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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 26, 1995
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-10542
UNIFI, INC.
(Exact name of registrant as specified its charter)
New York 11-2165495
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 19109 - 7201 West Friendly Road
Greensboro, NC 27419
(Address of principal executive offices) (Zip Code)
(910) 294-4410
(Registrant's telephone number, including area code)
Same
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1995
Common Stock, par value $.10 per share 68,137,505 Shares
Part I. Financial Information
UNIFI, INC.
Condensed Consolidated Balance Sheets
March 26, June 26,
1995 1994
(Unaudited) (Audited)
(Amounts in Thousands)
ASSETS
Current Assets:
Cash and Cash Equivalents $66,931 $80,653
Short-Term Investments 69,450 71,483
Accounts Receivable, Net 204,387 200,537
Inventories
Raw Materials and Supplies $57,003 $29,797
Work in Process 14,235 12,937
Finished Goods 55,186 57,545
$126,424 $100,279
Other Current Assets 9,367 3,605
Total Current Assets $476,559 $456,557
Property, Plant and Equipment $891,413 $848,637
Less: Accumulated Depreciation 380,748 336,375
$510,665 $512,262
Investments in Affiliates $173 $10,626
Other Assets $21,886 $23,807
Total Assets $1,009,283 $1,003,252
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes Payable $-- $25
Accounts Payable 82,050 83,831
Accrued Expenses 50,390 56,295
Income Taxes 10,937 12,132
Total Current Liabilities $143,377 $152,283
Long-Term Debt $230,000 $230,000
Deferred Income Taxes $37,606 $32,447
Shareholders' Equity
Common Stock $6,811 $7,043
Capital in Excess of Par 141,853 199,959
Retained Earnings 446,464 385,472
Cumulative Translation Adjustment 2,297 (3,060)
Reserve for Investments 875 (892)
Total Shareholders' Equity $598,300 $588,522
Total Liabilities and
Shareholders' Equity $1,009,283 $1,003,252
See Accompanying Notes to Condensed Consolidated Financial Statements.
UNIFI, INC.
Condensed Consolidated Statements of Income
(Unaudited)
For the Quarters For the Nine Months
Ended Ended
March 26, March 27, March 26, March 27,
1995 1994 1995 1994
(Amounts in Thousands Except Per Share Data)
Net Sales $403,001 $346,059 $1,149,492 $1,022,930
Costs and Expenses:
Cost of Goods Sold $344,699 $295,470 $987,741 $874,052
Selling, General &
Admin. Expense 11,055 10,661 31,016 30,419
Interest Expense 3,983 4,432 11,856 13,711
Interest Income (2,507) (1,029) (7,560) (5,749)
Other (Income)Expense (4,526) (1,358) (7,364) (1,422)
$352,704 $308,176 $1,015,689 $911,011
Income Before Income
Taxes $50,297 $37,883 $133,803 $111,919
Income Taxes 19,247 15,129 51,944 44,992
Net Income $31,050 $22,754 $81,859 $66,927
Earnings Per Share:
Primary $.45 $.32 $1.17 $.94
Fully Diluted $.43 $.32 $1.14 $.93
Cash Dividends Per Share $.10 $.14 $.30 $.42
Average Shares
Outstanding: Primary 68,699 71,027 69,955 71,048
Fully Diluted 76,470 78,780 77,715 78,810
See Accompanying Notes to Condensed Consolidated Financial Statements.
UNIFI, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Months
Ended
March 26, March 27,
1995 1994
(Amounts in Thousands)
Cash and Cash Equivalents Provided by $92,741 $81,645
Operating Activities
Investing Activities:
Capital Expenditures $(64,175) $(98,994)
Sale of Capital Assets 2,078 3,061
Notes Receivable 4,983 (22)
Sale of Subsidiary 13,798 --
Sale of Investments 80,460 42,015
Purchase of Investments (64,659) (4)
Net Investing Activities $(27,515) $(53,944)
Financing Activities:
Issuance of Common Stock $410 $499
Borrowing of Debt -- 7,453
Repayment of Debt (25) (28,545)
Cash Dividend (20,867) (29,198)
Purchase and Retirement of Common Stock (58,748) --
Net Financing Activities $(79,230) $(49,791)
Currency Translation Adjustment $282 $10
Increase (Decrease) in Cash $(13,722) $(22,080)
Cash and Cash Equivalents - Beginning 80,653 76,093
Cash and Cash Equivalents - Ending $66,931 $54,013
See Accompanying Notes to Condensed Consolidated Financial Statements.
UNIFI, INC.
Notes to Condensed Consolidated Financial Statements
(a)Basis of Presentation
The information furnished is unaudited and reflects all adjustments which
are, in the opinion of Management, necessary to present fairly the
financial position at March 26, 1995 and the results of operations and
cash flows for the periods ended March 26, 1995 and March 27, 1994. Such
adjustments consisted of normal recurring items. Interim results are not
necessarily indicative of results for a full year. It is suggested that
the condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest
annual report on Form 10-K.
(b)Income Taxes
Deferred income taxes arise primarily from timing differences between the
financial and tax basis of assets and liabilities, principally property
and equipment.
The difference between the statutory federal income tax rate and the
effective tax rate is primarily due to results of foreign subsidiaries
which are taxed at rates below those of U.S. operations. The current
periods' operating results were more favorably impacted by foreign
operations than the prior periods' which contributed to the lower
effective tax rates.
(c)Per Share Information
Earnings per common share are computed on the basis of the number of
shares outstanding, adjusted for the dilutive effect of stock options
outstanding.
The Convertible Notes do not meet the test of a common stock equivalent,
accordingly, conversion of these notes is only assumed for the calculation
of fully diluted earnings per share.
Computation of average shares outstanding (in 000's):
Quarters Ended Nine Months Ended
Mar.26, Mar.27, Mar.26, Mar.27,
1995 1994 1995 1994
Average Shares 68,127 70,482 69,427 70,419
Outstanding
Add: Dilutive Options 572 545 528 629
Primary Average Shares 68,699 71,027 69,955 71,048
Incremental Shares
Arising from Full
Dilution Assumption 7,771 7,753 7,760 7,762
Average Shares Assuming
Full Dilution 76,470 78,780 77,715 78,810
Computation of net income for per share data (in 000's):
Quarters Ended Nine Months Ended
Mar.26, Mar.27, Mar.26, Mar.27,
1995 1994 1995 1994
Net Income - Primary $31,050 $22,754 $81,859 $66,927
Add: Convertible
Subordinated Interest
Net of Tax 2,147 2,111 6,442 6,332
Net Income Assuming
Full Dilution $33,197 $24,865 $88,301 $73,259
(d)Common Stock
On April 20, 1995, the Company's Board of Directors declared a cash
dividend of 10 cents per share payable to shareholders of record on May 5,
1995, payable on May 12, 1995.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is Management's discussion and analysis of certain significant
factors which have affected the Company's operations and material changes in
financial condition during the periods included in the accompanying condensed
consolidated financial statements.
Results of Operations
Net sales increased from $346.1 million to $403.0 million in the quarter or
16.5% and increased in the nine month period from $1.023 billion in 1994 to
$1.149 billion in 1995 or 12.4%. We experienced volume increases of 14.3%
for the quarter and 14.9% for the year-to-date period over the prior year
periods. Our average net sales price, based on the overall product mix,
increased 1.9% in the current quarter and decreased 2.2% for the current nine
month period.
Domestic unit volume increased 12.0% for the quarter and 13.6% year-to-date.
Unit sales of our polyester yarns were favorable during the quarter compared
to the corresponding period of the prior year consistent with the year-to-
date results. We have begun an expansion in our domestic polyester texturing
operations that will increase our capacity by approximately seven percent by
the end of the first quarter of Fiscal 1996. Average unit price for polyester
has improved for both the current quarter and year-to-date. Volume for our
nylon operations in the current quarter improved over the corresponding
period of the prior year but is down year-to-date. Average unit price for
our nylon products has declined for both the current quarter and year-to-
date. Capacity expansions in our spun facilities has resulted in volume
increases for both the current quarter and year-to-date. Average unit price
has also improved in both current periods.
Our European polyester yarn operation unit volume has increased in both the
current quarter and year-to-date. Average unit price has also improved as we
have increased prices to partially offset the effect of higher raw materials
costs. Average unit price in US dollar terms has also been impacted by the
further weakening of the U.S. dollar over the corresponding periods of the
prior year. European polyester yarn productive capacity will be increased
approximately 30% over the period of the next three calendar quarters.
Cost of goods sold as a percentage of net sales remained relatively
consistent at 85.5% in the current quarter compared to 85.4% in last year's
March quarter as higher raw yarn costs were mostly offset by improved sales
prices. The current quarter was also assisted by lower manufacturing
expenses as our increased sales diluted our per unit costs. For the year-to-
date periods, cost of goods sold increased from 85.4% to 85.9% of net sales
due to the combination of lower average unit sales price and slightly higher
per unit raw yarn costs. Lower per unit fixed manufacturing charges in the
current period, however, have mitigated the effects of these changes.
During the quarter selling, general and administrative expenses increased
from $10.7 million in 1994 to $11.1 million in 1995. For the nine month
period selling, general and administrative expenses increased from $30.4
million in 1994 to $31.0 million in 1995. Selling, general and
administrative expenses as a percentage of net sales decreased from 3.1% in
the prior year quarter to 2.7% in the current quarter. For the nine month
periods we experienced a decrease from 3.0% in 1994 to 2.7% in 1995. This
improved ratio for both the current quarter and year-to-date reflects the
absorption of the higher current period costs over larger net sales amounts.
Interest expense decreased from $4.4 million in the 1994 quarter to $4.0
million in the current quarter. For the nine month periods interest expense
decreased from $13.7 million in the prior year to $11.9 million in the
current year. The reduction in interest expense is attributed to lower debt
levels as debt acquired in prior year mergers was retired throughout Fiscal
1994.
Interest income improved from $1.0 million in the prior year quarter to $2.5
million in the current quarter and from $5.7 million in the prior year-to-
date to $7.6 million in the current nine month period.
Other (income) expense represents income in all periods presented. Other
income increased from $1.4 million to $4.5 million or $3.1 million during the
current quarter and increased from $1.4 million to $7.4 million or $6.0
million during the current nine month period. The year-to-date income
includes the recognition of a $3.1 million gain on the sale of an investment
that had been previously deferred pending collection of a note receivable
balance. In addition, a gain of $2.7 million on the sale of an equity
investment contributed to the increase noted in both the current quarter and
year-to-date periods.
Our effective tax rate was 38.3% in the current quarter as compared with
39.9% in the prior year quarter. For the year-to-date periods, the rate was
38.8% and 40.2% in 1995 and 1994, respectively. The lower rates in the
current periods are due to taxable earnings of foreign subsidiaries
comprising a larger percentage of total consolidated pretax income. These
earnings are taxed at rates lower than US rates.
Earnings per share increased from $.32 per share to $.45 per share in the
current quarter and increased from $.94 per share to $1.17 for the current
nine month period.
Liquidity and Capital Resources
We ended the current quarter with working capital of $333.2 million of which
$136.4 million represents cash and short-term investments. This compares
with working capital of $304.3 million and cash reserves of $152.1 million at
year end. Inventories increased $26.1 million from $100.3 million at June
26, 1994 to $126.4 million at March 26, 1995 as we are maintaining higher
levels of raw yarn inventories in anticipation of continued strong demand and
capacity increases. This increase is also attributable to overall higher per
unit raw material prices.
Our primary source of cash funds is from operating activities which generated
$92.7 million in cash and cash equivalents for the year-to-date period ended
March 26, 1995. The Company utilized $27.5 million and $79.2 million for net
investing and financing activities, respectively for the nine months ended
March 26, 1995. These net investing and financing activities were primarily
comprised of $34.6 million received from net investment activity, including
$13.8 million from the sale of its French subsidiary, and funds used for
capacity expansions and upgrades totaling $64.2 million, the payment of the
Company's cash dividends of $20.9 million and the purchase and retirement of
Company common stock of $58.7 million.
Management believes the current financial position of the Company in
connection with its operations and its access to debt and equity markets are
sufficient to meet anticipated capital expenditure, strategic acquisition,
working capital and other financial needs.
Part II. Other Information
UNIFI, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
(27) Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter
ended March 26, 1995.
UNIFI, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIFI, INC.
Date: MAY 9, 1995 WILLIS C. MOORE, III
Willis C. Moore, III
Vice President and Chief
Financial Officer (Mr. Moore is
the Principal Financial and
Accounting Officer and has been
duly authorized to sign on behalf
of the Registrant.)