UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
April 24, 2013
UNIFI, INC.
(Exact name of registrant as specified in its charter)
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New York |
1-10542 |
11-2165495 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
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7201 West Friendly Avenue |
27410 | |||
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Greensboro, North Carolina |
(Zip Code) | |||
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(Address of Principal Executive Offices) |
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Registrant’s telephone number, including area code: (336) 294-4410
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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[ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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[ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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[ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On April 24, 2013, Unifi, Inc. (the “Registrant”) issued a press release announcing its preliminary operating results for its third fiscal quarter ended March 24, 2013, which press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
ITEM 7.01. REGULATION FD DISCLOSURE.
On April 25, 2013, the Registrant will host a conference call to discuss its preliminary operating results for its third fiscal quarter ended March 24, 2013. The slide package prepared for use by executive management for this conference call is attached hereto as Exhibit 99.2. All of the information in the conference call is presented as of April 25, 2013, and the Registrant does not assume any obligation to update such information in the future.
The information included in the preceding paragraph, as well as the exhibit referenced therein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
ITEM 8.01. OTHER EVENTS.
On April 24, 2013, the Registrant issued a press release announcing its preliminary operating results for its third fiscal quarter ended March 24, 2013, a copy of which press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
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EXHIBIT NO. |
DESCRIPTION OF EXHIBIT |
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99.1 |
Press Release dated April 24, 2013 with respect to the Registrant’s preliminary operating results for its third fiscal quarter ended March 24, 2013. |
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99.2 |
Slide Package prepared for use in connection with the Registrant’s conference call to be held on April 25, 2013. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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UNIFI, INC. |
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| By: | /S/ CHARLES F. MCCOY | ||
| Charles F. McCoy | |||
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Vice President, Secretary and General Counsel |
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Dated: April 25, 2013
INDEX TO EXHIBITS
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EXHIBIT NO. |
DESCRIPTION OF EXHIBIT |
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99.1 |
Press Release dated April 24, 2013 with respect to the Registrant’s preliminary operating results for its third fiscal quarter ended March 24, 2013. |
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99.2 |
Slide Package prepared for use in connection with the Registrant’s conference call to be held on April 25, 2013. |
Exhibit 99.1 For more information, contact: Ronald L. Smith Chief Financial Officer (336) 316-5545
Unifi Announces Third Quarter 2013 Results
GREENSBORO, N.C., April 24, 2013 – Unifi, Inc. (NYSE: UFI) today released preliminary operating results for its third fiscal quarter ended March 24, 2013. The Company reported net income of $1.4 million, or $0.07 per share, compared to net income of $7.5 million, or $0.38 per share, for the prior year fiscal quarter ended March 25, 2012. Net sales decreased $10.8 million, or 6.0%, to $168 million for the March 2013 quarter compared to net sales of $179 million for the March 2012 quarter. Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) for the March 2013 quarter were $8.4 million. The quarter over prior year quarter net income decline is primarily the result of the Company extending the length of its holiday shutdown in the current quarter, a $5.1 million decrease in the Company’s share of earnings from its equity affiliates and a one-time charge related to the early extinguishment of outstanding debt.
Some highlights for the March quarter included:
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● |
Paying off the $13.8 million remaining balance on the Company’s Term B loan; |
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● |
Improving Polyester and Nylon working capital levels, sales volumes and capacity utilization as the Company moved through the quarter; |
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● |
Strong operating performance in China; and, |
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● |
Repurchasing and retiring 571 thousand shares of the Company’s common stock at an average price of $16.93 per share. |
The Company reported net income of $6.1 million, or $0.30 per share, for the nine months ended March 24, 2013 compared to net income of $0.2 million, or $0.01 per share, for the prior year period. Net sales decreased $3.9 million, or 0.8%, to $513 million for the first nine months of fiscal year 2013 compared to net sales of $517 million for the prior year period. Results for the first nine months of fiscal 2013 were positively impacted by a 220 basis point improvement in gross margin and an $8.8 million reduction in interest expense resulting from the continued successful execution of the Company’s deleveraging strategy.
-continued-
Unifi Announces Third Quarter 2013 Results – page 2
"The Company improved margins during the quarter despite operating in an environment where raw material prices increased more sharply than anticipated, and we aggressively managed our inventories and cash,” said Bill Jasper, Chairman and CEO of Unifi. "The on-going stability of the domestic economy, improvements in our operational efficiencies, signs of recovery in our global operations and continued growth of our premier value-added products all point to a strong June 2013 quarter, which should create positive momentum leading into our 2014 fiscal year. Our confidence in our business and its ability to generate cash from operations also allowed us to begin purchasing stock under our $50 million stock repurchase program, and we expect to continue doing so, while maintaining a strong balance sheet.”
Cash-on-hand as of March 24, 2013 was $15.9 million, an increase of $0.7 million compared to cash-on-hand as of December 23, 2012. Total debt at the end of the March 2013 quarter was $98.4 million compared to $106.7 million total debt as of December 23, 2012.
"During this fiscal year, strong operating cash flow combined with working capital improvements and distributions from our equity affiliates have allowed the Company to reduce net debt by $28.2 million and repurchase $9.7 million worth of its outstanding shares of common stock, while maintaining excellent liquidity," said Ron Smith, Chief Financial Officer of Unifi. “Much of the working capital improvement during the fiscal year came from the Company’s strategic decision to extend its holiday shutdown period into the March 2013 quarter, which enabled us to reduce adjusted working capital by $4.3 million compared to the December 2012 quarter, despite rising raw material prices."
Roger Berrier, President and Chief Operating Officer of Unifi, added: “We are very pleased with the results achieved from our latest efforts to market REPREVE® to consumers and educate them about the benefits of recycling and choosing products made with recycled content. Our program with X Games Aspen 2013 generated more than 42 million consumer impressions and engaged the target audience with the REPREVE brand. This positive exposure not only creates valuable awareness with consumers, but helps create demand for REPREVE and our other premier value-added products with downstream customers. We continue to be on track to double our premier value-added business by 2014, which is an important part of our mix enrichment strategy.”
-continued-
Unifi Announces Third Quarter 2013 Results – page 3
The Company will provide additional commentary regarding its third quarter results during its earnings conference call on April 25, 2013, at 8:30 a.m. Eastern Time. The call will be webcast live at http://investor.unifi.com/ and will available for replay approximately two hours after the live event and archived for up to twelve months. Additional supporting materials and information related to the call, as well as the Company's financial results for the March 2013 quarter will also be available at http://investor.unifi.com/.
Unifi, Inc. (NYSE: UFI) is a diversified producer and processor of multi-filament polyester and nylon textured yarns and related raw materials. The Company adds value to the supply chain and enhances consumer demand for its products through the development and introduction of branded yarns that provide unique performance, comfort and aesthetic advantages. Key Unifi brands include, but are not limited to: AIO® - all-in-one performance yarns, SORBTEK®, A.M.Y.®, MYNX® UV, REPREVE®, REFLEXX®, MICROVISTA® and SATURA®. Unifi's yarns and brands are readily found in home furnishings, apparel, legwear, and sewing thread, as well as industrial, automotive, military, and medical applications. For more information about Unifi, visit www.unifi.com, or to learn more about REPREVE®, visit www.repreve.com.
###
Financial Statements to Follow
Unifi Announces Third Quarter 2013 Results – page 4
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(amounts in thousands, except share and per share amounts)
|
March 24, 2013 |
June 24, 2012 |
|||||||
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ASSETS |
||||||||
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Cash and cash equivalents |
$ | 15,901 | $ | 10,886 | ||||
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Receivables, net |
97,219 | 99,236 | ||||||
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Inventories |
108,749 | 112,750 | ||||||
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Income taxes receivable |
1,152 | 596 | ||||||
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Deferred income taxes |
3,304 | 7,807 | ||||||
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Other current assets |
5,969 | 6,722 | ||||||
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Total current assets |
232,294 | 237,997 | ||||||
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Property, plant and equipment, net |
115,698 | 127,090 | ||||||
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Deferred income taxes |
1,527 | 1,290 | ||||||
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Intangible assets, net |
8,348 | 9,771 | ||||||
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Investments in unconsolidated affiliates |
92,971 | 95,763 | ||||||
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Other non-current assets |
10,444 | 10,322 | ||||||
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Total assets |
$ | 461,282 | $ | 482,233 | ||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
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Accounts payable |
$ | 53,561 | $ | 48,541 | ||||
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Accrued expenses |
11,966 | 14,402 | ||||||
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Income taxes payable |
866 | 1,332 | ||||||
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Current portion of long-term debt |
7,264 | 7,237 | ||||||
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Total current liabilities |
73,657 | 71,512 | ||||||
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Long-term debt |
91,104 | 114,315 | ||||||
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Other long-term liabilities |
5,156 | 4,832 | ||||||
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Deferred income taxes |
1,180 | 794 | ||||||
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Total liabilities |
171,097 | 191,453 | ||||||
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Commitments and contingencies |
||||||||
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Common stock, $0.10 par (500,000,000 shares authorized, |
||||||||
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19,541,755 and 20,090,094 shares outstanding) |
1,954 | 2,009 | ||||||
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Capital in excess of par value |
35,077 | 34,723 | ||||||
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Retained earnings |
250,289 | 252,763 | ||||||
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Accumulated other comprehensive income |
1,408 | 28 | ||||||
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Total Unifi, Inc. shareholders’ equity |
288,728 | 289,523 | ||||||
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Non-controlling interest |
1,457 | 1,257 | ||||||
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Total shareholders’ equity |
290,185 | 290,780 | ||||||
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Total liabilities and shareholders’ equity |
$ | 461,282 | $ | 482,233 | ||||
-continued-
Unifi Announces Third Quarter 2013 Results – page 5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(amounts in thousands, except per share amounts)
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For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
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March 24, 2013 |
March 25, 2012 |
March 24, 2013 |
March 25, 2012 |
|||||||||||||
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Net sales |
$ | 168,249 | $ | 179,037 | $ | 513,220 | $ | 517,160 | ||||||||
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Cost of sales |
155,568 | 165,447 | 465,828 | 480,858 | ||||||||||||
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Gross profit |
12,681 | 13,590 | 47,392 | 36,302 | ||||||||||||
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Selling, general and administrative expenses |
11,262 | 11,148 | 33,941 | 32,505 | ||||||||||||
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Provision (benefit) for bad debts |
74 | (144 | ) | 257 | 418 | |||||||||||
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Other operating expense, net |
616 | 669 | 1,777 | 1,118 | ||||||||||||
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Operating income |
729 | 1,917 | 11,417 | 2,261 | ||||||||||||
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Interest income |
(240 | ) | (571 | ) | (508 | ) | (1,713 | ) | ||||||||
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Interest expense |
1,236 | 4,189 | 4,041 | 12,791 | ||||||||||||
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Loss on extinguishment of debt |
746 | — | 1,102 | 462 | ||||||||||||
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Loss on previously held equity interest |
— | — | — | 3,656 | ||||||||||||
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Other non-operating expense (income) |
96 | (9 | ) | 96 | (1,488 | ) | ||||||||||
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Equity in earnings of unconsolidated affiliates |
(4,783 | ) | (9,863 | ) | (6,712 | ) | (14,166 | ) | ||||||||
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Income before income taxes |
3,674 | 8,171 | 13,398 | 2,719 | ||||||||||||
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Provision for income taxes |
2,510 | 861 | 7,959 | 2,940 | ||||||||||||
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Net income (loss) including non-controlling interest |
1,164 | 7,310 | 5,439 | (221 | ) | |||||||||||
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Less: net (loss) attributable to non-controlling interest |
(235 | ) | (225 | ) | (680 | ) | (434 | ) | ||||||||
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Net income attributable to Unifi, Inc. |
$ | 1,399 | $ | 7,535 | $ | 6,119 | $ | 213 | ||||||||
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Net income attributable to Unifi, Inc. per common share: |
||||||||||||||||
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Basic |
$ | 0.07 | $ | 0.38 | $ | 0.30 | $ | 0.01 | ||||||||
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Diluted |
$ | 0.07 | $ | 0.37 | $ | 0.30 | $ | 0.01 | ||||||||
-continued-
Unifi Announces Third Quarter 2013 Results – page 6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(amounts in thousands)
|
For The Nine Months Ended |
||||||||
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March 24, 2013 |
March 25, 2012 |
|||||||
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Cash and cash equivalents at beginning of year |
$ | 10,886 | $ | 27,490 | ||||
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Operating activities: |
||||||||
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Net income (loss) including non-controlling interest |
5,439 | (221 | ) | |||||
|
Adjustments to reconcile net income (loss) including non-controlling interest to net cash provided by operating activities: |
||||||||
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Equity in earnings of unconsolidated affiliates |
(6,712 | ) | (14,166 | ) | ||||
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Dividends received from unconsolidated affiliates |
10,531 | 4,150 | ||||||
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Depreciation and amortization expense |
19,263 | 20,384 | ||||||
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Loss on extinguishment of debt |
1,102 | 462 | ||||||
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Loss on previously held equity interest |
— | 3,656 | ||||||
|
Non-cash compensation expense, net |
1,896 | 2,070 | ||||||
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Deferred income taxes |
4,703 | (505 | ) | |||||
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Other |
300 | 239 | ||||||
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Changes in assets and liabilities, excluding effects of |
||||||||
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foreign currency adjustments: |
||||||||
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Receivables, net |
2,094 | (4,009 | ) | |||||
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Inventories |
4,460 | 16,784 | ||||||
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Other current assets and income taxes receivable |
564 | (859 | ) | |||||
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Accounts payable and accrued expenses |
1,756 | (1,574 | ) | |||||
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Income taxes payable |
(470 | ) | 843 | |||||
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Net cash provided by operating activities |
44,926 | 27,254 | ||||||
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Investing activities: |
||||||||
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Capital expenditures |
(4,522 | ) | (5,329 | ) | ||||
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Investments in unconsolidated affiliates |
— | (360 | ) | |||||
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Other investments |
(1,243 | ) | — | |||||
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Acquisition, net of cash acquired |
— | (356 | ) | |||||
|
Proceeds from sale of assets |
56 | 224 | ||||||
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Other |
(272 | ) | 14 | |||||
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Net cash used in investing activities |
(5,981 | ) | (5,807 | ) | ||||
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Financing activities: |
||||||||
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Payments of notes payable |
— | (10,288 | ) | |||||
|
Proceeds from revolving credit facilities |
64,100 | 95,600 | ||||||
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Payments on revolving credit facilities |
(63,800 | ) | (95,200 | ) | ||||
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Payments on term loans |
(26,530 | ) | — | |||||
|
Proceeds from related party term loan |
1,250 | — | ||||||
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Purchase and retirement of Company stock |
(9,671 | ) | — | |||||
|
Contributions from non-controlling interest |
880 | 320 | ||||||
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Other |
(76 | ) | (442 | ) | ||||
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Net cash used in financing activities |
(33,847 | ) | (10,010 | ) | ||||
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Effect of exchange rate changes on cash and cash equivalents |
(83 | ) | (3,107 | ) | ||||
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Net increase in cash and cash equivalents |
5,015 | 8,330 | ||||||
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Cash and cash equivalents at end of period |
$ | 15,901 | $ | 35,820 | ||||
-continued-
Unifi Announces Third Quarter 2013 Results – page 7
RECONCILIATIONS OF NET INCOME ATTRIBUTABLE TO UNIFI, INC. TO ADJUSTED EBITDA (Unaudited)
(amounts in thousands)
The reconciliations of Net income attributable to Unifi, Inc. to EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are as follows:
|
For the Three Months Ended |
For the Nine Months Ended |
|||||||||||||||
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March 24, 2013 |
March 25, 2012 |
March 24, 2013 |
March 25, 2012 |
|||||||||||||
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Net income attributable to Unifi, Inc. |
$ | 1,399 | $ | 7,535 | $ | 6,119 | $ | 213 | ||||||||
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Provision for income taxes |
2,510 | 861 | 7,959 | 2,940 | ||||||||||||
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Interest expense, net |
996 | 3,618 | 3,533 | 11,078 | ||||||||||||
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Depreciation and amortization expense |
6,087 | 6,677 | 18,718 | 19,692 | ||||||||||||
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EBITDA |
10,992 | 18,691 | 36,329 | 33,923 | ||||||||||||
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Non-cash compensation expense, net |
570 | 609 | 1,896 | 2,004 | ||||||||||||
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Loss on extinguishment of debt |
746 | — | 1,102 | 462 | ||||||||||||
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Loss on previously held equity interest |
— | — | — | 3,656 | ||||||||||||
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Refund of Brazilian non-income related tax |
— | (9 | ) | — | (1,488 | ) | ||||||||||
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Operating expenses for Repreve Renewables |
314 | 315 | 919 | 602 | ||||||||||||
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Other |
531 | 513 | 817 | 737 | ||||||||||||
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Adjusted EBITDA Including Equity Affiliates |
13,153 | 20,119 | 41,063 | 39,896 | ||||||||||||
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Equity in earnings of unconsolidated affiliates |
(4,783 | ) | (9,863 | ) | (6,712 | ) | (14,166 | ) | ||||||||
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Adjusted EBITDA |
$ | 8,370 | $ | 10,256 | $ | 34,351 | $ | 25,730 | ||||||||
-continued-
Unifi Announces Third Quarter 2013 Results – page 8
NON-GAAP FINANCIAL MEASURES
Included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") because management believes such measures are useful to investors.
EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA
EBITDA represents net income or loss attributable to Unifi, Inc. before income tax expense, net interest expense, and depreciation and amortization expense (excluding interest portion of amortization). Adjusted EBITDA Including Equity Affiliates represents EBITDA adjusted to exclude non-cash compensation expense net of distributions, gains or losses on extinguishment of debt, loss on previously held equity interest, refund of Brazilian non-income related tax, operating expenses for Repreve Renewables and certain other adjustments. Such other adjustments include gains or losses on sales or disposals of property, plant and equipment, currency and derivative gains or losses, restructuring and certain employee severance and healthcare expenses, and other operating or non-operating income or expense items necessary to understand the underlying operating results of the Company. Adjusted EBITDA represents Adjusted EBITDA Including Equity Affiliates adjusted to exclude equity in earnings and losses of unconsolidated affiliates. We present Adjusted EBITDA as a supplemental measure of our operating performance. We also present Adjusted EBITDA because we believe such measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are alternative views of performance used by management and we believe that investors' understanding of our performance is enhanced by disclosing these performance measures. Our management uses Adjusted EBITDA: (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal operating business; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is also a key performance metric utilized in the determination of variable compensation.
We believe that the use of EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA as operating performance measures provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense decreases as deductible interest expense increases; depreciation and amortization are non-cash charges. Equity in earnings and losses of unconsolidated affiliates is excluded because such earnings or losses do not reflect our operating performance. The other items excluded from Adjusted EBITDA are excluded in order to better reflect the performance of our continuing operations.
-continued-
Unifi Announces Third Quarter 2013 Results – page 9
NON-GAAP FINANCIAL MEASURES
(continued)
In evaluating EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
Each of our Adjusted EBITDA and Adjusted EBITDA Including Equity Affiliates measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
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● |
it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments; |
|
● |
it does not reflect changes in, or cash requirements for, our working capital needs; |
|
● |
it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt; |
|
● |
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our Adjusted EBITDA (or our Adjusted EBITDA Including Equity Affiliates) measure does not reflect any cash requirements for such replacements; |
|
● |
it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows; |
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● |
it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our on-going operations; |
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● |
it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and |
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● |
other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure. |
Because of these limitations, neither of Adjusted EBITDA or Adjusted EBITDA Including Equity Affiliates should be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information.
-continued-
Unifi Announces Third Quarter 2013 Results – page 10
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the financial condition and results of operations of Unifi, Inc. (the "Company") that are based on management's current expectations, estimates and projections about the markets in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.
Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to, availability, sourcing and pricing of raw materials, the success of our subsidiaries, pressures on sales prices and volumes due to competition and economic conditions, reliance on and financial viability of significant customers, operating performance of joint ventures and other equity investments, technological advancements, employee relations, changes in construction spending, capital expenditures and long-term investments (including those related to unforeseen acquisition opportunities), continued availability of financial resources through financing arrangements and operations, market price of the Company’s stock, restrictions imposed by the Company’s credit facility, outcomes of pending or threatened legal proceedings, negotiation of new or modifications of existing contracts for asset management and for property and equipment construction and acquisition, regulations governing tax laws, other governmental and authoritative bodies' policies and legislation, and proceeds received from the sale of assets held for disposal. In addition to these representative factors, forward-looking statements could be impacted by general domestic and international economic and industry conditions in the markets where the Company competes, such as changes in currency exchange rates, interest and inflation rates, recession and other economic and political factors over which the Company has no control. Other risks and uncertainties may be described from time to time in the Company's other reports and filings with the Securities and Exchange Commission.
-end-
Unifi, Inc.
For the Third Quarter Ended
March 24, 2013
Conference Call
Slide Presentation
Exhibit 99.2
Cautionary Statement
Certain statements included herein contain forward-looking statements within the meaning of federal securities laws about the financial condition and results of operations of Unifi, Inc. (the “Company”) that are based on management’s current expectations, estimates and projections about the markets in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "believes," "estimates," variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to update publicly any of these forward-looking statements to reflect new information, future events or otherwise.
Factors that may cause actual outcome and results to differ materially from those expressed in, or implied by, these forward-looking statements include, but are not necessarily limited to, availability, sourcing and pricing of raw materials, the success of our subsidiaries, pressures on sales prices and volumes due to competition and economic conditions, reliance on and financial viability of significant customers, operating performance of joint ventures and other equity investments, technological advancements, employee relations, changes in construction spending, capital expenditures and long-term investments (including those related to unforeseen acquisition opportunities), continued availability of financial resources through financing arrangements and operations, market price of the Company’s stock, restrictions imposed by the Company’s credit facility, outcomes of pending or threatened legal proceedings, negotiation of new or modifications of existing contracts for asset management and for property and equipment construction and acquisition, regulations governing tax laws, other governmental and authoritative bodies’ policies and legislation, and proceeds received from the sale of assets held for disposal. In addition to these representative factors, forward-looking statements could be impacted by general domestic and international economic and industry conditions in the markets where the Company competes, such as changes in currency exchange rates, interest and inflation rates, recession and other economic and political factors over which the Company has no control. Other risks and uncertainties may be described from time to time in the Company’s other reports and filings with the Securities and Exchange Commission.
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
Net Sales and Gross Profit Highlights
(Amounts in Thousands, Except Percentages)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
Year Over Year
Quarter over Quarter For The Nine Months Ended
March 24, 2013 vs. March 25, 2012 March 24, 2013 vs. March 25, 2012
Volume Price Volume Price
Net Sales:
Polyester (4.7%) (0.9%) 1.0% (2.0%)
Nylon (1.3%) (1.7%) 1.6% (2.8%)
International (9.4%) (1.0%) 9.4% (9.0%)
Consolidated (5.5%) (0.5%) 3.1% (3.9%)
For the Three Months Ended For the Nine Months Ended
March 24, 2013 March 25, 2012 March 24, 2013 March 25, 2012
Gross Profit:
Polyester $5,034 $5,859 $21,678 $11,810
Nylon 3,682 3,401 11,768 12,279
International 3,965 4,330 13,946 12,213
Consolidated $12,681 $13,590 $47,392 $36,302
Income Statement Highlights(Amounts in Thousands, Except Percentages and Per Share Amounts)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
For the Three Months Ended
March 24, 2013 March 25, 2012
Net sales $168,249 100.0% $179,037 100.0%
Gross profit 12,681 7.5% 13,590 7.6%
Selling, general and administrative expenses 11,262 6.7% 11,148 6.2%
Operating income 729 0.4% 1,917 1.1%
Interest expense 1,236 4,189
Income before income taxes 3,674 2.2% 8,171 4.6%
Net income attributable to Unifi, Inc. 1,399 0.8% 7,535 4.2%
Earnings per share (basic) $0.07 $0.38
Weighted average shares outstanding 20,082 20,089
Income Statement Highlights(Amounts in Thousands, Except Percentages and Per Share Amounts)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
For the Nine Months Ended
March 24, 2013 March 25, 2012
Net sales $513,220 100.0% $517,160 100.0%
Gross profit 47,392 9.2% 36,302 7.0%
Selling, general and administrative expenses 33,941 6.6% 32,505 6.3%
Operating income 11,417 2.2% 2,261 0.4%
Interest expense 4,041 12,791
Income before income taxes 13,398 2.6% 2,719 0.5%
Net income attributable to Unifi, Inc. 6,119 1.2% 213 0.0%
Earnings per share (basic) $0.30 $0.01
Weighted average shares outstanding 20,091 20,088
Equity Affiliates Highlights
(Amounts in thousands, Except Percentages)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
For the Three Months Ended For the Nine Months Ended
March 24, 2013 March 25, 2012 March 24, 2013 March 25, 2012
Earnings (Loss):
Parkdale America (34%) $4,294 $9,719 $4,990 $14,213
Other 489 144 1,722 (47)
Total $4,783 $9,863 $6,712 $14,166
Distributions:
Parkdale America (34%) $7,807 $1,645 $10,031 $3,650
Other - 500 500 500
Total $7,807 $2,145 $10,531 $4,150
Reconciliations of Net Income to Adjusted EBITDA (Amounts in Thousands)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
For the Three Months Ended For the Nine Months Ended
March 24, 2013 March 25, 2012 March 24, 2013 March 25, 2012
Net income attributable to Unifi, Inc. $1,399 $7,535 $6,119 $213
Provision for income taxes 2,510 861 7,959 2,940
Interest expense, net 996 3,618 3,533 11,078
Depreciation and amortization expense 6,087 6,677 18,718 19,692
EBITDA 10,992 18,691 36,329 33,923
Non-cash compensation expense, net 570 609 1,896 2,004
Loss on extinguishment of debt 746 - 1,102 462
Loss on previously held equity interest - - - 3,656
Refund of Brazilian non-income related tax - (9) - (1,488)
Operating expenses for Repreve Renewables 314 315 919 602
Other 531 513 817 737
Adjusted EBITDA Including Equity Affiliates 13,153 20,119 41,063 39,896
Equity in earnings of unconsolidated affiliates (4,783) (9,863) (6,712) (14,166)
Adjusted EBITDA $8,370 $10,256 $34,351 $25,730
Working Capital Highlights(Amounts in Thousands)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
March 24, December 23, June 24,
2013 2012 2012
Receivables, net $97,219 $88,618 $99,236
Inventory 108,749 107,101 112,750
Accounts payable (53,561) (38,623) (48,541)
Accrued expenses (11,761) (12,162) (14,004)
Adjusted Working Capital $140,646 $144,934 $149,441
Adjusted Working Capital $140,646 $144,934 $149,441
Cash 15,901 15,246 10,886
Other current assets 10,425 13,515 15,125
Accrued interest (205) (260) (398)
Other current liabilities (8,130) (7,421) (8,569)
Working Capital $158,637 $166,014 $166,485
Capital Structure(Amounts in Thousands)
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
March 24, December 23, June 24,
2013 2012 2012
Cash $15,901 $15,246 $10,886
Revolver Availability, Net 34,199 35,447 37,122
Total Liquidity $50,100 $50,693 $48,008
ABL Revolver $51,300 $44,000 $51,000
ABL Term Loan 44,600 46,400 50,000
Term B Loan - 13,800 20,515
Other 2,468 2,482 37
Total Debt $98,368 $106,682 $121,552
Cash 15,901 15,246 10,886
Net Debt $82,467 $91,436 $110,666
Shares Outstanding 19,542 20,104 20,090
Key Dates
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)
Form 10-Q for quarter ended March 24, 2013
Filing due on Friday, May 3, 2013
Quiet period for quarter ended June 30, 2013
Begins on Friday, June 28, 2013
Extends through our Earnings Release date
Expected to be Thursday, July 25, 2013
Non-GAAP Financial Measures
Included in this presentation are certain non-GAAP financial measures designed to complement the financial information presented in accordance with generally accepted accounting principles in the United States of America ("GAAP") because management believes such measures are useful to investors.
EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA
EBITDA represents net income or loss attributable to Unifi, Inc. before income tax expense, net interest expense, and depreciation and amortization expense (excluding interest portion of amortization). Adjusted EBITDA Including Equity Affiliates represents EBITDA adjusted to exclude non-cash compensation expense net of distributions, gains or losses on extinguishment of debt, loss on previously held equity interest, refund of Brazilian non-income related tax, operating expenses for Repreve Renewables, and certain other adjustments. Such other adjustments include gains or losses on sales or disposals of property, plant and equipment, currency and derivative gains or losses, restructuring and certain employee severance and healthcare expenses, and other operating or non-operating income or expense items necessary to understand the underlying results of the Company. Adjusted EBITDA represents Adjusted EBITDA Including Equity Affiliates adjusted to exclude equity in earnings and losses of unconsolidated affiliates. We present Adjusted EBITDA as a supplemental measure of our operating performance. We also present Adjusted EBITDA because we believe such measure is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA are alternative views of performance used by management and we believe that investors’ understanding of our performance is enhanced by disclosing these performance measures. Our management uses Adjusted EBITDA: (i) as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of (a) items directly related to our asset base (primarily depreciation and amortization) and (b) items that we would not expect to occur as a part of our normal operating business; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) as a valuation measure for evaluating our operating performance and our capacity to incur and service debt, fund capital expenditures and expand our business; and (iv) as one measure in determining the value of other acquisitions and dispositions. Adjusted EBITDA is also a key performance metric utilized in the determination of variable compensation. We believe that the use of EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA as operating performance measures provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles, and ages of related assets, among otherwise comparable companies. We also believe Adjusted EBITDA is an appropriate supplemental measure of debt service capacity, because cash expenditures on interest are, by definition, available to pay interest, and tax expense is inversely correlated to interest expense because tax expense decreases as deductible interest expense increases; depreciation and amortization are non-cash charges. Equity in earnings and losses of unconsolidated affiliates is excluded because such earnings or losses do not reflect our operating performance. The other items excluded from Adjusted EBITDA are excluded in order to better reflect the performance of our continuing operations. In evaluating EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in this presentation. Our presentation of EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. EBITDA, Adjusted EBITDA Including Equity Affiliates, and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
Unifi, Inc. Third Qtr. Conf. Call April 25, 2013 (Unaudited)
Non-GAAP Financial Measures - continued
Each of our Adjusted EBITDA and Adjusted EBITDA Including Equity Affiliates measures has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
• it does not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
• it does not reflect changes in, or cash requirements for, our working capital needs;
• it does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future,
and our Adjusted EBITDA (or our Adjusted EBITDA Including Equity Affiliates) measure does not reflect any cash requirements for such replacements;
• it is not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
• it does not reflect the impact of earnings or charges resulting from matters we consider not indicative of our ongoing operations;
• it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and
• other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Because of these limitations, neither of Adjusted EBITDA or Adjusted EBITDA Including Equity Affiliates should be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of cash that will be available to us to meet our obligations, including those under our outstanding debt obligations. You should compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as supplemental information.
Unifi, Inc.
Third Qtr. Conf. Call
April 25, 2013
(Unaudited)