Unifi(US:UFI)2021-08-25 20:01Financial Performance and Risks - UNIFI's working capital is funded through cash flows from operations and short-term borrowings as needed[114]. - The company expects continued rising costs for consumables, utilities, and labor, which may negatively impact profitability despite efforts to increase operational efficiencies and selling prices[117]. - As of June 27, 2021, UNIFI had borrowings totaling $77,500, with $2,500 subject to variable interest rates, indicating exposure to interest rate risk[324]. - UNIFI is exposed to political risks, including changes in international trade laws, which could impact operations[333]. Cost Management and Pricing Strategy - UNIFI experienced above-average inflationary pressures on input costs in fiscal 2021, prompting selling price adjustments to protect gross margins[116]. - A significant portion of raw materials and energy costs are derived from petroleum-based chemicals, with prices being volatile and dependent on global supply and demand dynamics[329]. - UNIFI has historically been successful in implementing price adjustments within one to two fiscal quarters for index-priced customers following raw material price increases[329]. - During fiscal 2020, UNIFI experienced a favorable, declining raw material cost environment, particularly due to suppressed petroleum prices during the COVID-19 pandemic[331]. - In the second half of fiscal 2021, UNIFI faced cost increases for raw materials primarily due to rising petroleum prices and supply chain disruptions[332]. Foreign Currency and Exchange Rate Risk - UNIFI's foreign currency exchange rate risk includes approximately 27.6% of total consolidated assets held by subsidiaries outside the U.S. whose functional currency is not USD[328].