectively. The
Receivables Agreement does not have a stated maturity but is terminable at
the option of the Company with a five-day written notice. Loans under the
Credit Facility bear interest at LIBOR plus 2.0% and advances under the
Receivables Agreement bear interest at the applicable commercial paper rate
plus .30%. As of September 23, 2001, the Company had unused capacity of
approximately $145 million under the terms of the Credit Facility.
The loans under the Credit Facility include financial covenants that
required, at September 23, 2001, tangible net worth of $395.4 million, a
maximum leverage ratio of 3.25 and a minimum interest coverage ratio of
2.50. The Company believes that it is in compliance with all these
covenants at September 23, 2001. However, the Company was in default of the
interest coverage covenant of the Credit Facility at June 24, 2001. As a
result, the Company obtained a waiver through November 30, 2001. The
Company is currently in discussions with the lending group and others to
secure a more flexible long-term borrowing arrangement. The outstanding
balance of the Credit Facility of $5.0 million at September 23, 2001 has
been classified as a current maturity of long-term debt. The Company has
classified the $80.1 million outstanding at September 23, 2001 under the
Receivables Agreement, as a current maturity of long-term debt, pending
renegotiation of the Credit Facility. The Company believes that its current
financial position as well as its cash flow from operations and available
collateral will allow it to refinance on a long-term basis the Credit
Facility and Receivables Agreement on acceptable terms.
(j) Consolidation and Cost Reduction Efforts
In fiscal 2001, the Company recorded charges of $7.6 million for severance
and employee related costs and $24.5 million for asset impairments and
write-downs. The majority of these charges related to U.S. and European
operations and included plant closings and consolidations, the
reorganization of administrative functions and the write down of assets for
certain operations determined to be impaired as well as certain non-core
businesses that are being held for sale. The plant closing and
consolidations of the manufacturing and distribution systems were aimed at
improving the overall efficiency and effectiveness of the Company's
operations and reducing our fixed cost structure in response to decreased
sales volumes.
11
The severance and other employee related costs provided for the termination
of approximately 750 people who were terminated as a result of these
worldwide initiatives and included management, production workers and
administrative support located in Ireland, England and in the United
States. Notification of the termination was made to all employees prior to
March 24, 2001 and substantially all affected personnel were terminated by
the end of April 2001. Severance will be paid in accordance with various
plan terms, which vary from lump sum to a payout over a maximum of 21
months ending December 2002. Additionally, this charge included costs
associated with medical and dental benefits for former employees no longer
providing services to the Company and provisions for certain consultant
agreements for which no future benefit is anticipated.
The charge for impairment and write down of assets included $18.6 million
for the write down of duplicate or less efficient property, plant and
equipment to their fair value less disposal cost and the write down of
certain non-core assets which are held for sale. It is anticipated that the
remaining non-core assets and business will be sold prior to the end of
calendar 2001. Additionally, an impairment charge of $5.9 million was
recorded for the write down to fair value of assets, primarily goodwill,
associated with the European polyester dyed yarn operation and Colombian
nylon covering operation as the undiscounted cash flows of the business
were not sufficient to cover the carrying value of these assets. These
reviews were prompted by ongoing excess manufacturing capacity issues.
Run-out expenses related to the consolidation and closing of the affected
operations, including equipment relocation and other costs associated with
necessary ongoing plant maintenance expenses, were charged to operations as
incurred and were completed by the end of fiscal 2001.
The table below summarizes changes to the accrued liability for the
employee severance portion of the consolidation and cost reduction charge
for the quarter ended September 23, 2001:
Balance at Balance at
(Amounts in thousands) June 24, 2001 Cash Payments Sept. 23, 2001
---------------------------------------------------------------------------
Accrued Severance Liability $2,338 (724) $1,614
This accrued liability excludes the additional $1.7 million charge recorded
in the prior year for the change in estimate associated with the expected
payout of medical and dental benefits for former employees who retired and
terminated in fiscal year 1999. Substantially all costs other than
severance and the change in estimate associated with the expected payout of
medical and dental benefits associated with the consolidation and cost
reduction charges were non cash.
(k) Alliance Plant Closure Costs
In the fourth quarter of fiscal 2001, the Company recorded its share of the
anticipated costs of closing DuPont's Cape Fear, North Carolina facility.
The charge totaled $15.0 million and represents 50% of the severance and
dismantlement cost of closing this plant. The Cape Fear plant produced
polyester POY and was one of two DuPont facilities involved in the
Alliance. Payments for this obligation are to be made over the
eighteen-month period ending December 2002. No payments were made by the
Company during the first quarter
12
ended September 23, 2001. This obligation is included in accrued
liabilities on the Condensed Consolidated Balance Sheets.
(l) Goodwill and Other Intangible Assets
As described in Note (e), the Company adopted SFAS 142 on June 25, 2001.
The following table reconciles net income for the quarter ended September
24, 2000 to its pro forma balance adjusted to exclude goodwill amortization
expense which is no longer recorded under the provisions of SFAS 142.
Reported net income $2,883
Add back: goodwill amortization (net of tax) 816
------
Adjusted net income $3,699
------
Basic net income per share:
Reported net income $ .05
Adjusted net income $ .07
Diluted net income per share:
Reported net income $ .05
Adjusted net income $ .07
There were no changes in the net carrying amount ($59.8 million) of
goodwill for the quarter ended September 23, 2001. Intangible assets
subject to amortization under SFAS 142 amounted to $2.9 million (net of
accumulated amortization of $7.7 million) and $3.4 million (net of
accumulated amortization of $7.2 million) at September 23, 2001 and June
24, 2001, respectively. These intangible assets consist of non-compete
agreements entered into in connection with business combinations and are
amortized over the term of the agreements, principally 5 years. There are
no expected residual values related to these intangible assets. Estimated
fiscal year amortization expense is as follows: 2002 - $2.1 million; 2003 -
$1.1 million; and 2004 - $0.2 million.
13
Management's Discussion and Analysis of
Financial Condition and Results of Operations
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The following is Management's discussion and analysis of certain significant
factors that have affected the Company's operations and material changes in
financial condition during the periods included in the accompanying Condensed
Consolidated Financial Statements.
Results of Operations
General
Consolidated net sales decreased 30.1% for the quarter from $319.2 million to
$223.0 million. Unit volume for the quarter decreased 24.6% while average unit
sales prices, based on product mix, declined 5.5%.
Segment Information
At the segment level, polyester accounted for 70.0% of dollar sales and nylon
accounted for 30.0% for the quarter.
The polyester business in the U.S and Europe continues to be negatively impacted
by the importation of fabric and apparel that has eroded the business of our
customers, primarily in the commodity areas. Additionally, the current quarter
was adversely affected by customers reducing inventory levels in response to
slow downs at retail and the economy in general. These effects were experienced
across substantially all end-use markets including apparel, automotive, and home
furnishings. As a result, sales for our polyester segment declined 29.1% for the
quarter compared with the previous year's respective period.
Our domestic polyester unit volume decreased 28.1% for the September quarter
compared to the September quarter a year ago. Domestic polyester pricing on
sales of first quality goods remained stable compared to the prior year quarter.
Sales in local currency for our Brazilian operation were down 19.8% for the
quarter due to a 17.1% reduction in unit volume and reduced average selling
prices. Sales in local currency of our Irish operation decreased 14.8% for the
quarter due to reduced volume which was partially offset by higher average unit
selling prices. The movement in currency exchange rates from the prior year to
the current year adversely affected current quarter sales translated to U.S.
dollars for the Irish and Brazilian operations. U.S. dollar net sales were $4.8
million less than what sales would have been reported using prior year
translation rates for the quarter, with most of this effect attributable to the
change in the U.S. dollar and Brazilian Reais exchange rate.
Gross profit for our polyester segment decreased $11.2 million to $15.5 million
in the quarter. The decrease in gross profit for the quarter is primarily due to
the 29.1% decrease in sales.
The nylon business continues to be negatively impacted by the decline in the
ladies hosiery business as well as the slow down of seamless apparel sales.
Consistent with the polyester business, the current quarter was adversely
affected by inventory corrections in response to economic and retail slow downs.
As a result, sales for our nylon segment declined 28.1% for the quarter compared
with the previous year's respective period. Our domestic nylon unit volume,
which represents substantially all of consolidated nylon sales volume, declined
17.7%
14
for the September quarter compared to the prior year quarter. Average sales
prices were down 10.4% for the current year period relative to the prior year.
Gross profit for our nylon segment decreased $4.8 million to $5.7 million in the
quarter. The decrease in gross profit for the quarter is primarily due to the
28.1% decrease in sales.
Selling, general and administrative expenses as a percentage of net sales,
increased from 5.0% in last year's quarter to 5.2% this quarter. On a dollar
basis, selling, general and administrative expense decreased $4.5 million to
$11.6 million. These lower costs are primarily due to the sale of the consulting
arm of Unifi Technology Group and from the continuing cost reduction efforts
initiated in March 2001.
Corporate
Interest expense decreased $2.1 million to $6.2 million in the current quarter.
The decrease in interest expense for the quarter reflects lower average debt
outstanding and lower average interest rates. The weighted average interest rate
on outstanding debt at September 23, 2001, was 5.9% compared to 6.7% at
September 24, 2000.
Other income and expense was positively impacted in the current quarter by a
gain on sale of non-operating assets of $2.9 million. Other income and expense
for the current year quarter also includes a provision for bad debts of $1.0
million compared with $2.5 million in the prior year quarter. In addition, other
income and expense for the prior year quarter included a charge of $1.6 million
in currency losses associated with the partial cancellation of a Euro-based
hedge originally secured to purchase machinery.
Equity in the losses of our unconsolidated affiliates, Parkdale America, LLC
("the LLC"), Micell Technologies, Inc., ("Micell"), Unifi-Sans Technical Fibers,
LLC and U.N.F. Industries Ltd amounted to $0.3 million in the first quarter of
fiscal 2002 compared with $1.4 million for the corresponding prior year quarter.
The minority interest charge was $0.9 million in the current year fiscal quarter
compared to $2.8 million in the prior year quarter. The decrease in minority
interest expense in the current quarter is due to lower operating results and
cash flows generated by our domestic natural textured polyester business
venture, which has historically represented substantially all of the minority
interest charge.
In fiscal 2001, the Company recorded charges of $7.6 million for severance and
employee related costs and $24.5 million for asset impairments and write-downs.
The majority of these charges related to U.S. and European operations and
included plant closings and consolidations, the reorganization of administrative
functions and the write down of assets for certain operations determined to be
impaired as well as certain non-core businesses that are being held for sale.
The plant closing and consolidations of the manufacturing and distribution
systems were aimed at improving the overall efficiency and effectiveness of the
Company's operations and reducing our fixed cost structure in response to
decreased sales volumes.
The severance and other employee related costs provided for the termination of
approximately 750 people who were terminated as a result of these worldwide
initiatives and included management, production workers and administrative
support located in Ireland, England and in the United States. Notification of
the termination was made to all employees prior to March 24,
15
2001 and substantially all affected personnel were terminated by the end of
April 2001. Severance will be paid in accordance with various plan terms, which
vary from lump sum to a payout over a maximum of 21 months ending December 2002.
Additionally, this charge included costs associated with medical and dental
benefits for former employees no longer providing services to the Company and
provisions for certain consultant agreements for which no future benefit is
anticipated.
The charge for impairment and write down of assets included $18.6 million for
the write down of duplicate or less efficient property, plant and equipment to
their fair value less disposal cost and the write down of certain non-core
assets which are held for sale. It is anticipated that the remaining non-core
assets and business will be sold prior to the end of calendar 2001.
Additionally, an impairment charge of $5.9 million was recorded for the write
down to fair value of assets, primarily goodwill, associated with the European
polyester dyed yarn operation and Colombian nylon covering operation as the
undiscounted cash flows of the business were not sufficient to cover the
carrying value of these assets. These reviews were prompted by ongoing excess
manufacturing capacity issues. Run-out expenses related to the consolidation and
closing of the affected operations, including equipment relocation and other
costs associated with necessary ongoing plant maintenance expenses, were charged
to operations as incurred and were completed by the end of fiscal 2001.
The table below summarizes changes to the accrued liability for the employee
severance portion of the consolidation and cost reduction charge for the quarter
ended September 23, 2001:
Balance at Balance at
(Amounts in thousands) June 24, 2001 Cash Payments Sept. 23, 2001
---------------------------------------------------------------------------
Accrued Severance Liability $2,338 (724) $1,614
This accrued liability excludes the additional $1.7 million charge recorded in
the prior year for the change in estimate associated with the expected payout of
medical and dental benefits for former employees who retired and terminated in
fiscal year 1999. Substantially all costs other than severance and the change in
estimate associated with the expected payout of medical and dental benefits
associated with the consolidation and cost reduction charges were non cash.
The Company's income tax provision (benefit) for the current year period is
different from the statutory rate as no income tax benefits have been recognized
for the losses incurred by foreign subsidiaries as the recoverability of such
tax benefits through loss carryforwards or carrybacks is not reasonably assured.
As a result of the above, the Company realized during the current quarter net
income of $2.7 million, or diluted earnings per share of $.05, compared to $2.9
million, or $.05 per share, for the corresponding quarter of the prior year.
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141). SFAS
141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Use of the pooling-of-interests
method is prohibited after this date. SFAS 141 also includes guidance on the
initial recognition and measurement of goodwill and other intangible
16
assets acquired in a business combination completed after June 30, 2001. The
Company adopted SFAS 141 on July 1, 2001.
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
(SFAS 142). As allowed under the Standard, the Company has early adopted SFAS
142 as of June 25, 2001. SFAS 142 requires goodwill and intangible assets with
indefinite useful lives to no longer be amortized, but instead be tested for
impairment at least annually.
With the adoption of SFAS 142, the Company reassessed the useful lives and
residual values of all acquired intangible assets to make any necessary
amortization period adjustments. Based on that assessment, only goodwill was
determined to have an indefinite useful life and no other adjustments were made
to the amortization period or residual values of other intangible assets.
SFAS 142 provides a six-month transitional period from the effective date of
adoption for the Company to perform an assessment of whether there is an
indication that goodwill is impaired. To the extent that an indication of
impairment exists, the Company must perform a second test to measure the amount
of the impairment. The second test must be performed as soon as possible, but no
later than the end of the Company's 2002 fiscal year. Any impairment measured as
of the date of adoption will be recognized as the cumulative effect of a change
in accounting principle. Because of the extensive effort needed to complete this
assessment, the Company has not determined whether there is any indication that
goodwill is impaired or estimated the amount of any potential impairment.
At September 23, 2001, the Company had goodwill of $59.8 million (net of
accumulated amortization of $18.1 million), which is being assessed for
impairment. The Company anticipates completing its initial assessment of
impairment by December 23, 2001. Should an indication of impairment exist, the
Company will perform the second test under SFAS 142 to measure and record the
amount of impairment, if any.
As described above, the Company adopted SFAS 142 on June 25, 2001. The following
table reconciles net income for the quarter ended September 24, 2000 to its pro
forma balance adjusted to exclude goodwill amortization expense which is no
longer recorded under the provisions of SFAS 142.
Reported net income $2,883
Add back: goodwill amortization (net of tax) 816
------
Adjusted net income $3,699
------
Basic net income per share:
Reported net income $ .05
Adjusted net income $ .07
Diluted net income per share:
Reported net income $ .05
Adjusted net income $ .07
17
There were no changes in the net carrying amount ($59.8 million) of goodwill for
the quarter ended September 23, 2001. Intangible assets subject to amortization
under SFAS 142 amounted to $2.9 million (net of accumulated amortization of $7.7
million) and $3.4 million (net of accumulated amortization of $7.2 million) at
September 23, 2001 and June 24, 2001, respectively. These intangible assets
consist of non-compete agreements entered into in connection with business
combinations and are amortized over the term of the agreements, principally 5
years. There are no expected residual values related to these intangible assets.
Estimated fiscal year amortization expense is as follows: 2002 - $2.1 million;
2003 - $1.1 million; and 2004 - $0.2 million.
Effective June 26, 2000, the Company began accounting for derivative contracts
and hedging activities under Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities" which
requires all derivatives to be recorded on the balance sheet at fair value.
There was no cumulative effect adjustment of adopting this accounting standard
in fiscal 2001. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives will either be offset against
the change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company does not
enter into derivative financial instruments for trading purposes.
The Company conducts its business in various foreign currencies. As a result, it
is subject to the transaction exposure that arises from foreign exchange rate
movements between the dates that foreign currency transactions are recorded
(export sales and purchases commitments) and the dates they are consummated
(cash receipts and cash disbursements in foreign currencies). The Company
utilizes some natural hedging to mitigate these transaction exposures. The
Company also enters into foreign currency forward contracts for the purchase and
sale of European, Canadian and other currencies to hedge balance sheet and
income statement currency exposures. These contracts are principally entered
into for the purchase of inventory and equipment and the sale of Company
products into export markets. Counterparties for these instruments are major
financial institutions.
Currency forward contracts are entered to hedge exposure for sales in foreign
currencies based on specific sales orders with customers or for anticipated
sales activity for a future time period. Generally, 60-80% of the sales value of
these orders are covered by forward contracts. Maturity dates of the forward
contracts attempt to match anticipated receivable collections. The Company marks
the outstanding accounts receivable and forward contracts to market at month end
and any realized and unrealized gains or losses are recorded as other income and
expense. The Company also enters currency forward contracts for committed or
anticipated equipment and inventory purchases. Generally, 50-75% of the asset
cost is covered by forward contracts although 100% of the asset cost may be
covered by contracts in certain instances. Forward contracts are matched with
the anticipated date of delivery of the assets and gains and losses are recorded
as a component of the asset cost for purchase transactions the Company is firmly
committed. For anticipated purchase transactions, gains or losses on hedge
contracts are accumulated in Other Comprehensive Income (Loss) and periodically
evaluated to assess hedge effectiveness. In the prior year quarter, the Company
recorded and subsequently wrote off approximately $1.6 million of accumulated
losses on hedge contracts associated with the anticipated purchase of machinery
that was later canceled. The contracts outstanding for anticipated purchase
commitments that were subsequently canceled were
18
unwound by entering into sales contracts with identical remaining maturities and
contract values. These purchase and sales contracts continue to be marked to
market with offsetting gains and losses. The latest maturity for all outstanding
purchase and sales foreign currency forward contracts are October 15, 2001 and
March 21, 2002, respectively.
The dollar equivalent of these forward currency contracts and their related fair
values are detailed below:
Sept. 23, 2001 June 24, 2001
-------------- -------------
Foreign currency purchase contracts:
Notional amount $ 3,600 $ 14,400
Fair value 3,223 12,439
----------- -----------
Net (gain) loss $ 377 $ 1,961
----------- -----------
Foreign currency sales contracts:
Notional amount $ 18,602 $ 28,820
Fair value 18,560 29,369
----------- -----------
Net (gain) loss $ (42) $ 549
----------- -----------
For the quarters ended September 23, 2001 and September 24, 2000, the total
impact of foreign currency related items on the Condensed Consolidated
Statements of Income, including transactions that were hedged and those that
were not hedged, was a pre-tax loss of $0.2 million and $2.1 million,
respectively.
On September 13, 2000, the Company and SANS Fibres of South Africa formed a
50/50 joint venture (UNIFI - SANS Technical Fibers, LLC or UNIFI-SANS) to
produce low-shrinkage high tenacity nylon 6.6 light denier industrial (LDI)
yarns in North Carolina. Sales from this entity are expected to be primarily to
customers in the NAFTA and CBI markets. UNIFI-SANS will also incorporate the
two-stage light denier industrial nylon yarn business of Solutia, Inc. (Solutia)
which was purchased by SANS Fibres. Solutia will exit the two-stage light denier
industrial yarn business transitioning production from its Greenwood, South
Carolina site to the UNIFI-SANS Stoneville, North Carolina facility, a former
Unifi manufacturing location. The UNIFI-SANS facility is scheduled to begin
production in January 2002. Until such time, UNIFI-SANS will continue to
purchase yarn from Solutia to meet market demand. Unifi will manage the
day-to-day production and shipping of the LDI produced in North Carolina and
SANS Fibres will handle technical support and sales. Annual LDI production
capacity from the joint venture is estimated to be approximately 9.6 million
pounds.
On September 27, 2000, Unifi and Nilit Ltd., located in Israel, formed a 50/50
joint venture named U.N.F. Industries Ltd. The joint venture produces
approximately 25.0 million pounds of nylon POY at Nilit's manufacturing facility
in Migdal Ha - Emek, Israel. Production and shipping of POY from this facility
began in March 2001. The nylon POY is utilized in the Company's nylon texturing
and covering operations.
Liquidity and Capital Resources
Cash generated from operations was $2.5 million for the quarter ended September
23, 2001, compared to $1.9 million for the prior year corresponding period. The
primary sources of cash from operations, other than net income, were a decrease
in accounts receivable of $14.6 an increase in income taxes payable/refundable
of $7.1 million, and depreciation and
19
amortization aggregating $19.5 million. Offsetting these sources were decreases
in accounts payable and accruals of $28.6 million and an increase in inventories
of $8.1 million. All working capital changes have been adjusted to exclude
currency translation effects.
The Company ended the current quarter with working capital of $78.2 million,
which included cash and cash equivalents of $11.7 million. Included in the
working capital amount is $85.1 million of debt classified as short-term that is
expected to be refinanced on a long-term basis.
The Company utilized $5.6 million for net investing activities and obtained $9.1
million from net financing activities during the current quarter. Significant
cash expenditures during this period included $2.4 million for capital
expenditures and $5.8 million for investments in unconsolidated equity
affiliates. Also, the Company obtained $9.9 million in net borrowings during
this period and invested, on a long-term basis, $1.2 million of restricted cash
from the Brazilian government. The Company also received cash proceeds from the
sale of capital assets of $3.3 million.
At September 23, 2001, the Company was not committed for any significant capital
expenditures.
Effective June 1, 2000, the Company and DuPont initiated a manufacturing
alliance to produce polyester filament yarn. The alliance is intended to
optimize Unifi's and DuPont's partially oriented yarn (POY) manufacturing
facilities, increase manufacturing efficiency and improve product quality. Under
its terms, DuPont and Unifi will cooperatively run their polyester filament
manufacturing facilities as a single operating unit. This consolidation will
shift commodity yarns from our Yadkinville facility to DuPont's Kinston plant,
and bring high-end specialty production to Yadkinville from Kinston and Cape
Fear. The companies will split equally the costs to complete the necessary plant
consolidation and the benefits gained through asset optimization. Additionally,
the companies will collectively attempt to increase profitability through the
development of new products. Likewise, the costs incurred and benefits derived
from the product innovations will be split equally. DuPont and Unifi will
continue to own and operate their respective sites and employees will remain
with their respective employers. DuPont will continue to provide POY to the
marketplace and will use DuPont technology to expand the specialty product range
at each company's sites. Unifi will continue to provide textured yarn to the
marketplace. Through the first quarter of fiscal 2002, the Alliance is operating
as intended and the financial benefits are in line with expectations.
The Company periodically evaluates the carrying value of long-lived assets,
including property, plant and equipment and intangibles to determine if
impairment exists. If the sum of expected future undiscounted cash flows is less
than the carrying amount of the asset, additional analysis is performed to
determine the amount of loss to be recognized. The Company continues to evaluate
for impairment the carrying value of its polyester natural textured operations
and its nylon texturing and covering operations as the importation of fiber,
fabric and apparel continues to impair sales volumes and margins for these
operations and has negatively impacted the U.S. textile and apparel industry in
general.
The Board of Directors, effective July 26, 2000, increased the remaining
authorization to repurchase up to 10.0 million shares of Unifi's common stock of
which an authorization to purchase 8.6 million shares remains. The Company will
continue to operate its stock buy-back program from time to time as it deems
appropriate and financially prudent. However, the Company did not repurchase any
shares during the first quarter of fiscal 2002 and
20
presently does not anticipate significant share repurchases until debt is
reduced to an acceptable level.
The Company has access to financing through unused capacity under an unsecured
$150 million revolving bank credit facility (the "Credit Facility") that is
scheduled to mature in December 2003 and a $100 million trade receivables
financing agreement (the "Receivables Agreement") which is secured by certain
domestic and foreign accounts receivable. Amounts outstanding under the Credit
Facility and the Receivables Agreement as of September 23, 2001 were $5.0
million and $80.1 million, respectively. The Receivables Agreement does not have
a stated maturity but is terminable at the option of the Company with a five-day
written notice. Loans under the Credit Facility bear interest at LIBOR plus 2.0%
and advances under the Receivables Agreement bear interest at the applicable
commercial paper rate plus .30%. As of September 23, 2001, the Company had
unused capacity of approximately $145 million under the terms of the Credit
Facility.
The loans under the Credit Facility include financial covenants that required,
at September 23, 2001, tangible net worth of $395.4 million, a maximum leverage
ratio of 3.25 and a minimum interest coverage ratio of 2.50. The Company
believes that it is in compliance with all these covenants at September 23,
2001. However, the Company was in default of the interest coverage covenant of
the Credit Facility at June 24, 2001. As a result, the Company obtained a waiver
through November 30, 2001. The Company is currently in discussions with the
lending group and others to secure a more flexible long-term borrowing
arrangement. The outstanding balance of the Credit Facility of $5.0 million at
September 23, 2001 has been classified as a current maturity of long-term debt.
The Company has classified the $80.1 million outstanding at September 23, 2001
under the Receivables Agreement, as a current maturity of long-term debt,
pending renegotiation of the Credit Facility. The Company believes that its
current financial position as well as its cash flow from operations and
available collateral will allow it to refinance on a long-term basis the Credit
Facility and Receivables Agreement on acceptable terms.
The current business climate for U.S. based textile manufacturers remains very
challenging due to importation pressures and excess capacity worldwide as well
as currency imbalances. This situation does not appear that it will improve in
the foreseeable future. This highly competitive environment has impacted the
markets in which the Company competes, both domestically and abroad.
Consequently, management took certain consolidation and cost reduction actions
during fiscal year 2001 to align our capacity with current market demands.
Should business conditions worsen the Company is prepared to take such actions
as deemed necessary to align our capacity and cost structure with market
demands. Management feels confident that a long-term stable financing
arrangement will be negotiated which will continue to enable the Company, in
combination with its current financial position, the ability to meet working
capital and long-term investment needs and pursue strategic business
opportunities.
Euro Conversion
The Company conducts business in multiple currencies, including the currencies
of various European countries in the European Union which began participating in
the single European currency by adopting the Euro as their common currency as of
January 1, 1999. Additionally, the functional currency of our Irish operation
and several sales office locations will change before January 1, 2002, from
their historical currencies to the Euro. During the period January 1, 1999, to
January 1, 2002, the existing currencies of the member countries will remain
legal
21
tender and customers and vendors of the Company may continue to use these
currencies when conducting business. Currency rates during this period, however,
will no longer be computed from one legacy currency to another but instead will
first be converted into the Euro. The Company continues to evaluate the Euro
conversion and the impact on its business, both strategically and operationally.
At this time, the conversion to the Euro has not had, nor is expected to have, a
material adverse effect on the financial condition or results of operations of
the Company.
Forward Looking Statements
Certain statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations and other sections of this quarterly report
contain forward-looking statements within the meaning of federal security laws
about the Company's financial condition and results of operations that are based
on management's current expectations, estimates and projections about the
markets in which the Company operates, management's beliefs and assumptions made
by management. Words such as "expects," "anticipates," "believes," "estimates,"
variations of such words and other similar expressions are intended to identify
such forward-looking statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions, which are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in, or implied by, such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's judgment only as of
the date hereof. The Company undertakes no obligation to update publicly any of
these forward-looking statements to reflect new information, future events or
otherwise.
Factors that may cause actual outcome and results to differ materially from
those expressed in, or implied by, these forward-looking statements include, but
are not necessarily limited to, availability, sourcing and pricing of raw
materials, pressures on sales prices and volumes due to competition and economic
conditions, reliance on and financial viability of significant customers,
operating results of our equity affiliates and alliances, technological
advancements, employee relations, changes in capital expenditures and long-term
investments (including those related to unforeseen acquisition opportunities),
continued availability of financial resources through financing arrangements and
operations, negotiations of new or modifications of existing contracts for asset
management, regulations governing tax laws, other governmental and authoritative
bodies' policies and legislation, the continuation and magnitude of the
Company's common stock repurchase program and proceeds received from the sale of
assets held for disposal. In addition to these representative factors,
forward-looking statements could be impacted by general domestic and
international economic and industry conditions in the markets where the Company
competes, such as changes in currency exchange rates, interest and inflation
rates, recession and other economic and political factors over which the Company
has no control. Other risks and uncertainties may be described from time to time
in the Company's other reports and filings with the Securities and Exchange
Commission.
22
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(b) No reports on Form 8-K have been filed during the quarter ended
September 23, 2001
23
UNIFI, INC.
--------------------------------------------------------------------------------
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 thereunto duly authorized.
UNIFI, INC.
----------------------------------------
Date: November 7, 2001 /s/ Willis C. Moore, III
------------------------- ----------------------------------------
Willis C. Moore, III
Executive Vice President and Chief
Financial Officer (Mr. Moore is the
Principal Financial and has been duly
authorized to sign on behalf of the
Registrant.)
Date: November 7, 2001 /s/ Edward A. Imbrogno
------------------------- -----------------------------------------
Edward A. Imbrogno
Chief Accounting Officer
24