Unifi(UFI) - 2022 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Item 1. Financial Statements This section presents the company's unaudited condensed consolidated financial statements and accompanying notes Condensed Consolidated Balance Sheets Details the company's assets, liabilities, and shareholders' equity at the end of the reporting period ASSETS (in thousands) | ASSETS (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $49,556 | $78,253 | | Receivables, net | $103,031 | $94,837 | | Inventories | $150,511 | $141,221 | | Total current assets | $319,282 | $329,067 | | Total assets | $548,705 | $555,368 | | LIABILITIES AND SHAREHOLDERS' EQUITY (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :-------------------------------- | :----------- | :----------- | | Accounts payable | $57,528 | $54,259 | | Total current liabilities | $99,602 | $105,423 | | Total liabilities | $187,708 | $196,949 | | Total shareholders' equity | $360,997 | $358,419 | Condensed Consolidated Statements of Income Outlines revenues, costs, and profits, resulting in the net income for the period (in thousands, except per share amounts) | (in thousands, except per share amounts) | Sep 26, 2021 | Sep 27, 2020 | | :--------------------------------------- | :----------- | :----------- | | Net sales | $195,992 | $141,505 | | Cost of sales | $169,895 | $126,944 | | Gross profit | $26,097 | $14,561 | | Operating income | $13,251 | $2,906 | | Income before income taxes | $13,093 | $2,253 | | Provision (benefit) for income taxes | $4,413 | $(1,179) | | Net income | $8,680 | $3,432 | | Net income per common share: | | | | Basic | $0.47 | $0.19 | | Diluted | $0.46 | $0.18 | Condensed Consolidated Statements of Comprehensive Income Reports net income and other comprehensive income changes for the period (in thousands) | (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :------------- | :----------- | :----------- | | Net income | $8,680 | $3,432 | | Other comprehensive (loss) income, net | $(6,670) | $72 | | Comprehensive income | $2,010 | $3,504 | Condensed Consolidated Statements of Shareholders' Equity Summarizes the changes in shareholders' equity components during the period (in thousands) | (in thousands) | Balance at Jun 27, 2021 | Balance at Sep 26, 2021 | | :------------- | :---------------------- | :---------------------- | | Common Stock | $1,849 | $1,852 | | Capital in Excess of Par Value | $65,205 | $65,770 | | Retained Earnings | $344,797 | $353,477 | | Accumulated Other Comprehensive Loss | $(53,432) | $(60,102) | | Total Shareholders' Equity | $358,419 | $360,997 | - Net income for the period contributed $8,680 thousand to retained earnings, while other comprehensive loss, net of tax, reduced accumulated other comprehensive loss by $6,670 thousand[22] Condensed Consolidated Statements of Cash Flows Details the cash inflows and outflows from operating, investing, and financing activities (in thousands) | (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :------------- | :----------- | :----------- | | Cash and cash equivalents at beginning of period | $78,253 | $75,267 | | Net cash (used) provided by operating activities | $(15,808) | $7,922 | | Net cash used by investing activities | $(9,269) | $(1,864) | | Net cash used by financing activities | $(2,767) | $(3,452) | | Net (decrease) increase in cash and cash equivalents | $(28,697) | $2,828 | | Cash and cash equivalents at end of period | $49,556 | $78,095 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations of the accounting policies and financial statement components 1. Background Describes the company's core business, products, and principal geographic markets - UNIFI, Inc is a multinational company manufacturing and selling innovative recycled and synthetic polyester and nylon products to various end-use markets[28] - The company's product offerings include specialized, value-added, and commodity solutions, with principal geographic markets in the Americas, Asia, and Europe[29] 2. Basis of Presentation; Condensed Notes Outlines the preparation basis of the unaudited interim financial statements - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S GAAP for interim financial information[30][31] - Interim results are not necessarily indicative of full-year results, and management's estimates and assumptions affect reported amounts[31] 3. Recent Accounting Pronouncements States the impact of newly issued accounting standards on the financial statements - No newly issued or applicable accounting pronouncements are expected to have a material impact on UNIFI's consolidated financial statements[34] 4. Revenue Recognition Breaks down net sales by type and product, highlighting growth in REPREVE® Fiber sales Net Sales by Type (in thousands) | Net Sales by Type (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :------------------------------- | :----------- | :----------- | | Third-party manufacturer | $193,297 | $138,841 | | Service | $2,695 | $2,664 | | Net sales | $195,992 | $141,505 | Net Sales by Product (in thousands) | Net Sales by Product (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :---------------------------------- | :----------- | :----------- | | REPREVE® Fiber | $71,906 | $51,612 | | All other products and services | $124,086 | $89,893 | | Net sales | $195,992 | $141,505 | - REPREVE® Fiber sales increased from $51,612 thousand in Q1 FY2021 to $71,906 thousand in Q1 FY2022[35][40] 5. Receivables, Net Details the components of the company's net receivables balance Receivables, Net (in thousands) | Receivables, Net (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :------------------------------ | :----------- | :----------- | | Customer receivables | $86,997 | $81,921 | | Allowance for uncollectible accounts | $(2,396) | $(2,525) | | Net customer receivables | $84,003 | $78,693 | | Other receivables | $19,028 | $16,144 | | Total receivables, net | $103,031 | $94,837 | - Total receivables, net increased by $8,194 thousand from June 27, 2021, to September 26, 2021, due to higher customer and other receivables[42] 6. Inventories Provides a breakdown of inventory balances by category Inventories (in thousands) | Inventories (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :------------------------- | :----------- | :----------- | | Raw materials | $61,826 | $54,895 | | Supplies | $10,449 | $10,692 | | Work in process | $8,701 | $7,516 | | Finished goods | $72,090 | $70,525 | | Gross inventories | $153,066 | $143,628 | | Net realizable value adjustment | $(2,555) | $(2,407) | | Total inventories | $150,511 | $141,221 | - Total inventories increased by $9,290 thousand from June 27, 2021, to September 26, 2021, driven by higher raw materials and finished goods[43] 7. Other Current Assets Lists the components of other current assets, including tax recoveries and prepayments Other Current Assets (in thousands) | Other Current Assets (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :---------------------------------- | :----------- | :----------- | | Vendor deposits | $3,604 | $3,341 | | Recovery of non-income taxes | $3,274 | $3,456 | | Prepaid expenses and other | $3,265 | $2,753 | | Value-added taxes receivable | $2,204 | $2,484 | | Contract assets | $469 | $330 | | Total other current assets | $12,816 | $12,364 | - UNIFI expects to recover its Brazilian non-income tax overpayment claims as credits against future tax obligations over a 40-month period[46][47][48] 8. Property, Plant and Equipment, Net Details the composition of and changes in net property, plant, and equipment PP&E, Net (in thousands) | PP&E, Net (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :----------------------- | :----------- | :----------- | | Land | $3,154 | $3,184 | | Buildings and improvements | $159,143 | $160,122 | | Machinery and equipment | $610,768 | $609,414 | | Construction in progress | $20,686 | $17,834 | | Gross PP&E | $867,473 | $864,235 | | Less: accumulated depreciation | $(657,668) | $(656,576) | | Total PP&E, net | $203,339 | $201,696 | - Net Property, Plant and Equipment increased by $1,643 thousand, primarily due to an increase in construction in progress[49] 9. Other Non-Current Assets Outlines other long-term assets, including intangible assets and affiliate investments Other Non-Current Assets (in thousands) | Other Non-Current Assets (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :-------------------------------------- | :----------- | :----------- | | Recovery of non-income taxes | $7,638 | $8,063 | | Intangible assets, net | $3,604 | $3,978 | | Investments in unconsolidated affiliates | $2,377 | $2,159 | | Total other non-current assets | $14,061 | $14,625 | - UNIFI maintains investments in two unconsolidated affiliates from which it purchases substantially all of their nylon POY output[52][55][58] Unconsolidated Affiliates (in thousands) | Unconsolidated Affiliates (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :--------------------------------------- | :----------- | :----------- | | Current assets | $8,406 | $7,931 | | Non-current assets | $625 | $659 | | Current liabilities | $4,281 | $3,967 | | Shareholders' equity and capital accounts | $4,750 | $4,623 | | UNIFI's portion of undistributed earnings | $2,318 | $2,100 | 10. Other Current Liabilities Details the components of other short-term obligations Other Current Liabilities (in thousands) | Other Current Liabilities (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :--------------------------------------- | :----------- | :----------- | | Payroll and fringe benefits | $8,706 | $10,204 | | Deferred revenue | $2,654 | $2,691 | | Incentive compensation | $2,377 | $12,356 | | Interest rate swaps | $901 | $1,234 | | Total other current liabilities | $19,319 | $31,638 | - Total other current liabilities decreased by $12,319 thousand, primarily due to a significant reduction in incentive compensation payable[61] 11. Long-Term Debt Provides a comprehensive overview of the company's debt obligations and maturities Debt Obligations (in thousands) | Debt Obligations (in thousands) | Scheduled Maturity Date | Interest Rate (Sep 26, 2021) | Principal Amounts (Sep 26, 2021) | Principal Amounts (Jun 27, 2021) | | :------------------------------ | :---------------------- | :----------------------------- | :------------------------------- | :------------------------------- | | ABL Revolver | Dec 2023 | 0.0% | $0 | $0 | | ABL Term Loan | Dec 2023 | 3.2% | $75,000 | $77,500 | | Finance lease obligations | May 2022 to Nov 2027 | 3.6% | $7,548 | $8,475 | | Construction financing | (3) | 2.3% | $1,764 | $882 | | Total debt | | | $84,312 | $86,857 | | Total long-term debt | | | $68,465 | $70,336 | - UNIFI maintains three interest rate swaps fixing LIBOR at approximately 1.9% on $75,000 thousand of variable-rate debt, scheduled to terminate in May 2022[67] Scheduled Debt Maturities (in thousands) | Scheduled Debt Maturities (in thousands) | Fiscal 2022 | Fiscal 2023 | Fiscal 2024 | Fiscal 2025 | Fiscal 2026 | Thereafter | | :--------------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | :--------- | | ABL Term Loan | $10,000 | $10,000 | $55,000 | $0 | $0 | $0 | | Finance lease obligations | $2,618 | $1,257 | $1,301 | $1,195 | $733 | $444 | | Total | $12,618 | $11,257 | $56,301 | $1,195 | $733 | $444 | 12. Other Long-Term Liabilities Lists other non-current liabilities, including uncertain tax positions Other Long-Term Liabilities (in thousands) | Other Long-Term Liabilities (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :----------------------------------------- | :----------- | :----------- | | Uncertain tax positions | $3,168 | $3,045 | | Supplemental post-employment plan | $2,168 | $2,090 | | Other | $2,308 | $2,337 | | Total other long-term liabilities | $7,644 | $7,472 | 13. Income Taxes Explains the components of the income tax provision and the effective tax rate Income Taxes | Income Taxes | Sep 26, 2021 | Sep 27, 2020 | | :------------- | :----------- | :----------- | | Provision (benefit) for income taxes | $4,413 | $(1,179) | | Effective tax rate | 33.7% | (52.3)% | - The effective tax rate for the three months ended September 26, 2021, was 33.7%, higher than the U.S federal statutory rate[78] - The prior period's effective tax rate of (52.3)% was lower due to a retroactive GILTI high-tax exclusion[79] 14. Shareholders' Equity Details information regarding the company's share repurchase program - UNIFI's Board of Directors approved a share repurchase program authorizing the acquisition of up to $50,000 thousand of common stock[81][83] Share Repurchase Program (2018 SRP) | Share Repurchase Program (2018 SRP) | Total Number of Shares Repurchased | Average Price Paid per Share | Approximate Dollar Value that May Yet Be Repurchased | | :---------------------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------- | | Fiscal 2019 | — | $— | $50,000 | | Fiscal 2020 | 84 | $23.72 | $48,008 | | Fiscal 2021 | — | $— | $48,008 | | Fiscal 2022 (through Sep 26, 2021) | — | $— | $48,008 | 15. Stock-Based Compensation Describes the company's incentive compensation and employee stock purchase plans - Shareholders approved the Unifi, Inc Second Amended and Restated 2013 Incentive Compensation Plan with 850 thousand shares available for future issuance[84][85] - The Unifi, Inc Employee Stock Purchase Plan (ESPP) was approved on October 27, 2021, reserving 100 thousand shares for eligible employees[86] 16. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities Discusses the use of derivative instruments to manage interest rate risk - UNIFI uses derivative financial instruments, such as interest rate swaps, to reduce exposure to interest rate fluctuations[87] Impact of Interest Rate Swaps (in thousands) | Impact of Interest Rate Swaps (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :------------------------------------------- | :----------- | :----------- | | Interest expense | $696 | $871 | | Increase in fair value of interest rate swaps | $(333) | $(332) | | Impact of interest rate swaps to increase interest expense | $347 | $329 | 17. Accumulated Other Comprehensive Loss Details the changes in the components of accumulated other comprehensive loss Accumulated Other Comprehensive Loss (in thousands) | Accumulated Other Comprehensive Loss (in thousands) | Foreign Currency Translation Adjustments | Changes in Interest Rate Swaps | Accumulated Other Comprehensive Loss | | :-------------------------------------------------- | :--------------------------------------- | :----------------------------- | :----------------------------------- | | Balance at June 27, 2021 | $(52,480) | $(952) | $(53,432) | | Other comprehensive (loss) income | $(6,926) | $256 | $(6,670) | | Balance at September 26, 2021 | $(59,406) | $(696) | $(60,102) | - Accumulated other comprehensive loss increased from $(53,432) thousand to $(60,102) thousand, primarily due to foreign currency translation adjustments[91] 18. Earnings Per Share Presents the calculation of basic and diluted earnings per share EPS Calculation (in thousands, except per share) | EPS Calculation (in thousands, except per share) | Sep 26, 2021 | Sep 27, 2020 | | :----------------------------------------------- | :----------- | :----------- | | Net income | $8,680 | $3,432 | | Basic weighted average shares | 18,515 | 18,447 | | Diluted weighted average shares | 18,997 | 18,698 | | Basic EPS | $0.47 | $0.19 | | Diluted EPS | $0.46 | $0.18 | - Diluted EPS increased significantly from $0.18 in the prior period to $0.46 in the current period, reflecting higher net income[92] 19. Commitments and Contingencies Discloses potential liabilities from lawsuits, claims, and environmental matters - UNIFI is a party to various lawsuits and claims but does not believe any would have a material adverse effect on its financial position[202] - UNIFI's subsidiary assumed sole remediator responsibility for the Kentec site's environmental monitoring, with no active site remediation anticipated to be material[94] 20. Related Party Transactions Details transactions and balances with related parties Related Party Payables (in thousands) | Related Party Payables (in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :------------------------------------ | :----------- | :----------- | | Accounts payable | $457 | $469 | | Operating lease obligations | $1,049 | $1,133 | | Finance lease obligations | $5,850 | $6,149 | | Total related party payables | $7,356 | $7,751 | Significant Related Party Transactions (in thousands) | Significant Related Party Transactions (in thousands) | Transaction Type | Sep 26, 2021 | Sep 27, 2020 | | :---------------------------------------------------- | :------------------------------------ | :----------- | :----------- | | Salem Leasing Corporation | Payments for transportation equipment costs and finance lease debt service | $1,028 | $939 | 21. Business Segment Information Provides financial information for the company's reportable operating segments - UNIFI operates through four reportable segments: Polyester, Asia, Brazil, and Nylon, plus an 'All Other' category[99][100] - Segment performance is evaluated based on Segment Profit, which is gross profit plus segment depreciation expense[102] Segment Profit (in thousands) | Segment Profit (in thousands) | Polyester | Asia | Brazil | Nylon | All Other | Total | | :---------------------------- | :-------- | :------ | :------ | :------ | :-------- | :------ | | Sep 26, 2021 | $12,776 | $6,971 | $10,323 | $1,161 | $324 | $31,555 | | Sep 27, 2020 | $9,035 | $4,578 | $5,043 | $1,107 | $237 | $20,000 | 22. Supplemental Cash Flow Information Discloses additional details regarding cash payments for interest and taxes Cash Payments (in thousands) | Cash Payments (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :--------------------------- | :----------- | :----------- | | Interest, net | $644 | $836 | | Income tax payments, net | $5,091 | $602 | - Cash payments for income taxes significantly increased to $5,091 thousand in the current period[106][108] - Unpaid capital expenditures included in accounts payable were $1,524 thousand as of September 26, 2021[108] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides management's perspective on the company's financial condition and operational results Overview and Significant General Matters Discusses strategic focus, improved results, trade petitions, and ongoing cost headwinds - UNIFI's strategy focuses on delivering products globally to enhance profitability and cash flows[114] - Operating results significantly improved from the prior period due to the restoration of global demand and consumer spending[116] - UNIFI is pursuing trade petitions against low-cost polyester textured yarn imports to normalize the U.S polyester market[118][119] - Elevated input costs and global production volatility are headwinds, though selling price adjustments have been implemented to protect gross margins[120][121] Key Performance Indicators and Non-GAAP Financial Measures Defines the non-GAAP financial measures used to evaluate operating performance - UNIFI uses non-GAAP financial measures like EBITDA, Adjusted EBITDA, Adjusted Working Capital, and Net Debt to provide a clearer view of underlying operating performance[123] - Adjusted EBITDA is used for operating performance comparison, planning, valuation, and variable compensation[124][125] - Adjusted Working Capital indicates production efficiency, while Net Debt assesses remaining debt after using cash for repayment[126] Review of Results of Operations Analyzes the consolidated and segment-level operational results for the period Consolidated Overview Provides a high-level view of consolidated financial performance, showing significant growth in sales and profit Consolidated Financial Highlights (in thousands, except %) | Consolidated Financial Highlights (in thousands, except %) | Sep 26, 2021 | Sep 27, 2020 | % Change | | :------------------------------------------------------- | :----------- | :----------- | :------- | | Net sales | $195,992 | $141,505 | 38.5% | | Cost of sales | $169,895 | $126,944 | 33.8% | | Gross profit | $26,097 | $14,561 | 79.2% | | Operating income | $13,251 | $2,906 | nm | | Net income | $8,680 | $3,432 | 152.9% | - Consolidated net sales increased by 38.5% to $195,992 thousand, driven by higher sales volumes and average sales prices[133][134] - Gross profit surged by 79.2% to $26,097 thousand, benefiting from restored U.S demand and higher Asia sales volumes[136] EBITDA and Adjusted EBITDA (in thousands) | EBITDA and Adjusted EBITDA (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :---------------------------------------- | :----------- | :----------- | | Net income | $8,680 | $3,432 | | Interest expense, net | $438 | $746 | | Provision (benefit) for income taxes | $4,413 | $(1,179) | | Depreciation and amortization expense | $6,308 | $6,052 | | EBITDA | $19,839 | $9,051 | | Adjusted EBITDA | $19,839 | $9,051 | - Net income increased by 152.9% to $8,680 thousand, or $0.46 per diluted share, primarily due to higher gross profit[144] Segment Overview Details the net sales and profit performance for each of the company's business segments Segment Net Sales (in thousands) | Segment Net Sales (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :------------------------------- | :----------- | :----------- | | Polyester Segment | $89,467 | $69,076 | | Asia Segment | $51,428 | $37,723 | | Brazil Segment | $33,738 | $22,606 | | Nylon Segment | $20,159 | $11,029 | | All Other | $1,200 | $1,071 | | Total | $195,992 | $141,505 | Segment Profit (in thousands) | Segment Profit (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :---------------------------- | :----------- | :----------- | | Polyester Segment | $12,776 | $9,035 | | Asia Segment | $6,971 | $4,578 | | Brazil Segment | $10,323 | $5,043 | | Nylon Segment | $1,161 | $1,107 | | All Other | $324 | $237 | | Total | $31,555 | $20,000 | - Polyester Segment net sales increased by 29.5%, leading to a 41.4% increase in Segment Profit[148][149] - Asia Segment net sales grew by 36.3%, resulting in a 52.3% increase in Segment Profit[150][152] - Brazil Segment net sales rose by 49.2%, leading to a 104.7% increase in Segment Profit[153][154][156] - Nylon Segment net sales increased by 82.8%, but Segment Profit only increased by 4.9% due to a less favorable sales and production mix[157][158] Liquidity and Capital Resources Assesses the company's liquidity position, capital requirements, and cash flow activities - UNIFI's primary capital requirements are for working capital, capital expenditures, debt service, and share repurchases[159] Liquidity and Debt (in thousands) | Liquidity and Debt (in thousands) | Domestic | Foreign | Total | | :-------------------------------- | :------- | :------ | :---- | | Cash and cash equivalents | $12,051 | $37,505 | $49,556 | | Borrowings available under financing arrangements | $73,693 | $0 | $73,693 | | Liquidity | $85,744 | $37,505 | $123,249 | | Working capital | $85,254 | $134,426 | $219,680 | | Total debt obligations | $84,312 | $0 | $84,312 | - UNIFI expects its strong liquidity position to provide adequate funding for fiscal 2022[162][163] Net Debt (Non-GAAP Financial Measure, in thousands) | Net Debt (Non-GAAP Financial Measure, in thousands) | Sep 26, 2021 | Jun 27, 2021 | | :-------------------------------------------------- | :----------- | :----------- | | Debt principal | $84,312 | $86,857 | | Less: cash and cash equivalents | $49,556 | $78,253 | | Net Debt | $34,756 | $8,604 | - Adjusted Working Capital increased to $189,511 thousand, driven by higher receivables and inventories[171][172] - Capital expenditures for the current period were $9,300 thousand, with an estimated $40,000 to $44,000 thousand planned for fiscal 2022[173][174] Operating Cash Flows (in thousands) | Operating Cash Flows (in thousands) | Sep 26, 2021 | Sep 27, 2020 | | :---------------------------------- | :----------- | :----------- | | Net income | $8,680 | $3,432 | | Subtotal (adjustments to net income) | $11,962 | $7,888 | | Receivables, net | $(9,462) | $(23,499) | | Inventories | $(12,190) | $4,853 | | Accounts payable and other current liabilities | $(7,393) | $15,314 | | Net cash (used) provided by operating activities | $(15,808) | $7,922 | - Net cash used by operating activities was $(15,808) thousand, a decrease from $7,922 thousand provided in the prior period, mainly due to increased working capital[181] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discloses the company's exposure to interest rate, foreign currency, and commodity price risks Interest Rate Risk Details the company's exposure to and management of interest rate fluctuations - UNIFI's $75,000 thousand ABL Term Loan borrowings are hedged by interest rate swaps, mitigating interest rate risk[189] - A 50-basis point increase in LIBOR would result in an increase in annual interest expense of less than $100 thousand[189] Foreign Currency Exchange Rate Risk Describes the risks associated with operating in various foreign currencies - UNIFI conducts business in various foreign currencies, exposing it to foreign currency exchange rate risk[190] - Fluctuations in the Brazilian Real (BRL) and Chinese Renminbi (RMB) have negatively impacted UNIFI[191] Foreign Currency Exposure (as of Sep 26, 2021) | Foreign Currency Exposure (as of Sep 26, 2021) | Amount/Percentage | | :--------------------------------------------- | :---------------- | | Percentage of total consolidated assets held by foreign subsidiaries (non-USD functional currency) | 28.4% | | Total cash and cash equivalents held outside the U.S | $32,147 thousand | | Percentage of total cash and cash equivalents held outside the U.S | 64.9% | Raw Material and Commodity Risks Outlines the company's exposure to volatile raw material and energy costs - UNIFI is exposed to volatile petroleum-based raw material and energy costs but manages it by adjusting customer prices[193] - Despite elevated raw material costs, UNIFI has implemented responsive selling price adjustments, preventing significant pressure on gross margins[193][194] Other Risks Discusses exposure to political, climate change, and other operational risks - UNIFI is exposed to political risks, including changes in international trade laws, and risks associated with climate change[195][197] - Recent events like the Texas winter storm and energy management in China have impacted supply chains, leading to increased costs[197] Item 4. Controls and Procedures Confirms the effectiveness of disclosure controls and internal control over financial reporting - UNIFI's disclosure controls and procedures were evaluated and deemed effective as of September 26, 2021[198] - There were no material changes in UNIFI's internal control over financial reporting during the quarter[199] PART II—OTHER INFORMATION Item 1. Legal Proceedings Discloses information on significant pending legal proceedings - UNIFI is a party to various lawsuits, claims, and legal proceedings in the ordinary course of business[202] - UNIFI does not believe any proceedings will have a material adverse effect on its results, financial position, or cash flows[202] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Indicates no unregistered sales of equity securities occurred during the reporting period - This item is not applicable for the reporting period[203] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q report - The exhibits include corporate governance documents, a Letter Agreement with Albert P Carey, and certifications from executive officers[204] - Inline XBRL documents are also included as exhibits[204]