-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oPgiG6soXFhz0VXq3QCiiuIuujAalu94Eo8hQnr+DF5GJajXkYN+kPheyvXVVKv4 i5aPeRdSNbYIlMzxID0m5w== 0000100726-94-000009.txt : 19940513 0000100726-94-000009.hdr.sgml : 19940513 ACCESSION NUMBER: 0000100726-94-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940327 FILED AS OF DATE: 19940505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIFI INC CENTRAL INDEX KEY: 0000100726 STANDARD INDUSTRIAL CLASSIFICATION: 2200 IRS NUMBER: 112165495 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10542 FILM NUMBER: 94526155 BUSINESS ADDRESS: STREET 1: 7201 WEST FRIENDLY RD STREET 2: P O BOX 19109 CITY: GREENSBORO STATE: NC ZIP: 27410-9109 BUSINESS PHONE: 9192944410 FORMER COMPANY: FORMER CONFORMED NAME: AUTOMATED ENVIRONMENTAL SYSTEMS INC DATE OF NAME CHANGE: 19720906 10-Q 1 FORM 10-Q PERIOD ENDING 3/27/94 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 March 27, 1994 [] 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 UNIFI, INC. (Exact name of registrant as specified its charter) New York 11-2165495 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 19109 - 7201 West Friendly Road Greensboro, NC 27419 (Address of principal executive offices) (Zip Code) (910) 294-4410 (Registrant's telephone number, including area code) Same (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 March 27, 1994 Common Stock, par value $.10 per share 70,491,722 Shares UNIFI, INC. Consolidated Condensed Balance Sheets Mar 27, 1994 Jun 27, 1993 (Unaudited) (Audited) ASSETS (Amounts in Thousands) Current Assets: Cash and Cash Equivalents $54,013 $76,093 Short-Term Investments $77,833 $119,848 Accounts Receivable, Net $190,273 $200,678 Inventories: Raw Material/Supplies $40,648 $41,498 Work in Process 12,954 13,181 Finished Goods 53,455 50,295 $107,057 $104,974 Prepaid Expenses/Deposits $5,003 $3,321 Total Current Assets $434,179 $504,914 Property, Plant and Equipment, Net 515,519 468,291 Investments in Affiliates 10,413 11,040 Other Assets 32,016 33,204 Total Assets 992,127 1,017,449 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Notes Payable 3,797 4,664 Accounts Payable 78,266 121,492 Accrued Expenses 51,560 45,179 Income Taxes 9,844 13,364 Total Current Liabilities 143,467 184,699 Long-Term Debt 230,000 250,241 Deferred Income Taxes 30,913 36,956 Shareholders' Equity Common Stock 7,049 7,034 Capital in Excess of Par 201,615 196,133 Retained Earnings 385,763 348,821 Cumulative Translation Adjustment (5,849) (5,515) Reserve for Investments (831) (920) Total Shareholders' Equity 587,747 545,553 Total Liabilities and Shareholders' Equity 992,127 1,017,449 See Accompanying Notes to Consolidated Condensed Financial Statements Consolidated Condensed Statements of Income (Unaudited) For the Quarter Ended For the Nine Months Ended Mar 27, Mar 28, Mar 27, Mar 28, 1994 1993 1994 1993 (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) (Amounts in Thousands Except Per Share Data) Net Sales $346,059 $361,995 $1,022,930 $1,043,369 Cost and Expenses: Cost of Goods Sold $295,470 $291,674 $874,052 $847,849 Selling, General & Administrative Expense 10,661 9,103 30,419 28,130 Interest Expense 4,432 5,645 13,711 19,976 Interest (Income) (1,029) (2,373) (5,749) (9,848) Other (Income) Expense (1,358) (3,737) (1,422) (4,275) 308,176 300,312 911,011 881,832 Income Before Income Taxes 37,883 61,683 111,919 161,537 Provision for Income Taxes 15,129 23,414 44,992 60,683 Net Income 22,754 38,269 66,927 100,854 Per Share Data: Primary 0.32 0.54 0.94 1.43 Fully Diluted 0.32 0.51 0.93 1.37 Cash Dividends Per Share 0.14 0.11 0.42 0.31 Average Shares Outstanding: Primary 71,027 70,922 71,048 70,684 Fully Diluted 78,780 78,707 78,810 78,471 See Accompanying Notes to Consolidated Condensed Financial Statements UNIFI, INC. Consolidated Condensed Statements of Cash Flows (Unaudited) For the Nine Months Ended Mar. 27, Mar. 28, 1994 1993 (Amounts in Thousands) Cash Provided by Operating Activities $81,645 $128,052 Investing Activities: Capital Expenditures $(98,994) $(108,491) Sale of Capital Assets 3,061 122 Purchase of Investments (62) (69,372) Sale of Investments 43,015 15,904 $(53,944) $(161,837) Financing Activities: Issuance of Common Stock $499 $(43) Borrowing of Debt 7,453 22,997 Repayment of Debt (28,545) (1,507) Cash Dividend (29,198) (18,475) $(49,791) $2,972 Currency Translation Adjustment $10 $(1,545) Increase (Decrease) in Cash $(22,080) $(32,358) Cash and Cash Equivalents - Beginning 76,093 139,047 Cash and Cash Equivalents - Ending $54,013 $106,689 See Accompanying Notes to Consolidated Condensed Financial Statements UNIFI, INC. Notes to Consolidated Condensed Financial Statements The information furnished is unaudited and reflects all adjustments which are, in the opinion of Management, necessary to present fairly the financial position at March 27, 1994 and the results of operations and cash flows for the periods ended March 27, 1994 and March 28, 1993. Such adjustments consisted of normal recurring items. The Company has reclassified certain prior year information to conform with the current year presentation. Interim results are not necessarily indicative of results for a full year. It is suggested that the condensed 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. Income Taxes Deferred income taxes arise primarily from timing differences between financial and tax reporting associated with depreciable assets. The difference between the statutory federal income tax rate and the effective tax rate is primarily due to the results of foreign subsidiaries that are taxed at rates below those of U.S. operations. The current periods were not significantly impacted by foreign operations; therefore, the current periods' rates approach the statutory rate. Foreign earnings were more significant last year and helped to lower the effective rate. The increase in the statutory rate from 34% to 35%, such change being retroactive to January 1, 1993, has been provided for in the current periods and was not material to the results of the periods. Per Share Information Earnings per common share are computed on the basis of the number of shares outstanding, adjusted for the dilutive effect of stock options outstanding. The Convertible Notes do not meet the test of a common stock equivalent, accordingly, conversion of these notes is only assumed for the calculation of the fully diluted earnings per share. Computation of the average shares outstanding (in 000's): Quarters Ended Nine Months Ended Mar. 27, Mar. 28, Mar. 27, Mar. 28, 1994 1993 1994 1993 Average Shares Outstanding 70,482 69,953 70,419 69,694 Add: Dilutive Options 545 969 629 990 Primary Average Shares 71,027 70,922 71,048 70,684 Incremental Shares Arising from Full Dilution Assumption 7,753 7,785 7,762 7,787 Average Shares Assuming Full Dilution 78,780 78,707 78,810 78,471 Computation of net income for per share data (in 000's): Quarters Ended Nine Months Ended Mar. 27, Mar. 28, Mar. 27, Mar. 28, 1994 1993 1994 1993 Net Income - Primary $22,754 $38,269 $66,927 $100,854 Add: Convertible Subordinated Interest Net of Tax 2,111 2,205 6,332 6,518 Net Income Assuming Full Dilution $24,865 $40,474 $73,259 $107,372 Common Stock On April 28, 1994, the Company's Board of Directors declared a cash dividend of 14 cents per share payable to shareholders of record on May 12, 1994, payable on May 19, 1994. Management's Discussion and Analysis of Financial Condition and Results of Operations The following is Management's discussion and analysis of certain significant factors which have affected the Company's operations and material changes in financial condition during the periods included in the accompanying consolidated condensed financial statements. Results of Operations Net sales decreased from $362.0 million to $346.1 million in the quarter or 4.4 percent and decreased in the nine month period from $1.043 billion in 1993 to $1.023 billion in 1994 or 2.0 percent. We experienced volume increases of 2.8 percent for the quarter and 3.6 percent for the year-to-date period over the prior year periods. Our average net sales price, based on the overall product mix, decreased 7.0 percent in the current quarter and decreased 5.3 percent for the current nine month period. In the quarter, unit volume was strong in our domestic polyester business and improved in our spun yarn business. Demand from the automotive, home upholstery and export markets led the way for our polyester business, while a recovery in the fleece, tee shirt and women's apparel markets firmed up orders for our spun yarn products. However, margins in the spun yarn area remain down from year-ago levels due to escalating raw material prices and erratic retail demand. Sales of our nylon and covered yarn products to the ladies' hosiery market were not as strong as in the previous quarter. Sales at the retail level have been down and adjustments in running schedules were made accordingly. Sales of nylon and covered yarns into the sock and apparel areas remained steady and we look for improvement in the next quarter. The business environment in Europe is improving slowly and we continue to make progress in the areas of quality, product differentiation, and market position. Polyester operations ran at capacity in the quarter. Cost of sales increased from $291.7 million in last year's third quarter to $295.5 million in this year's quarter or 1.3 percent. The nine month period increased from $847.8 million to $874.1 million or 3.1 percent. Cost of sales, as a percentage of net sales, increased from 80.6 percent last year to 85.4 percent during the quarter. For the nine months, cost of sales climbed from 81.3 percent to 85.4 percent of net sales. Based on our average product mix, raw material prices decreased in both the current periods; however, the declines were not sufficient to offset the decreases mentioned above involving net sales prices. Manufacturing costs were unchanged in the current quarter. Fixed manufacturing costs increased slightly in the current nine month period as a result of capacity additions and upgrades in many of our divisions. These capacity improvements contributed to the sales volume increases previously mentioned. Selling, general and administrative expenses as a percentage of net sales increased from 2.5 percent to 3.1 percent in the current quarter. For the nine month periods we experienced an increase from 2.7 percent in 1993 to 3.0 percent in 1994. During the quarter actual expense increased from $9.1 million to $10.7 million. For the nine month period expense increased from $28.1 million in 1993 to $30.4 million in 1994. The growth in expenditures was due to the volume increases previously mentioned and the current period's consolidation of administrative functions resulting from earlier mergers. S,G&A expenses, when expressed as a percentage of net sales, also increased due to the current periods having fewer net sales dollars even though we experienced increases in sales volume. Interest expense decreased from $5.6 million in the 1993 quarter to $4.4 million in the current quarter. The same holds true for the nine month periods as interest expense decreased from $20.0 million to $13.7 million in the current period. The Company has used cash reserves generated from operations and the issuance of the subordinated debentures in prior periods to eliminate the debt of merged companies and thereby lower the overall interest costs of the consolidated group. As these reserves have decreased for the payment of debt, our investment base has also declined. As a result, interest income has decreased from $2.4 million in last year's third quarter to $1.0 million in the current quarter. For the nine month period, interest income has declined from $9.8 million to $5.7 million in the current period Other (income) expense represents income in all periods presented. Other income decreased from $3.7 million to $1.4 million or $2.3 million during the current quarter and decreased from $4.3 million to $1.4 million or $2.9 million during the current nine month period. Last year's periods included a pretax gain of approximately $4.0 million on the sale of an affiliate. The current periods amounts include gains on sale of property and equipment and a gain reported by a 45 percent owned affiliate from the disposal of an investment. Our effective tax rate was 39.94% in the current quarter as compared with 37.96% in the prior quarter. For the year-to-date periods, the rate was 40.20% and 37.57% in 1994 and 1993, respectively. The higher rates of the current periods are due to taxable earnings of foreign subsidiaries comprising a smaller percentage of total consolidated pretax income in the current periods. Foreign earnings are normally taxed at rates lower than US rates. The current periods also reflect the higher US statutory rate that became effective in the current year. Earnings per share decreased from $.54 per share to $.32 per share in the current quarter and decreased from $1.43 per share to $.94 for the current nine month period. Financial Condition We ended the current quarter with working capital of $290.7 million of which $131.8 million represents cash and short-term investments. This compares with working capital of $320.2 million and cash reserves of $195.9 million at year end. Net receivables and net payables decreased due to seasonal and timing differences between the Company's June year end and the March quarter end. The primary sources of cash funds continue to be operations and the Company's access to debt and equity markets. The primary uses of funds during the current nine months were capital expenditures for the previously mentioned capacity expansions and upgrades totaling $99.0 million, the reduction of net long-term debt by $21.1 million and the payment of the Company's cash dividends of $29.2 million. During this time period the Company generated $43.0 million from the sale of short-term investments to supplement cash generated from operations to cover the aforementioned cash outlays. Management believes the current financial position of the Company in connection with its operations and its access to debt and equity markets are sufficient to meet its anticipated capital expenditure, strategic acquisition and working capital needs. Total shareholders' equity increased from $545.6 million at year end to $587.7 million at quarterend. Net book value per share was $8.34 at March 27, 1994. UNIFI, INC. 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 March 27, 1994. 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: ROBERT A. WARD Robert A. Ward Executive Vice President- Financial and Administration (Mr. Ward is the Principal Financial and Accounting Officer and has been duly authorized to sign on behalf of the Registrant.) Date: GREGG H. LOWE Gregg H. Lowe Vice President and Corporate Controller -----END PRIVACY-ENHANCED MESSAGE-----