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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission File
June 28, 1998 Number 1-10542
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UNIFI, INC.
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(Exact name of Registrant as specified in its charter)
New York 11-2165495
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7201 West Friendly Avenue
Greensboro, North Carolina 27410
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(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (336) 294-4410
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Class On Which Registered
--------------------------------- -------------------------
Common Stock, par value $.10 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
Aggregate market value of the voting stock held by non-affiliated of the
Registrant as of August 14, 1998, based on a closing price of $23.875 per
share: $1,427,674,599.87
Number of shares outstanding as of August 14, 1998: 61,355,386
Documents Incorporated By Reference
Portions of the Annual Report to Shareholders of Unifi, Inc. for the fiscal
year ended June 28, 1998, are incorporated by reference into Parts I and II
hereof.
Portions of the definitive proxy statement for the Annual Meeting of the
Shareholders of Unifi, Inc., to be held on October 22, 1998, are incorporated
by reference into Part III.
Exhibits, Financial Statement Schedules and Reports on Form 8-K index is
located on pages IV-1 through IV-6.
PART I
Item 1. Business:
Unifi, Inc., a New York corporation formed in 1969, together with its
subsidiaries, hereinafter set forth, (the "Company" or "Unifi"), is one of the
largest and most diversified processors of polyester and nylon yarns in the
world. The Company is engaged in the business of texturing polyester and
nylon filament fiber to produce polyester and nylon yarns, dyed yarns and
spandex yarns covered with nylon and polyester. The Company sells its
products to knitters and weavers that produce fabrics for the apparel,
automotive upholstery, hosiery, home furnishings, industrial and other end use
markets.
Texturing polyester and nylon filament fiber involves the processing of
partially oriented yarn ("POY"), which is either raw polyester or nylon
filament fiber purchased from chemical manufacturers, to give it greater bulk,
strength, stretch, consistent dyeability and a softer feel, thereby making it
suitable for use in knitting and weaving of fabrics. The texturing process
involves the use of high speed machines to draw, heat and twist the POY to
produce yarn having various physical characteristics, depending on its
ultimate end use.
On June 30, 1997, the Company and Parkdale Mills, Inc. ("Parkdale")
contributed cash, assets and certain liabilities associated with their
respective open-end and air jet spun cotton yarn operations to a newly formed
joint venture, Parkdale America, LLC ("Parkdale America"). As a result, the
Company and Parkdale own a 34.0% and 66.0% equity interest in Parkdale
America, respectively. Parkdale America is one of the largest and most
diversified processors of spun cotton yarns in the world. The Company
believes that its equity ownership in Parkdale America provides it with an
opportunity to partner with the leading manufacturer in the cotton yarn
industry and to increase the profitability of these operations through
economies of scale and elimination of redundant overhead costs.
On November 14, 1997, the Company completed its $55.8 million acquisition
of SI Holding Company ("SI Holding"), a manufacturer of covered nylon yarns
operating under the "Spanco" name, generating approximately $85.0 million in
annual sales.
On May 29, 1998, the Company and Burlington Industries, Inc. ("BI")
contributed certain assets associated with their respective textured polyester
yarn businesses to a newly formed limited liability company, Unifi Textured
Polyester, LLC ("UTP"). Unifi contributed its textured polyester yarn
facilities in Yarkinville, North Carolina and BI contributed its textured
yarn operation in Mayodan, North Carolina. Unifi is the majority owner of the
new entity (approximately 85%) and manages the business, while BI holds a
minority interest. All yarn products are sold under the Unifi label. The
Company's polyester texturing facility in Reidsville, North Carolina, which
processes textured products for yarn dyeing, was not contributed to UTP.
I-1
The information included under "Year 2000 Compliance Status" on pages 35
and 36 of the Annual Report of the company for fiscal year ended June 28,
1998, is incorporated herein by reference.
SOURCES AND AVAILABILITY OF RAW MATERIALS:
The primary suppliers of POY to the Company are E. I. DuPont de Nemours
and Company, Hoechst Celanese Corporation, Wellman Industries, Cookson Fibers,
Inc., and Nan Ya Plastics Corp. of America with the majority of the Company's
POY being supplied by DuPont. In addition, the Company has POY manufacturing
facilities in Ireland, and recently began full-scale operation in its newly
constructed, state-of-the-art manufacturing facility in Yadkinville, North
Carolina, designed to further vertically integrate the Company's domestic
polyester operations. Management expects this facility to provide
approximately 25% of its total domestic POY supply needs. Management expects
that all polyester fiber manufactured by this facility will be used by the
Company. Although the Company is heavily dependent upon a limited number of
suppliers, the Company has not had and does not anticipate any material
difficulty in obtaining its raw POY.
PATENTS AND LICENSES: The Company currently has several patents and
registered trademarks, none of which it considers material to its business as a
whole.
CUSTOMERS: The Company in fiscal year ended June 28, 1998, sold its
polyester and nylon yarns to approximately 1,260 customers, no one
customer's purchases exceeded 10% of net sales during said period, the ten
largest customers accounted for approximately 32% of total net sales. The
Company does not believe that it is dependent on any one customer.
BACKLOG: The Company, other than in connection with certain foreign
sales and for textured yarns that are package dyed according to customers'
specifications, does not manufacture to order. The Company's products can be
used in many ways and can be thought of in terms of a commodity subject to
the laws of supply and demand and, therefore, does not have what is considered
a backlog of orders. In addition, the Company does not consider its products
to be seasonal ones.
COMPETITIVE CONDITIONS: The textile industry in which the Company
currently operates is keenly competitive. The Company processes and sells
high-volume commodity products, pricing is highly competitive with product
quality and customer service being essential for differentiating the
competitors within the industry. Product quality insures manufacturing
efficiencies for the customer. The Company's polyester and nylon yarns, dyed
yarns, and covered yarns compete with a number of other domestic producers of
such yarns. In the sale of polyester filament yarns, major competitors are
Dillon Yarn Company, Inc., and Milliken & Company and in the sale of nylon
yarns, dyed yarns, and covered yarns, major competitors are Jefferson Mills,
Inc., Worldtex, Inc., and Spectrum Dyed Yarns, Inc..
I-2
RESEARCH AND DEVELOPMENT: The estimated amount spent during each of the
last three fiscal years on Company-sponsored and Customer-sponsored research
and development activities is considered immaterial.
COMPLIANCE WITH CERTAIN GOVERNMENT REGULATIONS: Management of the
Company believes that the operation of the Company's production facilities and
the disposal of waste materials are substantially in compliance with
applicable laws and regulations.
EMPLOYEES: The number of full-time employees of the Company is
Approximately 6,400.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC INTERNATIONAL
OPERATIONS AND EXPORT SALES: The information included under the heading
"Business Segments, Foreign Operations and Concentrations of Credit Risk"
on Page 28 of the Annual Report of the Company to the Shareholders for the
fiscal year ended June 28, 1998, is incorporated herein by reference.
Item 2. Description of Property:
The Company currently maintains a total of 24 manufacturing and
warehousing facilities and one central distribution center in North Carolina,
one manufacturing and related warehousing facility in Staunton, Virginia, one
central distribution center in Fort Payne, Alabama, two manufacturing
operations in Letterkenny, County of Donegal,
Republic of Ireland and two warehousing locations in Carrickfergus, Northern
Ireland. All of these facilities, which contain approximately 7,992,513
square feet of floor space, with the exception of one (1) plant facility
leased from NationsBank Leasing and R.E. Corp. pursuant to a Sales-leaseback
Agreement entered on May 20, 1997, as amended, and two warehouses in
Carrickfergus, Northern Ireland, are owned in fee; and management believes they
are in good condition, well maintained, and are suitable and adequate for
present production.
The Company leases sales offices and/or apartments in New York,
Coleshill, England, Oberkotzau, Germany, and Lyon, France, and has a
representative office in Tokyo, Japan.
The Company also leases its corporate headquarters building at 7201 West
Friendly Avenue, Greensboro, North Carolina, which consists of a building
containing approximately 121,125 square feet located on a tract of land
containing approximately 8.99 acres. This property is leased from
Merrill Lynch Trust Company of North Carolina, Trustee under the Unifi, Inc.
Profit Sharing Plan and Trust, and Wachovia Bank & Trust Company, N.A.,
Independent Trustee. On May 20, 1996, the Company exercised its option to
extend the term of the lease on this property for five (5) years, through
March 13, 2002. Reference is made to a copy of the lease agreement attached
to the Registrant's Annual Report on Form 10-K as Exhibit (10d) for the fiscal
year ended June 28, 1987, which is by reference incorporated herein.
I-3
The information included under "Leases and Commitments"
on Page 27 of the Annual Report of the Company to Shareholders for fiscal
year ended June 28, 1998, is incorporated herein by reference.
Item 3. Legal Proceedings:
The Company is not currently involved in any litigation which is
considered material, as that term is used in Item 103 of Regulation S-K.
Item 4. Submission of Matters to a Vote of Security Holders:
No matters were submitted to a vote of security holders during the fourth
quarter for the fiscal year ended June 28, 1998.
I-4
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
(a)(c) PRICE RANGE OF COMMON STOCK AND DIVIDENDS PAID.
The information included under the heading "Market and Dividend
Information (Unaudited)" on Page 31 of the Annual Report of the Company to
Shareholders for the fiscal year ended June 28, 1998, is incorporated herein
by reference.
(b) Approximate Number of Equity Security Holders:
Title of Class Number of Record Holders
(as of August 14, 1998)
Common Stock, $.10 par value 929
(c) CASH DIVIDEND POLICY. Effective July 16, 1998, the Board of
Directors of the Company terminated its previously-established policy of
April, 1990 of paying cash dividends equal to approximately 30% of the
Company's after tax earnings for the previous year and authorized management
of the Company to utilize cash equal to said 30% of previous year's earnings
to purchase shares of the Company's stock, as, management deems advisable up
to ten (10) million shares. Under said April 1990 cash dividend policy, the
Company paid a quarterly dividend of $.14 per share on its common stock for
each quarter of the 1998 fiscal year.
Item 6. Selected Financial Data:
The financial data for the five fiscal years included under the heading
"Summary of Selected Financial Data" on Page 30 of the Annual Report of the
Company to Shareholders for the fiscal year ended June 28, 1998, is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
The information included under the heading "Management's Review and
Analysis of Operations and Financial Position" beginning on Page 32 and ending
on Page 36 of the Annual Report of the Company to Shareholders for the fiscal
year ended June 28, 1998, is incorporated herein by reference.
II-1
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The information included under the heading "Derivative Financial
Instruments and Fair Value of Financial Instruments" on Page 28 of
the Annual Report of the Company to Shareholders for the fiscal year ended
June 28, 1998, is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data:
The report of independent auditors, consolidated financial statements and
notes beginning on Page 17 and ending on Page 29 and the information included
under the heading "Quarterly Results (Unaudited)" on Page 31 of the Annual
Report of the Company to Shareholders for the fiscal year ended June 28, 1998,
are incorporated herein by reference.
Item 9. Change in and Disagreements With Accountants on Accounting and
Financial Disclosure:
The Company has not changed accountants nor are there any disagreements
with its accountants, Ernst & Young LLP, on accounting and financial
disclosure that should be reported pursuant to Item 304 of Regulation S-K.
II-2
PART III
Item 10. Directors and Executive Officers of Registrant and Compliance with
Section 16(a) of the Exchange Act:
(a) Directors of Registrant: The information included under the headings
"Election of Directors", "Nominees for Election as Directors", "Security
Holding of Directors, Nominees, and Executive Officers", "Directors'
Compensation", "Committees of the Board of Directors", and compliance with
Section 16(a) of The Securities and Exchange Act, beginning on Page 2 and
ending on Page 6 and on page 12 of the definitive proxy statement filed with
the Commission since the close of the Registrant's fiscal year ended June 28,
1998, and within 120 days after the close of said fiscal year, are
incorporated herein by reference.
(b) Identification of Executive Officers:
Chairman of The Board of Directors
G. Allen Mebane, IV Mr. Mebane is 68 and has been an Executive Officer
and member of the Board of Directors of the Company since 1971, and served as
President and Chief Executive Officer of the Company, relinquishing these
positions in 1980 and 1985, respectively. He was the Chairman of the Board of
Directors for many years, Chairman of the Executive Committee from 1974 to
1995, and was elected as one of the three members of the Office of Chairman on
August 8, 1991. On October 22, 1992, Mr. Mebane was again elected as Chairman
of the Board of Directors.
President and Chief Executive Officer
William T. Kretzer Mr. Kretzer is 52 and served as a Vice President or
Executive Vice President from 1971 until 1985. He has been the President and
Chief Executive Officer since 1985. He has been a member of the Board of
Directors since 1985 and has been Chairman of the Executive Committee since
1995.
Executive Vice Presidents
Jerry W. Eller Mr. Eller is 57 and has been a Vice President or
Executive Vice President since 1975. He has been a member of the Board of
Directors since 1985 and is a member of the Executive Committee.
G. Alfred Webster Mr. Webster is 50 and has been a Vice President or
Executive Vice President since 1979. He has been a member of the Board of
Directors since 1986 and is a member of the Executive Committee.
III-1
Senior Vice Presidents
Kenneth L. Huggins Mr. Huggins is 55, had been an employee of Macfield,
Inc. since 1970 and, at the time of the Macfield merger with Unifi, was
serving as a Vice President of Macfield and President of Macfield's Dyed Yarn
Division. He was a Director of Macfield from 1989 until August 8, 1991, when
Macfield, Inc. merged into and with Unifi. He is Senior Vice President and
also Assistant to the President.
Raymond W. Maynard Mr. Maynard is 55 and has been a Vice President of
the Company since June 27, 1971, and a Senior Vice President since October 22,
1992.
Willis C. Moore, III Mr. Moore is 45 and had been a Partner with Ernst
& Young LLP, or its predecessors from 1985 until December, 1994, when he
became employed by the Company as its Chief Financial Officer. Mr. Moore was
elected as a Vice President of the Company on October 19, 1995, and is
currently serving as a Senior Vice President and Chief Financial Officer.
Vice Presidents
James W. Brown, Jr. Mr. Brown is 46 and was an employee of Macfield
from 1973 until the Macfield merger on August 8, 1991, when he became an
employee of the Company. He became a Vice President of the Company on October
22, 1992, and he is currently serving as President of the Nylon/Covered Yarn
Division of the Company.
Stewart O. Little Mr. Little is 45 and has been a Vice President of
the Company since October 24, 1985. He is currently serving as President of
the Polyester Division of the Company.
Ralph D. Mayes Mr. Mayes is 49 and had been a Vice President and Chief
Information Officer of the Leggett Group from 1992 until September, 1994 when
he became employed by the Company as its Chief Information Officer. Mr. Mayes
was elected as a Vice President on October 20, 1994, and is currently serving
as Vice President and Chief Information Officer.
These officers were elected by the Board of Directors of the Registrant
at the Annual Meeting of the Board of Directors held on October 23, 1997.
Each officer was elected to serve until the next Annual Meeting of the Board
of Directors or until his successor was elected and qualified.
(c) Family Relationship: Mr. Mebane, Chairman of the Board, and Mr. C.
Clifford Frazier, Jr., the Secretary of the Registrant, are first cousins.
Except for this relationship, there is no family relation between any of the
Officers.
III-2
Item 11. Executive Compensation:
The information set forth under the headings "Compensation and Option
Committees Interlocks and Insider Participation in Compensation Decisions",
"Executive Officers and Their Compensation", "Employment and Termination
Agreements", "Options Granted", "Option Exercises and Option/SAR Values", the
"Report of the Compensation and Incentive Stock Option Committees on Executive
Compensation", and the "Performance Graph-Shareholder Return on Common Stock"
beginning on Page 6 and ending on Page 11 of the Company's definitive proxy
statement filed with the Commission since the close of the Registrant's fiscal
year ended June 28, 1998, and within 120 days after the close of said fiscal
year, are incorporated herein by reference.
For additional information regarding executive compensation reference is
made to Exhibits (101), (10m), (10n), (10q) and (10r) of this Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management:
Security ownership of certain beneficial owners and management is the
same as reported under the heading "Information Relating to Principal Security
Holders" on Page 2 of the definitive proxy statement and under the heading
"Security Holding of Directors, Nominees and Executive Officers" on Page 4
and Page 5 of the definitive proxy statement filed with the Commission
pursuant to Regulation 14(a) within 120 days after the close of the fiscal
year ended June 28, 1998, which are hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions:
The information included under the heading "Compensation and Option
Committees Interlocks and Insider Participation In Compensation Decisions",
on Page 6 of the definitive proxy statement filed with the Commission since
the close of the Registrant's fiscal year ended June 28, 1998, and within 120
days after the close of said fiscal year, is incorporated herein by
reference.
III-3
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
UNIFI, INC.
September 28, 1998 BY: WILLIAM T. KRETZER
______________________________
William T. Kretzer, President
(Chief Executive Officer)
September 28, 1998 BY: WILLIS C. MOORE, III
______________________________
Willis C. Moore,III, Sr Vice President
(Chief Financial Officer)
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
G. ALLEN MEBANE, IV
September 28, 1998 Chairman __________________________
and Director G. Allen Mebane, IV
WILLIAM T. KRETZER
September 28, 1998 President, Chief __________________________
Executive Officer William T. Kretzer
and Director
ROBERT A. WARD
September 28, 1998 Senior Advisor ___________________________
to President and Robert A. Ward
Director
JERRY W. ELLER
September 28, 1998 Executive Vice ___________________________
President and Jerry W. Eller
Director
G. ALFRED WEBSTER
September 28, 1998 Executive Vice ___________________________
President and G. Alfred Webster
Director
CHARLES R. CARTER
September 28, 1998 Director ___________________________
Charles R. Carter
KENNETH G. LANGONE
September 28, 1998 Director ___________________________
Kenneth G. Langone
DONALD F. ORR
September 28, 1998 Director ___________________________
Donald F. Orr
J.B. DAVIS
September 28, 1998 Director ___________________________
J. B. Davis
R. WILEY BOURNE, JR.
September 28, 1998 Director ___________________________
R. Wiley Bourne, Jr.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
The following financial statements and report of independent auditors included
in the Annual Report of Unifi, Inc. to its Shareholders for the fiscal year
ended June 28, 1998, are incorporated herein by reference. With the exception
of the aforementioned information and the information incorporated by
reference in Items 1, 2, 5, 6, 7 7A and 8 herein, the 1998 Annual Report to
shareholders is not deemed to be filed as part of this report.
Annual
Report
Pages
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Consolidated Balance Sheets at June 28, 1998
and June 29, 1997 18
Consolidated Statements of Income for the
Years Ended June 28, 1998, June 29, 1997,
and June 30, 1996 19
Consolidated Statements of Changes in
Shareholders' Equity for the Years Ended
June 28, 1998, June 29, 1997 and June 30,
1996 20
Consolidated Statements of Cash Flows for
the Years Ended June 28, 1998, June 29,
1997 and June 30, 1996 21
Notes to Consolidated Financial Statements 22 - 29
Management's Review and Analysis of Operations and
Financial Position 32 - 36
Report of Independent Auditors 17
(a) 2. Financial Statement Schedules
Form 10-K
Pages
Schedules for the three years ended June 28, 1998:
II - Valuation and Qualifying Accounts IV-6
IV-1
Schedules other than those above are omitted because they are not
required, are not applicable, or the required information is given in the
consolidated financial statements or notes thereto.
Individual financial statements of the Registrant have been omitted
because it is primarily an operating company and all subsidiaries included in
the consolidated financial statements being filed, in the aggregate, do not
have minority equity interest and/or indebtedness to any person other than
the Registrant or its consolidated subsidiaries in amounts which together
exceed 5% of the total assets as shown by the most recent year end
consolidated balance sheet.
(a) 3. Exhibits
(2a-1) Contribution Agreement, dated June 30, 1997, by and between
Parkdale Mills, Inc., Unifi, Inc., UNIFI Manufacturing, Inc., and Parkdale
America, LLC, filed as Exhibit (2) to Unifi's Form 8-K filed with the
Commission on July 15, 1997, which is incorporated herein by reference.
(3a) Restated Certificate of Incorporation of Unifi, Inc., dated July 21,
1994, (filed as Exhibit (3a) with the Company's Form 10-K for the fiscal year
ended June 26, 1994), which is incorporated herein by reference.
(3b) Restated By-Laws of Unifi, Inc., (filed as Exhibit (3b) with the
Company's Form 10-K for the fiscal year ended June 29, 1997), which is
incorporated herein by reference.
(4a) Specimen Certificate of Unifi, Inc.'s common stock, filed as Exhibit
4(a) to the Registration Statement on Form S-1, (Registration No. 2-45405),
which is incorporated herein by reference.
(4b) Unifi, Inc.'s Registration Statement for the 6 1/2% Notes due 2008,
Series B, filed on Form S-4 (Registration No. 333-49243), which is
incorporated herein by reference.
(10a) *Unifi, Inc. 1982 Incentive Stock Option Plan, as amended, filed as
Exhibit 28.2 to the Registration Statement on Form S-8, (Registration No.
33-23201), which is incorporated herein by reference.
(10b) *Unifi, Inc. 1987 Non-Qualified Stock Option Plan, as amended, filed
as Exhibit 28.3 to the Registration Statement on Form S-8, (Registration No.
33-23201), which is incorporated herein by reference.
(10c) *Unifi, Inc. 1992 Incentive Stock Option Plan, effective July 16,
1992, (filed as Exhibit (10c) with the Company's Form 10-K for the fiscal year
ended June 27, 1993), and included as Exhibit 99.2 to the Registration
Statement on Form S-8 (Registration No. 33-53799), which are incorporated
herein by reference.
IV-2
(10d) *Unifi, Inc.'s Registration Statement for selling Shareholders, who
are Directors and Officers of the Company, who acquired the shares as stock
bonuses from the Company, filed on Form S-3 (Registration No. 33-23201),
which is incorporated herein by reference.
(10e) Unifi Spun Yarns, Inc.'s 1992 Employee Stock Option Plan filed as
Exhibit 99.3 to the Registration Statement on Form S-8 (Registration No.
33-53799), which is incorporated herein by reference.
(10f) *Unifi, Inc.'s 1996 Incentive Stock Option Plan (filed as Exhibit
10(f) with the Company's Form 10-K for the fiscal year ended June 30, 1996),
which is incorporated herein by reference.
(10g) *Unifi, Inc.'s 1996 Non-Qualified Stock Option Plan (filed as
Exhibit 10(g) with the Company's Form 10-K for the fiscal year ended June 30,
1996), which is incorporated herein by reference.
(10h) Lease Agreement, dated March 2, 1987, between NationsBank, Trustee
under the Unifi, Inc. Profit Sharing Plan and Trust, Wachovia Bank and Trust
Co., N.A., Independent Fiduciary, and Unifi, Inc., (filed as Exhibit (10d)
with the Company's Form 10-K for the fiscal year ended June 28, 1987), which
is incorporated herein by reference.
(10i) Factoring Contract and Security Agreement and a Letter Amendment
thereto, all dated as of May 25, 1994, by and between Unifi, Inc. and the CIT
Group/DCC, Inc., (filed as Exhibit (10g) with the Company's Form 10-K for the
fiscal year ended June 26, 1994), which are incorporated herein by
reference.
(10j) Factoring Contract and Security Agreement, dated as of May 2, 1988,
between Macfield, Inc., and First Factors Corp., and First Amendment thereto,
dated September 28, 1990, (both filed as Exhibit (10g) with the Company's Form
10-K for the fiscal year ended June 30, 1991), and Second Amendment to the
Factoring Contract and Security Agreement, dated March 1, 1992, (filed as
Exhibit (10g) with the Company's Form 10-K for the fiscal year ended June 28,
1992), and Letter Agreement dated August 31, 1993 and Amendment to Factoring
Contract and Security Agreement dated January 5, 1994, (filed as Exhibit (10h)
with the Company's Form 10-K for the fiscal year ended June 26, 1994), which
are incorporated herein by reference.
(10k) Factoring Agreement dated August 23, 1995, and a Letter Amendment
thereto dated October 16, 1995, by and between Unifi, Inc. and Republic
Factors Corp., (filed as Exhibit 10(k) with the Company's Form 10-K for the
fiscal year ended June 30, 1996), which is incorporated herein by reference.
IV-3
(10l) *Employment Agreement between Unifi, Inc. and G. Allen Mebane, dated
July 19, 1990, (filed as Exhibit (10h) with the Company's Form 10-K for the
fiscal year ended June 30, 1991), which is incorporated herein by reference.
(10m) *Employment Agreement between Unifi, Inc. and William T. Kretzer,
dated July 19, 1990, (filed as Exhibit (10i) with the Company's Form 10-K for
the fiscal year ended June 30, 1991), and Amendment to Employment Agreement
between Unifi, Inc. and William T. Kretzer, dated October 22, 1992 (filed as
Exhibit (10j) with the Company's Form 10-K for fiscal year ended June 27,
1993), which are incorporated herein by reference.
(10n) *Severance Compensation Agreement between Unifi, Inc. and William T.
Kretzer, dated July 20, 1996, expiring on July 19, 1999 (similar agreements
were signed with G. Allen Mebane, Robert A. Ward, Jerry W. Eller and G. Alfred
Webster)(filed as Exhibit (10n) with the Company's Form 10-K for fiscal year
ended June 30, 1996), which is incorporated herein by reference.
(10o) Credit Agreement, dated April 15, 1996, by and between Unifi, Inc.
and The Several Lenders from Time to Time Party thereto and NationsBank, N.A.
as agent, (filed as Exhibit (10o) with the Company's Form 10-K for the fiscal
year ended June 30, 1996), which is incorporated herein by reference.
(10p) *Deferral Agreement, dated November 21, 1997, by and between Unifi,
Inc. and William T. Kretzer, filed herewith.
.
(10q) *Severance Compensation Agreement between Unifi, Inc. and Willis C.
Moore, III, dated July 16, 1998, expiring on July 20, 2001 (similar agreements
were signed with James W. Brown, Jr., Kenneth L. Huggins, Stewart Q. Little,
Ralph D. Mayes, and Raymond W. Maynard), filed herewith.
(13a) Portions of Unifi, Inc.'s 1998 Annual Report to Shareholders which
are incorporated herein by reference, as a part of this Form 10-K for fiscal
year ended June 28, 1998, filed herewith.
(13b-1)Report of Independent Auditors/Ernst & Young LLP - on the Consolidated
Financial Statements of Unifi, Inc. as of June 28, 1998, and each of the three
years in the period ended June 28, 1998.
(21) Subsidiaries of Unifi, Inc.
(23) Consent of Ernst & Young LLP
(27) Financial Data Schedule
IV-4
(b) Reports on Form 8-K
None.
* NOTE: These Exhibits are management contracts or compensatory plans or
arrangements required to be filed as an exhibit to this Form 10-K pursuant to
Item 14(c) of this report.
IV-5
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
UNIFI, INC. AND SUBSIDIARIES
JUNE 28, 1998
(in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ---------- --------- ----------- ---------- ---------
Additions
-------------------
Balance Charged Charged to Balance
at to Other at
Beginning of Costs and Accounts- Deductions- End of
Description Period Expenses Describe Describe Period
- ----------- ----------- -------- --------- ----------- ---------
Allowance for doubtful accounts:
Year ended
June 28, 1998 $5,462 $3,917 $3,665(a) $(4,819) (b) $ 8,225
Year ended
June 29, 1997 6,595 4,390 - (5,523) (b) 5,462
Year ended
June 30, 1996 6,452 3,660 - (3,517) (b) 6,595
(a) Primarily represents acquisition related adjustment to write-down acquired
accounts receivable to fair market value.
(b) Includes uncollectible accounts written off and customer claims paid, net
of certain recoveries.
Unrealized (gains)/losses on certain investments:
Year ended
June 28, 1998 $ - $ - $ - $ - $ -
Year ended
June 29, 1997 - - - - -
Year ended
June 30, 1996 (1,835) - 1,835 (c) - -
(c) Represents the change in fair market value of the related investment
securities and the entry to reflect the disposition of the underlying
investments.
EXHIBIT (10p)
DEFERRAL AGREEMENT
THIS DEFERRAL AGREEMENT ("Agreement"), effective the 21st day of November,
1997, between Unifi, Inc., a New York Corporation, ("Unifi"), and William T.
Kretzer (hereinafter referred to a the "Executive");
W I T N E S S E T H :
WHEREAS, the Executive is the President and Chief Executive Officer as well
as Chairman of the Executive Committee of Unifi; and,
WHEREAS, the Executive was granted stock options to purchase 163,668 shares
of Unifi Common stock at an option price of $4.80 per share (as adjusted for
stock splits and stock dividends) on January 21, 1988 (the "Stock Option") under
the Unifi, Inc. 1982 Incentive Stock Option Plan ("ISOP"); and,
WHEREAS, the exercise of the Stock Option would result in the Executive
recognizing taxable compensation; and,
WHEREAS, the Executive and Unifi desire to enter into this Deferral
Agreement to defer such taxable compensation as provided herein.
NOW THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, it is agreed as follows:
1. DEFERRAL. Pursuant to the second paragraph of Section 3 of
his Incentive Stock Option Agreement dated January 21, 1988
with Unifi as amended effective November 21, 1997 ("ISOP"
Agreement), the Executive will tender on or before January 20,
1998, to Unifi such number of his previously acquired
outstanding shares of Unifi common stock that has been held
for at least six (6) months and that has a fair market value
equal to the exercise price of the Stock Option in exchange
for an equivalent number of shares of Unifi common stock (the
"Exchange Shares") and the right to receive 163,668 shares less
the amount of Exchange Shares of Unifi common stock in the
future ("Deferral Shares") under the terms of this Agreement.
Unifi shall issue the Deferral Shares to the Trustee of the
Unifi, Inc. Trust for Deferred Compensation Arrangements
("Trust").
2. INCOME ON SHARES. Any and all dividends paid on the Deferral
Shares shall be held as additional deferral compensation for
the Executive's account and distributed as provided in
paragraph 3 hereof. Additionally, as of each January 1st and
July 1st until all accumulated dividends are fully and finally
paid out, Unifi shall pay to the Trust as additional deferral
compensation for the Executive, interest on any accumulated
dividends as heretofore provided in such amounts after
considering the income generated by the Trusts on said
accumulated dividends as is necessary to provide a rate of
return equal to the Prime Rate as hereinafter described for
the last business day preceding the applicable January 1st and
July 1st plus three (3) percentage points (such sum being
referred to as the "Interest Factor"), multiplied by the
balance of said accumulated dividends, including the amount of
Interest previously credited on such accumulated dividends as
of the previous day (i.e., December 31st or June 30th). Said
accumulated dividends and the interest thereon are hereafter
referred to herein as "Accumulated Dividends".
The term "Prime Rate" used in this Agreement shall be the
base rate on the Corporate loans posted by at least seventy-
five (75%) percent of the nation's thirty (30) largest banks
as reported in the Wall Street Journal or, if no longer
published, a similar publication for the last business day
preceding the applicable January 1st and July 1st.
3. DEFERRAL PERIOD. Ten (10) years from the date hereof the
Executive or his designated beneficiary, if the Executive
should die before the expiration of said ten (10) year period,
will be entitled to receive the Deferral Shares and
Accumulated Income in the form of equal annual distributions
over a period of five (5) years.
4. DEATH OF EXECUTIVE. If the Executive should die prior to the
time that all of his Deferral Shares and Accumulated Dividends
(cumulatively referred to as "Deferral Compensation") have been
completely distributed to him, the Executive's designated
beneficiary will be entitled to receive the amount he was
entitled to receive under paragraph 3 in the manner specified
therein.
5. BENEFICIARIES. The Executive shall have the right at any
time to name any person or persons (including his estate or
any trust) as his beneficiary hereunder by filing written
notice with the Compensation Committee. The Executive's last
written designation to the Compensation Committee shall be
deemed his last designated beneficiary. The Executive may
name a contingent beneficiary or beneficiaries to receive
payment in the event of the death of his primary beneficiary.
If the Executive has not designated a beneficiary or his
designated beneficiary is not alive when payments are due
hereunder, the Executive's designated beneficiary shall be
deemed his estate. All designations of the Executive's
beneficiary shall not be effective unless countersigned by a
member of the Compensation Committee.
6. ASSIGNMENT. Except as specifically provided in paragraph 5
herein, relating to the designation of a beneficiary, neither
the Executive nor his designated beneficiary may assign,
transfer, pledge, encumber, or hypothecate this Agreement, or
any rights hereunder, or any part hereof (whether by operation
of law or otherwise), and this Agreement shall not be subject
to the execution, attachment, or similar proceeding. Any
attempted assignment, transfer, pledge, encumbrance,
hypothecation, or other disposition of this agreement,
contrary to the provisions hereof, and the levy of any
attachment or similar proceedings upon this Agreement, shall
be null and void and without effect.
7. NO VESTED BENEFIT. Nothing contained herein shall be deemed
to give the Executive any vested interest in any specific
assets of Unifi and no benefits to which the Executive or his
beneficiary is entitled hereunder shall give the Executive any
greater right to receive payment from Unifi than the right of
an unsecured general creditor of Unifi.
8. TERMINATION BY BOARD. The Board of Directors ("Board") of
Unifi, excluding the Executive if he is a member of the Board,
may at any time, in its sole discretion, terminate this
agreement and distribute to the Executive the balance of his
Deferral Compensation at one time.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the Executive and Unifi, and may not be
altered, modified, amended, or rescinded except in writing,
signed by the parties hereto. It is further understood that
this Agreement shall inure to the benefit of the parties,
their successors or assigns.
10. GOVERNING LAW. This Agreement, and the interpretation
thereof, shall be governed by the laws of the State of North
Carolina and shall be deemed to have been made in the State of
North Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement, on the day
and year first above written.
UNIFI, INC.
____________11/21/97____________ By:_________Willis C. Moore, III___
Date Willis C. Moore, III
Senior Vice-President and
Chief Financial Officer
____________11/21/97_____________ _________William T. Kretzer________
Date William T. Kretzer
EXHIBITY (10q)
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") between UNIFI, INC., a New York corporation
(the "Company"), and WILLIS C. MOORE, III ("Executive") effective the 16th
day of July, 1998.
WITNESSETH:
WHEREAS, WILLIS C. MOORE, III is presently a Senior Vice President and
Chief Financial Officer for the Company, has been an Officer of the Company
since 1995, and is and has been an integral part of the Company's Management;
and
WHEREAS, the Company's Board of Directors considers the establishment and
maintenance of a sound and vital Management to be essential in protecting and
enhancing the best interests of the Company and its Shareholders, recognizes
that the possibility of a change in control exists and that such possibility,
and the uncertainty and questions which it may raise among Management, may
result in the departure or distraction of Management personnel to the
detriment of the Company and its Shareholders; and
WHEREAS, the Executive desires that in the event of any change in control
he will continue to have the responsibility and status he has earned; and
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of the Executive, as a member of the Company's Management, to his assigned
duties without distraction in potentially disturbing circumstances arising
from the possibility of a change in control of the Company.
NOW, THEREFORE, in order to induce the Executive to remain in the
employment of the Company and in consideration of the Executive agreeing to
remain in the employment of the Company, subject to the terms and conditions
set out below, the Company agrees it will pay such amount, as provided in
Section 4 of this Agreement, to the Executive, if the Executive's employment
with the Company terminates under one of the circumstances described herein
following a change in control of the Company, as herein defined.
Section 1. Term: This Agreement shall terminate, except to the extent
that any obligation of the Company hereunder remains unpaid as of such time,
upon the earliest of (i) July 20, 2001 if a Change in Control of the Company
has not occurred within such period; (ii) the termination of the Executive's
employment with the Company based on Death, Disability (as defined in Section
3(b), Retirement (as defined in Section 3(c)), Cause (as defined in Section
3(d)) or by the Executive other than for Good Reason (as defined in Section
3(e)); and (iii) two years from the date of a Change in Control of the Company
if the Executive has not voluntarily terminated his employment for Good Reason
as of such time.
Section 2. Change in Control: No compensation shall be payable under
this Agreement unless and until (a) there shall have been a Change in Control
of the Company, while the Executive is still an employee of the Company and (b)
the Executive's employment by the Company thereafter shall have been terminated
in accordance with Section 3. For purposes of this Agreement, a Change in
Control of the Company shall be deemed to have occurred if (i) there shall
be consummated (x) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company's Common Stock would be converted into cash, securities
or other property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company, or (ii) the Shareholders of
the Company approved any plan or proposal for the liquidation or dissolution
of the Company, or (iii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of twenty percent (20%) or more of the Company's
outstanding Common Stock, or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constitute the entire Board of
Directors shall cease for any reason to constitute a majority thereof unless
the election, or the nomination for election by the Company's Shareholders, of
each new Director was approved by a vote of at least two-thirds of the
Directors then still in office who were Directors at the beginning of the
period.
Section 3. Termination Following Change in Control: (a) If a Change in
Control of the Company shall have occurred while the Executive is still an
employee of the Company, the Executive shall be entitled to the compensation
provided in Section 4 upon the subsequent termination of the Executive's
employment with the Company by the Executive voluntarily for Good Reason or by
the Company unless such termination by the Company is as a result of (i) the
Executive's Death, (ii) the Executive's Disability (as defined in Section
(3)(b) below); (iii) the Executive's Retirement (as defined in Section 3(c)
below); (iv) the Executive's termination by the Company for Cause(as defined
in Section 3(d) below); or (v) the Executive's decision to terminate
employment other than for Good Reason (as defined in Section 3(e) below).
(b) Disability: If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties with the Company on a full-time basis for six months (including months
before and after the change of control) and within 30 days after written
notice of termination is thereafter given by the Company the Executive shall
not have returned to the full- time performance of the Executive's duties, the
Company may terminate this Agreement for "Disability."
(c) Retirement: The term "Retirement" as used in this Agreement shall mean
termination in accordance with the Company's retirement policy or any
arrangement established with the consent of the Executive.
(d) Cause: The Company may terminate the Executive's employment for Cause.
For purposes of this Agreement only, the Company shall have "Cause" to
terminate the Executive's employment hereunder only on the basis of fraud,
misappropriation or embezzlement on the part of the Executive or malfeasance
or misfeasance by said Executive in performing the duties of his office, as
determined by the Board of Directors. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been a meeting of the Company's Board of Directors
(after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), and the delivery to the Executive of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
said Board of Directors stating that in the good faith opinion of the Board
the Executive was guilty of conduct set forth in the second sentence of this
Section 3(d) and specifying the particulars thereof in detail.
(e) Good Reason: The Executive may terminate the Executive's employment for
Good Reason at any time during the term of this Agreement. For purposes of
this Agreement "Good Reason" shall mean any of the following (without the
Executive's express written consent):
(i) the assignment to the Executive by the Company of duties inconsistent
with the Executive's position, duties, responsibilities and status with the
Company immediately prior to a Change in Control of the Company; or a change
in the Executive's titles or offices as in effect immediately prior to a
Change in Control of the Company; or any removal of the Executive from or
any failure to reelect the Executive to any of the positions held prior to the
change of control, except in connection with the termination of his employment
for Disability, Retirement, or Cause, or as a result of the Executive's Death;
or by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's base salary as in effect
on the date hereof or as the same may be increased from time to time during
the term of this Agreement or the Company's failure to increase (within 12
months of the Executive's last increase in base salary) the Executive's base
salary after a Change in Control of the Company in an amount which at least
equals, on a percentage basis, the average percentage increase in base salary
for all executive officers of the Company effected in the preceding 12 months;
(iii) any failure by the Company to continue in effect any benefit plan or
arrangement (including, without limitation, the Company's Profit Sharing Plan,
group life insurance plan and medical, dental, accident and disability plans)
in which the Executive is participating at the time of a Change in Control of
the Company (or any other plans providing the Executive with substantially
similar benefits) (hereinafter referred to as "Benefit Plans"), or the taking
of any action by the Company which would adversely affect the Executive's
participation in or materially reduce the Executive's benefits under any such
Benefit Plan or deprive the Executive of any material fringe benefit enjoyed
by the Executive at the time of a Change in Control of the Company;
(iv) any failure by the Company to continue in effect any plan or arrangement
to receive securities of the Company (including, without limitation, Stock
Option Plans or any other plan or arrangement to receive and exercise stock
options, restricted stock or grants thereof) in which the Executive is
participating at the time of a Change in Control of the Company (or plans or
arrangements providing him with substantially similar benefits) (hereinafter
referred to as "Securities Plans") and the taking of any action by the Company
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any such Securities Plan;
(v) any failure by the Company to continue in effect any bonus plan,
automobile allowance plan, or other incentive payment plan in which the
Executive is participating at the time of a Change in Control of the Company,
or said Executive had participated in during the previous calendar year;
(vi) a relocation of the Company's principal executive offices to a location
outside of North Carolina, or the Executive's relocation to any place other
than the location at which the Executive performed the Executive's duties
prior to a Change in Control of the Company, except for required travel by the
Executive on the Company's business to an extent substantially consistent with
the Executive's business travel obligations at the time of a Change in Control
of the Company;
(vii) any failure by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled at the time of a Change
in Control of the Company;
(viii) any breach by the Company of any provision of this Agreement;
(ix) any failure by the Company to obtain the assumption of this Agreement by
any successor or assign of the Company; or
(x) any purported termination of the Executive's employment which is not made
pursuant to a Notice of Termination satisfying the requirements of Section
3(f).
(f) Notice of Termination: Any termination by the Company pursuant to
Section 3(b), 3(c) or 3(d) shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement,
no such purported termination by the Company shall be effective without such
Notice of Termination.
(g) Date of Termination: "Date of Termination" shall mean (a) if Executive's
employment is terminated by the Company for Disability, 30 days after Notice
of Termination is given to the Executive (provided that the Executive shall
not have returned to the performance of the Executive's duties on a full-time
basis during such 30 day period) or (b) if the Executive's employment is
terminated by the Company for any other reason, the date on which a Notice of
Termination is given; provided that if within 30 days after any Notice of
Termination is given to the Executive by the Company the Executive notifies
the Company that a dispute exists concerning the termination, the Date of
Termination shall be the date the dispute is finally determined, whether by
mutual agreement by the parties or upon final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected) or (c) the date the Executive notifies
the Company in writing that he is terminating his employment and setting forth
the Good Reason (as defined in Section 3(e)).
Section 4. Severance Compensation upon Termination of Employment. If the
Company shall terminate the Executive's employment other than pursuant to
Section 3(b), 3(c) or 3(d) or if the Executive shall voluntarily terminate his
employment for Good Reason, then the Company shall pay to the Executive as
severance pay in a lump sum, in cash, on the fifth day following the Date of
Termination, an amount equal to 2.99 times the annualized aggregate
annual compensation paid to the Executive by the Company or any of its
subsidiaries during the five calendar years preceding the Change in Control of
the Company; provided, however, that if the lump sum severance payment under
this Section 4, either alone or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code")), such lump sum severance payment shall be
reduced to the largest amount as will result in no portion of the lump sum
severance payment under this Section 4 being subject to the excise tax imposed
by Section 4999 of the Code. The determination of any reduction in the lump
sum severance payment under this Section 4 pursuant to the foregoing proviso
shall be made by the Company's Independent Certified Public Accountants, and
their decision shall be conclusive and binding on the Company and the
Executive.
Section 5. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights: (a) The Executive shall not be required to mitigate damages or the
amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for
under this Agreement be reduced by any compensation earned by the Executive as
the result of employment by another employer after the Date of Termination, or
otherwise.
(b) The provisions of this Agreement, and any payment provided for hereunder,
shall not reduce any amounts otherwise payable, or in any way diminish the
Executive's rights under any employment agreement or
other contract, plan or employment arrangement with the Company.
(c) The Company shall, upon the termination of the Executive's employment
other than by Death, Disability (as defined in Section 3(b)), Retirement (as
defined in Section 3(c)) or Cause (as defined in Section 3(d)), or the
termination of the Executive's employment by the Executive without Good
Reason, maintain in full force and effect, for the Executive's continued
benefit until the earlier of (a) two years after the Date of Termination or
(b) Executive's commencement of full time employment with a new employer, all
life insurance, medical, health and accident, and disability plans, programs
or arrangements in which he was entitled to participate immediately prior to
the Date of Termination, provided that his continued participation is possible
under the general terms and provisions of such plans and programs. In the
event the Executive is ineligible under the terms of such plans or programs to
continue to be so covered, the Company shall provide substantially equivalent
coverage through other sources.
(d) The Executive's account and rights in and under Unifi, Inc.'s Profit
Sharing Plan and Trust, Unifi, Inc.'s Retirement Savings Plan and any other
retirement benefit or incentive plans, shall remain subject to the terms and
conditions of the respective plans as they existed at the time of the
termination of the Executive's employment.
Section 6. Successor to the Company: (a) The Company will require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement expressly, absolutely and unconditionally
to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor or assign to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this Section 6 or which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law. If at any time during the term of this Agreement the
Executive is employed by any corporation a majority of the voting securities
of which is then owned by the Company, "Company" as used in Sections 3, 4 and
11 hereof shall in addition include such employer. In such event, the Company
agrees that it shall pay or shall cause such employer to pay any amounts owed
to the Executive pursuant to Section 4 hereof.
(b) If the Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to the Executive's legatee, or
other designee or, if there be no such designee, to the Executive's estate.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives or attorney-in-fact, executors or
administrators, heirs, distributees and legatees.
Section 7. Notice: For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Unifi, Inc.
P. O. Box 19109
Greensboro, NC 27419-9109
ATTENTION: Mr. William T. Kretzer
President and Chief Executive Officer
If to the Executive:
Mr. Willis C. Moore, III
3801 Roundhill Road
Greensboro, NC 27408
or such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
Section 8. Miscellaneous: (a) The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of
this Agreement, which shall remain in full force and effect.
(b) Any payment or delivery required under this Agreement
shall be subject to all requirements of the law with regard to withholding
(including FICA tax), filing, making of reports and the like, and Company
shall use its best efforts to satisfy promptly all such requirements.
(c) Prior to the Change in Control of the Company, as herein defined, this
Agreement shall terminate if Executive shall resign, retire, become
permanently and totally disabled, or die. This Agreement shall also terminate
if Executive's employment as an executive officer of the Company shall have
been terminated for any reason by the Board of Directors of the Company as
constituted more than three (3) months prior to any Change in Control of the
Company, as defined in Section 2 of this Agreement.
Section 9. Legal Fees and Expenses: The Company shall pay all legal fees and
expenses which the Executive may incur as a result of the Company's contesting
the validity, enforceability or the executive's interpretation of, or
determinations under, this Agreement.
Section 10. Confidentiality: The Executive shall retain in confidence any
and all confidential information known to the Executive concerning the Company
and its business so long as such information is not otherwise publicly
disclosed.
IN WITNESS WHEREOF, Unifi, Inc. has caused this Agreement to be signed by a
member of the Company's Compensation Committee who is an outside director
pursuant to resolutions duly adopted by the Board of Directors and its seal
affixed hereto and the Executive has hereunto affixed his hand and seal
effective as of the date first above written.
UNIFI, INC.
BY: ROBERT A. WARD (SEAL)
Compensation Committee
WILLIS C. MOORE, III (SEAL)
WILLIS C. MOORE, III
Vice President and Chief Financial Officer
EXHIBIT (13a)
Consolidated balance sheets
- --------------------------------------------------------------------------------
EXHIBIT (13b-1)
report of Independent Auditors
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders of Unifi, Inc.
We have audited the accompanying consolidated balance sheets of Unifi,
Inc. as of June 28, 1998, and June 29, 1997, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the three years in the period ended June 28, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Unifi, Inc. at
June 28, 1998, and June 29, 1997, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended June 28,
1998, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
- ---------------------
Ernst & Young LLP
Greensboro, North Carolina
July 14, 1998
17
(Exhibit 21)
UNIFI, INC.
SUBSIDIARIES
Name Address Incorporation Unifi Percentage of
Voting Securities Owned
Unifi, FSC Ltd. Agana, Guam Guam 100%
Unifi Textured
Yarns Letterkenny, Ireland United Kingdom 100%
Europe, Ltd.
Unifi International Greensboro, NC North Carolina 100%
Services, Inc.
Unifi Manufacturing, Greensboro, NC North Carolina 100%
Inc. ("UMI")
Unifi Sales & Greensboro, NC North Carolina 100%
Distribution, Inc.
Unifi Manufacturing Greensboro, NC North Carolina 95%
Virginia, LLC (5% - UMI)
Unifi Export Sales, Greensboro, NC North Carolina 95%
LLC (5% - UMI)
Unifi Equipment Greensboro, NC North Carolina 100%
Leasing, LLC
Unifi Textured Greensboro, NC North Carolina 85.42% - UMI
Polyester, LLC (14.58% - Burlington
Industries, Inc.)
Spanco Industries, Greensboro, NC North Carolina 100% - UMI
Inc. ("SI")
[ SI owns: 100% Spanco International, Inc., ("SII"), a North
Carolina corporation]
[SII owns: 67% Spanco - Latin America, S.A., a Columbian sociedad
anonime; the remainder of Spanco Latin America is presently owned by:
1% Unifi designees
32% Spanco - Panama, S.A. ]
Consent of Independent Auditors
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Unifi, Inc. of our report dated July 14, 1998, included in the 1998 Annual
Report to Shareholders of Unifi, Inc.
Our audit also included the financial statement schedule of Unifi, Inc. listed
in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
In addition, we consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-23201) pertaining to the Unifi, Inc. 1982 Incentive
Stock Option Plan and the 1987 Non-Qualified Stock Option Plan, and the
Registration Statement (Form S-8 No. 33-53799) pertaining to the Unifi, Inc.
1992 Incentive Stock Option Plan and Unifi Spun Yarns, Inc. 1992 Employee
Stock Option Plan, and Registration Statement (Form S-8 No. 333-35001)
pertaining to the Unifi, Inc. 1996 Incentive Stock Option Plan and the Unifi,
Inc. 1996 Non-Qualified Stock Option Plan of our report dated July 14, 1998,
with respect to the consolidated financial statements and schedule of Unifi,
Inc. incorporated herein by reference in this Annual Report (Form 10-K) for
the year ended June 28, 1998.
Ernst & Young LLP
Greensboro, North Carolina
September 25, 1998