0000906601-95-000012.txt : 19950925 0000906601-95-000012.hdr.sgml : 19950925 ACCESSION NUMBER: 0000906601-95-000012 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950625 FILED AS OF DATE: 19950920 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIFI INC CENTRAL INDEX KEY: 0000100726 STANDARD INDUSTRIAL CLASSIFICATION: TEXTILE MILL PRODUCTS [2200] IRS NUMBER: 112165495 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10542 FILM NUMBER: 95574900 BUSINESS ADDRESS: STREET 1: 7201 WEST FRIENDLY RD STREET 2: P O BOX 19109 CITY: GREENSBORO STATE: NC ZIP: 27410-9109 BUSINESS PHONE: 9192944410 MAIL ADDRESS: STREET 1: P O BOX 19109 CITY: GREENSBORO STATE: NC ZIP: 24719-9109 FORMER COMPANY: FORMER CONFORMED NAME: AUTOMATED ENVIRONMENTAL SYSTEMS INC DATE OF NAME CHANGE: 19720906 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended Commission File June 25, 1995 Number 1-10542 _________________________ ________________ UNIFI, INC. _________________________________________________________________ (Exact name of Registrant as specified in its charter) New York 11-2165495 ________________________________ ____________________ (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7201 West Friendly Avenue Greensboro, North Carolina 27410 ________________________________________ ___________________ (Address of principal executive offices) (Zip Code) Registrant's telephone no., including a/c: (910) 294-4410 ___________________ Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Class On Which Registered ___________________ _______________________ Common Stock, par value $.10 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 ____ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Aggregate market value of the voting stock held by nonaffiliates of the Registrant as of August 4, 1995: $1,520,298,446 Number of shares outstanding as of August 4, 1995: 66,807,005 Documents Incorporated By Reference Portions of the Annual Report to shareholders of Unifi, Inc. for the fiscal year ended June 25, 1995, are incorporated by reference into Parts I and II hereof. Portions of the definitive Proxy Statement for the Annual Meeting of the shareholders of Unifi, Inc., to be held on October 19, 1995 are incorporated by reference into Part III. Exhibits, Financial Statement Schedules and Reports on Form 8-K index is located on pages IV-1 through IV-5. PART I Item 1. Business: Unifi, Inc., a New York corporation formed in 1969, together with its subsidiaries, hereinafter set forth, (the "Company" or "Unifi"), is engaged predominantly in the business of processing yarns by: texturing of synthetic filament polyester and nylon fiber; and spinning of cotton and cotton blend fibers. The Company's texturing operation mainly involves purchasing partially oriented yarn (POY), which is either raw polyester or nylon filament fiber, from chemical manufacturers and using high speed machines to draw, heat and twist the POY to produce yarns having various physical characteristics, depending upon its ultimate end-use. The Company's spinning operation mainly involves the spinning on either open-end or ring spindles of cotton, cotton and undyed synthetic blends, and cotton and pre-dyed polyester blends into yarns of different strengths and thickness. The Company currently sells textured polyester yarns, nylon yarns, dyed yarns, covered yarns, spun yarns made of cotton, cotton and un-dyed synthetic blends, and cotton and pre-dyed polyester blends domestically and internationally to weavers and knitters who produce fabrics for the apparel, industrial, hosiery, home furnishing, auto upholstery, activewear, and underwear markets. The Company, internationally, has manufacturing facilities in Letterkenny, County Donegal, Republic of Ireland, which texturizes polyester, as well as producing its own polymer (POY). SOURCES AND AVAILABILITY OF RAW MATERIALS: A. POY. The primary suppliers of POY to the Company are E. I. DuPont de Nemours and Company, Hoechst Celanese Corporation, and Wellman Industries, with the majority of the Company's POY being supplied by DuPont. Although the Company is heavily dependent upon a limited number of suppliers, the Company has not had and does not anticipate any material difficulty in obtaining its raw POY. B. Cotton. The Company buys its cotton, which is a commodity and is traded on established markets, from brokers such as Dunavant Enterprises, HoHenBerg Brothers Co., Staple Cotton, and Stahel (America). The Company has not had and does not anticipate any material difficulty in obtaining cotton. PATENTS AND LICENSES: The Company currently has several patents and registered trademarks, including the following: I-1 DATE ISSUED OR PATENT TITLE/DESCRIPTION PAT/APP. NO. APPLIED FOR Dye Tube Spacer For Package 8/284,305 08/02/94 Dyeing Method For Treatment of Yarn 5,387,263 12/16/93 in Package Form Yarn Package Cover 080,654 06/18/93 Wallpaper Backing 1,317,705 (Canada) 05/18/93 Nylon/Lycra Composit Yarn 5,237,808 08/24/93 Polyester Substrate (Vinyl) 5,063,108 11/05/91 Polyester Substrate (Vinyl) 5,043,208 08/27/91 Continuous Multi-Filament 4,935,293 06/19/90 Polyester Substrate Wallpaper Backing 4,925,726 05/15/90 Wallpaper Backing 4,874,019 10/17/89 Wallpaper Backing 325,028 07/26/89 (United Kingdom) Friction Discs For False- 4,129,980 12/19/78 Twist Head Apparatus for Restarting 4,125,229 11/14/78 a Broken Thread or Yarn Strand During a Winding Process Safety Guard for the Blade 4,086,698 05/02/78 of Carton Openers REGISTRATION/ DATE REGISTRATION TRADEMARK NAME SERIAL NO. FILED Sheertech 74/637666 02/22/95 Unifi 299,227 07/28/92 Quality Through Pride (Stylized) Unifi 261,913 04/02/92 Unifi (Stylized) 261,912 04/02/92 I-2 Trifi 1,703,349 07/28/92 Mactex 1,511,013 11/01/88 Bi-Dye 1,105,160 06/19/84 The Company does not have any patents, trademarks, licenses, or franchises which are material to its business as a whole. CUSTOMERS: The Company in fiscal year ended June 25, 1995, sold textured and spun yarns to approximately 1,000 customers, one customer's purchases were approximately 11% of the net sales during said period, the ten largest customers accounted for approximately 32% of the total sales and the Company does not believe that it is dependent on any one customer. BACKLOG: The Company, other than in connection with certain foreign sales and for textured yarns that are package dyed according to customers' specifications, does not manufacture to order. The Company's products can be used in many ways and can be thought of in terms of a commodity subject to the laws of supply and demand and, therefore, does not have what is considered a backlog of orders. In addition, the Company does not consider its products to be seasonal ones. COMPETITIVE CONDITIONS: The textile industry in which the Company currently operates is keenly competitive. The Company processes and sells high-volume commodity products, pricing is highly competitive with product quality and customer service being essential for differentiating the competitors within the industry. Product quality insures manufacturing efficiencies for the customer. The Company's polyester and nylon yarns, dyed yarns, covered yarns and cotton and cotton blend yarns compete with a number of other domestic producers of such yarns. In the sale of polyester filament yarns major competitors are Atlas Yarn Company, Inc., Burlington Industries, Inc. and Milliken & Company, in the sale of nylon yarns, dyed yarns, and covered yarns major competitors are Glen Raven Mills, Inc., Jefferson Mills, Inc., Spanco Yarns, Inc., Regal Manufacturing Company and Spectrum Dyed Yarns, Inc., and in the sale of cotton and cotton blend yarns major competitors are Parkdale Mills, Inc., Avondale Mills, Inc., Harriett & Henderson, Mayo Yarns, Inc. and TNS Mills, Inc. RESEARCH AND DEVELOPMENT: The estimated amount spent during each of the last three fiscal years on Company-sponsored and Customer-sponsored research and development activities is considered immaterial. COMPLIANCE WITH CERTAIN GOVERNMENT REGULATIONS: Management of the Company believes that the operation of the Company's production facilities and the disposal of waste materials are substantially in compliance with applicable laws and regulations. I-3 EMPLOYEES: The number of employees of the Company is approximately 6,000 full-time employees. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC INTERNATIONAL OPERATIONS AND EXPORT SALES: The information included under the heading "Business Segments and Foreign Operations" on page 23 of the Annual Report of the Company to the Shareholders for the fiscal year ended June 25, 1995, is incorporated herein by reference. ITEM 2. DESCRIPTION OF PROPERTY: The following table sets forth the location and general character of the principal plants and other physical properties (properties) of the Company, which contain approximately 6,805,627 sq. ft. of floor space. All properties are well maintained and in good operating condition. Approximate Location Of Area Facility (Square Feet) How Held Type of Operation Yadkinville, NC 1,831,000 Owned Texturizing of POY, ware- housing and office space Greensboro, NC 65,000 Leased (1) Executive offices Staunton, VA 424,000 Owned Texturizing of POY, ware- housing and office space Letterkenny, 488,000 Owned Production of filament County Donegal, polyester fiber, texturiz- Ireland ing facility, warehousing and office space Archdale, NC 122,000 Owned (2) Production of covered Plant No. 7 yarns and associated warehousing 301 N. Hwy St. 126,673 Owned (2) Production of covered Madison, NC yarns and associated Plant No. 14 warehousing Piedmont Street 504,000 Owned (2) Texturizing of nylon Madison, NC and polyester, and associ- Plant No. 6 ated warehousing 200 S Ayersville Rd. 79,000 Owned (2) Transportational Madison, NC Terminal Madison, NC 31,000 Owned Nylon Warehouse Decatur Warehouse I-4 Ayersville Road 314,000 Owned (2) Plant 1 - Texturizing Mayodan, NC of nylon, associated ware- Plant 1 housing and office space Ayersville Road 213,000 Owned (2) Plant 5 - Production Mayodan, NC of covered yarns and asso- Plant 5 ciated warehousing Cardwell Road 130,000 Owned (2) Dyeing facility Mayodan, NC Plant No. 15 Mayodan, NC 150,000 Owned Central Distribution CDC Center Vance Street Ext. 485,000 Owned (2) Plants 2 & 4 - Textur- Reidsville, NC izing of polyester, dyeing Plants 2 & 4 and associated warehousing SR 770 East 230,000 Owned (2) Texturizing of nylon, Stoneville, NC production of covered Plant No. 8 yarn and associated warehousing Fort Payne, AL 20,000 Owned (2) Distribution Center Distribution Center and Office Space State Road 1366 151,000 Owned (3) Spun Cotton Yarn Pro- Booneville, NC duction and office space Plant No. 1 Oakland Avenue 211,000 Owned (3) Spun Cotton Yarn Pro- Eden, NC duction and office space Plant No. 2 Oakland Avenue 195,000 Owned (3) Spun Cotton Yarn Pro- Eden, NC duction and office space Plant No. 3 U.S. Route 311 214,000 Owned (3) Spun Cotton Yarn Pro- Walnut Cove, NC duction and office space Plant No. 4 400 West Franklin St. 172,000 Owned (3) Spun Cotton Yarn Pro- Mt. Pleasant, NC duction and office space Plant No. 6 420 Elliot 114,600 Owned (4) Spun Cotton Yarn Pro- Edenton, NC duction and office space Edenton Plant I-5 2000 Boone Trail Road 137,850 Owned (4) Spun Cotton Yarn Pro- Sanford, NC duction and office space Pioneer Spinning Plant 2000 Boone Trail Road 77,520 Owned (4) Spun Cotton Yarn Pro- Sanford, NC duction and office space Pioneer Yarn Plant 1901 Boone Trail Road 245,200 Owned (4) Spun Cotton Yarn Pro- Sanford, NC duction and office space Pioneer Cotton Plant 9480 Neuville Avenue 11,200 Owned Nylon Covered Yarn and Hickory, NC Cotton Warehouse 600 River Road 63,584 Owned Spun Cotton Yarn Pro- Rockingham, NC duction and office space The Company leases sales offices and apartments in New York City and Coleshill, England, and has a representative office in Tokyo, Japan. (1) This property consists of a building containing approximately 65,000 square feet which is being used by the Company as its executive offices and is located on a tract of land containing approximately 8.99 acres and is known as 7201 West Friendly Avenue, Greensboro, North Carolina. This property is leased by Unifi, Inc. from NationsBank, Trustee under the Unifi, Inc. Profit Sharing Plan and Trust, and Wachovia Bank & Trust Company, N.A., Independent Trustee. In September, 1991, the Company exercised its option to extend the term of the lease on this property for five (5) years, through March 13, 1997. Reference is made to a copy of the lease agreement attached to the Registrant's Annual Report on Form 10-K as Exhibit (10d) for the year ended June 28, 1987 and which is by reference incorporated herein. (2) Acquired pursuant to the merger of Macfield into Unifi on August 8, 1991. (3) Acquired pursuant to the Reverse Triangular Merger with Unifi Spun Yarns, Inc. (formerly Vintage Yarns, Inc.) ("USY") on April 23, 1993. (4) Acquired pursuant to the Triangular Merger of the Pioneer Corporations into USY on August 18, 1993. The information included under "Leases, Commitments and Concentrations of Credit Risks" on page 23 of the Annual Report to Shareholders for fiscal year ended June 25, 1995, is incorporated herein by reference. I-6 ITEM 3. LEGAL PROCEEDINGS: The Company is not currently involved in any litigation which is considered material, as that term is used in Item 103 of the Regulations S-K. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: No matters were submitted to a vote of security holders during the fourth quarter for the fiscal year ended June 25, 1995. I-7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. (a)(c) PRICE RANGE OF COMMON STOCK AND DIVIDENDS PAID. The information included under the heading "Market and Dividend Information (Unaudited)" on page 27 of the Annual Report of Unifi, Inc. to its shareholders for the year ended June 25, 1995, is incorporated herein by reference. (b) Approximate Number of Equity Security Holders: TITLE OF CLASS NUMBER OF RECORD HOLDERS (AS OF AUGUST 4, 1995) Common Stock, $.10 par value 1,364 (c) CASH DIVIDEND POLICY. In April 1990, the Board of Directors of the Company adopted a resolution that it intended to pay a cash dividend in quarterly installments equal to approximately thirty percent (30%) of the earnings after taxes of the Company for the previous year, payable as hereafter declared by the Board of Directors. Prior to this action by the Board of Directors, the Company had since 1978 followed a policy of retaining earnings for working capital, acquisitions, capital expansion and modernization of existing facilities. The Company paid a quarterly dividend of $.10 per share on its common stock for each quarter of the 1995 fiscal year. The Board of Directors in July 1995, declared a cash dividend in the amount of $.13 per share on each issued and outstanding share of the common stock of the Company, payable on August 11, 1995, to shareholders of record at the close of business on August 4, 1995. (d) 6% CONVERTIBLE SUBORDINATED NOTES DUE MARCH 15, 2002. The information contained under the heading "Long-Term Debt", regarding the Convertible Subordinated Notes, on page 21 of the Annual Report of Unifi, Inc. to its shareholders for the year ended June 25, 1995, is incorporated herein by reference. For additional information regarding the 6% Convertible Subordinated Notes Due 2002 reference is made to Exhibit (4b) of this Form 10-K. ITEM 6. SELECTED FINANCIAL DATA: The financial data for the five fiscal years included under the heading "Summary of Selected Financial Data" on page 26 of the Annual Report of Unifi, Inc. to its shareholders for the year ended June 25, 1995, is incorporated herein by reference. II-1 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: The information included under the heading "Management's Review and Analysis of Operations and Financial Position" on pages 24 and 25 of the Annual Report of Unifi, Inc. to its shareholders for the year ended June 25, 1995, is incorporated herein by reference. SUBSEQUENT EVENTS: On September 18, 1995, the Company announced restructuring plans to further reduce the Company's cost structure and improve productivity through the consolidation of certain manufacturing operations and the disposition of underutilized assets. The restructuring plan is focused on the consolidation of production facilities acquired via mergers during the preceding four years and reflects the Company's continued efforts to streamline operations. As part of the restructuring action, the Company will close its spun cotton manufacturing facilities in Edenton and Mount Pleasant, North Carolina with the majority of the manufacturing production being transferred to other facilities. Approximately 275 jobs, primarily wage-level positions, will be affected. The estimated cost of restructuring will result in a first quarter fiscal 1996 non-recurring charge to earnings of $23.8 million or an after-tax charge to earnings of $14.9 million ($.22 per share). The significant components of the non-recurring charge include $2.4 million of severance and other employee-related costs from the termination of employees and a $21.4 million write-down to estimated fair value less the cost of disposal of underutilized assets and consolidated facilities to be disposed. Costs associated with the relocation of equipment or personnel will be expensed as incurred. The Company anticipates that all signficant aspects of the consolidation of spun yarn facilities would be accomplished within a one year period. However, the ultimate disposal of the equipment and facilities may take longer due to current market conditions and the physical locations of the properties. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA: The consolidated financial statements and notes beginning on page 15 and ending on page 23 and the information included under the heading "Quarterly Results (Unaudited)" on page 26 of the Annual Report of Unifi, Inc. to its shareholders for the year ended June 25, 1995, are incorporated herein by reference. II-2 ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE: The Company has not changed accountants nor are there any disagreements with its accountants, Ernst & Young LLP, on accounting and financial disclosure that should be reported pursuant to Item 304 of the Regulation S-K. II-3 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT AND COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT: (a) DIRECTORS OF REGISTRANT: The information included under the headings "Election of Directors", "Vote Required", "Security Holding of Directors, Nominees, And Executive Officers", "Directors Compensation", and "Committees of The Board of Directors", beginning on page 2 and ending on page 6 of the definitive Proxy Statement filed with the Commission since the close of the Registrant's fiscal year ended June 25, 1995, and within 120 days after the close of said fiscal year, are incorporated herein by reference. (b) IDENTIFICATION OF EXECUTIVE OFFICERS: CHAIRMAN OF THE BOARD OF DIRECTORS G. ALLEN MEBANE Mr. Mebane is 66 and has been an Executive Officer and member of the Board of Directors of the Company since 1971, and served as President and Chief Executive Officer of the Company, relinquishing these positions in 1980 and 1985, respectively. He was the Chairman of the Board of Directors for many years, Chairman of the Executive Committee since 1974, and was elected as one of the three members of the Office of Chairman on August 8, 1991. On October 22, 1992, Mr. Mebane was again elected as Chairman of the Board of Directors. VICE CHAIRMAN OF THE BOARD OF DIRECTORS WILLIAM J. ARMFIELD, IV Mr. Armfield is 60 and was President of Macfield, Inc. from 1970 until August 8, 1991, when Macfield merged with and into Unifi. He has been a Director of Unifi and was elected as one of the three members of the Office of Chairman on August 8, 1991. On October 22, 1992, Mr. Armfield was elected as Vice Chairman of the Board of Directors. He is a member of the Executive Committee. PRESIDENT AND CHIEF EXECUTIVE OFFICER WILLIAM T. KRETZER Mr. Kretzer is 49 and served as a Vice President or Executive Vice President from 1971 until 1985. He has been the President and Chief Executive Officer since 1985. He has been a member of the Board of Directors since 1985 and is a member of the Executive Committee. EXECUTIVE VICE PRESIDENTS JERRY W. ELLER Mr. Eller is 55 and has been a Vice President or Executive Vice President since 1975. He has been a member of the Board of Directors since 1985 and is a member of the Executive Committee. III-1 ROBERT A. WARD Mr. Ward is 55 and has been a Vice President or Executive Vice President since 1974. He has been a member of the Board of Directors since its inception in 1971 and is a member of the Executive Committee. G. ALFRED WEBSTER Mr. Webster is 47 and has been a Vice President or Executive Vice President since 1979. He has been a member of the Board of Directors since 1986 and is a member of the Executive Committee. SENIOR VICE PRESIDENTS GEORGE R. PERKINS, JR. Mr. Perkins is 55 and was the President and a Director of Pioneer Yarn Mills, Inc., Pioneer Spinning, Inc. and Pioneer Cotton Mill, Inc. since each was founded in 1988, 1991, and 1993, respectively, and of Edenton Cotton Mills, Inc., since its acquisition in 1989 (Pioneer Corporations) until August 18, 1993, when the Pioneer Corporations merged with and into USY. He has been a Director of Unifi since August 18, 1993, was President and Chief Executive Officer of USY from August 19, 1993, until December 26, 1994 when USY merged into Unifi, and a Senior Vice President of Unifi since October 21, 1993. KENNETH L. HUGGINS Mr. Huggins is 51, had been an employee of Macfield since 1970 and, at the time of the merger, was serving as a Vice President of Macfield, Inc. and President of Macfield's Dyed Yarn Division. He was a Director of Macfield from 1989 until Aug- ust 8, 1991, when Macfield, Inc. merged into and with Unifi, Inc. He is Senior Vice President and also Assistant to the President. RAYMOND W. MAYNARD Mr. Maynard is 52 and had been a Vice President of the Company since June 27, 1971, and a Senior Vice President since October 22, 1992. These officers were elected by the Board of Directors of the Registrant at the Annual Meeting of the Board of Directors held on October 20, 1994. Each officer was elected to serve until the next Annual Meeting of the Board of Directors or until his successor was elected and qualified. (c) FAMILY RELATIONSHIP: Mr. Mebane, Chairman of the Board, and Mr. C. Clifford Frazier, Jr., the Secretary of the Registrant, are first cousins. Except for this relationship, there is no family relation between any of the Officers. (d) COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT: Based solely upon the review of the Form 3's and 4's and amendments thereto, furnished to the Company during the most recent fiscal year, no Form 3's or Form 4's were filed late by a director, officer, or beneficial owner of more than ten percent of any class of equity securities of the Company. The Company received written representation from reporting persons that Form 5's were not required. III-2 ITEM 11. EXECUTIVE COMPENSATION: The information set forth under the headings "Compensation And Option Committees Interlocks And Insider Participation In Compensation Decisions", "Executive Officers and Their Compensation", "Employment And Termination Agreements", "Options Granted", "Option Exercises and Option/SAR Values", and "Performance Graph-Shareholder Return on Common Stock" and the Report of The Compensation And Stock Option Committees on Executive Compensation beginning on page 6 and ending on page 11 of the Company's definitive Proxy Statement filed with the Commission since the close of the Registrant's fiscal year ended June 25, 1995, and within 120 days after the close of said fiscal year, are incorporated herein by reference. For additional information regarding executive compensation reference is made to Exhibits (10i), (10j), and (10k) of this Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT: Security ownership of certain beneficial owners and management is the same as reported under the heading "Information Relating to Principal Security Holders" on page 2 of the definitive Proxy Statement and under the heading "Security Holding of Directors, Nominees and Executive Officers" beginning on page 4 and ending on page 5 of the definitive Proxy Statement filed with the Commission pursuant to Regulation 14(a) within 120 days after the close of the fiscal year ended June 25, 1995, which are hereby incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: The information included under the heading "Compensation And Option Committees Interlocks And Insider Participation In Compensation Decisions", on page 6 of the definitive Proxy Statement filed with the Commission since the close of the Registrant's fiscal year ended June 25, 1995, and within 120 days after the close of said fiscal year, is incorporated herein by reference. III-3 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and 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. September 20, 1995 BY: ROBERT A. WARD ----------------------------------- Robert A. Ward, Executive Vice President - Finance and Administration September 20, 1995 BY: WILLIAM T. KRETZER ----------------------------------- William T. Kretzer, President (Chief Executive Officer) September 20, 1995 BY: WILLIS C. MOORE ----------------------------------- Willis C. Moore, Vice President (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: September 20, 1995 Chairman G. ALLEN MEBANE ------------------------- and Director G. Allen Mebane September 20, 1995 Vice Chairman WILLIAM J. ARMFIELD, IV ------------------------- and Director William J. Armfield, IV September 20, 1995 President, Chief WILLIAM T. KRETZER ------------------------- Executive Officer William T. Kretzer and Director September 20, 1995 Executive Vice ROBERT A. WARD ------------------------- President and Robert A. Ward Director September 20, 1995 Executive Vice JERRY W. ELLER ------------------------- President and Jerry W. Eller Director September 20, 1995 Executive Vice G. ALFRED WEBSTER ------------------------- President and G. Alfred Webster Director September 20, 1995 Director CHARLES R. CARTER ------------------------- Charles R. Carter September __, 1995 Director _________________________ Kenneth G. Langone September 20, 1995 Director GEORGE R. PERKINS ------------------------- George R. Perkins September 20, 1995 Director DONALD F. ORR ------------------------- Donald F. Orr September __, 1995 Director _________________________ Timotheus R. Pohl PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) 1. Financial Statements The following financial statements and report of independent auditors included in the Annual Report of Unifi, Inc. to its shareholders for the year ended June 25, 1995, are incorporated herein by reference. With the exception of the aforementioned information and the information incorporated by reference in Items 1, 2, 5, 6, 7 and 8 herein, the 1995 Annual Report to shareholders is not deemed to be filed as part of this report. Annual Report Pages Consolidated Balance Sheets at June 25, 1995 and June 26, 1994 15 Consolidated Statements of Income for the Years Ended June 25, 1995, June 26, 1994, and June 27, 1993 16 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended June 25, 1995, June 26, 1994 and June 27, 1993 17 Consolidated Statements of Cash Flows for the Years Ended June 25, 1995, June 26, 1994 and June 27, 1993 18 Notes to Consolidated Financial Statements 19-23 Report of Independent Auditors 14 (a) 2. Financial Statement Schedules Form 10-K Pages Schedules for the three years ended June 25, 1995: II - Valuation and Qualifying Accounts IV - 6 IV-1 Schedules other than those above are omitted because they are not required, are not applicable, or the required information is given in the consolidated financial statements or notes thereto. Individual financial statements of the Registrant have been omitted because it is primarily an operating company and all subsidiaries included in the consolidated financial statements being filed, in the aggregate, do not have minority equity interest and/or indebtedness to any person other than the Registrant or its consolidated subsidiaries in amounts which together exceed 5% of the total assets as shown by the most recent year end consolidated balance sheet. (a) 3. Exhibits (2a-1) Form of Agreement and Plan of Merger, dated as of May 24, 1991, by and between Unifi, Inc. and Macfield, Inc., including exhibits, filed as Exhibit 2.1 to Unifi, Inc.'s Registration Statement on Form S-4 (Registration No. 33-40828), which is incorporated herein by reference. (2a-2) Form 8-K, filed by Unifi, Inc. in relation to the confirmation of the merger of Macfield, Inc. with and into Unifi, Inc. and related exhibits, filed with the Securities and Exchange Commission on August 8, 1991, which is incorporated herein by reference. (2a-3) Form of Agreement and Reverse Triangular Merger, dated February 10, 1993, by and between Unifi, Inc. and Vintage Yarns, Inc., filed as Exhibit 2.1 to Unifi, Inc.'s Registration Statement on Form S-4 (Registration No. 33-58282), which is incorporated herein by reference. (2a-4) Form 8-K, filed by Unifi, Inc. in relation to the confirmation of the Reverse Triangular Merger, where Vintage Yarns, Inc. became a wholly-owned subsidiary of Unifi, and related exhibits, filed with the Securities and Exchange Commission on May 10, 1993, which is incorporated herein by reference. (2a-5) Form of Agreement and Plan of Triangular Merger, dated July 15, 1993, by and between Unifi, Inc. and Pioneer Yarn Mills, Inc., Pioneer Spinning, Inc., Edenton Cotton Mills, Inc., and Pioneer Cotton Mill, Inc., (the "Pioneer Corporations"), filed as Exhibit 2.1 to Unifi, Inc's Registrations Statement on Form S-4 (Registration No. 33-65454), which is incorporated herein by reference. IV-2 (2a-6) Form 8-K, filed by Unifi, Inc. for the purpose of reporting the Pioneer Corporations' Interim Combined Financial Statements (Unaudited) and Unifi, Inc.'s, and the Pioneer Corporations' Proforma Combined Interim Financial Information (Unaudited), and related exhibits, filed with the Securities and Exchange Commission on September 2, 1993, which is incorporated herein by reference. (2a-7) Form 8-K, filed by Unifi, Inc. for the purpose of reporting the Pioneer Corporations' merger with and into USY, and related exhibits filed with the Securities and Exchange Commission on November 5, 1993, which is incorporated herein by reference. (3a) Restated Certificate of Incorporation of Unifi, Inc., dated July 21, 1994, (filed as Exhibit (3a) with the Company's Form 10-K for the Fiscal Year ended June 26, 1994), which is incorporated herein by reference. (3b) Restated By-Laws of Unifi, Inc., effective July 21, 1994, (filed as Exhibit (3b) with the Company's Form 10-K for the Fiscal Year ended June 26, 1994), which is incorporated herein by reference. (4a) Specimen Certificate of Unifi, Inc.'s common stock, filed as Exhibit 4(a) to the Registration Statement on Form S-1, (Registration No. 2-45405), which is incorporated herein by reference. (4b) Unifi, Inc.'s Registration Statement for the 6% Convertible Subordinated Notes Due 2002, filed on Form S-3, (Registration No. 33-45946), which is incorporated herein by reference. (10a) *Unifi, Inc. 1982 Incentive Stock Option Plan, as amended, filed as Exhibit 28.2 to the Registration Statement on Form S-8, (Registration No. 33-23201), which is incorporated herein by reference. (10b) *Unifi, Inc. 1987 Non-Qualified Stock Option Plan, as amended, filed as Exhibit 28.3 to the Registration Statement on Form S-8, (Registration No. 33-23201), which is incorporated herein by reference. IV-3 (10c) *Unifi, Inc. 1992 Incentive Stock Option Plan, effective July 16, 1992, (filed as Exhibit (10c) with the Company's Form 10-K for the Fiscal year ended June 27, 1993), and included as Exhibit 99.2 to the Registration Statement on Form S-8 (Registration No. 33-53799), which are incorporated herein by reference. (10d) *Unifi, Inc.'s Registration Statement for selling Shareholders, who are Directors and Officers of the Company, who acquired the shares as stock bonuses from the Company, filed on Form S-3 (Registration No. 33-23201), which is incorporated herein by reference. (10e) Unifi Spun Yarns, Inc.'s 1992 Employee Stock Option Plan filed as Exhibit 99.3 to the Registration Statement on Form S-8 (Registration No. 33-53799), which is incorporated herein by reference. (10f) Lease Agreement, dated March 2, 1987, between NationsBank, Trustee under the Unifi, Inc. Profit Sharing Plan and Trust, Wachovia Bank and Trust Co., N.A., Independent Fiduciary, and Unifi, Inc., (filed as Exhibit (10d) with the Company's Form 10-K for the fiscal year ended June 28, 1987), which is incorporated herein by reference. (10g) Factoring Contract and Security Agreement and a Letter Amendment thereto, all dated as of May 25, 1994, by and between Unifi, Inc. and the CIT Group/DCC, Inc., (filed as Exhibit (10g) with the Company's Form 10-K for the Fiscal Year ended June 26, 1994), which are incorporated herein by reference. (10h) Factoring Contract and Security Agreement, dated as of May 2, 1988, between Macfield, Inc. and First Factors Corp., and first amendment thereto, dated September 28, 1990, (both filed as Exhibit (10g) with the Company's Form 10-K for the fiscal year ended June 30, 1991), and Second Amendment to the Factoring Contract and Security Agreement, dated March 1, 1992, (filed as Exhibit (10g) with the Company's Form 10-K for the Fiscal Year Ended June 28, 1992), and Letter Agreement dated August 31, 1993 and Amendment To Factoring Contract and Security Agreement, dated January 5, 1994, (filed as Exhibit (10h) with the Company's Form 10-K for the Fiscal Year ended June 26, 1994), which are incorporated herein by reference. IV-4 (10i) *Employment Agreement between Unifi, Inc. and G. Allen Mebane, dated July 19, 1990, (filed as Exhibit (10h) with the Company's Form 10-K for the fiscal year ended June 30, 1991), which is incorporated herein by reference. (10j) *Employment Agreement between Unifi, Inc. and William T. Kretzer, dated July 19, 1990, (filed as Exhibit (10i) with the Company's Form 10-K for the fiscal year ended June 30, 1991), and Amendment to Employment Agreement between Unifi, Inc. and William T. Kretzer, dated October 22, 1992 (filed as Exhibit (10j) with the Company's Form 10-K for fiscal year ended June 27, 1993), which are incorporated herein by reference. (10k) *Severance Compensation Agreement between Unifi, Inc. and William T. Kretzer, dated July 20, 1993, expiring on July 19, 1996 (similar agreements were signed with G. Allen Mebane, William J. Armfield, IV, Robert A. Ward, Jerry W. Eller and G. Alfred Webster), (filed as Exhibit (10k) for the fiscal year ended July 27, 1993), which is incorporated herein by reference. (11) Computation of Earnings per share. (13a) Portions of Unifi, Inc.'s 1995 Annual Report to Shareholders which are incorporated herein by reference, as a part of this Form 10-K for fiscal year ended June 25, 1995, filed herewith. (13b-1) Report of Independent Auditors/Ernst & Young LLP - on the Consolidated Financial Statements of Unifi, Inc. as of June 25, 1995 and each of the two years in the period ended June 25, 1995. (21) Subsidiaries of Unifi, Inc. (23) Consent of Ernst & Young LLP (27) Financial Data Schedules (b) Reports on Form 8-K (i) No Form 8-K's were filed. * NOTE: These Exhibits are management contracts or compensatory plans or arrangements required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c) of this report. IV-5 UNIFI, INC. AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E _________________ ______________ ________________________ ____________ ____________ Balance at Charged to Charged to Balance at Beginning of Costs and Other End of Description Period Expenses Accounts Deductions Period _________________ ______________ ________________________ ____________ ____________ Allowance for doubtful accounts: Year ended June 25, 1995 $4,302 $5,524 $ - $ (3,374) $ 6,452 Year ended June 26, 1994 3,675 4,626 25 (4,024) 4,302 Year ended June 27, 1993 5,196 745 - (2,266) 3,675 Unrealized (gains)/losses on certain investments: Year ended June 25, 1995 $1,445 $ - $(3,280) $ - $ (1,835) Year ended June 26, 1994 1,488 - (43) - 1,445 Year ended June 27, 1993 - - 1,488 - 1,488
IV-6 EX-11 2 Exhibit (11) UNIFI, INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE (Amounts in thousands, except per share data)
Years Ended _________________________________________________ June 25, 1995 June 26, 1994 June 27, 1993 ______________ _____________ _____________ Computation of share totals used in computing earnings per share: Weighted average number of shares outstanding 69,005 70,415 69,854 Incremental shares arising from outstanding stock options using the treasury stock method 537 605 1,007 _____________ ______________ _____________ Primary average shares outstanding (a) 69,542 71,020 70,861 _____________ ______________ _____________ _____________ ______________ _____________ Incremental shares arising from outstanding stock options, using end of year prices for the treasury stock method and convertible debt using the if converted method 7,760 7 7,779 _____________ ______________ _____________ Fully-diluted average shares out- standing (b) 77,302 71,027 78,640 _____________ ______________ _____________ _____________ ______________ _____________ Net earnings applicable to common stock: Net income - primary (c) $ 116,171 $ 76,492 $ 136,644 Add: convertible subordinated debt interest net of tax 8,703 - 8,614 _____________ ______________ _____________ Net income assuming full dilution (d) $ 124,874 $ 76,492 $ 145,258 _____________ ______________ _____________ _____________ ______________ _____________ Net income per share, primary (c)/(a) $ 1.67 $ 1.08 $ 1.93 _____________ ______________ _____________ _____________ ______________ _____________ Net income per share assuming full dilution (d)/(b) $ 1.62 $ 1.08 $ 1.85 The effect of the convertible subordinated notes was antidilutive for the fiscal year ended June 26, 1994.
EX-13 3 EXHIBIT (13a) CONSOLIDATED BALANCE SHEETS (Amounts in thousands) June 25, 1995 June 26, 1994 ------------- ------------- ASSETS: Current assets: Cash and cash equivalents $ 60,350 $ 80,653 Short-term investments 85,844 71,483 Receivables 209,432 200,537 Inventories 139,378 100,279 Prepaid expenses 8,017 3,605 ___________________________________________________________________ Total current assets $ 503,021 $ 456,557 ___________________________________________________________________ Property, plant and equipment: Land $ 5,865 $ 5,797 Buildings and air conditioning 203,114 174,549 Machinery and equipment 631,470 606,423 Other 69,934 61,868 __________________________________________________________________ $ 910,383 $ 848,637 Less: accumulated depreciation 394,168 336,375 __________________________________________________________________ $ 516,215 $ 512,262 __________________________________________________________________ Investment in affiliates $ 173 $ 10,626 __________________________________________________________________ Other assets $ 21,493 $ 23,807 __________________________________________________________________ $ 1,040,902 $ 1,003,252 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable $ 100,165 $ 83,831 Accrued expenses 54,338 56,320 Income taxes 15,161 12,132 __________________________________________________________________ Total current liabilities $ 169,664 $ 152,283 __________________________________________________________________ Long-term debt $ 230,000 $ 230,000 __________________________________________________________________ Deferred income taxes $ 37,736 $ 32,447 __________________________________________________________________ Shareholders' equity: Common stock $ 6,714 $ 7,043 Capital in excess of par value 117,277 199,959 Retained earnings 473,962 385,472 Cumulative translation adjustment 4,415 (3,060) Unrealized gains (losses) on certain investments 1,134 (892) __________________________________________________________________ $ 603,502 $ 588,522 __________________________________________________________________ $ 1,040,902 $ 1,003,252 The accompanying notes are an integral part of the financial statements. 15 CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data)
June 25, 1995 June 26, 1994 June 27, 1993 ------------- ------------- ------------- Net sales $ 1,554,557 $ 1,384,797 $ 1,405,651 _______________________________________________________________________________________ Costs and expenses: Cost of sales $ 1,330,410 $ 1,185,386 $ 1,141,126 Selling, general and administrative expense 43,116 40,429 38,484 Interest expense 15,452 18,241 25,785 Interest income (10,372) (8,290) (13,537) Other income (9,659) (1,238) (5,775) Non-recurring charge --- 13,433 --- _____________________________________________________________________________________ $ 1,368,947 $ 1,247,961 $ 1,186,083 _____________________________________________________________________________________ Income before taxes $ 185,610 $ 136,836 $ 219,568 Provision for income taxes 69,439 60,344 82,924 _____________________________________________________________________________________ Net income $ 116,171 $ 76,492 $ 136,644 Per share data: Net income: Primary $ 1.67 $ 1.08 $ 1.93 Fully diluted $ 1.62 $ 1.08 $ 1.85 Cash dividends $ .40 $ .56 $ .42 The accompanying notes are an integral part of the financial statements.
16 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Amounts in thousands, except per share data)
Captl. Cumul. Unrlzd Gains Shares Comm. in Excess of Retained Transltn (Loss) on Cert. Outstdng Stock Par Val. Earnings Adjstmnt Investments --------------------------------------------------------------- Balance June 28, 1992 46,332 $ 4,633 $177,222 $ 273,624 $ 7,564 $ --- --------------------------------------------------------------- Purchase of stock (27) (2) (1,126) --- --- --- Options exercised 143 14 972 --- --- --- Stock issued 639 64 904 --- --- --- Stock dividend-50% 23,253 2,325 (2,426) (20) --- --- Stock option tax benefit --- --- 959 --- --- --- Cash dividends-$.42 per share --- --- --- (25,910) --- --- Net distributions to S Corporation shareholders --- --- --- (4,471) --- --- Foreign currency --- --- --- --- (13,079) --- Unrealized gains (losses) on certain investments --- --- --- --- --- (920) Net income --- --- --- 136,644 --- --- Reclass of S Corporation net earnings to capital in excess of par value --- --- 21,484 (21,484) --- --- Pooling adjustment-conform fiscal year and accounting policies --- --- (1,856) (9,562) --- --- Balance June 27, 1993 $70,340 $ 7,034 $ 196,133 $ 348,821 $ (5,515) $ (920) --------------------------------------------------------------- Purchase of stock (98) (10) (2,051) --- --- --- Options exercised 191 19 899 --- --- --- Cash dividends-$.56 per share --- --- --- (39,053) --- --- Net contributions and tax benefits from (to) S Corporation shareholders --- --- 4,562 (372) --- --- Foreign currency --- --- --- --- 2,455 --- Change in unrealized gains (losses) on certain investments --- --- --- --- --- 28 Net income --- --- --- 76,492 --- --- Reclass of S Corporation net earnings to capital in excess of par value --- --- 416 (416) --- --- ____________________________________________________________________________________________ Balance June 26, 1994 $70,433 $ 7,043 $ 199,959 $ 385,472 $ (3,060) $ (892) --------------------------------------------------------------- Purchase of stock (3,362) (336) (83,414) --- --- --- Options exercised 69 7 732 --- --- --- Cash dividends-$.40 per share --- --- --- (27,681) --- --- Foreign currency --- --- --- --- 7,475 --- Change in unrealized gains (losses) on certain investments --- --- --- --- --- 2,026 Net income --- --- --- 116,171 --- --- _____________________________________________________________________________________ Balance June 25, 1995 $67,140 $ 6,714 $ 117,277 $ 473,962 $ 4,415 $ 1,134 The accompanying notes are an integral part of the financial statements.
17 CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands)
June 25, 1995 June 26, 1994 June 27, 1993 ------------- ------------- ------------- Cash and cash equivalents at beginning of year $ 80,653 $ 76,093 $ 139,046 _____________________________________________________________________________________________ Operating activities: Net income $ 116,171 $ 76,492 $ 136,644 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 75,805 70,116 58,949 Non-cash portion of non-recurring charge --- 13,433 --- Gain on sale of assets (1,119) (1,021) (5,861) Gain on sale of investments (6,697) --- --- Equity in (earnings) losses of nonconsolidated affiliates (649) 62 1,481 Noncash compensation --- --- 507 Provision for deferred income taxes 7,505 6,939 6,506 Changes in assets and liabilities, excluding effects of acquisition and foreign currency adjustments: Receivables (11,665) 374 (5,099) Inventories (42,751) 4,921 (20,144) Prepaid expenses 27 (272) (82) Payables and accruals 19,804 (31,118) 21,007 Income taxes (542) (8,605) 10,664 Other (548) (533) (59) ____________________________________________________________________________________________ Net-operating activities $ 155,341 $ 130,788 $ 204,513 ____________________________________________________________________________________________ Investing activities: Capital expenditures $ (88,941) $ (104,672) $ (141,223) Purchase of investments (93,671) (151,565) (115,620) Sale of capital assets 3,479 3,611 773 Sale of investments 94,379 198,855 127,119 Sale of subsidiary 13,798 --- --- Proceeds from notes receivable 5,311 --- --- Other 3 (423) (5,909) ____________________________________________________________________________________________ Net-investing activities $ (65,642) $ (54,194) $ (134,860) ____________________________________________________________________________________________ Financing activities: Net payments on revolving credit and bank lines $ --- $ --- $ (117) Borrowing of long-term debt --- --- 30,585 Repayments of long-term debt --- (32,221) (125,920) Issuance of stock 739 898 566 Purchase and retirement of stock (83,750) (2,061) (85) Net distributions to S Corporation shareholders --- --- (8,266) Cash dividends paid (27,681) (39,053) (25,910) ____________________________________________________________________________________________ Net-financing activities $ (110,692) $ (72,437) $ (129,147) ____________________________________________________________________________________________ Currency translation adjustment $ 690 $ 403 $ (3,459) ____________________________________________________________________________________________ Net increase (decrease) in cash and cash equivalents $ (20,303) $ 4,560 $ (62,953) ____________________________________________________________________________________________ Cash and cash equivalents at end of year $ 60,350 $ 80,653 $ 76,093 ---------------------------------------------------- Cash paid during the year: Interest $ 14,777 $ 17,487 $ 22,696 Income taxes 61,495 61,653 65,601 Non-cash investing and financing activities: Tendering of stock to exercise options $ --- $ --- $ 1,129 Assets acquired by issuance of debt --- 7,453 8,617 Note receivable obtained from sale of an affiliate 10,436 --- --- The accompanying notes are an integral part of the financial statements.
18 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1.ACCOUNTING POLICIES AND FINANCIAL STATEMENT INFORMATION PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of the Company and all subsidiaries. The accounts of all foreign subsidiaries have been included on the basis of fiscal periods ended three months or less prior to the dates of the consolidated balance sheets. All significant intercompany accounts and transactions have been eliminated. FISCAL YEAR: The Company's fiscal year is the fifty-two or fifty-three weeks ending the last Sunday in June. All three fiscal years presented were comprised of fifty-two weeks. RECLASSIFICATION: The Company has reclassified the presentation of certain prior year information to conform with the current presentation format. REVENUE RECOGNITION: Substantially all revenue from sales is recognized at the time shipments are made. FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign subsidiaries are translated at year-end rates of exchange and revenues and expenses are translated at the average rates of exchange for the year. Gains and losses resulting from translation are accumulated in a separate component of shareholders equity. Gains and losses resulting from foreign currency transactions (transactions denominated in a currency other than the subsidiary's functional currency) are included in net income. CASH AND CASH EQUIVALENTS: Cash equivalents are defined as short-term investments having an original maturity of three months or less. SHORT-TERM INVESTMENTS: Short-term investments are comprised primarily of high-quality, highly liquid marketable securities with original maturities greater than three months. The Company adopted Statement of Financial Accounting Standard No. 115 Accounting for Certain Investments in Debt and Equity Securities as of the end of the fiscal year ended June 26, 1994. The adoption had no significant impact on the fiscal 1994 financial statements. Short-term investments at June 25, 1995, and June 26, 1994, are classified as available-for-sale securities and are carried at fair market value, with the unrealized gains and losses, net of tax, reported as a separate component of shareholders equity. ACCOUNTS RECEIVABLE: Certain customer accounts receivable are factored without recourse with respect to credit risk. An allowance for losses is provided for accounts not factored based on a periodic review of the accounts. Reserve for such losses was $6.5 million at June 25, 1995, and $4.3 million at June 26, 1994. INVENTORIES: The Company utilizes the last-in, first-out (LIFO) method for valuing certain inventories representing 59% of all inventories at June 25, 1995, and the first-in first-out (FIFO) method for all other inventories. Inventory values computed by the LIFO method are lower than current market values. Inventories valued at current or replacement cost would have been approximately $10.3 million and $5.6 million in excess of the LIFO valuation at June 25, 1995, and June 26, 1994, respectively. Finished goods, work in process, and raw materials and supplies at June 25, 1995, and June 26, 1994, amounted to $66.1 million and $57.6 million; $14.3 million and $12.9 million; and $59.0 million and $29.8 million, respectively. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at cost. Depreciation is computed for asset groups primarily utilizing the straight-line method for financial reporting and accelerated methods for tax reporting. OTHER ASSETS: Other assets consist primarily of the cash surrender value of key executive life insurance policies, investments in marketable equity securities, long-term notes receivable, deferred debt expense, identifiable intangibles associated with acquisitions and, also in the prior year, noncompete covenants. The investments in marketable equity securities are classified as available-for-sale and are carried at a fair market value of $0.3 million and $9.5 million at June 25, 1995, and June 26, 1994, respectively. The deferred debt expense and remaining intangible assets are being amortized on a straight-line method over periods from three to fifteen years. The noncompete covenants and certain intangibles associated with acquisitions were fully amortized in fiscal 1994. Accumulated amortization at June 25, 1995, and June 26, 1994, was $1.6 million and $16.0 million, respectively. INCOME TAXES: The Company and its domestic subsidiaries file a consolidated federal tax return. Income tax expense is computed on the basis of transactions entering into pretax operating results. Deferred income taxes have been provided for the tax effect of temporary differences between financial statement carrying amounts and the tax basis of existing assets and liabilities. Income taxes have not been provided on the undistributed earnings of certain foreign subsidiaries as such earnings are deemed to be permanently invested. EARNINGS PER SHARE: Earnings per common and common equivalent share are computed on the basis of the weighted average number of common shares outstanding plus, to the extent applicable, common stock equivalents. Average common and common equivalent shares for primary earnings per share were 69,542,155, 71,020,075 and 70,861,463 for 1995, 1994 and 1993, respectively. Fully diluted earnings per share amounts are based on 77,302,035, 71,026,610 and 78,640,459 shares for 1995, 1994 and 1993, respectively. The effect of the convertible subordinated notes was antidilutive for the fiscal year ended June 26, 1994. 19 2.BUSINESS COMBINATIONS On August 18, 1993, Pioneer Yarn Mills, Inc., Edenton Cotton Mills, Inc., Pioneer Spinning, Inc., Pioneer Cotton Mills, Inc., and certain real estate (collectively the Pioneer Corporations) were merged into Unifi Spun Yarns, Inc., a wholly-owned subsidiary of the Company. In order to effect the Merger, 2,745,284 shares of the Company's common stock were issued for all of the outstanding shares of the Pioneer Corporations. On April 23, 1993, Vintage Yarns, Inc. (Vintage) was merged with and became a wholly-owned subsidiary of the Company, and 7,891,800 shares of the Company's common stock were issued in exchange for all of the outstanding common stock of Vintage. Additionally, 496,832 shares of the Company's common stock were reserved for issuance pursuant to outstanding options on Vintage common stock. Both mergers were accounted for as a pooling of interests, and accordingly, the accompanying financial statements for the year ended June 27, 1993 have been restated to include the accounts and operations of the Pioneer Corporations and Vintage. Prior to the mergers, the Pioneer Corporations used a fiscal year ending on the last Saturday in September and Vintage used a fiscal year ending September 30. The restated 1993 financial statements combine the June 27, 1993, financial statements of the Company with the financial statements of the Pioneer Corporations and Vintage for their respective twelve month periods ended June 26, 1993, and June 30, 1993, respectively. Accordingly, to conform the fiscal years of the Pioneer Corporations and Vintage with the Company's, the results of operations of the Pioneer Corporations and Vintage for the three months ended September 26, 1992, and September 30, 1992, respectively, have been included in both fiscal 1993 and 1992. Combined net sales and net income for the three month periods of the Pioneer Corporations and Vintage were $60.8 million and $9.6 million, respectively. An adjustment for the net income of the three month period has been reflected as an adjustment to the June 29, 1992, consolidated retained earnings and an additional adjustment of $1.9 million has been reflected to conform the accounting policies of the previously separate companies. Separate results of the combining entities for the year ended June 27, 1993, are as follows: (Amounts in thousands) June 27, 1993 ______________________________________________ Net sales: Unifi $ 1,133,863 Pioneer Corporations 73,457 Vintage 198,331 ______________________________________________ $ 1,405,651 ______________________________________________ Net income: Unifi $ 94,839 Pioneer Corporations 8,591 Vintage 33,214 ______________________________________________ $ 136,644 ______________________________________________ For all periods prior to the merger to the date of acquisition, the Pioneer Corporations and Vintage were taxed as S Corporations and, therefore, federal and state taxes were assessed to the shareholders. For purposes of the consolidated financial statements, income taxes have been provided on the Pioneer Corporations and Vintage's earnings at the rates which would have been applicable had such earnings been taxed to it. Distributions to S Corporation shareholders have been adjusted for the effects of corporate, federal and state taxes payable on an annualized basis. 3.NON-RECURRING CHARGE In the fiscal 1994 fourth quarter, the Company recorded a non-recurring charge of $13.4 million ($14.1 million after-tax or $.20 per share) related to the sale of the Company's investment in its wholly-owned French subsidiary, Unifi Texturing, S.A. (UTSA) and the Company's decision to exit the European nylon market. Of the non-recurring charge, $3.1 million relates to the loss from the sale of UTSA, $8.8 million relates to the write-off of goodwill and other intangibles associated with the Company's European nylon operations and $1.5 million relates to the write-down of nylon production equipment and inventories. The sale was consummated during the first fiscal quarter of 1995. Net cash proceeds from the sale totaled $13.8 million, excluding $4.1 million of cash remitted to the Company from UTSA coincident with the sale. The results of operations of UTSA were not significant to the consolidated Company for any of the periods presented. 20 4.LONG-TERM DEBT A summary of long-term debt follows: (Amounts in thousands) June 25, 1995 June 26, 1994 _________________________________________________________________ Convertible subordinated notes due March 15, 2002 $ 230,000 $ 230,000 There are no scheduled maturities of long-term debt in the five years following June 25, 1995. The 6% convertible subordinated notes due March 15, 2002, are convertible at any time on or before the due date, unless previously redeemed, into common stock of the Company at a conversion price of $29.67 per share, subject to adjustment in certain events. The notes are redeemable, in whole or in part, at the option of the Company on or after March 27, 1995, at redemption prices beginning at 104% of their principal amount, declining to par on or after March 15, 2001. The Company has 7.8 million shares reserved at year end for potential conversion. Interest is payable semi-annually on March 15 and September 15 of each year. The fair value of the Company's long-term debt at June 25, 1995, is estimated at $227.7 million using quoted market prices. 5.INCOME TAXES Deferred income taxes of $37.7 million and $32.4 million at June 25, 1995, and June 26, 1994, respectively, have been provided as a result of temporary differences between financial statement carrying amounts and the tax basis of existing assets and liabilities. The net deferred tax liability consists of deferred tax liabilities resulting primarily from the temporary differences related to property, plant and equipment of $57.7 million and $52.7 million, other assets of $1.7 million and $.7 million and deferred tax assets attributable to basis differences resulting from mergers and valuation reserves of $21.7 million and $21.0 million, respectively. U.S. deferred income taxes have not been recognized on $43.0 million at June 25, 1995 ($35.2 million at June 26, 1994), of undistributed earnings of foreign subsidiaries, because assets representing those earnings are considered to be permanently invested. The amount of foreign withholding taxes and U.S. taxes that would be payable upon the repatriation of assets that represent those earnings would be approximately $16.4 million at June 25, 1995 ($13.6 million at June 26, 1994). Components of deferred tax expense were as follows: (Amounts in thousands) 1995 1994 1993 ___________________________________________________________________ Depreciation and asset disposals $ 5,801 $ 6,996 $ 6,424 Other 1,704 (57) 82 ___________________________________________________________________ $ 7,505 $ 6,939 $ 6,506 ___________________________________________________________________ State income taxes included in provision for income taxes $ 9,501 $ 7,639 $ 12,608 ___________________________________________________________________ Significant items affecting a reconciliation of the statutory federal income tax rate and the effective rate are attributable to the following: 1995 1994 1993 __________________________________________________________________ Federal statutory rate 35.0% 35.0% 34.0% State income taxes-net 3.1 3.6 3.8 Foreign subsidiaries taxed at different rates (.7) (.2) (.3) Nondeductible expenses and other -- 5.7 .3 ___________________________________________________________________ Effective rate 37.4% 44.1% 37.8% ___________________________________________________________________ 21 6.COMMON STOCK Shares authorized were 500 million in 1995 and 1994. Common shares outstanding at June 25, 1995 and June 26, 1994, were 67,140,005 and 70,432,862, respectively. The Company has Incentive Stock Option Plans with 1,972,651 shares reserved at June 25, 1995. There remain 287,683 options available for grant at year end. The transactions for 1995, 1994 and 1993 are as follows:
1995 1994 1993 ___________________________________________________________________________________________ Shares under option beginning of year 1,122,694 1,305,095 1,296,773 Granted 773,317 176,500 262,500 Exercised (68,110) (189,890) (187,449) Canceled (from $10.19 to $24.67) (142,933) (169,011) (66,729) ___________________________________________________________________________________________ Shares under option-end of year 1,684,968 1,122,694 1,305,095 ___________________________________________________________________________________________ Options exercisable-end of year 1,273,900 1,067,055 874,992 ___________________________________________________________________________________________ Option price range $ 3.80-$25.25 $1.62-$24.67 $1.62-$24.67 ___________________________________________________________________________________________ Option price range for options exercised $10.19-$23.88 $1.62-$24.67 $2.53-$24.67 ___________________________________________________________________________________________
The Company also has a Non-Qualified Stock Option Plan with 747,935 shares reserved at June 25, 1995. There remain 9,416 options available for grant at year end. Transactions for 1995, 1994 and 1993 are as follows:
1995 1994 1993 ___________________________________________________________________________________________ Shares under option - beginning of year 331,033 330,000 23,907 Granted 408,519 2,065 330,000 Exercised (1,033) (1,032) (23,907) ___________________________________________________________________________________________ Shares under option-end of year 738,519 331,033 330,000 ___________________________________________________________________________________________ Options exercisable-end of year 338,519 331,033 330,000 ___________________________________________________________________________________________ Option price range $10.57-$25.83 $10.57-$25.83 $10.57-$25.83 ___________________________________________________________________________________________ Option price for options exercised $10.57 $10.57 $4.80 ___________________________________________________________________________________________ 7.RETIREMENT PLANS
The Company has a qualified profit-sharing plan, which provides benefits for eligible salaried and hourly employees. The annual contribution to the plan, which is at the discretion of the Board of Directors, amounted to $17.0 million, $15.8 million and $13.3 million in 1995, 1994 and 1993, respectively. The Company leases its corporate office building from its profit-sharing plan through an independent trustee. 22 8.LEASES, COMMITMENTS AND CONCENTRATIONS OF CREDIT RISK The Company is obligated under operating leases consisting primarily of real estate and equipment. Future obligations for minimum rentals under the leases during fiscal years after June 25, 1995, are $3.0 million in 1996, $2.8 million in 1997, $2.6 million in 1998, $2.5 million in 1999, and $2.5 million in 2000. Rental expense was $3.7 million, $3.2 million and $2.7 million for the fiscal years 1995, 1994 and 1993, respectively. The Company had committed approximately $99.5 million for the purchase of equipment and facilities at June 25,1995. The concentration of credit risk for the Company with respect to trade receivables is mitigated due to the large number of customers, dispersion across different industries and its factoring arrangements. The Company had sales to one customer of approximately 11% in 1995, 12% in 1994 and 12% in 1993. 9.BUSINESS SEGMENTS AND FOREIGN OPERATIONS The Company and its subsidiaries are engaged predominantly in the processing of yarns by: texturing of synthetic filament polyester and nylon fiber, and spinning of cotton and cotton blend fibers with sales domestically and internationally, mostly to knitters and weavers for the apparel, industrial, hosiery, home furnishing, automotive upholstery and other end-use markets. The Company's foreign operations are comprised primarily of its manufacturing facility in Ireland along with its foreign sales corporation and had net sales of $231.1 million, $178.5 million and $199.3 million; pretax income, before non-recurring charges in 1994, of $10.4 million, $4.4 million and $7.6 million; and identifiable assets of $129.9 million, $132.0 million and $123.4 million in 1995, 1994 and 1993, respectively. 23 MANAGEMENT'S REVIEW AND ANALYSIS OF OPERATIONS AND FINANCIAL POSITION FISCAL 1995 Net sales increased 12.3% from $1.385 billion in 1994 to $1.555 billion in 1995. The growth was accomplished by an increase in unit volume for the consolidated domestic and international operations. The increase in unit sales volume was predominantly in our lower average priced, natural textured and spun yarn products. The volume increase was supplemented by a slight increase in per unit sales price. Our domestic operations experienced increased sales volume of approximately 12.4% during 1995 with significant gains noted in natural polyester and spun yarn products. Domestic volume growth was achieved primarily through capacity expansions, acquisitions and ongoing modernization projects. Domestic polyester texturing productive capacity will be increased throughout the 1996 fiscal year as the Company continues with a modernization project in process in its Reidsville, NC facility and completes construction of a new texturing plant in Yadkinville, NC. The growth in sales in our international polyester operations was accomplished through increased capacity gained from fiscal 1995 expansions at our Irish facility, higher average unit sales prices which were raised to partially offset escalating raw material costs and to the further weakening of the U.S. dollar compared to the prior year. Texturing capacity will be increased approximately 30% during the upcoming fiscal year due to the installation of new texturing equipment. Sales from foreign operations are denominated in local currencies and are hedged in part by the purchase of raw materials and services in those same currencies. The net asset exposure is hedged by borrowings in local currencies which minimize the risk of currency fluctuations. Cost of sales as a percentage of sales remained stable at 85.6% for both the 1995 and 1994 fiscal years. On a consolidated basis for fiscal 1995, slight increases in per unit raw material and packaging costs were offset by lower manufacturing costs per unit. Increased sales volume and a shift in product mix to higher-volume, lower-cost items resulted in improved manufacturing costs on a per unit basis. These improvements reflect management's continued efforts to improve operating efficiency and reduce manufacturing cost. Selling, general and administrative expenses as a percentage of net sales decreased to 2.8% in 1995 from 2.9% in 1994 primarily as a result of further consolidations of operations relating to the previous mergers and an increase in the net sales base. Interest expense declined $2.8 million from $18.3 million in 1994 to $15.5 million in 1995. The decline was attributable to the retirement of debt acquired in prior year mergers throughout fiscal 1994. The only long-term debt remaining at June 25, 1995, is the $230 million in convertible subordinate notes issued in March 1992. Interest income increased $2.1 million from 1994 to 1995 as a result of increased short-term investment levels. Other income increased $8.4 million from 1994 to 1995 mainly as a result of the recognition of gains from the sale of equity affiliates and capital assets. The effective income tax rate decreased from 44.1% in 1994 to 37.4% in 1995. This decrease was mainly due to the non-deductible, non-recurring charge in the prior year while no such charge was incurred in 1995. Also contributing to the current year's lower effective tax rate was the increase in the earnings of foreign operations, which are taxed at rates lower than the domestic federal tax rate. Net income increased 51.9% from $76.5 million in 1994 to $116.2 million in 1995. Earnings per share increased from $1.08 per share from fiscal 1994 to $1.67 for fiscal 1995, an increase of 54.6%. Net income and net income per share in 1994 before the non-recurring charge were $90.6 million or $1.28 per share. FISCAL 1994 Net sales decreased 1.5% from $1.406 billion in 1993 to $1.385 billion in 1994. This reduction resulted from an overall decline in sales prices of 6.6% based on product mix offset by volume gains of 5.5% experienced for the year in our combined domestic and foreign markets. Domestic growth was achieved through phased in production from a new texturizing plant in Yadkinville, NC that commenced operations in 1993, and the completion of other modernization projects in 1994 and latter stages of the prior fiscal year. Also, significant volume growth was noted in our spun yarn business for the year although pressure on pricing and raw material increases adversely impacted the margins. In the first quarter of 1994, the Company increased its presence in the cotton and cotton blend spun yarn business through the merger with the Pioneer Corporations. During 1993, the Company entered this market through its merger with Vintage Yarns. Our European facilities also experienced overall capacity increases. However, sales prices in local currencies were adversely affected due to weak economic conditions and overcapacity throughout most of the year. Sales from foreign operations are denominated in local currencies and are hedged in part by the purchase of raw materials and services in those same currencies. The net asset exposure is hedged by borrowings in local currencies which minimize the risk of currency fluctuations. 24 Cost of sales as a percentage of sales increased from 81.2% in 1993 to 85.6% in 1994. Impacting cost of sales in the current year was increased fixed charges, such as depreciation, resulting from added capacity being absorbed on a lower net sales base. Also, our spun operations experienced significant raw material price increases during 1994 adversely impacting cost of sales. On a Company-wide basis, however, raw material prices per pound were lower in the current fiscal year than in the prior year. Selling, general and administrative expenses as a percentage of net sales increased from 2.7% in 1993 to 2.9% in 1994 primarily as a result of increased fixed charges over a reduced net sales base. Interest expense declined $7.6 million from $25.8 million in 1993 to $18.2 million in 1994. This decline was attributable to the payoff of long-term debt acquired through merger activity. The only long-term debt remaining at June 26, 1994 is the $230 million in convertible subordinate notes issued in March 1992. Interest income declined $5.2 million from 1993 to 1994 as a result of decreased short-term investment levels. These investments were used to pay off acquired debt, modernize capital equipment and for other financing activities. Other income declined $4.5 million from 1993 to 1994 mainly as a result of the prior year gains recognized from the sale of investment in affiliates and short-term investments while no such activity was present in the current year. In connection with the planned sale of the nylon operations in France, the Company recognized the anticipated loss on the sale of its French subsidiary and wrote off certain intangible costs, primarily goodwill, and other costs associated with the European nylon business. These costs aggregated $14.1 million, or $.20 per share on an after tax basis. The effective income tax rate increased from 37.8% in 1993 to 44.1% in 1994. This increase was mainly due to the non-deductible, non-recurring charge in the current year while no such charge was incurred in 1993. Also adversely impacting the current year'seffective tax rate was the decreased foreign earnings which are taxed at rates lower than the federal tax rate and the increase in the statutory federal rate from 34% to 35% for all of 1994. Net income declined from $136.6 million or $1.93 per share in 1993 to $76.5 million or $1.08 per share in 1994. Net income and net income per share in 1994 before the non-recurring charge previously discussed were $90.6 million or $1.28 per share. LIQUIDITY AND CAPITAL RESOURCES Cash generated from operations is a major source of liquidity for the Company. During 1995, $155.3 million was generated as a result of net income, adjusted for the effects of depreciation and amortization and noncash expenses and increases in accounts payable offset by increases in both receivables and inventories. Receivables have increased in connection with increased volume for both our domestic and export markets. Payment terms for our export sales are typically longer than our domestic sales. The growth in inventory was due to anticipated capacity increases and overall higher per unit raw material prices. The growth in inventory resulted in a corresponding increase to accounts payable. During 1995, the Company expended $83.8 million for the repurchase of 3.4 million shares of the Company's common stock, $88.9 million for additions to property and equipment and $27.7 million for cash dividend payments. Cash generated from the sale of our French subsidiary amounted to $13.8 million. At June 25, 1995, the Company has working capital of $333.4 million which represents a $29.1 million increase in working capital from June 26, 1994. Included in working capital at June 25, 1995, is cash and short-term investments of $146.2 million. In addition, the Company has access to debt and equity markets. At June 25, 1995, the Company has committed approximately $99.5 million for the purchase of equipment and facilities. On October 21, 1993, the Board of Directors authorized Management to repurchase up to 15 million shares of Unifi's common stock from time to time at such prices as Management feels advisable and in the best interest of the Company. Approximately 3.5 million shares have been repurchased as of June 25, 1995, pursuant to this Board authorization. Management believes the current financial position is sufficient to meet anticipated capital expenditures, working capital needs, and other financial requirements. 25 SUMMARY OF SELECTED FINANCIAL DATA
(Amounts in thousands, except per share data) 6/25/95 6/25/94 6/25/93 6/25/92 6/25/91 ____________________________________________________________________________________________ Summary of Earnings: Net sales $ 1,554,557 $ 1,384,797 $ 1,405,651 $ 1,322,910 $ 1,121,592 Cost of sales 1,330,410 1,185,386 1,141,126 1,090,611 965,115 Gross profit 224,147 199,411 264,525 232,299 156,477 Selling, general and administrative 43,116 40,429 38,484 38,530 41,193 Interest expense 15,452 18,241 25,785 16,756 18,707 Interest income (10,372) (8,290) (13,537) (5,306) (3,705) Other income (9,659) (1,238) (5,775) (1,598) (3,100) Non-recurring charge --- 13,433 --- --- --- Merger expenses --- --- --- 24,805 --- Income before taxes 185,610 136,836 219,568 159,112 103,382 Provision for income taxes 69,439 60,344 82,924 62,263 35,707 Net income 116,171 76,492 136,644 96,849 67,675 Per Share of Common Stock: Net income $ 1.67 $ 1.08 $ 1.93 $ 1.38 $ 1.01 Cash dividends .40 .56 .42 .36 .20 Financial Data: Working capital $ 333,357 $ 304,274 $ 320,215 $ 389,826 $ 104,275 Gross property, plant and equipment 910,383 848,637 750,552 640,963 529,701 Total assets 1,040,902 1,003,252 1,017,449 989,404 621,963 Long-term debt 230,000 230,000 250,241 328,685 160,113 Shareholders equity 603,502 588,522 545,553 463,043 269,031
QUARTERLY RESULTS (UNAUDITED) Quarterly financial data for the years ended June 25, 1995, and June 26, 1994 is presented below:
(Amounts in thousands, except per share data) 1st Qrtr 2nd Qrtr 3rd Qrtr 4th Qrtr _____________________________________________________________________________________________ 1994: Net sales $ 325,355 $ 351,516 $ 346,059 $ 361,867 Gross profit 45,725 52,564 50,589 50,533 Net income 19,812 24,361 22,754 9,565 Earnings per share .28 .34 .32 .14 1995: NET SALES $ 359,194 $ 387,297 $ 403,001 $ 405,065 GROSS PROFIT 48,334 55,115 58,302 62,396 NET INCOME 22,689 28,120 31,050 34,312 EARNINGS PER SHARE .32 .40 .45 .50
26 MARKET AND DIVIDEND INFORMATION (UNAUDITED) The Company's common stock is listed for trading on the New York Stock Exchange. The following table sets forth the range of high and low sales prices of the Unifi Common Stock as reported on the NYSE Composite Tape and the regular cash dividends per share declared by Unifi during the periods indicated. This information has been adjusted to reflect the stock split described below.
High Low Dividends ____________________________________________________________________________________________ Fiscal year 1993: First quarter ended September 27, 1992 $ 26.75 $ 23.59 $ .10 Second quarter ended December 27, 1992 $ 30.67 $ 23.67 $ .10 Third quarter ended March 28, 1993 $ 34.88 $ 27.92 $ .11 Fourth quarter ended June 27, 1993 $ 38.38 $ 31.50 $ .11 Fiscal year 1994: First quarter ended September 26, 1993 $ 34.13 $ 20.00 $ .14 Second quarter ended December 26, 1993 $ 27.63 $ 20.88 $ .14 Third quarter ended March 27, 1994 $ 27.00 $ 21.75 $ .14 Fourth quarter ended June 26, 1994 $ 26.63 $ 20.50 $ .14 FISCAL YEAR 1995: FIRST QUARTER ENDED SEPTEMBER 25, 1994 $ 25.50 $ 23.38 $ .10 SECOND QUARTER ENDED DECEMBER 25, 1994 $ 26.63 $ 23.88 $ .10 THIRD QUARTER ENDED MARCH 26, 1995 $ 29.13 $ 25.00 $ .10 FOURTH QUARTER ENDED JUNE 25, 1995 $ 27.75 $ 22.63 $ .10 On January 21, 1993, the Company's Board of Directors declared a three-for-two stock dividend in the form of a stock split.
27 EXHIBIT (13 b-1) REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders of Unifi, Inc. We have audited the accompanying consolidated balance sheets of Unifi, Inc. as of June 25, 1995, and June 26, 1994, and the related consolidated statements of income, changes in shareholders equity, and cash flows for each of the three years in the period ended June 25, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Unifi, Inc. at June 25, 1995, and June 26, 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 25, 1995, in conformity with generally accepted accounting principles. Ernst & Young LLP Greensboro, North Carolina July 17, 1995 14 EX-21 4 Exhibit (21) UNIFI, INC. SUBSIDIARIES Percentage of Voting Securities Name Address Incorporation Owned ----------------------------------------------------------------- Unifi, FSC Limited Agana, Guam Guam 100% Unifi Textured Yarns Letterkenny, Europe, Ltd. Ireland United Kingdom 100% Unifi International Service, Inc. Greensboro, NC North Carolina 100% EX-23 5 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Unifi, Inc. of our report dated July 17, 1995, included in the 1995 Annual Report to Shareholders of Unifi, Inc. We also consent to the addition of the financial statement schedule of Unifi, Inc. listed in Item 14(a), to the financial statements covered by our report dated July 17, 1995, incorporated herein by reference. In addition, we consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-23201) pertaining to the Unifi, Inc. 1982 Incentive Stock Option Plan and the 1987 Non-Qualified Stock Option Plan, Registration Statement (Form S-3 No. 33-45946) pertaining to the Unifi, Inc. 6% Convertible Subordinated Notes, and Registration Statement (Form S-8 No. 33-53799) pertaining to the Unifi, Inc. 1992 Incentive Stock Option Plan and Unifi Spun Yarns, Inc. 1992 Employee Stock Option Plan of our report dated July 17, 1995, with respect to the consolidated financial statements and schedule of Unifi, Inc. incorporated herein by reference in this Annual Report (Form 10-K) for the year ended June 25, 1995. Ernst & Young LLP Greensboro, North Carolina September 15, 1995 EX-27 6
5 The Schedule contains summary financial information extracted from the Company's Annual Report to Shareholders for the fiscal year ended June 25, 1995, and is qualified in its entirety by reference to such financial statements. 1,000 YEAR JUN-25-1995 JUN-25-1995 60,350 85,844 215,852 6,420 139,378 503,021 910,383 394,168 1,040,902 169,664 0 6,714 0 0 596,788 1,040,902 1,554,557 1,554,557 1,330,410 1,330,410 0 0 15,452 185,610 69,439 116,171 0 0 0 116,171 1.67 1.62 Note: Other Equity of $596,788 is comprised of Capital in Excess of Par Value of $117,277, Retained Earnings of $473,962, Cumulative Translation Adjustment of $4,415 and Unrealized Gains/Losses on Certain Investments of $1,134.