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
[FEE REQUIRED]
For the fiscal year ended Commission File
June 26, 1994 Number 1-10542
- - - -------------------------- ---------------
UNIFI, INC.
- - - -------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
New York 11-2165495
- - - ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7201 West Friendly Avenue
Greensboro, North Carolina 27410
- - - --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including a/c: (910) 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
-----
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 nonaffiliates of
the Registrant as of August 5, 1994: $1,495,847,815
--------------
Number of shares outstanding as of August 5, 1994: 70,452,432
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Documents Incorporated By Reference
Portions of the Annual Report to shareholders of Unifi, Inc. for
the fiscal year ended June 26, 1994, 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 20, 1994,
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-5.
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 engaged predominantly in the business of processing
yarns by: texturing of synthetic filament polyester and nylon
fiber; and spinning of cotton and cotton blend fibers.
The Company's texturing operation mainly involves purchasing
partially oriented yarn (POY), which is either raw polyester or
nylon filament fiber, from chemical manufacturers and using high
speed machines to draw, heat and twist the POY to produce yarns
having various physical characteristics, depending upon its
ultimate end-use. The Company's spinning operation mainly involves
the spinning on either open-end or ring equipment of cotton, cotton
and undyed synthetic blends, and cotton and pre-dyed polyester
blends into yarns of different strengths and thickness.
The Company currently sells textured polyester yarns, nylon
yarns, dyed yarns, covered yarns, spun yarns made of cotton, cotton
and un-dyed synthetic blends, and cotton and pre-dyed polyester
blends domestically and internationally to weavers and knitters who
produce fabrics for the apparel, industrial, hosiery, home
furnishing, auto upholstery, activewear, and underwear markets.
On August 18, 1993, the Company concluded an agreement with
the principals of Pioneer Yarn Mills, Inc., Pioneer Spinning, Inc.,
Edenton Cotton Mills, Inc., and Pioneer Cotton Mill, Inc., (the
"Pioneer Corporations"), all of which are affiliated privately-held
North Carolina corporations, where through a Triangular Merger, the
Pioneer Corporations would merge into Unifi Spun Yarns, Inc., a
wholly-owned subsidiary of Unifi ("USY"). The Pioneer
Corporations' primary products included spun yarns made solely of
cotton, although two of the Pioneer Corporations' plants have or
will have the capability of adding synthetic blends.
The Company, internationally, has manufacturing facilities in
Letterkenny, County Donegal, Republic of Ireland, which texturizes
polyester, as well as producing its own polymer (POY).
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SOURCES AND AVAILABILITY OF RAW MATERIALS:
A. POY. The primary suppliers of POY to the Company are E.
I. DuPont de Nemours and Company, Hoechst Celanese Corporation, and
Wellman Industries, with the majority of the Company's POY being
supplied by DuPont. 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.
B. Cotton. The Company buys its cotton, which is a commodity
and is traded on established markets, from brokers such as Dunavant
Enterprises, HoHenBerg Brothers Co., Staple Cotton, and Stahel
(America). The Company has not had and does not anticipate any
material difficulty in obtaining cotton.
PATENTS AND LICENSES: The Company currently has several
patents and registered trademarks, including the following:
DATE ISSUED
PATENT TITLE/DESCRIPTION PAT/APP. NO. OR APPLIED
- - - --------------------------- ------------- -------------
Yarn Package Cover 080,654 06/18/93
Wallpaper Backing 1,317,705 (Canada) 05/18/93
Nylon/Lycra Composit Yarn 5,237,808 08/24/93
Polyester Substrate (Vinyl) 5,063,108 11/05/91
Polyester Substrate (Vinyl) 5,043,208 08/27/91
Continuous Multi-Filament 4,935,293 06/19/90
Polyester Substrate
Wallpaper Backing 4,925,726 05/15/90
Wallpaper Backing 4,874,019 10/17/89
Wallpaper Backing 325,028 07/26/89
(United Kingdom)
Friction Discs For False- 4,129,980 12/19/78
Twist Head
Apparatus for Restarting 4,125,229 11/14/78
a Broken Thread or Yarn
Strand During a Winding
Process
Safety Guard for the Blade 4,086,698 05/02/78
of Carton Openers
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REGISTRATION/ DATE REGISTRATION
TRADEMARK NAME SERIAL NO. FILED
- - - ----------------------- ------------- ----------------
Unifi 299,227 07/28/92
Quality Through Pride
(Stylized)
Unifi 261,913 04/02/92
Unifi (Stylized) 261,912 04/02/92
Trifi 1,703,349 07/28/92
Mactex 1,511,013 11/01/88
Bi-Dye 1,105,160 06/19/84
The Company does not have any patents, trademarks, licenses,
or franchises which are material to its business as a whole.
CUSTOMERS: The Company in fiscal year ended June 26, 1994,
sold textured and spun yarns to approximately 1,000 customers, one
customer's purchases were approximately 12% of the net sales during
said period, the ten largest customers accounted for approximately
30% of the total sales and 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.
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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,
covered yarns and cotton and cotton blend yarns compete with a
number of other domestic producers of such yarns. In the sale of
polyester filament yarns major competitors are Atlas Yarn Company,
Inc., Burlington Industries, Inc. and Milliken & Company, in the
sale of nylon yarns, dyed yarns, and covered yarns major
competitors are Glen Raven Mills, Inc., Jefferson Mills, Inc.,
Spanco Yarns, Inc., Regal Manufacturing Company and Spectrum Dyed
Yarns, Inc., and in the sale of cotton and cotton blend yarns major
competitors are Parkdale Mills, Inc., Avondale Mills, Inc.,
Harriett & Henderson, Mayo Yarns, Inc. and TNS Mills, Inc..
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 employees of the Company is
approximately 6,000 full-time employees.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC INTERNATIONAL
OPERATIONS AND EXPORT SALES: The information included under the
heading "Business Segments and Foreign Operations" on page 19 of
the Annual Report of the Company to the Shareholders for the fiscal
year ended June 26, 1994, is incorporated herein by reference. In
addition, on September 9, 1994, the Company completed the sale of
its wholly-owned French subsidiary, Unifi Texturing, S.A. ("UTSA")
located in St. Juliene, France, to Continental Fibre, Spa.
ITEM 2. DESCRIPTION OF PROPERTY:
The following table sets forth the location and general
character of the principal plants and other physical properties
(properties) of the Company, which contain approximately 6,775,370
sq. ft. of floor space. All properties are well maintained and in
good operating condition.
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APPROXIMATE
LOCATION OF AREA
FACILITY (SQUARE FEET) HOW HELD TYPE OF OPERATION
- - - ------------------ ------------- --------- --------------------
Yadkinville, NC 1,831,000 Owned Texturizing of POY, ware-
housing and office space
Greensboro, NC 65,000 Leased (1) Executive offices
Staunton, VA 424,000 Owned Texturizing of POY, ware-
housing and office space
Letterkenny, 488,000 Owned Production of filament
County Donegal, polyester fiber, texturiz-
Ireland ing facility, warehousing
and office space
Archdale, NC 122,000 Owned (2) Production of covered
yarns and associated
warehousing
301 N. Hwy St. 160,000 Owned (2) Production of covered
Madison, NC yarns and associated
warehousing
Piedmont Street 504,000 Owned (2) Texturizing of nylon
Madison, NC and polyester, and associ-
ated warehousing
200 S Ayersville Rd. 79,000 Owned (2) Transportational
Madison, NC Terminal
Decatur Warehouse
Madison, NC 31,000 Owned Nylon Warehouse
Ayersville Road 314,000 Owned (2) Plant 1 - Texturizing
Mayodan, NC of nylon, associated ware-
housing and office space
Ayersville Road 213,000 Owned (2) Plant 5 - Production
Mayodan, NC of covered yarns and asso-
ciated warehousing
Cardwell Road 130,000 Owned (2) Dyeing facility
Mayodan, NC
Mayodan, NC 150,000 Owned Central Distribution
CDC Center
Vance Street Ext. 485,000 Owned (2) Plants 2 & 4 - Textur-
Reidsville, NC izing of polyester, dyeing
and associated warehousing
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SR 770 East 230,000 Owned (2) Texturizing of nylon,
Stoneville, NC production of covered yarn
and associated warehousing
Distribution Center 20,000 Owned (2) Distribution Center
Fort Payne, AL and Office Space
State Road 1366 151,000 Owned (3) Spun Cotton Yarn Pro-
Booneville, NC duction and office space
Oakland Avenue 211,000 Owned (3) Spun Cotton Yarn Pro-
Eden, NC duction and office space
Oakland Avenue 195,000 Owned (3) Spun Cotton Yarn Pro-
Eden, NC duction and office space
U.S. Route 311 214,000 Owned (3) Spun Cotton Yarn Pro-
Walnut Cove, NC duction and office space
400 West Franklin St. 172,000 Owned (3) Spun Cotton Yarn Pro-
Mt. Pleasant, NC duction and office space
420 Elliot 114,600 Owned (4) Spun Cotton Yarn Pro-
Edenton, NC duction and office space
2000 Boone Trail Road 137,850 Owned (4) Spun Cotton Yarn Pro-
Sanford, NC duction and office space
2000 Boone Trail Road 77,520 Owned (4) Spun Cotton Yarn Pro-
Sanford, NC duction and office space
1901 Boone Trail Road 245,200 Owned (4) Spun Cotton Yarn Pro-
Sanford, NC duction and office space
9480 Neuville Avenue 11,200 Owned Nylon covered yarn and
Hickory, NC cotton warehouse
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The Company leases sales offices and apartments in New York
City and Coleshill, England, and has a representative office in
Tokyo, Japan.
(1) This property consists of a building containing approximately
65,000 square feet which is being used by the Company as its
executive offices and is located on a tract of land containing
approximately 8.99 acres and is known as 7201 West Friendly Avenue,
Greensboro, North Carolina. This property is leased by Unifi, Inc.
from NationsBank, Trustee under the Unifi, Inc. Profit Sharing Plan
and Trust, and Wachovia Bank & Trust Company, N.A., Independent
Trustee. In September, 1991, the Company exercised its option to
extend the term of the lease on this property for five (5) years,
through March 13, 1997. 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 year ended June 28, 1987 and which is by
reference incorporated herein.
(2) Acquired pursuant to the merger of Macfield into Unifi on
August 8, 1991.
(3) Acquired pursuant to the Reverse Triangular Merger with USY
(formerly Vintage Yarns, Inc.) on April 23, 1993.
(4) Acquired pursuant to the Triangular Merger of the Pioneer
Corporations into USY on August 18, 1993.
The information included under Leases, Contingencies and
Commitments on page 19 of the Annual Report to Shareholders for
fiscal year ended June 26, 1994, is incorporated herein by
reference.
ITEM 3. LEGAL PROCEEDINGS:
The Company is not currently involved in any litigation which
is considered as material, as that term is used in Item 103 of the
Regulations 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 26, 1994.
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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" on page 23 of the Annual Report of Unifi,
Inc. to its shareholders for the year ended June 26, 1994, is
incorporated herein by reference.
(b) Approximate Number of Equity Security Holders:
Title of Class Number of Record Holders
----------------- ------------------------
(as of August 5, 1994)
------------------------
Common Stock, $.10 par value 1,524
---------
(c) CASH DIVIDEND POLICY. In April 1990, the Board of
Directors of the Company adopted a resolution that it intended to
pay a cash dividend in quarterly installments equal to
approximately thirty percent (30%) of the earnings after taxes of
the Company for the previous year, payable as hereafter declared by
the Board of Directors. Prior to this action by the Board of
Directors, the Company had since 1978 followed a policy of
retaining earnings for working capital, acquisitions, capital
expansion and modernization of existing facilities. The Company
paid a quarterly dividend of $.14 per share on its common stock for
each quarter of the 1994 fiscal year. The Board of Directors in
July 1994, declared a cash dividend in the amount of $.10 per share
on each issued and outstanding share of the common stock of the
Company, payable on August 12, 1994, to shareholders of record at
the close of business on August 5, 1994.
(d) 6% CONVERTIBLE SUBORDINATED NOTES DUE MARCH 15, 2002.
The information contained under the heading "Notes
Payable/Long-Term Debt", regarding the Convertible Subordinated
Notes, on page 18 of the Annual Report of Unifi, Inc. to its
shareholders for the year ended June 26, 1994, is incorporated
herein by reference. For additional information regarding the 6%
Convertible Subordinated Notes Due 2002 reference is made to
Exhibit (4b) of this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA:
The financial data for the five fiscal years included under
the heading "Summary of Selected Data" on page 22 of the Annual
Report of Unifi, Inc. to its shareholders for the year ended June
26, 1994, is incorporated herein by reference.
II-1
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" on pages
20 and 21 of the Annual Report of Unifi, Inc. to its shareholders
for the year ended June 26, 1994, is incorporated herein by
reference. In addition, on September 9, 1994, the Company
completed the sale of its wholly-owned French subsidiary, Unifi
Texturing, S.A. ("UTSA") located in St. Juliene, France, to
Continental Fibre, Spa.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The consolidated financial statements and notes beginning on
page 19 and the information included under the heading "Quarterly
Results" on page 22 of the Annual Report of Unifi, Inc. to its
shareholders for the year ended June 26, 1994, 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 the 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", "Vote Required", "Security
Holding of Directors, Nominees, And Executive Officers", "Directors
Compensation", and "Committees of The Board of Directors",
beginning on page 2 and ending on page 6 of the definitive Proxy
Statement filed with the Commission since the close of the
Registrant's fiscal year ended June 26, 1994, 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 Mr. Mebane is 65 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 since 1974,
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.
VICE CHAIRMAN OF THE BOARD OF DIRECTORS
WILLIAM J. ARMFIELD, IV Mr. Armfield is 59 and was President of
Macfield, Inc. from 1970 until August 8, 1991, when Macfield merged with and
into Unifi. He has been a Director of Unifi and was elected as one of the
three members of the Office of Chairman on August 8, 1991. On October 22,
1992, Mr. Armfield was elected as Vice Chairman of the Board of Directors.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WILLIAM T. KRETZER Mr. Kretzer is 48 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 is a member of the Executive Committee.
EXECUTIVE VICE PRESIDENTS
JERRY W. ELLER Mr. Eller is 54 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.
III-1
ROBERT A. WARD Mr. Ward is 54 and has been a Vice President or Executive
Vice President since 1974. He has been a member of the Board of Directors
since its inception in 1971 and is a member of the Executive Committee. Mr.
Ward is also the Company's Chief Financial Officer.
G. ALFRED WEBSTER Mr. Webster is 46 and has been a Vice President or
Executive Vice President since 1979. He has been a member of the Board of
Directors since 1985 and is a member of the Executive Committee.
SENIOR VICE PRESIDENTS
GEORGE R. PERKINS, JR. Mr. Perkins is 54 and was the President and a
director of Pioneer Yarn Mills, Inc., Pioneer Spinning, Inc. and Pioneer
Cotton Mill, Inc. since each was founded in 1988, 1991, and 1993,
respectively, and of Edenton Cotton Mills, Inc., since its acquisition in
1989 (Pioneer Corporations) until August 18, 1993, when the Pioneer
Corporations merged with and into Unifi Spun Yarns, Inc. He has been a
director of Unifi since August 18, 1993, President and Chief Executive
Officer of Unifi Spun Yarns, Inc. since August 19, 1993 and a Senior Vice
President of Unifi since October 21, 1993.
KENNETH L. HUGGINS Mr. Huggins is 50, had been an employee of Macfield
since 1970 and, at the time of the merger, was serving as a Vice President of
Macfield, Inc. 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, Inc. He is Senior Vice President of Unifi and
is also the Assistant to the President.
RAYMOND W. MAYNARD Mr. Maynard is 51 and had been a Vice President of
the Company since June 27, 1971 and a Senior Vice President of Unifi since
October 22, 1992.
These officers were elected by the Board of Directors of the
Registrant at the Annual Meeting of the Board of Directors held on October
21, 1993. 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.
(d) Compliance with Section 16(a) of the Exchange Act: Based solely
upon the review of the Form 3's and 4's and amendments thereto, furnished to
the Company during the most recent fiscal year, no Form 3's or Form 4's were
III-2
filed late by a director, officer, or beneficial owner of more than ten
percent of any class of equity securities of the Company. The Company
received written representation from reporting persons that Form 5's were not
required.
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", and
"Performance Graph-Shareholder Return on Common Stock" and the Report of The
Compensation And Stock Option Committees on Executive Compensation 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 26, 1994, 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 (10i), (10j), and (10k) 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" beginning
on page 4 and ending on 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 26, 1994, 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 26, 1994, and within 120
days after the close of said fiscal year, is incorporated herein by reference.
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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 21, 1994 By: ROBERT A. WARD
----------------------------------
Robert A. Ward, Executive Vice
President (Chief Financial Officer)*
September 21, 1994 By: WILLIAM T. KRETZER
----------------------------------
William T. Kretzer, President
(Chief Executive 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:
September 21, 1994 Chairman G. ALLEN MEBANE
--------------------------
and Director G. Allen Mebane
September 21, 1994 Vice Chairman WILLIAM J. ARMFIELD, IV
--------------------------
and Director William J. Armfield, IV
September 21, 1994 President, Chief
Executive Officer WILLIAM T. KRETZER
--------------------------
and Director William T. Kretzer
September 21, 1994 Executive Vice
President, Chief
Financial Officer ROBERT A. WARD
--------------------------
and Director Robert A. Ward
September 21, 1994 Executive Vice
President and JERRY W. ELLER
--------------------------
Director Jerry W. Eller
September 21, 1994 Executive Vice
President and G. ALFRED WEBSTER
--------------------------
Director G. Alfred Webster
September 21, 1994 Director CHARLES R. CARTER
--------------------------
Charles R. Carter
September 21, 1994 Director
--------------------------
Kenneth G. Langone
September 21, 1994 Director GEORGE R. PERKINS
--------------------------
George R. Perkins
September 21, 1994 Director DONALD F. ORR
--------------------------
Donald F. Orr
September 21, 1994 Director TIMOTHEUS R. POHL
--------------------------
Timotheus R. Pohl
* Mr. Ward is the Principal Financial and Accounting Officer and
has been duly authorized to sign on behalf of the Registrant.
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 year ended
June 26, 1994, 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 and 8 herein, the 1994 Annual Report to shareholders is
not deemed to be filed as part of this report.
Annual
Report
Pages
Consolidated Balance Sheets at June 26, 1994
and June 27, 1993 11
Consolidated Statements of Income for the
Years Ended June 26, 1994, June 27, 1993,
and June 28, 1992 12
Consolidated Statements of Changes in
Shareholders' Equity for the Years Ended
June 26, 1994, June 27, 1993 and June 28,
1992 13
Consolidated Statements of Cash Flows for
the Years Ended June 26, 1994, June 27,
1993 and June 28, 1992 14
Notes to Consolidated Financial Statements 15-19
Report of Independent Auditors 10
(a) 2. Financial Statement Schedules
Form 10-K
Pages
Schedules for the three years ended June 26,
1994:
I - Investments-Marketable Securities IV - 6
V - Property, Plant and Equipment IV - 7
VI - Accumulated Depreciation and
Amortization of Property, Plant
and Equipment IV - 8
VIII - Valuation and Qualifying Accounts IV - 9
IX - Short-Term Borrowings IV -10
X - Supplementary Income Statement
Information IV -11
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) Form of Agreement and Plan of Merger, dated as of May 24,
1991, by and between Unifi, Inc. and Macfield, Inc.,
including exhibits, filed as Exhibit 2.1 to Unifi, Inc.'s
Registration Statement on Form S-4 (Registration No.
33-40828) which is incorporated herein by reference.
(2a-2) Form 8-K, filed by Unifi, Inc. in relation to the
confirmation of the merger of Macfield, Inc. with and
into Unifi, Inc. and related exhibits, filed with the
Securities and Exchange Commission on August 8, 1991,
which is incorporated herein by reference.
(2a-3) Form of Agreement and Reverse Triangular Merger, dated
February 10, 1993, by and between Unifi, Inc. and Vintage
Yarns, Inc., filed as Exhibit 2.1 to Unifi, Inc.'s
Registration Statement on Form S-4 (Registration No.
33-58282), which is incorporated herein by reference.
(2a-4) Form 8-K, filed by Unifi, Inc. in relation to the
confirmation of the Reverse Triangular Merger, where
Vintage Yarns, Inc. became a wholly-owned subsidiary of
Unifi, and related exhibits, filed with the Securities
and Exchange Commission on May 10, 1993, which is
incorporated herein by reference.
(2a-5) Form of Agreement and Plan of Triangular Merger, dated
July 15, 1993, by and between Unifi, Inc. and Pioneer
Yarn Mills, Inc., Pioneer Spinning, Inc., Edenton Cotton
Mills, Inc., and Pioneer Cotton Mill, Inc., (the "Pioneer
Corporations"), filed as Exhibit 2.1 to Unifi, Inc's
Registrations Statement on Form S-4 (Registration No.
33-65454), which is incorporated herein by reference.
IV-2
(2a-6) Form 8-K, filed by Unifi, Inc. for the purpose of
reporting the Pioneer Corporations' Interim Combined
Financial Statements (Unaudited) and Unifi, Inc.'s and
the Pioneer Corporations' Proforma Combined Interim
Financial Information (Unaudited), and related exhibits,
filed with the Securities and Exchange Commission on
September 2, 1993, which is incorporated herein by
reference.
(2a-7) Form 8-K, filed by Unifi, Inc. for the purpose of
reporting the Pioneer Corporations' merger with and into
USY and related exhibits filed with the Securities and
Exchange Commission on November 5, 1993, which is
incorporated herein by reference.
(3a) Restated Certificate of Incorporation of Unifi, Inc.,
dated July 21, 1994, filed electronically herewith.
(3b) Restated By-Laws of Unifi, Inc., effective July 21, 1994,
filed herewith.
(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%
Convertible Subordinated Notes Due 2002, filed on Form
S-3, (Registration No. 33-45946), 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.
IV-3
(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 is
incorporated herein by reference.
(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) 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.
(10g) Factoring Contract and Security Agreement, (a similar
agreement was entered into by Unifi Spun Yarns, Inc. and
the CIT Group/DCC, Inc.) and a Letter Amendment thereto,
all dated as of May 25, 1994, by and between Unifi, Inc.
and the CIT Group/DCC, Inc., filed herewith.
(10h) 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),
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), which are incorporated herein by
reference, and Letter Agreement dated August 31, 1993 and
Amendment To Factoring Contract and Security Agreement,
dated January 5, 1994, filed herewith.
(10i) *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.
IV-4
(10j) *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) which is incorporated herein by reference
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 is incorporated herein
by reference.
(10k) *Severance Compensation Agreement between Unifi, Inc. and
William T. Kretzer, dated July 20, 1993, expiring on July
19, 1996 (similar agreements were signed with G. Allen
Mebane, William J. Armfield, IV, Robert A. Ward, Jerry W.
Eller and G. Alfred Webster), (filed as Exhibit (10k) for
the fiscal year ended July 27, 1993), which is
incorporated herein by reference.
(11) Computation of Earnings per share.
(13a) Portions of Unifi, Inc.'s 1994 Annual Report to
Shareholders which are incorporated by reference as a
part of this Form 10-K for fiscal year ended June 26,
1994, filed herewith.
(13b-1) Report of Independent Auditors/Ernst & Young LLP - on the
Consolidated Financial Statements of Unifi, Inc. as of
June 26, 1994 and each of the two years in the period
ended June 26, 1994.
(21) Subsidiaries of Unifi, Inc.
(23) Consents of Ernst & Young LLP
(27) Financial Data Schedules
(b) Reports on Form 8-K
(i) No Form 8-K's were filed.
* 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
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
SCHEDULE I - MARKETABLE SECURITIES - OTHER INVESTMENTS
JUNE 26, 1994
(in thousands)
<CAPTION>
Column A Column B Column C Column D Column E
- - - ---------------------- ----------- --------- ------------ -----------------
Units or Amount at
Principal which shown
Type of Investment Amount Cost Market Value in Balance Sheet
- - - ---------------------- ----------- --------- ------------- -----------------
<S> <C> <C> <C> <C>
Current marketable
securities (1):
U.S. Treasury securities
and obligations of U.S.
government agencies $ 21,719 $21,740 $21,261 $21,261
Obligations of states
and political subdiv-
isions $ 24,325 24,619 24,703 24,703
Corporate debt
securities $ 25,750 26,048 25,519 25,519
-------- ---------- -----------
Total current market-
able securities $ 72,407 $71,483 $71,483
========= ========== ===========
Non-current market-
able securities (1):
Common stocks 178 sh $ 10,066 $ 9,545 $ 9,545
========= ========== ============
<FN>
(1) Classified as available-for-sale and carried at fair market value with
unrealized gains and losses included as a separate component of shareholders'
equity, net of estimated tax effect.
</TABLE>
IV-6
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (a)
(in thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Balance at
Beginning Additions Other Changes End of
Classification of period at Cost Retirements Add(Deduct) Period
- - - --------------- ---------- --------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended June
26, 1994:
Land $ 5,204 $ 591 $ 40 $ 42 (1)(2) $ 5,797
Buildings and air
conditioning 165,724 6,300 429 2,954 (1)(2) 174,549
Machinery and
equipment 503,072 81,914 9,988 31,425 (1)(2) 606,423
Other 76,552 24,144 7,948 (30,880)(1)(2) 61,868
---------- ---------- --------- ---------- ----------
$ 750,552 $112,949 $18,405 $ 3,541 $ 848,637
========== ========== ========= ========== ==========
Year ended June
27, 1993:
Land $ 4,413 $ 963 $ 4 $ (168)(3)(4) $ 5,204
Buildings and air
conditioning 141,311 27,661 -- (3,248)(3)(4)(5) 165,724
Machinery and
equipment 448,399 86,824 21,380 (10,771)(3)(4)(5) 503,072
Other 46,840 53,849 6,558 (17,579)(3)(4)(5) 76,552
--------- --------- -------- --------- ---------
$ 640,963 $169,297 $ 27,942 $(31,766) $750,552
========== ========= ========= ========= =========
Year ended June
28, 1992:
Land $ 3,931 $ 1,044 $ 280 $ (282)(6)(7)(8) $ 4,413
Buildings and air
conditioning 114,419 17,271 -- 9,621 (6)(7)(8) 141,311
Machinery and
equipment 377,831 68,125 6,474 8,917 (6)(7)(8) 448,399
Other 33,520 24,317 988 (10,009)(6)(7)(8) 46,840
---------- --------- -------- --------- --------
$ 529,701 $110,757 $7,742 $8,247 $640,963
========== ========= ======== ======== ========
<FN>
(1)Currency translation adjustment $ 3,541
=========
(2)Transfers in, at cost $ 31,359
Transfers out, at cost (31,359)
---------
$ --
=========
(3)Currency translation adjustment $ (13,050)
=========
(4)Transfers in, at cost $ 12,096
Transfers out, at cost (12,096)
---------
$ --
=========
(5)Adjustment to conform fiscal year $ (18,716)
=========
(6)Currency translation adjustment $ 8,874
=========
(7)Transfers in, at cost $ 24,359
Transfers out, at cost (24,359)
---------
$ --
=========
(8)Adjustment to conform fiscal year $ (627)
=========
(a)See Notes to Consolidated Financial Statements for a disclosure of the
methods used to compute the annual depreciation and amortization expense of
property, plant and equipment.
</TABLE>
IV-7
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT(a)
(in thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Balance at Balance at
Beginning Additions Other Changes End of
Classification of Period at Cost Retirements Add(Deduct) Period
- - - ----------------- ---------- --------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended June
26, 1994:
Buildings and air
conditioning $ 34,815 $ 6,960 $ 55 $ 860 (1)(2) $ 42,580
Machinery and
equipment 231,033 54,327 7,798 984 (1)(2)(3) 278,546
Other 16,413 5,831 7,068 73 (1)(2) 15,249
-------- --------- -------- -------- ---------
$ 282,261 $ 67,118 $14,921 $ 1,917 $ 336,375
========= ========== ========= ========= =========
Year ended June
27, 1993:
Buildings and air
conditioning $ 29,895 $ 5,758 $ 79 $ (759)(4)(5)(6) $ 34,815
Machinery and
equipment 204,553 44,113 11,397 (6,236)(4)(5)(6) 231,033
Other 12,792 4,459 419 (419)(4)(5)(6) 16,413
--------- --------- ------- ------- ---------
$ 247,240 $ 54,330 $11,895 $(7,414) $ 282,261
========== ========= ======= ======= =========
Year ended June
28, 1992:
Buildings and air
conditioning $ 20,907 $ 5,661 $ -- $ 3,327 (7)(8)(9) $ 29,895
Machinery and
equipment 171,749 36,336 5,391 1,859 (7)(8)(9) 204,553
Other 9,467 3,312 539 552 (7)(8)(9) 12,792
---------- -------- ------- ------- -------
$ 202,123 $ 45,309 $ 5,930 $5,738 $247,240
========== ======== ======= ======= =======
<FN>
(1)Currency translation adjustment $ 1,421
=========
(2)Transfers in, at cost $ 744
Transfers out, at cost (744)
---------
$ --
=========
(3)Non-recurring charge $ 496
=========
(4)Currency translation adjustment $ (4,341)
=========
(5)Transfers in, at cost $ 294
Transfers out, at cost (294)
---------
$ --
=========
(6)Adjustment to conform fiscal year $ (3,073)
=========
(7)Currency translation adjustment $ 2,488
=========
(8)Transfers in, at cost $ 2,903
Transfers out, at cost (2,903)
---------
$ --
=========
(9)Adjustment to conform fiscal year $ 3,250
=========
(a)See Notes to Consolidated Financial Statements for a disclosure of the
methods used to compute the annual depreciation and amortization expense of
property, plant and equipment.
</TABLE>
IV-8
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- - - -------------- ------------- ---------------------- ----------- ---------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Period Expenses Accounts Deductions Period
- - - -------------- ------------- --------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful
accounts:
Year ended June
26, 1994 $ 3,675 $ 4,626 $ 25 $ (4,024) $ 4,302
Year ended June
27, 1993 5,196 745 -- (2,266) 3,675
Year ended June
28, 1992 2,932 3,074 -- (810) 5,196
Reserve for
investments:
Year ended June
26, 1994 $ 1,488 $ -- $ -- $ (43) $ 1,445
Year ended June
27, 1993 -- -- 1,488 -- 1,488
Year ended June
28, 1992 -- -- -- -- --
</TABLE>
IV-9
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT TERM BORROWINGS
(in thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - - --------------- ----------- ------------ ----------- ---------- ---------
Category of Maximum Average Weighted
Aggregate Balance at Weighted Amount Amount Average
Short-Term Beginning Average Outstanding Outstanding Interest Rate
Borrowings of Period Interest Rate in Period in Period in Period
- - - --------------- ----------- ------------- ----------- ----------- ---------
(a) (b)
<S> <C> <C> <C> <C> <C>
Year Ended June
26, 1994 $ -- -- % $ -- $ -- -- %
Year Ended June
27, 1993 -- -- 20,000 2,618 8.61
Year Ended June
28, 1992 -- -- -- -- --
<FN>
(a)Computed using daily total borrowings during the year.
(b)Computed by dividing interest expense on the borrowings by the average
amount outstanding during the year.
</TABLE>
IV-10
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
<CAPTION>
COLUMN A COLUMN B
- - - ---------------------------- ---------------------------------------------
Item Charged to Costs and Expenses
- - - ---------------------------- ----------------------------------------------
Year Ended
----------------------------------------------
June 26, 1994 June 27, 1993 June 28, 1992
---------------- ------------- -------------
<S> <C> <C> <C>
Maintenance and repairs $ 42,781 $ 36,285 $ 36,272
Depreciation and amortization of
intangible assets, preoperating
costs and similar deferrals * * *
Taxes, other than payroll and
income taxes * * *
Royalties * * *
Advertising cost * * *
<FN>
* Less than 1% of total sales.
</TABLE>
IV-11
Exhibit (3a)
RESTATED CERTIFICATE OF INCORPORATION
OF
UNIFI, INC.
UNDER SECTION 807 OF THE BUSINESS CORPORATION LAW
THE UNDERSIGNED, Robert A. Ward and Clifford Frazier, Jr., being
respectively the Executive Vice President and Secretary of Unifi, Inc.,
pursuant to Section 807 of the Business Corporation Law of the State of New
York, hereby restate, certify, and set forth:
(1) The name of the Corporation is Unifi, Inc.. The name under which
the Corporation was formed is Automated Environmental Systems, Inc.
(2) A Certificate of Incorporation of Unifi, Inc. was filed by the
Department of State on the 18th day of January, 1969, under the name
Automated Environmental Systems, Inc. A Restated Certificate of
Incorporation was filed by the Department of State on the 6th day of
November, 1990, a Certificate of Amendment was filed by the Department of
State on the 13th day of November, 1991, and a Certificate of Amendment was
filed by the Department of State on the 20th day of January, 1994.
(3) The text of the Certificate of Incorporation is hereby restated
without amendment or change to read as herein set forth in full:
"FIRST: The name of the Corporation shall be Unifi, Inc.
SECOND: The purposes for which the Corporation is formed are to
texture, prepare, buy, sell, deal in, trade, import,
export, and generally deal in synthetic and natural yarns of
every type and description.
To dye and finish, knit, buy, sell, acquire, import,
export, manufacture, prepare and generally deal in as dyers
and finishers, knitters, manufacturers, converters, jobbers,
purchasers, or as agents in all types and forms of knitted
fabrics including, without limitation, polyesters, acetates,
nylon, cotton, wool, rayon, silk, and otherwise with yarn and
fabric of every kind and description; and to generally deal in
and with any and all things made wholly or in part of
composition, imitation, or substitutes of any raw or finished
products thereof.
To create, manufacture, contract for, buy, sell, import,
export, distribute, job, and generally deal in and with,
whether at wholesale or retail, and as principal, agent,
broker, factor, commission merchant, licensor, licensee or
otherwise, any and all kinds of goods, wares, and merchandise,
and, in connection therewith or independent thereof, to
construct, establish, and maintain, by any manner or means,
factories, mills, buying offices, distribution centers,
specialty, and other shops, stores, mail order establishments,
concessions, leased departments, and any and all other
departments, sites, and locations necessary, convenient or
useful in the furtherance of any business of the corporation.
To export from and import into the United States of
America and its territories and possessions, and any and all
foreign countries, as principal or agent, merchandise of every
kind and nature, and to purchase, sell, and deal in and with,
at wholesale and retail, merchandise of every kind and nature
for exportation from, and importation into the United States,
and to and from all countries foreign thereto, and for
exportation from, and importation into, any foreign country,
to and from any other country foreign thereto, and to purchase
and sell domestic and foreign merchandise in domestic markets,
and domestic and foreign merchandise in foreign markets and to
do a general foreign and domestic exporting and importing
business.
To take, lease, purchase, or otherwise acquire, and to
own, use, hold, sell, convey, exchange, lease, mortgage,
clear, develop, redevelop, manage, operate, maintain, control,
license the use of, publicize, advertise, promote, and
generally deal in and with, whether as principal, agent,
broker, or otherwise, real and personal property of all kinds,
and, without limiting the generality of the foregoing, stores,
shops, markets, supermarkets, departments, and merchandising
facilities, shopping centers, recreational centers, discount
centers, merchandising outlets of all kinds, parking areas,
offices and establishments of all kinds, and to engage in the
purchase, sale, lease and rental of equipment and fixtures for
the same and for other enterprises, for itself or on behalf of
others.
To carry on a general mercantile, industrial, investing,
and trading business in all its branches; to devise, invent,
manufacture, fabricate, assemble, install, service, maintain,
alter, buy, sell, import, export, license as licensor or
licensee, lease as lessor or lessee, distribute, job, enter
into, negotiate, execute, acquire, and assign contracts in
respect of, acquire, receive, grant, and assign licensing
arrangements, options, franchises, and other rights in respect
of, and generally deal in and with, at wholesale or retail, as
principal, and as sales, business, special or general agent,
representative, broker, factor, merchant, distributor, jobber,
advisor, or in any other lawful capacity, goods, wares,
merchandise, commodities, and unimproved, improved, finished,
processed, and other real, personal and mixed property of any
kind and all kinds, together with the components, resultants,
and by-products thereof; to acquire by purchase or otherwise
own, hold, lease, mortgage, sell, or otherwise dispose of,
erect, construct, make, alter, enlarge, improve, and to aid or
subscribe toward the construction, acquisition, or improvement
of any factories, shops, storehouses, buildings, and
commercial and retail establishments of every character,
including all equipment, fixtures, machinery, implements, and
supplies necessary, or incidental to, or connected with, any
of the purposes or business of the corporation; and generally
to perform any and all acts connected therewith or arising
therefrom or incidental thereto, and all acts proper or
necessary for the purpose of the business.
THIRD: The office of the Corporation is to be located in
the City, County and State of New York.
FOURTH: The aggregate number of shares of capital stock
which the Corporation shall have the authority to issue is
five hundred million shares, all of which are to consist of
one class of common stock only of the par value of $.10 each.
FIFTH: The Secretary of State is designated as the agent
of the Corporation, upon whom process against it may be
served, and the post office address to which the Secretary of
State shall mail a copy of any process against the Corporation
served upon him is:
c/o KREINDLER & RELKIN, P.C.
Attn: Donald L. Kreindler, Esquire
Empire State Building
350 Fifth Avenue, 65th Floor
New York, New York 10118.
SIXTH: No holder of any shares of any class of the
Corporation shall as such holder have any pre-emptive right or
be entitled as a matter of right to subscribe for or to
purchase any other shares or securities of any class which at
any time may be sold or offered for sale by the Corporation.
SEVENTH: The number of Directors shall be fixed in the
By-Laws but in no case shall be less than nine (9), but this
number may be increased and subsequently increased or
decreased from time to time by the affirmative vote of the
majority of the Board, except that the number of Directors
shall not be less than nine (9). The Directors shall be
divided into three classes designated as Class 1, Class 2 and
Class 3. Each class shall be as nearly equal in number as
possible and no class shall include less than three (3)
Directors. The term of office of the Directors initially
classified shall be as follows: Class 1 shall expire at the
next (1992) Annual Meeting of the Shareholders, Class 2 at
the second succeeding (1993) Annual Meeting of the
Shareholders and Class 3 shall expire at the third succeeding
(1994) Annual Meeting of the Shareholders. At each Annual
Meeting after such initial Classification, Directors to
replace those whose terms expire at such Annual Meeting shall
be elected to hold office until the third succeeding Annual
Meeting of the Shareholders. A Director shall hold office
until the Annual Meeting of the year in which his term expires
and until his successor shall be elected and qualified,
subject to prior death, resignation, retirement, or removal
from office.
If the number of Directors is changed pursuant to the
By-Laws of the Corporation after the effective date of this
ARTICLE SEVENTH, any newly created Directorships or any
decrease in Directorships shall be apportioned among the
classes so as to make all classes as nearly equal in number as
possible. Newly created Directorships resulting from an
increase in the number of Directors and vacancies caused by
death, resignation, retirement, or removal from office, may be
filled by the majority of the Directors present at the
meeting, if a quorum is present. If the number of Directors
then in office is less than a quorum, such newly created
Directorships and vacancies may be filled by the affirmative
vote of a majority of the Directors in office. When the
number of Directors is increased by the Board, and the newly
created Directorships are filled by the Board, there shall be
no classification of the additional Directors until the next
Annual Meeting of the Shareholders. Any Director elected by
the Board to fill a vacancy shall serve until the next meeting
of the Shareholders, at which the election of the Directors is
in the regular order of business, and until his successor is
elected and qualified. In no case will a decrease in the
number of Directors shorten the term of an incumbent Director.
EIGHTH: A Director of the Corporation shall not be
liable to the Corporation or its Shareholders for monetary
damages for breach of duty as a Director, except to the extent
such exemption from liability or limitation thereof is not
permitted under the New York Business Corporation Law as the
same exists or may hereafter be amended.
Any repeal or modification of the foregoing paragraph by
the Shareholders of the Corporation shall not adversely affect
any right or protection of a Director of the Corporation
existing at the time of such repeal or modification."
(4) The restatement of the Certificate of Incorporation was authorized
by resolution duly adopted by the Board of Directors of the Corporation at
its Regular Meeting on July 21, l994.
IN WITNESS WHEREOF, this Certificate has been subscribed this the 7th
day of September, 1994, by the undersigned, who affirmed that the statements
made herein are true under penalties of perjury.
ROBERT A. WARD
_____________________________________
Robert A. Ward
Executive Vice President of
Finance and Administration
CLIFFORD FRAZIER, JR.
_____________________________________
Clifford Frazier, Jr.
Secretary
Exhibit (3b)
RESTATED BY-LAWS
OF
UNIFI, INC.
(Effective July 21, 1994)
-----------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
SHAREHOLDERS
Section 1.01 - Annual Meeting.........................1
Section 1.02 - Special meetings.......................1
Section 1.03 - Notice of Meetings
of Shareholders........................1
Section 1.04 - Waivers of Notice......................3
Section 1.05 - Quorum.................................3
Section 1.06 - Fixing Record Date.....................3
Section 1.07 - List of Shareholders
at Meeting.............................4
Section 1.08 - Proxies................................4
Section 1.09 - Selection of Duties
of Inspectors..........................7
Section 1.10 - Qualification of Voters................8
Section 1.11 - Vote of Shareholders..................10
Section 1.12 - Written Consent of
Shareholders..........................10
ARTICLE II
DIRECTORS
Section 2.01 - Management of Business;
Qualification of Directors............11
Section 2.02 - Number of Directors...................12
Section 2.03 - Classification and
Election..............................12
Section 2.04 - Newly Created Directorships
and Vacancies.........................12
Section 2.05(a) - Resignations..........................13
Section 2.05(b) - Removal of Directors..................14
Section 2.06 - Quorum of Directors...................14
Section 2.07 - Annual Meetings.......................14
Section 2.08 - Regular Meetings......................15
Section 2.09 - Special Meetings......................15
Section 2.10 - Compensation..........................15
Section 2.11 - Committees............................15
-i-
Section 2.12 - Interested Directors..................16
Section 2.13 - Loans to Directors....................17
Section 2.14 - Consent to Action.....................17
ARTICLE III
OFFICERS
Section 3.01 - Election or Appointment;
Number................................18
Section 3.02 - Term..................................18
Section 3.03 - Removal...............................19
Section 3.04 - Authority.............................19
Section 3.05 - Voting Securities Owned
by the Corporation....................19
ARTICLE IV
CAPITAL STOCK
Section 4.01 - Stock Certificates....................20
Section 4.02 - Transfers.............................21
Section 4.03 - Registered Holders....................21
Section 4.04 - New Certificates......................21
ARTICLE V
FINANCIAL NOTICES TO SHAREHOLDERS
Section 5.01 - Dividends.............................22
Section 5.02 - Share Distribution and
Changes...............................22
Section 5.03 - Cancellation of Reacquired
Shares................................23
Section 5.04 - Reduction of Stated Capital...........24
Section 5.05 - Application of Capital Surplus
to Elimination of a Deficit...........24
Section 5.06 - Conversion of Shares..................24
-ii-
ARTICLE VI
INDEMNIFICATION
Section 6.01 - Right to Indemnification.............25
Section 6.02 - Right of Claimant to
Bring Suit...........................27
Section 6.03 - Nonexclusiveness.....................28
Section 6.04 - Insurance for Indemnification
of Directors and Officers............29
ARTICLE VII
MISCELLANEOUS
Section 7.01 - Offices..............................30
Section 7.02 - Seal.................................30
Section 7.03 - Checks...............................30
Section 7.04 - Fiscal Year..........................30
Section 7.05 - Books and Records....................30
Section 7.06 - Duty of Directors and
Officers.............................31
Section 7.07 - When Notice or Lapse of
Time Unnecessary; Notices
Dispensed With When Delivery
is Prohibited........................31
Section 7.08 - Entire Board.........................32
Section 7.09 - Amendment of By-Laws.................32
Section 7.10 - Nonapplication of North Carolina
Shareholder Protection Act...........33
Section 7.11 - Section Headings.....................33
-iii-
RESTATED BY-LAWS
OF
UNIFI, INC.
ARTICLE I
SHAREHOLDERS
SECTION 1.01. ANNUAL MEETING. The Annual Meeting of
Shareholders for the election of Directors and the transaction of
such other business as may come before it shall be held on such
date in each calendar year, not later than the one hundred fiftieth
(150) day after the close of the Corporation's preceding fiscal
year, and at such place as shall be fixed by the President and
stated in the notice or waiver of notice of the meeting.
SECTION 1.02. SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose of purposes, may be called at any
time by any Director, the President, any Vice President, the
Treasurer or the Secretary or by resolution of the Board of
Directors. Special meetings of the shareholders shall be held at
such place as shall be fixed by the person or persons calling the
meeting and stated in the notice or waiver of notice of the
meeting.
SECTION 1.03. NOTICE OF MEETINGS OF SHAREHOLDERS. Whenever
shareholders are required or permitted to take any action at a
meeting, written notice shall state the place, date and hour of the
meeting and, unless it is the Annual Meeting, indicate that it is
being issued by or at the direction of the person or persons
calling the meeting. Notice of a special meeting shall also state
1
the purpose or purposes for which the meeting is called. If, at
any meeting, action is proposed to be taken which would, if taken,
entitle shareholders fulfilling the requirements of Section 623 of
the Business Corporation Law to receive payment for their shares,
the notice of such meeting shall include a statement of that
purpose to that effect. A copy of the notice of any meeting shall
be given, personally or by mail, not less than ten nor more than
fifty days before the date of the meeting, to each shareholder
entitled to vote at such meeting. If mailed, such notice is given
when deposited in the United States mail, with postage thereon
prepaid, directed to the shareholder at his address as it appears
on the record of shareholders, or, if he shall have filed with the
Secretary of the Corporation a written request that notices to him
be mailed to some other address, then directed to him at such other
address.
When a meeting is adjourned to another time or place, it shall
not be necessary to give any notice of the adjourned meeting if the
time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned
meeting any business may be transacted that might have been
transacted on the original date of the meeting. However, if after
the adjournment, the Board of Directors fixes a new record date for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record on the new record date entitled
to notice under the next preceding paragraph.
2
SECTION 1.04. WAIVERS OF NOTICE. Notice of meeting need not
be given to any shareholder who submits a signed Waiver of Notice,
in person or by proxy, whether before or after the meeting. The
attendance of any shareholder at a meeting, in person or by proxy,
without protesting prior to the conclusion of the meeting the lack
of notice of such meeting, shall constitute a Waiver of Notice by
him.
SECTION 1.05. QUORUM. The holders of a majority of the
shares entitled to vote thereat shall constitute a quorum at a
meeting of shareholders for the transaction of any business,
provided that when a specified item of business is required to be
voted on by a class or series, voting as a class, the holders of a
majority of the shares of such class or series shall constitute a
quorum for the transaction of such specified item of business.
When a quorum is once present to organize a meeting, it is not
broken by the subsequent withdrawal of any shareholders.
The shareholders present may adjourn the meeting despite the
absence of a quorum and at andy such adjourned meeting at which the
requisite amount of voting stock shall be represented, any business
may be transacted which might have been transacted at the meeting
as originally noticed.
SECTION 1.06. FIXING RECORD DATE. For the purpose of
determining the shareholders entitled to notice of or to vote at
any meeting of shareholders or any adjournment thereof, or to
express consent to or dissent from any proposal without a meeting,
or for the purpose of determining shareholders entitled to receive
3
payment of any dividend or the allotment of any rights, or for the
purpose of any other action, the Board of Directors may fix, in
advance, a date as the record date for any such determination of
shareholders. Such date shall not be more than fifty nor less than
ten days before the date of such meeting, nor more than fifty days
prior to any other action.
When a determination of shareholders of record entitled to
notice of or to vote at any meeting or shareholders has been made
as provided in this Section, such determination shall apply to any
adjournment thereof, unless the Board of Directors fixes a new
record date under this Section for the adjourned meeting.
SECTION 1.07. LIST OF SHAREHOLDERS AT MEETING. A list of
shareholders as of the record date, certified by the corporate
officer responsible for its preparation or by a transfer agent,
shall be produced at any meeting of shareholders upon the request
thereat or prior thereto of any shareholder. If the right to vote
at any meeting is challenged, the inspectors of election, or person
presiding thereat, shall require such list of shareholders to be
produced as evidence of the right of the persons challenged to vote
at such meeting, and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
SECTION 1.08. PROXIES. Every shareholder entitled to vote at
a meeting of shareholders or to express consent or dissent without
a meeting may authorize another person or persons to act for him by
proxy.
4
Every proxy must be signed by the shareholder or his attorney-
in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof unless otherwise provided in the
proxy. Every proxy shall be revocable at the pleasure of the
shareholder executing it, except as otherwise provided in this
Section.
The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the shareholder who
executed the proxy unless, before the authority is exercised,
written notice of an adjudication of such incompetence or of such
death is received by the Corporate Officer responsible for
maintaining the list of shareholders.
Except when other provision shall have been made by written
agreement between the parties, the record holder of shares which
are held by a pledgee as security or which belong to another, upon
demand therefor and payment of necessary expenses thereof, shall
issue to the pledgor or to such owner of such shares a proxy to
vote or take other action thereon.
A shareholder shall not sell his vote or issue a proxy to vote
to any person for any sum of money or anything of value, except as
authorized in this Section and Section 620 of the Business
Corporation Law.
A proxy which is entitled "irrevocable proxy" and which states
that it is irrevocable, is irrevocable when it is held by any of
the following or a nominee of any of the following:
5
(1) A Pledgee;
(2) A person who has purchased or agreed to purchase the
shares;
(3) A creditor or creditors of the Corporation who extend or
continue credit to the Corporation in consideration of
the proxy if the proxy states that it was given in
consideration of such extension or continuation of
credit, the amount thereof, and the name of the person
extending or continuing credit;
(4) A person who has contracted to perform services as an
Officer of the Corporation, if a proxy is required by the
contract of employment, if the proxy states that it was
given in consideration of such contract of employment,
the name of the employee and the period of employment
contracted for;
(5) A person designated by or under an agreement under
paragraph (a) of said Section 620.
Notwithstanding a provision in a proxy, stating that it is
irrevocable, the proxy becomes revocable after the pledge is
redeemed, or the debt of the Corporation is paid, or the period of
employment provided for in the contract of employment has
terminated, or the agreement under paragraph (a) of said Section
620 has terminated, and becomes revocable, in a case provided for
in subparagraph (3) or (4) above, at the end of the period, if any,
specified therein as the period during which it is irrevocable, or
three years after the date of the proxy, whichever period is less,
unless the period of irrevocability is renewed from time to time by
the execution of a new irrevocable proxy as provided in this
Section. This paragraph does not affect the duration of a proxy
under the second paragraph of this Section.
6
A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the
existence of the provision unless the existence of the proxy and
its irrevocability is noted conspicuously on the face or back of
the certificate representing such shares.
SECTION 1.09. SELECTION AND DUTIES OF INSPECTORS. The Board
of Directors, in advance of any shareholders' meeting, may appoint
one or more inspectors to act at the meeting or any adjournment
thereof. If inspectors are not so appointed, the person presiding
at a shareholders' meeting may, and on the request of any
shareholder entitled to vote thereat shall, appoint one or more
inspectors. In case any person appointed failed to appear or act,
the vacancy may be filled by appointment made by the Board in
advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath faithfully to execute the
duties of inspector at such meeting with strict impartiality and
according to the best of his ability.
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, the validity and effect of
proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with
the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all shareholders. On
7
request of the person presiding at the meeting or any shareholder
entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and
execute a certificate of any fact found by them. Any report or
certificate made by them shall be prima facie evidence of the facts
stated and of the vote as certified by them.
Unless appointed by the Board of Directors or requested by a
shareholder, as above provided in this Section, inspectors shall be
dispensed with at all meetings of shareholders.
The vote upon any question before any shareholders' meeting
need not be by ballot.
SECTION 1.10. QUALIFICATION OF VOTERS. Every shareholder of
record shall be entitled at every meeting of shareholders to one
vote for every share standing in his name on the record of
shareholders, except as expressly provided otherwise in this
Section and except as otherwise expressly provided in the
Certificate of Incorporation of the Corporation.
Treasury shares and shares held by another domestic or foreign
corporation of any type or kind, if a majority of the shares
entitled to vote in the election of Directors of such other
corporation is held by the Corporation, shall not be shares
entitled to vote or to be counted in determining the total number
of outstanding shares.
Shares held by an administrator, executor, guardian,
conservator, committee, or other fiduciary, except a Trustee, may
be voted by him, either in person or by proxy, without transfer of
8
such shares into his name. Shares held by a Trustee may be voted
by him, either in person or by proxy, only after the shares have
been transferred into his name as Trustee or into the name of his
nominee.
Shares held by or under the control of a receiver may be voted
by him without the transfer thereof into his name if authority so
to do is contained in an order of the court by which such receiver
was appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, or a nominee of the pledgee.
Redeemable shares which have been called for redemption shall
not be deemed to be outstanding shares for the purpose of voting or
determining the total number of shares entitled to vote on any
matter on and after the date on which written notice of redemption
has been sent to holders thereof and a sum sufficient to redeem
such shares has been deposited with a bank or trust company with
irrevocable instruction and authority to pay the redemption price
to the holders of the shares upon surrender of certificates
therefor.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such Officer, agent
or proxy as the By-Laws of such corporation may provide, or, in the
absence of such provision, as the Board of Directors of such
corporation may determine.
9
When shares are registered on the record of shareholders of
the Corporation in the name of, or have passed by operation of law
or by virtue of any deed of trust or other instrument to two or
more fiduciaries, and if the fiduciaries shall be equally divided
as to voting such shares, any court having jurisdiction of their
accounts, upon petition by any of such fiduciaries or by any party
in interest, may direct the voting of such shares for the best
interest of the beneficiaries. This paragraph shall not apply in
any case where the instrument or order of the court appointing such
fiduciaries shall otherwise direct how such shares shall be voted.
Notwithstanding the foregoing paragraphs of this Section, the
Corporation shall be protected in treating the persons whose names
shares stand on the record of shareholders as the owners thereof
for all purposes.
SECTION 1.11. VOTE OF SHAREHOLDERS. Directors shall be
elected by a plurality of the votes cast at a meeting of
shareholders by the holders of shares entitled to vote in the
election. Whenever any corporate action, other than the election of
Directors, is to be taken by vote of the shareholders, it shall,
except as otherwise required by the Business Corporation Law or by
the Certificate of Incorporation of the Corporation, be authorized
by a majority of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote thereon.
SECTION 1.12. WRITTEN CONSENT OF SHAREHOLDERS. Whenever
under the Business Corporation Law shareholders are required or
permitted to take any action by vote, such action may be taken
10
without a meeting on written consent, setting forth the action so
taken, signed by the holders of all outstanding shares entitled to
vote thereon. This paragraph shall not be construed to alter or
modify the provisions of any section of the Business Corporation
Law or any provision in the Certificate of Incorporation of the
Corporation not inconsistent with the Business Corporation Law
under which the written consent of the holders of less than all
outstanding shares is sufficient for corporate action.
Written consent thus given by the holders of all outstanding
shares entitled to vote shall have the same effect as a unanimous
vote of shareholders.
ARTICLE II
DIRECTORS
SECTION 2.01. MANAGEMENT OF BUSINESS; QUALIFICATIONS OF
DIRECTORS. The business of the Corporation shall be managed by its
Board of Directors, each of whom shall be at least twenty-one years
of age.
Directors need not be Stockholders.
The Board of Directors, in addition to the powers and
authority expressly conferred upon it herein, by statute, by the
Certificate of Incorporation of the Corporation and otherwise, is
hereby empowered to exercise all such powers as may be exercised by
the Corporation, except as expressly provided otherwise by the
statutes of the State of New York, by the Certificate of
Incorporation of the Corporation and these By-Laws.
11
SECTION 2.02. NUMBER OF DIRECTORS. The number of Directors
which shall constitute the entire Board shall be eleven (11), but
this number may be increased and subsequently again increased or
decreased from time to time by the affirmative vote of the majority
of Directors, except that the number of Directors shall not be less
than nine (9).
SECTION 2.03. CLASSIFICATION AND ELECTION. (a) The
Directors shall be divided into three classes designated as Class
1, Class 2 and Class 3. All classes shall be as nearly equal in
number as possible and no class shall include less than three (3)
Directors. The term of office of the Directors initially
classified shall be as follows: Class 1 shall expire at the next
(1992) Annual Meeting of the Shareholders, Class 2 shall expire at
the second succeeding (1993) Annual Meeting of the Shareholders,
and Class 3 shall expire at the third succeeding (1994) Annual
Meeting of the Shareholders. (b) At each Annual Meeting after
such initial classification, Directors to replace those whose terms
expired at such Annual Meeting shall be elected to hold office
until the third succeeding Annual Meeting of the Shareholders. A
Director shall hold office until the Annual Meeting for the year in
which his term expires and subject to prior death, resignation,
retirement, or removal from office, until his successor shall be
elected and qualified.
SECTION 2.04. NEWLY CREATED DIRECTORSHIP AND VACANCIES.
Newly created Directorships or any decrease in Directorship shall
be apportioned among the classes as to make all classes as nearly
12
equal in number as possible. Newly created Directorships resulting
from an increase in the number of Directors and vacancies caused by
death, resignation, retirement, or removal from office, subject to
Section 2.05(b), may be filled by the majority of the Directors
voting on the particular matter, if a quorum is present. If the
number of Directors then in office is less than a quorum, such
newly created Directorships and vacancies may be filled by the
affirmative vote of a majority of the Directors in office. When
the number of Directors is increased by the Board, and the newly
created Directorships are filled by the Board, there shall be no
classification of the additional Directors until the next Annual
Meeting of the shareholders. Any Director elected by the Board to
fill a vacancy shall serve until the next meeting of the
shareholders, at which the election of the Directors is in the
regular order of business, and until his successor is elected and
qualified.
In no case will a decrease in the number of Directors shorten
the term of an incumbent Director.
SECTION 2.05(A). RESIGNATIONS. Any Director of the
Corporation may resign at any time by giving written notice to the
Board of Directors, the President or the Secretary of the
Corporation. Such resignation shall take effect at the time
specified therein, if any, or if no time is specified therein, then
upon receipt of such notice by the addressee; and, unless otherwise
provided therein, the acceptance of such resignation shall not be
necessary to make it effective.
13
SECTION 2.05(B). REMOVAL OF DIRECTORS. Any or all of the
Directors may be removed at any time (i) for cause by vote of the
shareholders or by action on the Board of Directors or (ii) without
cause by vote of the shareholders, except as expressly provided
otherwise by Section 706 of the Business Corporation Law. The
Board of Directors shall fill vacancies occurring in the Board by
reason of removal of Directors for cause. Vacancies occurring by
reason of removal without cause shall be filled by the
Shareholders.
SECTION 2.06. QUORUM OF DIRECTORS. At all meetings of the
Board of Directors, a majority of the number of Directors then
office shall be necessary and sufficient to constitute a quorum for
the transaction of business and the act of a majority of the
Directors present at any meeting at which there is a quorum shall
be the act of the Board of Directors, except as expressly provided
otherwise by the statutes of the State of New York and except as
provided in the third sentence of Section 2.04, in Section 2.11 and
Section 7.09 hereof.
A majority of the Directors present, whether or not a quorum
is present, may adjourn any meeting of the Directors to another
time and place. Notice of any adjournment need not be given if
such time and place are announced at the meeting.
SECTION 2.07. ANNUAL MEETING. The Board of Directors shall
meet immediately following the adjournment of the Annual Meeting of
shareholders in each year at the same place and no notice of such
meeting shall be necessary.
14
SECTION 2.08. REGULAR MEETINGS. Regular meetings of the
Board of Directors may be held at such time and place as shall from
time to time be fixed by the Board and no notice thereof shall be
necessary.
SECTION 2.09. SPECIAL MEETINGS. Special meetings may be
called at any time by any Director, the President, any Vice
President, the Treasurer, or the Secretary or by resolution of the
Board of Directors. Special meetings shall be held at such place
as shall be fixed by the person or persons calling the meeting and
stated in the notice or waiver of notice of the meeting.
SECTION 2.10. COMPENSATION. Directors shall receive such
fixed sums and expenses of attendance for attendance at each
meeting of the Board or of any committee and/or such salary as may
be determined from time to time by the Board of Directors; provided
that nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity and
receiving compensation therefor.
SECTION 2.11. COMMITTEES. The Board of Directors, by
resolution adopted by a majority of the entire Board, may designate
from among its members an Executive Committee and other committees,
each consisting of three or more Directors, and each of which, to
the extent provided in the resolution, shall have the authority of
the Board of Directors, except that no such committee shall have
authority as to the following matters:
(a) The submission to shareholders of any action that
needs shareholder's authorization under the Business
Corporation Law.
15
(b) The filling of vacancies in the Board of Directors or
in any committee.
(c) The fixing of compensation of the Directors for
serving on the Board of Directors or on any committee.
(d) The amendment or repeal of the By-Laws, or the
adoption of new By-Laws.
(e) The amendment or repeal of any resolution of the Board
of Directors which by its terms shall not be so
amendable or repealable.
The Board may designate one or more Directors as alternate
members of any such committee, who may replace any absent member or
members at any meeting of such committee. Each such committee
shall serve at the pleasure of the Board of Directors.
Regular meetings of any such committee shall be held at such
time and place as shall from time to time be fixed by such
committee and no notice thereof shall be necessary. Special
meetings may be called at any time by any Officer of the
Corporation or any member of such committee. Notice of each
special meeting of each such committee shall be given (or waived)
in the same manner as notice of a special meeting of the Board of
Directors. A majority of the members of any such committee shall
constitute a quorum for the transaction of business and the act of
a majority of the members present at the time of the vote, if a
quorum is present at such time, shall be the act of the committee.
SECTION 2.12. INTERESTED DIRECTORS. No contract or other
transaction between the Corporation and one or more of its
Directors, or between the Corporation and any other corporation,
firm, association or other entity in which one or more of the
Corporation's Directors are Directors or Officers, or are
16
financially interested, shall be either void or voidable for this
reason alone or by reason alone that such Director or Directors are
present at the meeting of the Board of Directors, or of a committee
thereof, which approves such contract or transaction, or that his
or their votes are counted for such purpose:
(1) If the fact of such common Directorship, Officership
or financial interest is disclosed or known to the
Board or committee, and the Board or committee
approves such contract or transaction by a vote
sufficient for such purpose without counting the vote
or votes of such interested Director or Directors;
(2) If such common Directorship, Officership or financial
interest is disclosed or known to the shareholders
entitled to vote thereon, and such contract or
transaction is approved by vote of the shareholders;
or
(3) If the contract or transaction is fair and reasonable
as to the Corporation at the time it is approved by
the Board, a committee of the shareholders.
Common or interested Directors may be counted in determining
the presence of a quorum at a meeting of the Board or of a
committee which approves such contract or transaction.
SECTION 2.13. LOANS TO DIRECTORS. A loan shall not be made
by the Corporation to any Director unless it is authorized by vote
of the shareholders. For this purpose, the shares of the Director
who would be the borrower shall not be shares entitled to vote. A
loan made in violation of this Section shall be a violation of the
duty to the Corporation of the Directors approving it, but the
obligation of the borrower with respect to the loan shall not be
affected thereby.
SECTION 2.14. CONSENT TO ACTION. Any action required or
permitted to be taken by the Board of Directors or any committee
17
thereof may be taken without a meeting if all members of the Board
or committee consent in writing, whether done before or after the
action so taken, to the adoption of a resolution authorizing the
action. The resolution and the written consent thereto shall be
filed with the Minutes of the proceeding of the Board or the
committee.
ARTICLE III
OFFICERS
SECTION 3.01. ELECTION OR APPOINTMENT: NUMBER. The Officers
shall be a Chairman, a Vice-Chairman, a President, a Secretary, a
Treasurer, and such number of Executive Vice-Presidents, Vice-
Presidents, Assistant Secretaries and Assistant Treasurers, and
such other Officers as the Board may from time to time determine.
Any person may hold two or more offices at the same time, except
the offices of President and Secretary. Any Officer, except the
Chairman, Vice-Chairman and the President of the Corporation, may
but does not need to be chosen from among the Board of Directors.
SECTION 3.02. TERM. Subject to the provisions of Section
3.03 hereof, all officers shall be elected or appointed to hold
office until the meeting of the Board of Directors following the
next Annual Meeting of shareholders, and each officer shall hold
office for the term for which he is elected or appointed and until
his successor has been elected or appointed and qualified.
18
The Board may require any Officer to give security for the
faithful performance of his duties.
SECTION 3.03. REMOVAL. Any Officer elected or appointed by
the Board of Directors may be removed by the Board with or without
cause.
The removal of an Officer without cause shall be without
prejudice to his contract rights, if any. The election or
appointment of an Officer shall not of itself create contract
rights.
SECTION 3.04. AUTHORITY. Any Director or such other person
as may be designated by the Board of Directors, and in the absence
of such Director or other person, the President shall be the Chief
Executive Officer of the Corporation. The Chairman shall oversee
the general operations of the Corporation and set company policy
which would be implemented, interpreted and carried out by the
President and Chief Executive Officer who will report directly to
the Chairman. The Chairman shall preside at all meetings of the
Board of Directors unless some other person is designated by the
Board.
SECTION 3.05. VOTING SECURITIES OWNED BY THE CORPORATION.
Powers of attorney, proxies, waivers or notice of meeting, consents
and other instruments relating to securities owned by the
Corporation may be executed in the name of and on behalf of the
Corporation by the President or any Vice-President and any such
officer may, in the name of and on behalf of the Corporation, take
all such action as any such officer may deem advisable to vote in
19
person or by proxy at any meeting of security holders of any
Corporation in which the Corporation may own securities and at any
such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as
the owner thereof, the Corporation might have exercised and
possessed if present. The Board of Directors may, by resolution,
from time to time confer like powers upon any other person or
persons.
ARTICLE IV
CAPITAL STOCK
SECTION 4.01. STOCK CERTIFICATES. The shares of the
Corporation shall be represented by certificates signed by the
Chairman of the Board or the President or a Vice-President and the
Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer of the Corporation, and may be sealed with the
seal of the Corporation or a facsimile thereof. The signatures of
the Officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by
a registrar other than the Corporation itself or its employee. In
case any Officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such Officer
before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such Officer at the
date of issue.
20
Each certificate representing shares shall also set fort such
additional material as is required by subdivisions (b) and (c) of
Section 508 of the Business Corporation Law.
SECTION 4.02. TRANSFERS. Stock of the Corporation shall be
transferable in the manner prescribed by the laws of the State of
New York and in these By-Laws Transfers of stock shall be made on
the books of the Corporation only by the person named in the
certificate or by attorney lawfully constituted in writing and upon
the surrender of the certificate therefor, which shall be canceled
before the new certificate shall be issued.
SECTION 4.03. REGISTERED HOLDERS. The Corporation shall be
entitled to treat and shall be protected in treating the persons in
whose names shares or any warrants, rights or options stand on the
record of shareholders, warrant holders, right holders or option
holders, as the case may be, as the owners thereof for all purposes
and shall not be bound to recognize any equitable or other claim
to, or interest in, any such share, warrant, right or option on the
part of any other person, whether or not the Corporation shall have
notice thereof, except as expressly provided otherwise by the
Statutes of the State of New York.
SECTION 4.04. NEW CERTIFICATES. The Corporation may issue a
new certificate of stock in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Directors may, in their discretion, require the
owner of the lost, stolen or destroyed certificate, or his legal
representatives, to give the Corporation a bond sufficient (in the
21
judgment of the Directors) to indemnify the Corporation against any
claim that may be made against it on account of the alleged loss or
theft of any such certificate or the issuance of such new
certificate. A new certificate may be issued without requiring any
bond when, in the judgment of the Directors, it is proper so to do.
ARTICLE V
Financial Notices to Shareholders
SECTION 5.01. DIVIDENDS. When any dividend is paid or any
other distribution is made, in whole or in part, from sources other
than earned surplus, it shall be accompanied by a written notice
(1) disclosing the amounts by which such dividend or distribution
affects stated capital, capital surplus and earned surplus, or (2)
if such amounts are not determinable at the time of such notice,
disclosing the approximate effect of such dividend or distribution
upon stated capital, capital surplus and earned surplus and stating
that such amounts are not yet determinable.
SECTION 5.02. SHARE DISTRIBUTION AND CHANGES. Every
distribution to shareholders of certificates representing a share
distribution or a change of shares which affects stated capital,
capital surplus or earned surplus shall be accompanied by a written
notice (1) disclosing the amounts by which such distribution or
change affects stated capital, capital surplus or earned surplus,
or (2) if such amounts are not determinable at the time of such
notice, disclosing the approximate effect of such distribution or
change upon stated capital, capital surplus and earned surplus and
stating that such amounts are not yet determinable.
22
When issued shares are changed in any manner which affects
stated capital, capital surplus or earned surplus, and no
distribution to shareholders of certificates representing any
shares resulting from such change is made, disclosure of the effect
of such change upon the stated capital, capital surplus and earned
surplus shall be made in the next financial statement covering the
period in which such change is made that is furnished by the
Corporation to holders of shares of the class or series so changed
or, if practicable, in the first notice of dividend or share
distribution or change that is furnished to such shareholders
between the date of the change and shares and the next such
financial statement, and in any event within six months of the date
of such change.
SECTION 5.03. CANCELLATION OF REACQUIRED SHARES. When
reacquired shares other than converted shares are canceled, the
stated capital of the Corporation shall be reduced by the amount of
stated capital then represented by such shares plus any stated
capital not theretofore allocated to any designated class or series
which is thereupon allocated to the shares canceled. The amount by
which stated capital has been reduced by cancellation of required
shares during a stated period of time shall be disclosed in the
next financial statement covering such period that is furnished by
the Corporation to all its shareholders or, if practicable, in the
first notice of dividend or share distribution that is furnished to
the holders of each class or series of its shares between the end
of the period and the next such financial statement, and in any
23
event to all its shareholders within six months of the date of the
reduction of capital.
SECTION 5.04. REDUCTION OF STATED CAPITAL. When a reduction
of stated capital has been effected under Section 516 of the
Business Corporation Law, the amount of such reduction shall be
disclosed in the next financial statement covering the period in
which such reduction is made that is furnished by the Corporation
to all its shareholders or, if practicable, in the first notice of
dividend or share distribution that is furnished to the holders of
each class or series of its shares between the date of such
reduction and the next such financial statement, and in any event
to all its shareholders within six months of the date of such
reduction.
SECTION 5.05. APPLICATION OF CAPITAL SURPLUS TO ELIMINATION
OF A DEFICIT. Whenever the Corporation shall apply any part or all
of its capital surplus to the elimination of any deficit in the
earned surplus account, such application shall be disclosed in the
next financial statement covering the period in which such
elimination is made that is furnished by the Corporation to all its
shareholders or, if practicable, in the first notice of dividend or
share distribution that is furnished to holders of each class or
series of its shares between the date of such elimination and the
next such financial statement, and in any event to all its
shareholders within six months of the date of such action.
SECTION 5.06. CONVERSION OF SHARES. Should the Corporation
issue any convertible shares, then, when shares have been
24
converted, disclosure of the conversion of shares during a stated
period of time and its effect, if any, upon stated capital shall be
made in the next financial statement covering such period that is
furnished by the Corporation to all its shareholders or, if
practicable, in the first notice of dividend or share distribution
that is furnished to the holders of each class or series of its
shares between the end of such period and the next financial
statement, and in any event to all its shareholders within six
months of the date of the conversion of shares.
ARTICLE VI
INDEMNIFICATION
SECTION 6.01. RIGHT TO INDEMNIFICATION. The Corporation
shall indemnify, defend and hold harmless any person who was or is
a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative, investigative or other, including
appeals, by reason of the fact that he is or was a Director,
Officer or employee of the Corporation, or is or was serving at the
request of the Corporation as a Director, Officer or employee of
any Corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an
official capacity as a Director, Officer or employee or in any
other capacity while serving as a Director, Officer or employee, to
the fullest extent authorized by the New York Business Corporation
Law, as the same exists or may hereafter be amended, against all
25
expenses, liability and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be
paid in settlement) reasonably incurred or suffered by such person
in connection therewith; provided, however, that except as provided
in Section 6.02 hereof with respect to proceedings seeking to
enforce rights to indemnification, the Corporation shall indemnify
any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if the
proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation.
The right to indemnification conferred in this Article shall
be a contract right and shall include the right to be paid by the
Corporation expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that if
required by law at the time of such payment, the payment of such
expenses incurred by a Director or Officer in his capacity as a
Director or Officer (and not in any other capacity in which service
was or is rendered by such person while a Director or Officer,
including, without limitation, service to an employee benefit plan)
in advance of the final disposition of such proceeding, shall be
made only upon delivery to the Corporation of an undertaking, by or
on behalf of such Director or Officer, to repay all amounts so
advanced if it should be determined ultimately that such Director
or Officer is not entitled to be indemnified under this Section or
otherwise.
26
"Employee" as used herein, includes both an active employee in
the Corporation's service, as well as a retired employee who is or
has been a party to a written agreement under which he might be, or
might have been, obligated to render services to the Corporation.
SECTION 6.02. RIGHT OF CLAIMANT TO BRING SUIT. If a claim
under Section 6.01 is not paid in full by the Corporation within
sixty (60) days or, in cases of advances of expenses, twenty (20)
days after a written claim has been received by the Corporation,
the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to
be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce
claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking has been
tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the New York
Business Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such
defence shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel, or its shareholders) to have made a determination prior to
the commencement of such action that indemnification of the
claimant is proper in the circumstances because he has met the
applicable standard of conduct set forth in the New York Business
Law, nor an actual determination by the Corporation (including its
27
Board of Directors, independent legal counsel, or its shareholders)
that the claimant had not met such applicable standard of conduct
shall be a defense to the action or create a presumption that
claimant had not met the applicable standard of conduct. The
Corporation shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Article that the procedures
and presumptions of this Article are not valid, binding and
enforceable and shall stipulate in any such proceeding that the
Corporation is bound by all provisions of this Article.
SECTION 6.03. NONEXCLUSIVENESS. The indemnification and
advances of expenses granted pursuant to, or provided by, this
Article shall not be deemed exclusive of any other rights to which
a Director or Officer seeking indemnification or advancement or
expenses may be entitled, whether contained in the Certificate of
Incorporation or these By-Laws, and the Board of Directors is
authorized, from time to time in its discretion, to enter into
agreements with one or more Directors, Officers and other persons
providing for the maximum indemnification allowed by applicable
law.
The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final
disposition conferred in this Article (a) shall apply to acts or
omissions antedating the adoption of this By-Law, (b) shall be
severable, (c) shall not be exclusive of other rights to which any
Director, Officer or employee may now or hereafter become entitled
apart from this Article, (d) shall continue as to a person who has
28
ceased to be such Director, Officer or employee and (e) shall inure
to the benefit of the heirs, Executors and Administrators of such
a person.
SECTION 6.04. INSURANCE FOR INDEMNIFICATION OF DIRECTORS AND
OFFICERS. The Corporation shall have the power to purchase and
maintain insurance (a) to indemnify the Corporation for any
obligations which it incurs as the result of the indemnification of
Directors and Officers under the provisions of this Article; (b) to
indemnify Directors and Officers in instances which they may be
indemnified by the Corporation under the provisions of this
Article; and (c) to indemnify Directors and Officers in instances
in which they may not otherwise be indemnified by the Corporation
under the provisions of this Article, provided the contract of
insurance covering such Directors and Officers provides, in a
manner acceptable to the Superintendent of Insurance of the State
of New York, for a retention amount and for co-insurance.
No insurance under the preceding paragraph of this Section may
provide for any payment, other than the cost of defense, to or on
behalf of any Director of Officer: (i) if a judgment or other
final adjudication adverse to the insured Director or Officer
establishes that his acts of active and deliberate dishonesty were
material to the cause of action so adjudicated or that he
personally gained in fact a financial profit or other advantage to
which he was not legally entitled, or (ii) in relation to any risk
the insurance of which is prohibited under the insurance laws of
the State of New York.
29
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. OFFICES. The principal office of the
Corporation shall be in the City of New York, County of New York,
State of New York. The Corporation may also have offices at other
places, within and/or without the State of New York.
SECTION 7.02. SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its incorporation
and the words "Corporate Seal of New York".
SECTION 7.03. CHECKS. All checks or demands for money shall
be signed by such person or persons as the Board of Directors may
from time to time determine.
SECTION 7.04. FISCAL YEAR. The fiscal year of the
Corporation shall begin on the 1st day of July in each year and
shall end on the 30th day of June of the ensuing year and the first
fiscal year shall end on June 30, 1969.
SECTION 7.05. BOOKS AND RECORDS. The Corporation shall keep
correct and complete books and records of accounts and shall keep
minutes of the proceedings of its shareholders, Board of Directors
and Executive Committee, if any, and shall keep at the office of
the Corporation in New York State or at the office of its transfer
agent or registrar in New York State, a record containing the names
and addresses of all shareholders, the number and class of shares
held by each and the dates when they respectively became the owners
30
of record thereof. Any of the foregoing books, minutes or records
may be in written form or in any other form capable of being
converted into written form within a reasonable time.
SECTION 7.6. DUTY OF DIRECTORS AND OFFICERS. Directors and
Officers shall discharge the duties of their respective positions
in good faith and with that degree of diligence, care and skill
which ordinarily prudent men would exercise under similar
circumstances in like positions. In discharging their duties,
Directors and Officers, when acting in good faith, may rely upon
financial statements of the Corporation represented to them to be
correct by the President or the Officer of the Corporation having
charge of its books of accounts, or stated in a written report by
an independent public or certified public accountant or firm of
such accountants fairly to reflect the financial condition of the
Corporation.
SECTION 7.07. WHEN NOTICE OR LAPSE OF TIME UNNECESSARY;
NOTICE DISPENSED WITH WHEN DELIVERY IS PROHIBITED. Whenever, under
the Business Corporation Law or the Certificate of Incorporation or
the By-Law of the Corporation or by the terms of any agreement or
instrument, the Corporation or the Board of Directors or any
committee thereof is authorized to take any action after notice to
any person or persons or after the lapse of a prescribed period of
time, such action may be taken without notice and without the lapse
of such period of time, if at any time before or after such action
is completed the person or persons entitled to such notice or
entitled to participate in the action to be taken or, in the case
31
of a shareholder, by his attorney-in-fact, submit a signed waiver
of notice of such requirements.
Whenever any notice or communication is required to be given
to any person by the Business Corporation Law, the Certificate of
Incorporation of the Corporation or theses By-Laws, or by the terms
of any agreement or instrument, or as a condition precedent to
taking any corporate action and communication with such person is
then unlawful under any statute of the State of New York or of the
United States or any regulation, proclamation or order issued under
said statutes, then the giving of such notice or communication to
such person shall not be required and there shall be no duty to
apply for license or other permission to do so. Any affidavit,
certificate or other instrument which is required to be made or
filed as proof of the giving of any notice or communication
required the Business Corporation Law shall, if such notice or
communication to any person is dispensed with under this paragraph,
include a statement that such notice or communication was not given
to any person with whom communication is unlawful. Such affidavit,
certificate or other instrument shall be as effective for all
purposes as though such notice or communication had been personally
given to such person.
SECTION 7.08. ENTIRE BOARD. As used in these By-Laws, the
term "Entire Board" means the total number of Directors which the
Corporation would have if there were no vacancies.
SECTION 7.09. AMENDMENT OF BY-LAWS. These By-Laws may be
amended or repealed and new By-Laws adopted by the Board of
32
Directors or by vote of the holders of the shares at the time
entitled to vote of the holders of the shares at the time entitled
to vote in the election of any Directors, except that any amendment
by the Board changing the number of Directors shall require the
vote of a majority of the Entire Board and except that any By-Laws
adopted by the Board may be amended or repealed by the shareholders
entitled to vote thereon as provided in the Business Corporation
Law.
If any By-Law regulating an impending election of Directors is
adopted, amended or repealed by the Board, the shall be set forth
in the notice of the next meeting of shareholders for the election
of Directors the By-Law so adopted, amended or repealed, together
with a concise statement of the changes made.
SECTION 7.10 NONAPPLICATION OF NORTH CAROLINA SHAREHOLDER
PROTECTION ACT. The provisions of North Carolina General Statutes
55-75 through 55-79 shall not be applicable to this Corporation.
SECTION 7.11. SECTION HEADINGS. The Headings to the Articles
and Sections of these By-Laws have been inserted for convenience of
reference only and shall not be deemed to be a part of these By-
Laws.
33
EXHIBIT (10g)
From: Unifi, Inc.
P. O. Box 19109
Greensboro, N.C. 27419
THE CIT GROUP/BCC, INC.
P. O. Box 31307
Charlotte, North Carolina 28231
Gentlemen:
We are pleased to propose the terms upon which you are to act
as our factor, effective as of May 25, 1994.
1. We hereby sell and assign to you as absolute owners and
you hereby purchase from us without recourse to us except as
hereinafter set forth, Receivables now or hereafter owned by us
which are acceptable to you. The term "Receivables" means and
includes accounts, contract rights, documents, instruments and
other evidence of customer indebtedness, whether secured or
unsecured, all proceeds thereof and all of our rights to any
merchandise, delivered or undelivered, which is represented
thereby, including all of our rights of stoppage in transit,
replevin and reclamation as an unpaid vendor or lienor; limited,
however, to those Receivables which we assign to you. On all
Receivables approved by you, you assume the risk of loss resulting
solely from customers' failure to pay at maturity because of
financial inability ("Credit Risk"), but you shall not be
responsible where nonpayment is due to any other cause.
Receivables not approved by you, as provided below in whole or in
part, are assigned to you with full recourse to the undersigned to
the extent and in the respects not so approved.
2. The amount and terms of each proposed sale or service to
our customers shall be submitted to you for your written approval
(which shall include facsimile) which approval may be withdrawn at
any time before actual shipment or performance is completed. We
warrant as to each such Receivable that: it is a bona fide existing
obligation created by the absolute sale and delivery of merchandise
or the rendition of services to customers in the ordinary course of
business; we have good title thereto and good right to sell and
assign same to you; all documents delivered to you in connection
therewith are genuine; it will at all times be enforceable against
all parties thereto without defense, offset or counterclaim, real
or claimed; it is and will at all times be free and clear of liens
and encumbrances, except in your favor; it will be paid according
to its terms and it does not represent a sale to any entity which
is our parent, subsidiary or affiliate.
3. You shall purchase and acquire a security interest in our
Receivables in accordance with the terms of this Agreement and, in
payment, shall credit the gross amount of all assigned Receivables
to a Reserve Account which you shall establish on your books in our
name. You shall also establish a Cash Account on your books in our
name and, at the time you credit the gross amount of assigned
receivables to our Reserve Account, you shall charge the Cash
Account with appropriate factoring charges and on the average
maturity date of each assignment (calculated on the maturity date
of each invoice in the assignment plus five business days for
collection) you will transfer the net amount of the assignment
(invoices less credits and discounts made available to or extended
to our customers, whether taken or not) from the Reserve Account to
the Cash Account. The Cash Account shall be charged with interest
and any other amounts chargeable to us hereunder. You shall furnish
us with advices of all entries to our Reserve and Cash Accounts.
As you credit our Reserve Account with the gross amount of
Receivables assigned to you, you will debit the same amount to an
Accounts Receivable Account which you shall establish on your books
in our name and which you shall credit with all credit memoranda
and allowances to our customers and with all payments received from
our customers. A discount, factored credit or allowance after
issuance or granting may be claimed solely by the customer, and
after your purchase of Receivables we will not issue or grant any
discounts, credits or allowances to the customer without your prior
written consent.
You may, at your option, maintain such reserve as you deem
necessary from time to time as security for payment and performance
of our Obligations, as defined in Paragraph "6".
4. Subject to the provisions of this Agreement, you shall
remit to us (and at any time in your sole discretion, you may
remit) any moneys standing to our credit in our Cash Account on
your books in excess of the reserve provided for herein. You may
charge to our Cash Account interest on any debit balance in our
Cash Account. Such interest shall be charged as of the last day of
each month, at the "Chemical Rate". ("Chemical Rate" is defined as
the per annum rate of interest publicly announced by Chemical Bank
in New York, New York, from time to time as its prime rate. The
Chemical Rate is not intended to be the lowest rate charged by
Chemical Bank to its borrowers.) All such interest shall be
computed for the actual number of days elapsed on the basis of a
year consisting of 360 days. Any adjustment in your interest rate,
whether downward or upward, will become effective on the first day
of the month next following the month in which the Chemical rate of
interest is reduced or increased. You shall also be entitled to
charge interest at the cost of funds rate (as defined below) on
Receivables with respect to which an alleged claim, defense or
offset is asserted or for which you have not assumed the Credit
Risk from the maturity date of the Receivable invoice until such
Receivable has been cleared from the Accounts Receivable Account.
If you hold a collected credit balance, you shall credit our Cash
Account as of the last day of the month, interest on such credit
balance at 2.75% below the Chemical Rate of interest as defined
above. Within fifteen (15) days after the end of each month or as
soon thereafter as is reasonably possible, you shall send us a
statement of our account. Each such statement will be fully
binding upon us and shall constitute an account stated unless we
give you written notice of exceptions within thirty (30) days from
its date of mailing. We agree to pay to you on demand any debit
balance in our account. Your factoring charge referred to above
shall be as follows: .35% of the net amount of all Receivables.
We together with our subsidiary company, Unifi Spun Yarns, Inc.,
which has entered into a separate factoring agreement with you of
even date hereof ("Unifi Spun Agreement") jointly and severally
agree to factor a minimum annual volume of $100,000,000.00 during
each Contract Year this Agreement and the Unifi Spun Agreement is
in effect. ("Contract Year" shall mean the twelve month period
beginning on the effective date of this agreement and each
succeeding twelve month period beginning on the anniversary date of
this agreement.) Please reference Letter Amendment of even date
hereof.
5. We agree to notify you promptly of all customer disputes,
claims and returns, to indemnify and protect you against liability,
loss or expense caused by or arising out of such disputes, claims
or returns, and, subject to your prior approval in each instance,
to issue credit memoranda immediately (with duplicates to you) upon
the acceptance of returns or granting of allowances. Without your
prior written consent, we will not change the amount or terms of
any Receivable, whether or not approved, or grant any other
indulgence with respect thereto. You may at any time charge to our
Cash Account, after 60 days notice, the amount of any customer
deduction and as of the due date of the invoice, the amount of (a)
each Receivable with respect to which any customer dispute is
asserted or which is not paid in full at its due date for any
reason other than financial ability to pay and (b) each Receivable
upon which you have not assumed the Credit Risk. Such charge shall
not constitute a reassignment to us of the Receivable involved and
title remains in you until you are fully reimbursed. Until
reassigned to us you shall remain the absolute owner of each
Receivable assigned to you and of any rejected, returned or
recovered merchandise in connection therewith, with the right to
take possession thereof at any time, and until such possession is
taken, such merchandise shall be set aside, marked in your name and
held for your account as owned. At your option, we agree to resell
such merchandise for your account at prices you deem advisable with
the proceeds made payable to you in all events and any
deficiencies, costs and expenses thereof payable by us.
6. With regard to those Receivables which we assign to you
hereunder, we hereby grant you a security interest in our now
existing and future accounts (whether or not specifically scheduled
in accordance with Paragraph "7"), instruments, documents, contract
rights, chattel paper, general intangibles, unpaid seller's rights,
returned and repossessed goods, reserves and credit balances
hereunder, and in all guaranties and collateral therefor, and all
proceeds of all the foregoing. We will not grant a security
interest in Inventory to anyone else without giving you prior
written notice.
7. We shall, from time to time, provide you with a schedule
of Receivables purchased by you, together with copies of customers'
invoices, conclusive evidence of shipment, and such other
documentation and proof of delivery as you shall at any time
require and documents, instruments and other evidences of customer
indebtedness, duly endorsed in blank by us. All invoices to
customers shall state plainly on their face that the accounts
receivable represented by such invoices have been assigned and are
payable only to you. We are to prepare and mail all customers'
invoices, but you may do so at your option. All Receivables shall
be subject to the assignment prescribed herein, whether or not we
execute any specific instrument of assignment or schedule. You are
authorized to regard our printed name or rubber stamp signature on
assignment schedules or invoices as the equivalent of a manual
signature by one of our authorized officers or agents. If any
remittances are made directly to us by our customers, we shall act
as trustee of an express trust for your benefit, hold the same as
your property and immediately deliver to you the identical checks,
moneys or other forms of remittance received, and you shall have
the right to endorse our name on any and all checks and other forms
of remittances received where such endorsement is required to
effect collection. We shall not sell or assign, negotiate, pledge
or grant any security interest in any Receivables to anyone other
than you without prior written notification to you. All sales of
Receivables to you by us shall be deemed to include all of our
right, title and interest to all of our books, records and files
and all other data and documents relating to each Receivables. If
any tax by any governmental authority is imposed on any transaction
between us, or in respect to sales or the merchandise affected by
such sales, which you are required to withhold or pay, we agree to
indemnify and hold you harmless in respect to such taxes, and we
will repay you the amount of any such taxes, which shall be charged
to our Cash Account.
8. The initial term of this agreement shall be two years from
the effective date of this agreement. Thereafter, this agreement
may be terminated by us upon written notice to you prior to the
anniversary date of this agreement, and at any time upon 30 days
written notice by you to us. Notwithstanding the foregoing, should
we become insolvent, be unable to meet our debts as they mature,
commit an act of bankruptcy, stop doing business, call a meeting of
our creditors, breach any warranty, promise or covenant in this
Agreement, fail to pay any Obligation when due, or have commenced
by or against us any bankruptcy, insolvency arrangement,
reorganization, receivership or similar proceeding, you shall have
the right to terminate this agreement at any time without notice.
Notwithstanding any termination, all the terms, conditions,
security interests and provisions hereof shall continue to be fully
operative during the time ("Termination Period") until all
transactions entered into, rights created or obligations incurred
hereunder prior to the termination and all of our Obligations have
been fully disposed of, concluded, paid, satisfied any/or
liquidated. If the debit balance of our Accounts Receivable Account
exceeds the credit balance of our Reserve Account, the difference
will appear on your monthly statement to us as a debit balance of
funds advanced and vice versa. You shall be entitled to charge our
Reserve Account for funds advanced hereunder, as of the last day of
each month, interest on the debit balance of average daily funds
advanced for the month at the "Chemical Rate". ("Chemical Rate" is
defined as the per annum rate of interest publicly announced by
Chemical Bank in New York, New York, from time as its prime rate.
The Chemical Rate is not intended to be the lowest rate of interest
charged by Chemical Bank to its borrowers.) All such interest
shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days. Any adjustment in your
interest rate, whether downward or upward, will become effective on
the first day of the month next following the month in which the
Chemical Rate of interest is reduced or increased. Upon
termination of this Agreement, the provisions of this paragraph
shall supersede any provisions of the Agreement which are or become
inconsistent herewith. Please reference Letter Amendment dated of
even date hereof.
9. This Agreement and all transactions hereunder shall be
governed as to validity, enforcement, interpretation, construction
and in all other respects by the laws of the State of North
Carolina and shall be binding upon the parties hereto and their
heirs, legal representatives, successors and assigns. The
agreement shall become effective only from the date of your written
acceptance.
10. No delay or failure on your part in the exercise of any
right, privilege or option hereunder shall operate as a waiver of
any thereof, and no waiver whatever shall be valid unless in
writing signed by you and then only to the extent therein set
forth. This Agreement cannot be changed or terminated orally, is
our entire contract and is for the benefit of and binding upon us
and our respective successors and assigns, heirs, executors and
administrators. All notices are given when mailed registered or
certified mail, return receipt requested.
11. Each of us expressly submits and consents to the
jurisdiction of the Courts of the State of North Carolina and
United States District Court for the Western District of North
Carolina with respect to any controversy arising out of or relating
to this Agreement or any supplement hereto or to any transactions
in connection herewith and hereby waive personal service of the
summons, complaint or other process or papers to be issued therein
and hereby agree that service of such summons, complaint, process
or papers may be made by registered or certified mail addressed to
the other party at the address appearing herein; failure on the
part of either party to appear or answer within thirty (30) days
after the mailing of such summons, complaint, process or papers
shall constitute a default entitling the other party to enter a
judgment or order as demanded or prayed for therein. Insofar as
permitted by law, WE EACH HEREBY WAIVER ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.
12. We hereby constitute and appoint you or such person as you
may name, including substitutions, as our attorney-in-fact to
exercise, and at your cost and expense, to execute all necessary
documents in our name and do all other things necessary to carry
out this Agreement. We hereby ratify and approve all acts of the
attorney and agree that neither you nor the attorney will be liable
for any acts of commission or omission nor for any error of
judgement or mistake of fact or law, provided you have acted as in
a manner consistent with reasonable prudent business standards.
This power being coupled with an interest is irrevocable so long as
any Receivable assigned and sold you remains unpaid or we are
indebted to you in any manner.
Very truly yours,
ATTEST: UNIFI, INC.
CLIFFORD FRAZIER, JR. By: ROBERT A. WARD
- - - --------------------- ---------------------------
Secretary
Title: Executive Vice President
(Corporate Seal) ------------------------
Date: May 25, 1994
Accepted at Charlotte, North
Carolina
ATTEST: THE CIT GROUP/BCC, INC.
BRENDA C. PAINTER
- - - ----------------- By: EDWARD L. BOYD
Asst. Secretary ---------------------------
Title: President-Charlotte Division
(Corporate Seal) ----------------------------
Date: May 25, 1994
Unifi, Inc. and Unifi Spun Yarns, Inc.
Post Office Box 19109
Greensboro, North Carolina 27419
May 25, 1994
The CIT Group/BCC, Inc.
Post Office Box 31307
Charlotte, North Carolina 28231
Gentlemen:
This letter amendment shall serve to modify the terms and
conditions of the separate Factoring Agreements between you and us
dated of even date hereof. Notwithstanding the minimum Annual
Volume guaranteed amount as set forth in paragraph 4 of both of the
Factoring Agreements, the minimum Annual Volume guaranteed amount
will be increased based on the customer credit line provided
jointly and severally to Unifi, Inc. and Unifi Spun Yarns, Inc. by
you for Texfi Industries, Inc. and subsidiaries ("Texfi"), and will
be as set forth in the chart below.
Also, in the event that the credit line to Texfi is increased or
reduced by CIT, Unifi, Inc. or Unifi Spun Yarns, Inc., the minimum
Annual Volume guaranteed amount, which is the joint and several
obligation of Unifi, Inc. and Unifi Spun Yarns, Inc. will be as set
forth below.
Minimum Annual Volume
Texfi Line Rate Guaranteed Amount Term
---------- ---- --------------------- -------
Less
Than $3,000,000 .35% $100,000,000 1 Year
$3,000,000 .35% $190,000,000 2 Years
$4,000,000 .35% $220,000,000 2 Years
$5,000,000 .35% $250,000,000 2 Years
Any excess volume factored over the minimum Annual Volume
guaranteed amount during the first Contract Year shall be applied
to the second Contract Year's minimum Annual Volume guaranteed
amount. (Contract Year is defined in the Factoring Agreements.) Any
shortfall in the first Contract Year may be made up during the
second Contract Year. At the end of the two-year period, any
shortfall in the minimum Annual Volume guaranteed amount will be
paid to you based on the .35% rate.
Furthermore, we agree that the minimum Annual Volume guaranteed
amount will also be increased on a pro rata basis at credit lines
offered to Texfi between amounts stated above.
Finally, notwithstanding the termination language as stated in
paragraph 8 of the Factoring Agreements, the Factoring Agreements
may be terminated after the first Contract Year if the Texfi credit
provided jointly and severally to us by you is less than
$3,000,000, by giving you written notice prior to the anniversary
date.
The remaining terms and conditions of the Factoring Agreements
shall remain in full force and effect unless specifically amended
herein.
Very truly yours,
UNIFI, INC.
By: ROBERT A. WARD
-----------------------------
Its: Executive Vice President
-----------------------------
UNIFI SPUN YARNS, INC.
By: ROBERT A. WARD
-----------------------------
Its: Executive Vice President
-----------------------------
READ AND AGREED TO:
THE CIT GROUP/BCC, INC.
By: TERRY D. OELSCHLAEGER
----------------------
Its: Senior Vice President
---------------------
Date: May 29, 1994
---------------------
Exhibit (10h)
UNIFI August 31, 1993
QUALITY THROUGH PRIDE
Mr. T. Lynwood Smith, Jr.
Senior Vice President
First Factors Corporation
P. O. Box 2730
High Point, NC 27261-2730
Dear Woody:
As we discussed, this letter sets forth our basic understanding in regard to
our factoring contract:
A) Name: Unifi, Inc. and Wholly-Owned Subsidiaries, including but
not limited to Unifi Spun Yarns, Inc.
B) Assignment: Accounts are assigned on a collection basis and remain
Unifi's property until purchased and paid for by First
Factors.
C) Remittance of Funds: Based on a matured account with 5-day
collection.
D) Rate: .55% on net assignments.
E) Interest: Borrowing at Prime Rate + 2% or earnings on credit
balance at Prime Rate less 2%.
Should you have any questions, please don't hesitate to call me. If you
agree with the preceding, then please sign and return a copy of this letter.
Sincerely,
ROBERT A. WARD
Robert A. Ward
bpc - 093 Executive Vice President
Read & Agreed to this 9th day of September, 1993.
FIRST FACTORS CORPORATION
T. LYNWOOD SMITH, JR.
- - - -------------------------
T. Lynwood Smith
Senior Vice President
AMENDMENT TO FACTORING CONTRACT
AND SECURITY AGREEMENT
BETWEEN
UNIFI, INC.
AND
FIRST FACTORS CORPORATION
THIS AMENDMENT, entered into this 5th day of January, 1994, by and
between UNIFI, INC. (the "Client") and FIRST FACTORS CORPORATION, (the
"Factor");
WHEREAS, the Client and the Factor wish to amend the Factoring Contract
and Security Agreement of May 2, 1988 to provide for the addition of the
following:
8. INTEREST. Client shall pay interest upon the daily debit balance
in the Client Maturity Account at the close of business each day at a rate
equal to two percent (2%) per annum over the Prime Rate. "Prime Rate" is
defined as the interest rate announced from time to time by First Union
National Bank as its prime interest rate. Interest will be calculated on a
daily basis (computed on the actual number of days elapsed over a year of
three hundred sixty (360) days) and shall be charged to the Client Maturity
Account as of the last day of each month. If the daily balance in the Client
Maturity Account reflects a credit balance, Factor shall credit the Client
Maturity Account, as of the last day of the month, with interest on such
daily credit balance at a rate equal to one percent (1%) below the Prime
Rate. The Prime Rate in effect on the date of this agreement and on the last
day of each calendar month hereafter shall be the applicable Prime Rate in
determining the rate of interest payable hereunder for the following month
and shall be effective as of the first day of such following month.
NOW, THEREFORE, said Factoring Contract is hereby amended. Except as
specifically amended herein, all of the terms and provisions of the Factoring
Contract and Security Agreement referred to above shall remain in full force
and effect.
This 5th day of January, 1994.
UNIFI, INC. (Client)
By: ROBERT A. WARD
-------------------------
Title: EVP
-------------------------
FIRST FACTORS CORPORATION (Factor)
By: T. LYNWOOD SMITH, JR.
-------------------------
Title: Senior Vice President
-------------------------
EXHIBIT (11)
<TABLE>
UNIFI, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
(in thousands)
<CAPTION>
Years Ended
--------------------------------------------
June 26, 1994 June 27, 1993 June 28, 1992
------------- ------------- -------------
<S> <C> <C> <C>
Computation of share totals
used in computing earnings
per share:
Weighted average number of
shares outstanding 70,415 69,854 69,050
Incremental shares arising
from outstanding stock options
using the treasury stock
method 605 1,007 1,176
----------- ------------ -----------
Primary average shares
outstanding (a) 71,020 70,861 70,226
Incremental shares arising from
outstanding stock options, using
end-of-year prices for the
treasury stock method and
convertible debt, using the if
converted method 7 7,779 2,352
Fully-diluted average shares out- ------------ ------------- --------
standing (b) 71,027 78,640 72,578
============= ============= ========
Net earnings applicable to common
stock:
Net income-primary (c) $ 76,492 $ 136,644 $ 96,849
Add: convertible subordinated
debt interest net of tax -- 8,614 2,550
----------- ----------- ---------
Net income assuming full
dilution (d) $ 76,492 $ 145,258 $ 99,399
=========== =========== =========
Net income per share, primary
(c)/(a) $ 1.08 $ 1.93 $ 1.38
========== =========== =========
Net income per share assuming
full dilution (d)/(b) $ 1.08 $ 1.85 $ 1.37
========== =========== =========
<FN>
The effect of the convertible subordinated notes was antidilutive for the
fiscal year ended June 26, 1994.
</TABLE>
Exhibit (13a)
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Amounts in thousands) June 26, 1994 June 27, 1993
============================================================================
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 80,653 $ 76,093
Short-term investments 71,483 119,848
Receivables 200,537 200,678
Inventories 100,279 104,974
Prepaid expenses 3,605 3,321
---------------------------------
Total current assets $ 456,557 $ 504,914
---------------------------------
Property, plant & equipment:
Land $ 5,797 $ 5,204
Buildings and air conditioning 174,549 165,724
Machinery and equipment 606,423 503,072
Other 61,868 76,552
---------------------------------
$ 848,637 $ 750,552
Less: accumulated depreciation 336,375 282,261
---------------------------------
$ 512,262 $ 468,291
---------------------------------
Investment in affiliates $ 10,626 $ 11,040
---------------------------------
Other Assets $ 23,807 $ 33,204
---------------------------------
$1,003,252 $1,017,449
============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Current maturities of
long-term debt $ 137 $ 4,664
Accounts payable 83,831 121,492
Accrued expenses 56,183 45,179
Income taxes 12,132 13,364
---------------------------------
Total current liabilities $ 152,283 $ 184,699
---------------------------------
Long-term debt:
Convertible subordinated notes $ 230,000 $ 230,000
Notes payable - 20,241
---------------------------------
$ 230,000 $ 250,241
---------------------------------
Deferred income taxes $ 32,447 $ 36,956
---------------------------------
Shareholder's equity:
Common stock $ 7,043 $ 7,034
Capital in excess of par value 199,959 196,133
Retained earnings 385,472 348,821
Cumulative translation adjustment (3,060) (5,515)
Reserve for investments (892) (920)
---------------------------------
$ 588,522 $ 545,553
---------------------------------
$1,003,252 $1,017,449
=============================================================================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
. . . and wherever there's fiber, there's Unifi.
11
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(Amounts in thousands, except per share amounts)
June 26, 1994 June 27, 1993 June 28, 1992
===========================================================================
<S> <C> <C> <C>
Net sales $ 1,384,797 $ 1,405,651 $ 1,322,910
---------------------------------------------
Costs and expenses:
Cost of sales $ 1,185,386 $ 1,141,126 $ 1,090,611
Selling, general and
administrative expense 40,429 38,484 38,530
Interest expense 18,241 25,785 16,756
Interest income (8,290) (13,537) (5,306)
Other (income) expense (1,238) (5,775) (1,598)
Non-recurring charge 13,433 -- --
Merger costs and expenses -- -- 24,805
---------------------------------------------
$ 1,247,961 $ 1,186,083 $ 1,163,798
---------------------------------------------
Income before taxes $ 136,836 $ 219,568 $ 159,112
Provision for income taxes 60,344 82,924 62,263
---------------------------------------------
Net income $ 76,492 $ 136,644 $ 96,849
===========================================================================
Per share data:
Net income
Primary $ 1.08 $ 1.93 $ 1.38
=============================================
Fully diluted $ 1.08 $ 1.85 $ 1.37
=============================================
Cash dividends $ .56 $ .42 $ .36
===========================================================================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
Wherever there's fabric, there's fiber . . .
12
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
<CAPTION>
Shares Capital in Cumulative Reserve
(amounts in Out- Common Excess Retained Translation for
thousands) standing Stock of Par Earnings Adjustment Investments
=============================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance June
30, 1991 32,966 $3,296 $33,403 $229,574 $2,758 $ -
=============================================================================
Purchase of stock (183) (18) (3,535) - - -
Options exercised 783 78 4,520 - - -
Stock issued 3,536 354 103,151 - - -
Stock dividend--25% 9,230 923 (951) (8) - -
Stock option tax
benefit - - 7,658 - - -
Book value stock
options - - 6,714 - - -
Cash dividends--
$.36 per share - - - (21,318) - -
Net distributions to
S Corporation
Shareholders - - - (8,018) - -
Foreign currency - - - - 4,806 -
Net income - - - 96,849 - -
Reclass of S Corp
net earnings to
capital in excess
of par - - 26,262 (26,262) - -
Pooling adjustment--
conform fiscal year - - - 2,807 - -
----------------------------------------------------
Balance June
28, 1992 46,332 $4,633 $177,222 $273,624 $ 7,564 $ -
============================================================================
Purchase of stock (27) (2) (1,126) - - -
Options exercised 143 14 972 - - -
Stock issued 639 64 904 - - -
Stock
dividend--50% 23,253 2,325 (2,426) (20) - -
Stock option
tax benefit - - 959 - - -
Cash dividends--
$.42 per share - - - (25,910) - -
Net distributions to
S Corporation
Shareholders - - - (4,471) - -
Foreign currency - - - - (13,079) -
Investment reserve - - - - - (920)
Net income - - - 136,644 - -
Reclass of S Corp net
earnings to capital
in excess of par - - 21,484 (21,484) - -
Pooling adjustment--
conform fiscal year
and accounting
policies - - (1,856) (9,562) - -
-------------------------------------------------------
Balance June
27, 1993 70,340 $7,034 $196,133 $348,821 $(5,515) $(920)
=============================================================================
PURCHASE OF STOCK (98) (10) (2,051) - - -
OPTIONS EXERCISED 191 19 899 - - -
CASH DIVIDENDS--
$.56 PER SHARE - - - (39,053) - -
NET CONTRIBUTIONS
AND TAX BENEFITS
FROM (TO) S CORPORA-
ACTION SHAREHOLDERS - - 4,562 (372) - -
FOREIGN CURRENCY - - - - 2,455 -
CHANGE IN INVESTMENT
RESERVE - - - - - 28
NET INCOME - - - 76,492 - -
RECLASS OF S CORP
NET EARNINGS TO
CAPITAL IN EXCESS
OF PAR - - 416 (416) - -
--------------------------------------------------------
BALANCE AT JUNE
26, 1994 70,433 $7,043 $199,959 $385,472 $(3,060) $(892)
=============================================================================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
. . . and wherever there's fiber, there's Unifi.
13
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(Amounts in thousands) June 26, 1994 June 27,1993 June 28, 1992
============================================================================
<S> <C> <C> <C>
Cash and cash equivalents
at beginning of year $ 76,093 $ 139,046 $ 12,429
-----------------------------------------------
Operating activities:
Net income $ 76,492 $ 136,644 $ 96,849
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 70,116 58,949 49,504
Non-cash portion of non-
recurring charge 13,433 - -
(Gain) loss on sale
of assets (1,021) (5,861) 538
Equity in (earnings) losses
of nonconsolidated
affiliates 62 1,481 (1,741)
Noncash compensation - 507 6,714
Provision for deferred
income taxes 6,939 6,506 3,236
Changes in assets and
liabilities, excluding
effects of acquisition
and foreign currency
adjustments:
Receivables 374 (5,099) (25,600)
Inventories 4,921 (20,144) (7,768)
Prepaid expenses (272) (82) 916
Payables and accruals (31,118) 21,007 14,328
Income taxes (8,605) 10,664 731
Other (533) (59) (2,687)
--------------------------------------------------
Net--operating activities $ 130,788 $ 204,513 $ 135,020
--------------------------------------------------
Investing activities:
Capital expenditures $ (104,672) $ (141,223) $ (110,501)
Purchase of investments (151,565) (115,620) (133,987)
Sale of capital assets 3,611 773 983
Sale of investments 198,855 127,119 -
Other (423) (5,909) (4,082)
--------------------------------------------------
Net--investing activities $ (54,194) $ (134,860) $ (247,587)
--------------------------------------------------
Financing activities:
Net borrowing (payments)
on revolving credit
and bank lines $ - $ (117) $ 2,304
Borrowing of
long-term debt - 30,585 254,537
Repayments of
long-term debt (32,221) (125,920) (102,273)
Issuance of stock 898 566 104,573
Purchase and retirement
of stock (2,061) (85) (322)
Net distributions to S
Corporation Shareholders - (8,266) (3,173)
Cash dividends paid (39,053) (25,910) (21,318)
--------------------------------------------------
Net--financing activities $ (72,437) $ (129,147) $ 234,328
--------------------------------------------------
Currency translation
adjustment $ 403 $ (3,459) $ 1,551
--------------------------------------------------
Net increase (decrease)
in cash $ 4,560 $ (62,953) $ 123,312
--------------------------------------------------
Cash and cash equivalents
at end of year 80,653 $ 76,093 $ 135,741
=============================================================================
Cash paid during the year:
Interest $ 17,487 $ 22,696 $ 10,547
Income taxes 61,653 65,601 58,097
Non-cash investing and
financing activities:
Tendering of stock to
exercise options $ - $ 1,129 $ 3,231
Assets acquired by
issuance of debt 7,453 8,617 2,335
=============================================================================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
Wherever there's fabric, there's fiber . . .
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES AND FINANCIAL STATEMENT INFORMATION
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of the Company and all subsidiaries. The accounts of all foreign
subsidiaries have been included on the basis of fiscal periods ended three
months or less prior to the dates of the consolidated balance sheets. All
significant intercompany accounts and transactions have been eliminated.
FISCAL YEAR: The Company's fiscal year is the fifty-two or fifty-three weeks
ending the last Sunday in June. All three fiscal years presented were
comprised of fifty-two weeks.
RECLASSIFICATION: The Company has reclassified the presentation of certain
prior year information to conform with the current presentation format.
REVENUE RECOGNITION: Substantially all revenue from sales is recognized at
the time shipments are made.
FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign subsidiaries
are translated at year-end rates of exchange and revenues and expenses are
translated at the average rates of exchange for the year. Gains and losses
resulting from translation are accumulated in a separate component of
shareholders' equity. Gains and losses resulting from foreign currency
transactions (transactions denominated in a currency other than the
subsidiary's functional currency) are included in net income.
CASH AND CASH EQUIVALENTS: Cash equivalents are defined as short-term
investments having an original maturity of three months or less.
SHORT-TERM INVESTMENTS: Short-term investments are compromised primarily of
high quality, highly liquid marketable securities with original maturities
greater than three months. The Company adopted Statement of Financial
Accounting Standard No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" as of the end of its current fiscal year and the adoption
had no significant impact on the financial statements. Short-term investments
at June 26, 1994 are classified as available-for-sale securities and are
carried at fair market value, with the unrealized gains and losses, net of
tax, reported in a separate component of shareholders' equity. Short-term
investments at June 27, 1993 are carried at the lower of cost or market, with
market value exceeding cost by approximately $.6 million.
ACCOUNTS RECEIVABLE: Certain customer accounts receivable are factored. An
allowance for losses is provided for accounts not factored based on a
periodic review of the accounts. Reserve for such losses was $4.3 million in
1994 and 3.7 million in 1993.
INVENTORIES: The Company utilizes the last-in, first-out (LIFO) method for
valuing certain inventories representing 57% of all inventories at June 26,
1994, and the first-in first-out (FIFO) method for all other inventories.
Inventory values computed by the LIFO method are lower than current market
values. Inventories valued at current or replacement cost would have been
approximately $5.6 million and $7.4 million in excess of the LIFO valuation
at June 26, 1994 and June 27, 1993, respectively. Finished goods, work in
process, and raw materials and supplies at June 26, 1994 and June 27, 1993,
amounted to $57.6 million and $50.3 million; $12.9 million and $13.2 million;
and $29.8 million and $41.5 million, respectively.
. . . and wherever there's fiber, there's Unifi.
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
INVESTMENT IN NONCONSOLIDATED AFFILIATED COMPANIES: The investments in common
stock of 45% and 32% owned affiliated companies are accounted for by the
equity method and are stated at cost plus the Company's share of
undistributed earnings since acquisition.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are stated at
cost. Depreciation is computed for asset groups primarily utilizing the
straight-line method for financial reporting and accelerated methods for tax
reporting.
OTHER ASSETS: Other assets consist primarily of long-term investments in
marketable equity securities, long-term notes receivable, deferred debt
expense and, in the prior year, noncompete covenants and identified
intangibles associated with acquisitions. The long-term investments in
marketable equity securities are classified as available-for-sale and are
carried at fair market value of $9.5 million and $8.5 million at June 26,
1994 and June 27, 1993, respectively. The deferred debt expense, intangible
assets and noncompete covenants are being amortized on a straight-line method
over periods of two to fifteen years. Accumulated amortization at June 26,
1994 and June 27, 1993 was $16.0 million and $17.9 million, respectively.
INCOME TAXES: The Company and its domestic subsidiaries file a consolidated
federal tax return. Income tax expense is computed on the basis of
transactions entering into pretax operating results. Deferred income taxes
have been provided for the tax effect of temporary differences between
financial statement carrying amounts and the tax basis of existing assets and
liabilities. Income taxes have not been provided on the undistributed
earnings of certain foreign subsidiaries as such earnings are deemed to be
permanently invested.
EARNINGS PER SHARE: Earnings per common and common equivalent share are
computed on the basis of the weighted average number of shares of common
stock outstanding plus, to the extent applicable, common stock equivalents.
Average common and common equivalent shares for primary earnings per share
were 71,020,075, 70,861,463 and 70,226,216 for 1994, 1993 and 1992,
respectively. Reported fully diluted earnings per share amounts are based on
71,026,610, 78,640,459 and 72,578,448 shares for 1994, 1993 and 1992,
respectively. The effect of the convertible subordinated notes was
antidilutive for the fiscal year ended June 26, 1994.
BUSINESS COMBINATIONS
On August 18, 1993, Pioneer Yarn Mills, Inc. Edenton Cotton Mills, Inc.,
Pioneer Spinning, Inc., Pioneer Cotton Mills, Inc. and certain real estate
(collectively the Pioneer Corporations) were merged into Unifi Spun Yarns,
Inc. a wholly-owned subsidiary of the Company. In order to effect the merger,
2,745,284 shares of the Company's common stock were issued for all of the
outstanding shares of the Pioneer Corporations. On April 23, 1993, Vintage
Yarns, Inc. (Vintage) was merged with and became a wholly-owned subsidiary of
the Company, and 7,891,800 shares of the Company's common stock were issued
in exchange for all of the outstanding common stock of Vintage. Additionally,
496,832 shares of the Company's common stock were reserved for issuance
pursuant to outstanding options on Vintage common stock. On August 8, 1991,
Macfield, Inc. (Macfield) was merged with and into the Company, and
16,263,644 shares of the Company's common stock were issued in exchange for
all of the outstanding common stock of Macfield. All three mergers were
accounted for as a pooling of interests, and accordingly, the accompanying
financial statements for the years ended June 27, 1993 and June 28, 1992 have
been restated to include the accounts and operations of the Pioneer
Corporations, Vintage and Macfield for all periods prior to each of the
representative mergers.
Wherever there's fabric, there's fiber . . .
16
Prior to the mergers, the Pioneer Corporations used a fiscal year ending
on the last Saturday in September, Vintage used a fiscal year ending
September 30 and Macfield used a fiscal year ending on the Saturday nearest
April 30. The 1992 restated financial statements combine the June 28, 1992
financial statements of the Company with the September 26, 1992 financial
statements of the Pioneer Corporations and the September 30, 1992 financial
statements of Vintage and the 1993 restated financial statements combine the
June 27, 1993 financial statements of the Company with the financial
statements of the Pioneer Corporations and Vintage for their respective
twelve month periods ended June 26, 1993 and June 30, 1993, respectively.
Accordingly, to conform the fiscal years of the Pioneer Corporations and
Vintage with the Company's, the results of operations of the Pioneer
Corporations and Vintage for the three months ended September 26, 1992 and
September 30, 1992, respectively, have been included in both fiscal 1993 and
1992. Combined net sales and net income for the three month periods of the
Pioneer Corporations and Vintage were $60.8 million and $9.6 million,
respectively. An adjustment for the net income of the three month period has
been reflected as an adjustment to the June 29, 1992 consolidated retained
earnings and an additional adjustment of $1.9 million has been reflected to
conform the accounting policies of the previously separate companies.
Additionally, to conform the fiscal years of Macfield and the Company, the
net income of Macfield for the two months ended June 30, 1991 of $2.8 million
has been reflected as an adjustment to retained earnings effective July 1,
1991. Separate results of the combining entities for each of the two years in
the period ended June 27, 1993 are as follows (in 000's):
<TABLE>
<CAPTION>
June 27, 1993 June 28, 1992
==========================================================================
<S> <C> <C>
Net Sales:
Unifi $ 1,133,863 $ 1,091,368
Pioneer Corporations 73,457 61,941
Vintage 198,331 169,601
----------- -----------
$ 1,405,651 $ 1,322,910
==========================================================================
Net Income:
Unifi $ 94,839 $ 62,570
Pioneer Corporations 8,591 8,002
Vintage 33,214 26,277
----------- -----------
$ 136,644 $ 96,849
==========================================================================
</TABLE>
For all periods prior to the merger, to the date of the acquisitions, the
Pioneer Corporations and Vintage were taxed as S Corporations and, therefore,
federal and state taxes were assessed to the shareholders. For purposes of
the consolidated financial statements, income taxes have been provided on the
Pioneer Corporations' and Vintage's earnings at the rates which would have
been applicable had such earnings been taxed to it. Distributions to S
Corporation shareholders have been adjusted for the effects of corporate,
federal and state taxes payable on an annualized basis.
In connection with the merger with Macfield, approximately $24.8 million
of merger costs and expenses ($18.4 million net of income taxes, or $.26 per
share) were incurred and have been charged to expense in the Company's first
quarter of fiscal 1992.
NON-RECURRING CHARGE
In the fiscal 1994 fourth quarter, the Company recorded a non-recurring
charge of $13.4 million ($14.1 million after-tax or $.20 per share) related
to the planned sale of the Company's investment in its wholly-owned French
subsidiary, Unifi Texturing, S.A. (UTSA) and the Company's decision to exit
the European nylon market. Of the non-recurring charge, $3.1 million relates
to the loss from the sale of UTSA, 8.8 million relates to the write-off of
goodwill and other intangibles associated with the Company's European nylon
operations and $1.5 million relates to the write-down of nylon production
equipment and inventories. The net sales and net income of UTSA included in
the Company's consolidated results of operations were not significant during
any of the periods presented.
. . . and wherever there's fiber, there's Unifi.
17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
NOTES PAYABLE/LONG-TERM DEBT
A summary of long-term debt follows (in 000's):
<CAPTION>
June 26, 1994 June 27, 1993
=========================================================================
<S> <C> <C>
Convertible subordinated notes
due March 15, 2002 $ 230,000 $ 230,000
Term loans 25 23,101
Other 112 1,804
---------- ----------
$ 230,137 $ 254,905
Less current portion 137 4,664
---------- ----------
$ 230,000 $ 250,241
==========================================================================
</TABLE>
There are no scheduled maturities of long-term debt in the five years
following June 26, 1994 other than the amounts classified as current above.
The 6% convertible subordinated notes due March 15, 2002 are convertible
at any time on or before the due date, unless previously redeemed, into
common stock of the Company at a conversion price of $29.67 per share,
subject to adjustment in certain events. The notes are redeemable, in whole
or in part, at the option of the Company on or after March 27, 1995 at
redemption prices beginning at 104% of their principal amount, declining to
par on or after March 15, 2001. The Company had 7.8 million shares reserved
at year end for potential conversion. Interest is payable semi-annually on
March 15 and September 15 of each year.
The fair value of the Company's long-term debt is estimated using quoted
market price at June 26, 1994 of 99.75% or a total value of $229.4 million.
INCOME TAXES
Deferred income taxes of $32.4 million and $37.0 million at June 26,
1994 and June 27, 1993, respectively, have been provided as a result of
differences between accounting for financial statement versus tax purposes.
The net deferred tax liability of $32.4 million at June 26, 1994 and $37.0
million at June 27, 1993 consist of deferred tax liabilities resulting
primarily from the temporary differences related to property, plant and
equipment of $52.7 million and $44.8 million, other assets of $.7 million and
$1.9 million and deferred tax assets attributable to merger, valuation, other
assets and reserves of $21.0 million and $9.7 million, respectively. U.S.
deferred income taxes have not been recognized on $35.2 million at June 26,
1994 ($34.0 million at June 27, 1993) of undistributed earnings of foreign
subsidiaries, because assets representing those earnings are permanently
invested. The amount of foreign withholding taxes and U.S. taxes that would
be payable upon the repatriation of assets that represent those earnings
would be approximately $13.6 million at June 26, 1994 ($13.1 million at June
27, 1993).
<TABLE>
Components of deferred tax expense were as follows (in 000's):
<CAPTION>
1994 1993 1992
=========================================================================
<S> <C> <C> <C>
Depreciation and
asset disposals $ 6,996 $ 6,424 $ 4,485
Other (57) 82 (1,249)
-------- -------- --------
$ 6,939 $ 6,506 $ 3,236
=====================================
State income taxes
included in provision
for income taxes $ 7,639 $ 12,608 $ 10,313
==========================================================================
</TABLE>
Significant items affecting a reconciliation of the statutory federal income
tax rates and the effective rate are attributable to the following:
<TABLE>
<CAPTION>
1994 1993 1992
=========================================================================
<S> <C> <C> <C>
Federal statutory rate 35.0% 34.0% 34.0%
State income taxes--net 3.6 3.8 4.2
Foreign subsidiaries taxed at
different rates (.2) (.3) (2.0)
Nondeductible expenses
and other 5.7 .3 2.9
------- -------- -------
Effective rate 44.1% 37.8% 39.1%
=========================================================================
</TABLE>
Wherever there's fabric, there's fiber . . .
18
Common Stock
Shares authorized were 500 million in 1994 and 100 million in 1993. Common
shares outstanding at June 26, 1994 and June 27, 1993 were 70,432,862 and
70,339,965, respectively.
The Company has an Incentive Stock Option Plan with 1,964,027 shares
reserved at June 26, 1994. There remain 1,061,000 options available for grant
at year end. The transactions for 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
==========================================================================
<S> <C> <C> <C>
Shares under option
--beginning of year 874,992 799,941 1,513,334
Granted 176,500 262,500 -
Exercised (140,965) (187,449) (713,393)
Cancelled
(all at $24.67) (7,500) -- --
-------------------------------------------
Shares under option
--end of year 903,027 874,992 799,941
=============================================
Option price range $1.62-$24.67 $1.62-$24.67 $1.62-$4.80
=============================================
Option price range for
options exercised $1.62-$24.67 $2.53-$24.67 $1.62-$4.80
==========================================================================
</TABLE>
The Company also has Non-Qualified Stock Option Plans with 968,635 shares
reserved at June 26, 1994. There remain 417,935 options available for grant
at year end. Transactions for 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
==========================================================================
<S> <C> <C> <C>
Shares under option
--beginning of year 760,103 520,739 71,250
Granted 2,065 330,000 496,832
Exercised (49,957) (23,907) (47,343)
Canceled
(all at $10.19) (161,511) (66,729) -
--------------------------------------------
Shares under option
--end of year 550,700 760,103 520,739
==============================================
Options exercisable
--end of year 495,061 330,000 23,907
==============================================
Option price range $10.19-$25.83 $10.19-$25.83 $10.19-$25.83
==============================================
Option price range
for options
exercised $10.19-$10.57 $10.19-$25.83 $10.19-$25.83
============================================================================
</TABLE>
RETIREMENT PLAN
The Company has a qualified profit-sharing plan which provides benefits for
eligible salaried and hourly employees. The annual contribution to the plan,
which is at the discretion of the Board of Directors, amounted to $15.8
million, $13.3 million and $4.8 million in 1994, 1993 and 1992, respectively.
The Company leases its corporate office building from its profit-sharing plan
through an independent trustee.
LEASES, CONTINGENCIES AND COMMITMENTS
The Company is obligated under operating leases expiring in 1998, consisting
primarily of real estate and equipment. Future obligations for minimum
rentals under the leases during fiscal years after June 26, 1994 are $.6
million in 1995, $.6 million in 1996, $.4 million in 1997, and $.1 million in
1998.
Rental expense was $3.2 million, $2.7 million and $2.7 million for the
fiscal years 1994, 1993 and 1992, respectively.
The Company had committed approximately $41.7 million for the purchase
of equipment and facilities at June 26, 1994.
BUSINESS SEGMENTS AND FOREIGN OPERATIONS
The Company and its subsidiaries are engaged predominantly in the processing
of yarns by: texturing of synthetic filament polyester and nylon fiber and
spinning of cotton and cotton blend fibers with sales domestically and
internationally, mostly to knitters and weavers for the apparel, industrial,
hosiery, home furnishing, automotive upholstery and other end-use markets.
The Company had sales to one customer of approximately 12% in 1994 and
12% in 1993 and 11% in 1992.
The Company's foreign operations are comprised primarily of its
manufacturing facilities in Ireland and France, along with its foreign sales
corporation. The foreign operations had net sales of $178.5 million, $199.3
million and $209.9 million; pretax income, before non-recurring charges, of
$4.4 million, $7.6 million and $12.4 million; and identifiable assets of
$132.0 million, $123.4 million and $159.9 million in 1994, 1993 and 1992,
respectively.
. . . and wherever there's fiber, there's Unifi.
19
MANAGEMENT'S REVIEW AND ANALYSIS
OF OPERATIONS AND FINANCIAL POSITION
FISCAL 1994
Net sales decreased 1.5% from 1.406 billion in 1993 to $1.385 billion in
1994. This reduction resulted from an overall decline in sales prices of 6.6%
based on product mix offset by volume gains of 5.5% experienced for the year
in our combined domestic and foreign markets. Domestic growth was achieved
through phased in production from a new texturizing plant in Yadkinville, NC
that commenced operations in 1993 and the completion of other modernization
projects in 1994 and latter stages of the prior fiscal year. Also,
significant volume growth was noted in our spun yarn business for the year
although pressure on pricing and raw material increases adversely impacted
the margins. In the first quarter of 1994, the Company increased its presence
in the cotton and cotton blend spun yarn business through the merger with the
Pioneer Corporations. During 1993, the Company entered this market through
its merger with Vintage Yarns.
Our European facilities also experienced overall capacity increases.
However, sales prices in local currencies were adversely affected due to weak
economic conditions and overcapacity throughout most of the year. Sales from
foreign operations are denominated in local currencies and are hedged in part
by the purchase of raw materials and services in those same currencies. The
net asset exposure is hedged by borrowings in local currencies which minimize
the risk of currency fluctuations.
Cost of sales as a percentage of sales increased from 81.2% in 1993 to
85.6% in 1994. Impacting cost of sales in the current year was increased
fixed charges, such as depreciation, resulting from added capacity being
absorbed on a lower net sales base. Also, our spun operations experienced
significant raw material price increases during 1994 adversely impacting cost
of sales. On a Company wide basis, however, raw material prices per pound
were lower in the current fiscal year than in the prior year.
Selling, general and administrative expenses as a percentage of net
sales increased from 2.7% in 1993 to 2.9% in 1994 primarily as a result of
increased fixed charges over a reduced net sales base.
Interest expenses declined $7.6 million from $25.8 million in 1993 to
$18.2 million in 1994. This decline was attributable to the payoff of long-
term debt acquired through merger activity. The only long-term debt remaining
at June 26, 1994 is the $230 million in convertible subordinated notes issued
in March 1992. Interest income declined $5.2 million from 1993 to 1994 as a
result of decreased short-term investment levels. These investments were used
to payoff acquired debt, modernize capital equipment and for other financing
activities. Other income declined $4.5 million from 1993 to 1994 mainly as a
result of the prior year gains recognized from the sale of investment in
affiliates and short-term investments while no such activity was present in
the current year.
In connection with the planned sale of the nylon operations in France,
the Company recognized the anticipated loss on the sale of its French
subsidiary and wrote off certain intangible costs, primarily goodwill, and
other costs associated with the European nylon business. These costs
aggregated $14.1 million, or $.20 per share on an after tax basis.
The effective income tax rate increased from 37.8% in 1993 to 44.1 % in
1994. This increase was mainly due to the non-deductible, non-recurring
charge in the current year while no such charge was incurred in 1993. Also
adversely impacting the current year's effective tax rate was the decreased
foreign earnings which are taxed at rates lower than the federal tax rate and
the increase in the statutory federal rate from 34% to 35% for all of 1994.
Net income declined from $136.6 million or $1.93 per share in 1993 to
$76.5 million or $1.08 per share in 1994. Net income and net income per share
in 1994 before the non-recurring charge previously discussed were $90.6
million or $1.28 per share.
FISCAL 1993
Net sales increased 6.3% from 1.323 billion in 1992 to $1.406 billion in
1993. The sales growth resulted from volume increases as average pricing
based on overall product mix remained constant. Volume gains were seen in
both domestic and foreign markets. Growth in domestic markets came from
expenditures for improvements and capacity expansion. Unifi entered the spun
yarn business during 1993 through its acquisition of Vintage Yarns. During
the year the Company commenced production in a new texturizing plant at its
Yadkinville, NC facility, completed the modernization of its covering plants
and began upgrading the texturing equipment that provides yarn to its dyeing
operations.
We also experienced volume increases in our European plants; however,
these operations were adversely impacted by weak economic conditions
prevalent throughout most of the year. The sales from foreign operations are
Wherever there's fabric, there's fiber . . .
20
in local currencies and are hedged in part by the purchase of raw materials
and services in those same currencies. The net asset exposure is hedged by
borrowings in local currencies which minimizes the risks of currency
fluctuations.
Cost of sales as a percentage of net sales improved from 82.4% in 1992
to 81.2% in 1993. Based on our overall product mix, increases in
manufacturing costs and other components of cost of sales on a per unit basis
were offset by decreases in raw material costs.
Selling, general and administrative expenses remained constant from 1992
to 1993 at $38.5 million, reflecting an improvement from 2.9% and 2.7% of net
sales, respectively. These improvements were mainly due to the centralization
of operations and the elimination of duplications in staff and support
systems.
Interest expense increased from $16.8 million in 1992 to $25.8 million
in 1993. This increase was due primarily to the $230 million of convertible
subordinated debt outstanding during the current year. The debt was issued in
March 1992. Interest income increased from $5.3 million in 1992 to $13.5
million in 1993 due to higher investment levels stemming from the proceeds
made available from the issuance of the subordinated debt. Other income of
$5.8 million in 1993 was mainly comprised of gains from the sale of
investments in affiliates and from the sale of short-term investments in
marketable securities. Other income in 1992 of $1.6 million was derived
primarily from the equity in earnings of nonconsolidated affiliates.
In connection with the 1991 merger, the Company incurred approximately
$24.8 million of nonrecurring expenses that were charged to earnings in the
first quarter of 1992. These nonrecurring costs and expenses resulted in an
after-tax effect on net income of $18.4 million, or $.26 per share.
The effective income tax rate decreased form 39.1% in 1992 to 37.8% in
1993. This decrease in the effective rate was mainly due to a combination of
nondeductible merger expenses in 1992 whereas there were no such expenses in
1993.
Net income for 1993 was $136.6 million or $1.93 per primary share as
compared to net income of $96.8 million or $1.38 per primary share, in 1992.
Net income and net income per primary share for fiscal 1992 before the
effects of the nonrecurring merger expenses, previously described, were
$115.2 million and $1.64, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated from operations is a major source of liquidity for the
Company. During 1994, $130.8 million was generated as a result of net income,
adjusted for the effects of depreciation, amortization and noncash expenses
and decreases in both receivables and inventories offset by the decreases in
trade payables and accruals and income taxes. The decrease in accounts
payable results from maintaining lower quantities of raw yarn inventory in
1994 than in 1993 and in connection with other reductions experienced with
the merged companies.
In addition to cash generated from operations, the Company has access to
debt and equity markets. In 1992 the Company generated $104.7 from the sale
of Unifi common stock and approximately $230 million from the sale of 6%
convertible subordinated notes due March 15, 2002. The Company also maintains
reserves of liquid short-term investments which can be used for corporate
purposes as needed. Proceeds from these sources and existing reserves were
used primarily for repayment of debt of acquired companies and capital
expenditures.
During 1994 the Company expended $104.7 million for additions to
property and equipment, $32.2 million for repayment of long-term debt
associated with acquired companies, $39.1 million for cash dividend payments
and $2.1 million for stock repurchase.
At June 26, 1994 the Company has working capital of $304.3 million which
reflects a 3 to 1 current ratio (current assets compared to current
liabilities). This represents a decrease in working capital from June 27,
1993 of $320.2 million. The decrease is primarily attributable to the debt
repayments and purchases of property and equipment discussed above.
On October 21, 1993, the Board of Directors authorized Management to
repurchased from time to time up to 15 million shares of Unifi's common stock
at such price as Management feels advisable and in the best interest of the
Company. It has not been determined how many shares, if any, will be
repurchased nor has the time frame been established in which such purchases
may take place. To date, approximately 98,000 shares have been repurchased by
the Company.
Management believes the current financial position is sufficient to
complete anticipated capital expenditures, working capital, acquisitions and
other financial needs. It is anticipated that the sale of our French nylon
facility will produce $16 million to $18 million.
. . . and wherever there's fiber, there's Unifi.
21
<TABLE>
SUMMARY OF SELECTED DATA
(Amounts in
thousands,
except per
share data)
<CAPTION>
June 26 1994 June 27 1993 June 28 1992 June 30 1991 June 24 1990
===========================================================================
<S> <C> <C> <C> <C> <C>
SUMMARY OF
EARNINGS:
Net sales $ 1,384,797 $1,405,651 $1,322,910 $1,121,592 $1,010,026
Cost of
sales 1,185,386 1,141,126 1,090,611 965,115 881,271
Gross profit 199,411 264,525 232,299 156,477 128,755
Selling,
general and
administrative 40,429 38,484 38,530 41,193 35,943
Interest expense 18,241 25,785 16,756 18,707 14,911
Interest
income (8,290) (13,537) (5,306) (3,705) (2,805)
Other (income) (1,238) (5,775) (1,598) (3,100) (107)
Non-recurring
charge 13,433 - - - -
Merger expenses - - 24,805 - -
Pretax income 136,836 219,568 159,112 103,382 80,813(1)
Tax provision 60,344 82,924 62,263 35,707 29,297
Net income 76,492 136,644 96,849 67,675 51,516(1)
PER SHARE OF
COMMON STOCK:
Net income $ 1.08 $ 1.93 $ 1.38 $ 1.01 $ 0.73
Cash dividends .56 .42 .36 .20 -
FINANCIAL DATA:
Working
capital $ 304,274 $ 320,215 $ 389,826 $ 104,275 $117,578
Gross property,
plant and
equipment 848,637 750,552 640,963 529,701 463,420
Total assets 1,003,252 1,017,449 989,404 621,963 597,783
Long-term debt 230,000 250,241 328,685 160,113 146,892
Shareholders'
equity 588,522 545,553 463,043 269,031 272,164
===========================================================================
<FN>
(1) Net income before cumulative effect of change in accounting for income
taxes
</TABLE>
<TABLE>
QUARTERLY RESULTS
After restatement for the merger, quarterly financial data for the years
ended June 26, 1994 and June 27, 1993 is presented below:
(Unaudited) (Amounts in
thousands, except per
share data)
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
==========================================================================
<S> <C> <C> <C> <C>
1993
Net sales $ 333,645 $ 347,729 $ 361,996 $ 362,281
Gross profit 59,006 66,193 70,322 69,004
Net income 29,711 32,874 38,269 35,790
Earnings per
share .42 .47 .54 .50
1994
NET SALES $ 325,355 $ 351,516 $ 346,059 $ 361,867
GROSS PROFIT 45,725 52,564 50,589 50,533
NET INCOME 19,812 24,361 22,754 9,565
EARNINGS PER
SHARE .28 .34 .32 .14
==========================================================================
</TABLE>
Wherever there's fabric, there's fiber . . .
22
MARKET AND DIVIDEND INFORMATION
The Company's common stock is listed for trading on the New York Stock
Exchange. The following table sets forth the range of high and low sales
prices of the Unifi Common Stock as reported on the NYSE Composite Tape and
the regular cash dividends per share declared by Unifi during the periods
indicated. This information has been adjusted to reflect the stock splits
described below.
<TABLE>
<CAPTION>
(Unaudited) High Low Dividends
=============================================================================
<S> <C> <C> <C>
Fiscal year 1992:
First quarter ended September 29, 1991 $ 23.50 $ 17.75 $ .08
Second quarter ended December 29, 1991 $ 24.08 $ 20.42 $ .08
Third quarter ended March 29, 1992 $ 25.58 $ 23.08 $ .10
Fourth quarter ended June 28, 1992 $ 28.08 $ 22.67 $ .10
Fiscal year 1993:
First quarter ended September 27, 1992 $ 26.75 $ 23.59 $ .10
Second quarter ended December 27, 1992 $ 30.67 $ 23.67 $ .10
Third quarter ended March 28, 1993 $ 34.88 $ 27.92 $ .11
Fourth quarter ended June 27, 1993 $ 38.38 $ 31.50 $ .11
FISCAL YEAR 1994:
FIRST QUARTER ENDED SEPTEMBER 26, 1993 $ 34.13 $ 20.00 $ .14
SECOND QUARTER ENDED DECEMBER 26, 1993 $ 27.63 $ 20.88 $ .14
THIRD QUARTER ENDED MARCH 27, 1994 $ 27.00 $ 21.75 $ .14
FOURTH QUARTER ENDED JUNE 26, 1994 $ 26.63 $ 20.50 $ .14
=============================================================================
<FN>
On January 21, 1993 the Company's Board of Directors declared a three-for-two
stock dividend in the form of a stock split.
On January 16, 1992 the Company's Board of Directors declared a five-for-four
stock dividend in the form of a stock split.
</TABLE>
. . . and wherever there's fiber, there's Unifi.
23
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 26, 1994, and June 27, 1993, 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 26, 1994. 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 26, 1994 and June 27, 1993, and the consolidated results
of its cash flows for each of the three years in the period ended June 26,
1994, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Greensboro, North Carolina
July 19, 1994
Wherever there's fabric, there's fiber . . .
10
Exhibit (21)
UNIFI, INC.
SUBSIDIARIES
Percentage
of Voting
Securities
Name Address Incorporation
Owned
- - - ------------------------------------------------------------------------
Unifi Spun Yarns, Inc. Greensboro, NC North Carolina 100%
Unifi, FSC Limited Agana, Guam Guam 100%
Unifi Textured Yarns Letterkenny,
Europe, Ltd. Ireland United Kingdom 100%
Unifi International
Service, Inc. Greensboro, NC North Carolina 100%
Exhibit (23)
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 19, 1994, included in the 1994
Annual Report to Shareholders of Unifi, Inc.
Our audits also included the financial statement schedules of Unifi, Inc.
listed in Item 14(a). These schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules 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.
We also 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,
Registration Statement (Form S-3 No. 33-45946) pertaining to the Unifi, Inc.
6% Convertible Subordinated Notes, and 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 of our report dated
July 19, 1994, with respect to the consolidated financial statements
incorporated herein by reference and of our report included in the preceding
paragraph with respect to the financial statement schedules included in this
Annual Report (Form 10-K) for the year ended June 26, 1994.
Ernst & Young LLP
Greensboro, North Carolina
September 16, 1994
Exhibit 27
FINANCIAL DATA SCHEDULES
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL YEAR ENDED
JUNE 26, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-24-1994
<PERIOD-END> JUN-24-1994
<CASH> 80,653
<SECURITIES> 71,483
<RECEIVABLES> 200,537
<ALLOWANCES> 4,302
<INVENTORY> 100,279
<CURRENT-ASSETS> 456,557
<PP&E> 848,637
<DEPRECIATION> 336,375
<TOTAL-ASSETS> 1,003,252
<CURRENT-LIABILITIES> 152,283
<BONDS> 230,000
<COMMON> 7,043
0
0
<OTHER-SE> 581,479<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,003,252
<SALES> 1,384,797
<TOTAL-REVENUES> 1,384,797
<CGS> 1,185,386
<TOTAL-COSTS> 1,247,961
<OTHER-EXPENSES> 12,195<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,241
<INCOME-PRETAX> 136,836
<INCOME-TAX> 60,344
<INCOME-CONTINUING> 76,492
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,492
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.08
<FN>
<F1>Other-SE of $581,479 = Capital in excess of par value $199,959
+ Retained earnings $385,472 + Cumulative translation adjustment ($3,060)
+ Reserve of investments ($892).
<F2>Other-Expenses of $12,195 = Non-recurring charge $13,433 + Other
(income) expense ($1,238).
</FN>
</TABLE>
