March 2, 2021

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UNIFI : Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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The following is management's discussion and analysis of certain significant
factors that have affected UNIFI's operations, along with material changes in
financial condition, during the periods included in the accompanying condensed
consolidated financial statements. A reference to a "note" in this section
refers to the accompanying notes to condensed consolidated financial statements.
A reference to the "current period" refers to the three-month period ended
December 27, 2020, while a reference to the "prior period" refers to the
three-month period ended December 29, 2019. A reference to the "current
six-month period" refers to the six-month period ended December 27, 2020, while
a reference to the "prior six-month period" refers to the six-month period ended
December 29, 2019. Such references may be accompanied by certain phrases for
added clarity. The current period and the prior period each consisted of 13
weeks. The current six-month period and the prior six-month period each
consisted of 26 weeks.

Our discussions in this Item 2 focus on our results during, or as of, the three
months and six months ended December 27, 2020 and December 29, 2019, and, to the
extent applicable, any material changes from the information discussed in the
2020 Form 10-K or other important intervening developments or information. These
discussions should be read in conjunction with the 2020 Form 10-K for more
detailed and background information about our business, operations and financial
condition. Discussion of foreign currency translation is primarily associated
with the weakening of the Brazilian Real ("BRL") and changes in the Chinese
Renminbi ("RMB") versus the U.S. Dollar ("USD"). In discussion of its operating
results in this report, UNIFI refers to its operations in the "NACA" region,
which is the region comprised of the trade zones covered by USMCA, NAFTA and
CAFTA-DR.

All amounts, except per share amounts, are presented in thousands (000s), except
as otherwise noted.

Overview and Significant General Matters

UNIFI focuses on delivering products and solutions to direct customers and brand
partners throughout the world, leveraging our internal manufacturing
capabilities and an enhanced global supply chain that delivers a diverse range
of synthetic and recycled fibers and polymers. This strategic and synergistic
focus includes three supporting pillars: (1) engaging in strategic relationships
with like-minded entities, (2) growing our existing portfolio of technologies
and capabilities, and (3) expanding our supply chain to best serve our direct
and indirect customers. UNIFI remains committed to this strategy, which we
believe will increase profitability and generate improved cash flows from
operations.

UNIFI has four reportable segments for its operations - the Polyester Segment,
the Asia Segment, the Brazil Segment and the Nylon Segment - as well as certain
ancillary operations that include for-hire transportation services, which
comprise an All Other category. The ancillary operations classified within All
Other are insignificant for all periods presented; therefore, UNIFI's discussion
and analysis of those activities is generally limited to their impact on
consolidated results, where appropriate.

Significant general matters for the current period and the current six-month
period, which include certain sales pressures from the ongoing COVID-19
pandemic, are summarized below:

• net sales for the current period decreased $6,735, or 4.0%, to $162,776,

compared to $169,511 for the prior period;

• net sales for the current six-month period decreased $45,179, or 12.9%, to

$304,281, compared to $349,460 for the prior six-month period;

• revenues from REPREVE® Fiber products for the current period represented 37%

of consolidated net sales, compared to 34% for the prior period, 36% for the

current six-month period, and 32% for the prior six-month period;

• gross margin was 15.9% for the current period, compared to 9.2% for the

prior period, and was 13.3% for the current six-month period, compared to

9.5% for the prior six-month period;

• operating income was $13,092 for the current period, compared to $2,561 for

the prior period, and was $15,998 for the current six-month period, compared

to $8,907 for the prior six-month period; and

• diluted EPS was $0.40 for the current period, compared to $0.02 for the

prior period, and was $0.58 for the current six-month period, compared to

$0.22 for the prior six-month period.

COVID-19 Pandemic in Calendar 2020

In March 2020, the World Health Organization declared the current COVID-19
outbreak a global pandemic. Efforts to contain the spread of COVID-19
intensified during March and April 2020. Several states, including North
Carolina, where UNIFI's primary manufacturing and administrative operations are
located, declared states of emergency. A number of foreign and local governments
also enacted temporary business closures, issued quarantine orders and took
other restrictive measures in response to the COVID-19 pandemic. The local and
global measures significantly reduced economic activity and demand, thereby
reducing overall demand for UNIFI's products.

In an effort to protect the health and safety of our employees, customers and
communities, UNIFI took proactive, aggressive actions from the earliest signs of
the outbreak that included social distancing and travel restriction policies for
all locations, along with reducing costs in both manufacturing and selling,
general and administrative expenses ("SG&A") without impacting our ability to
service customers. These measures remain in effect and are evaluated regularly
against local, state and federal recommendations.

Global measures taken to reduce the spread of the COVID-19 pandemic generated a
significant decline in global business activity that may have a lasting impact
on the global economy and consumer demand. The duration of the COVID-19 pandemic
and its related impact on our business is currently unknown. Through March 2020,
the COVID-19 pandemic had no significant adverse impact on UNIFI's business,
although sales growth for our Asia Segment was temporarily slowed by the
extensive government shutdown in China. Throughout calendar 2020, the Asia
Segment's overall performance and profitability was moderately impacted by the
COVID-19 pandemic, while our U.S., Brazil and El Salvador operations were more
adversely impacted by the COVID-19 pandemic, most notably in the June 2020
quarter during the most intense declines in global demand. UNIFI anticipates
that the global disruption caused by the COVID-19 pandemic has negatively
impacted, and will continue to negatively impact, overall global demand and
business activity, including textiles in both the Americas and Asia.

While our operating results for the current six-month period indicate a robust
recovery of the textile supply chain and increased activity from the
considerably low levels of demand and production experienced in the June 2020
quarter, significant restoration of consumer spending and retail activity

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will be critical to our end-markets to enable a full and sustained economic
rebound. UNIFI anticipates a recovery in global economic activity when the
COVID-19 pandemic is sufficiently contained. The economic rebound will depend on
the pace and effectiveness of the containment efforts deployed by various
international, national, state, and local governments, along with the speed and
effectiveness with which potential treatment and vaccine methods are deployed.
However, the anticipated economic rebound would be jeopardized by a significant
degradation in local and global healthcare systems' abilities to treat
infections, mutations of the virus that generate further difficulty in
containment efforts, or shelter-in-place orders in UNIFI's primary geographic
markets.

Textile demand and business activity levels in the second half of calendar 2020
exceeded our expectations set when we began the fiscal year, however there is no
certainty that such levels will continue or increase during calendar 2021.
Additionally, there is no clear indication that the demand and activity levels
experienced in the second half of calendar 2020 were the result of economic
restoration, as those levels could have been favorably impacted by pent up
demand. UNIFI will continue to monitor the COVID-19 pandemic, prioritizing the
health and safety of our employees, while delivering on customer demand.
Although our year-to-date fiscal 2021 results have exceeded our expectations and
we have experienced several improvements across certain financial metrics, our
underlying sales volumes in certain core markets have not fully recovered.
Therefore, we are unsure of the impact on our operational and financial results
through at least fiscal 2021, based on present factors and conditions, along
with the uncertainty surrounding global demand.

Update on Recent Trade Initiatives

UNIFI remains committed to pursuing relief from the elevated levels of low-cost
and subsidized polyester textured yarn entering the U.S. market from foreign
countries. Efforts to slow low-cost and subsidized polyester textured yarn from
China and India were successful during calendar 2019, which led to a temporary
improvement in our U.S. polyester textured yarn sales prior to the onset of the
COVID-19 pandemic in March 2020.

Subsequent to the completion of the trade initiatives against China and India,
imports from Indonesia, Malaysia, Thailand, and Vietnam seemingly replaced the
imports from China and India and surged into the U.S. market. Subject import
volume from Indonesia, Malaysia, Thailand, and Vietnam increased from calendar
2017 to calendar 2019 by over 80%. Similar to the adverse impacts of imports
from China and India in previous years, the subject imports from Indonesia,
Malaysia, Thailand, and Vietnam undersold the domestic industry, taking sales
from and exerting considerable downward pricing pressure on yarns produced by
UNIFI. Accordingly, UNIFI is a petitioner to the United States Department of
Commerce and the United States International Trade Commission (the "USITC")
alleging dumping of polyester textured yarn in the U.S. market from Indonesia,
Malaysia, Thailand, and Vietnam.

In December 2020, the USITC made affirmative determinations in its preliminary
phase of antidumping duty investigations concerning polyester textured yarn from
Indonesia, Malaysia, Thailand, and Vietnam. The entire investigative process
will take approximately one year, with final determinations of dumping and
injury likely occurring by the end of calendar 2021.

Current Six-Month Period Performance

Prior to the COVID-19 pandemic, our operations were achieving incremental sales
volume growth from both (i) continued demand for sustainable products with our
REPREVE® platform and (ii) U.S. market share recapture from our trade
initiatives that were finalized in January 2020. Additionally, we have recently
benefited from a more favorable polyester raw material cost environment.

In the current six-month period, our Polyester and Nylon Segments were adversely
impacted by the COVID-19 pandemic, as manufacturing activity in the U.S. has
recovered less rapidly than in Asia and Brazil, while production activity in
Central America surged following the June 2020 quarter. In Asia, although
productivity remains pressured by lower global demand, our Asia Segment
continues to perform well with both new and existing customer programs. The
Brazil Segment was able to navigate its domestic recovery more favorably than
competitive importers, resulting in sales volume and market share growth
compared to recent quarters. We believe the outperformance by the Brazil Segment
includes temporary capture of market share from competitive imports and higher
conversion margin due to the unfavorable dynamics facing competitors surrounding
input and freight costs combined with weaker delivery speed. Competition and
pricing are expected to normalize over the mid- to long-term.

Although sales volumes in the NACA region were pressured in the current
six-month period, our operations benefited from raw material and selling price
stability and sales mix improvements. Accordingly, we were able to achieve
better-than-expected operating results in the current six-month period.

While sales and gross profit pressures from the COVID-19 pandemic have weighed
on our financial results, we have remained diligent in managing our operations
as efficiently and effectively as possible while delivering on customer demand.
Accordingly, we generated operating cash flows in the current six-month period
and continued to reduce our debt principal. Our performance in the first half of
fiscal 2021 further strengthened our balance sheet and solidified the foundation
for further growth subsequent to the negative impacts of the COVID-19 pandemic.

We believe that several facets of our business will remain drivers for growth
once the COVID-19 pandemic subsides, including: (i) continued sales and
portfolio growth for our Asia Segment, (ii) U.S. market share recapture from our
recent trade initiatives, (iii) continued commitments in sustainability by
corporations, governments and other entities leading to further demand for our
REPREVE® platform, (iv) leading-edge innovation and commercialization efforts
that deliver meaningful consumer products, and (v) continued expansion of our
portfolio with additional markets, applications, and brand partners.

Key Performance Indicators and Non-GAAP Financial Measures

UNIFI continuously reviews performance indicators to measure its success. These
performance indicators form the basis of management's discussion and analysis
included below:

• sales volume and revenue for UNIFI and for each reportable segment;

• gross profit and gross margin for UNIFI and for each reportable segment;

  • net income and diluted EPS;


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• Segment Profit, which equals segment gross profit plus segment depreciation

expense;

• unit conversion margin, which represents unit net sales price less unit raw

material costs, for UNIFI and for each reportable segment;

• working capital, which represents current assets less current liabilities;

• Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”),

which represents Net income before net interest expense, income tax expense

and depreciation and amortization expense;

• Adjusted EBITDA, which represents EBITDA adjusted to exclude equity in loss

      of PAL, and, from time to time, certain other adjustments necessary to
      understand and compare the underlying results of UNIFI;

• Adjusted Net Income, which represents net income calculated under GAAP,

adjusted to exclude certain amounts which management believes do not reflect

the ongoing operations and performance of UNIFI and/or for which exclusion

may be necessary to understand and compare the underlying results of UNIFI;

• Adjusted EPS, which represents Adjusted Net Income divided by UNIFI’s

weighted average common shares outstanding;

Adjusted Working Capital, which equals receivables plus inventories and

other current assets, less accounts payable and accrued expenses; and

• Net Debt, which represents debt principal less cash and cash equivalents.


EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted EPS, Adjusted Working
Capital and Net Debt (collectively, the "non-GAAP financial measures") are not
determined in accordance with GAAP and should not be considered a substitute for
performance measures determined in accordance with GAAP. The calculations of the
non-GAAP financial measures are subjective, based on management's belief as to
which items should be included or excluded in order to provide the most
reasonable and comparable view of the underlying operating performance of the
business. We may, from time to time, modify the amounts used to determine our
non-GAAP financial measures. When applicable, management's discussion and
analysis includes specific consideration for items that comprise the
reconciliations of its non-GAAP financial measures. We believe that these
non-GAAP financial measures better reflect UNIFI's underlying operations and
performance and that their use, as operating performance measures, provides
investors and analysts with a measure of operating results unaffected by
differences in capital structures, capital investment cycles and ages of related
assets, among otherwise comparable companies.

Management uses Adjusted EBITDA (i) as a measurement of operating performance
because it assists us in comparing our operating performance on a consistent
basis, as it removes the impact of (a) items directly related to our asset base
(primarily depreciation and amortization) and (b) items that we would not expect
to occur as a part of our normal business on a regular basis; (ii) for planning
purposes, including the preparation of our annual operating budget; (iii) as a
valuation measure for evaluating our operating performance and our capacity to
incur and service debt, fund capital expenditures and expand our business; and
(iv) as one measure in determining the value of other acquisitions and
dispositions. Adjusted EBITDA is a key performance metric utilized in the
determination of variable compensation. We also believe Adjusted EBITDA is an
appropriate supplemental measure of debt service capacity because it serves as a
high-level proxy for cash generated from operations and is relevant to our fixed
charge coverage ratio. Equity in loss of PAL is excluded from Adjusted EBITDA
because such results do not reflect our operating performance.

Management uses Adjusted Net Income and Adjusted EPS (i) as measurements of net
operating performance because they assist us in comparing such performance on a
consistent basis, as they remove the impact of (a) items that we would not
expect to occur as a part of our normal business on a regular basis and (b)
components of the provision for income taxes that we would not expect to occur
as a part of our underlying taxable operations; (ii) for planning purposes,
including the preparation of our annual operating budget; and (iii) as measures
in determining the value of other acquisitions and dispositions.

Management uses Adjusted Working Capital as an indicator of UNIFI’s production
efficiency and ability to manage inventories and receivables.

Management uses Net Debt as a liquidity and leverage metric to determine how
much debt would remain if all cash and cash equivalents were used to pay down
debt principal.

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Review of Results of Operations

Three Months Ended December 27, 2020 Compared to Three Months Ended December 29,
2019

Consolidated Overview

The below tables provide:

• the components of net income and the percentage increase or decrease over

      the prior fiscal year amounts,


  • a reconciliation from net income to EBITDA and Adjusted EBITDA, and

• a reconciliation from net income to Adjusted Net Income and Adjusted EPS.


Following the tables is a discussion and analysis of the significant components
of net income.

Net income

                                              For the Three Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $  162,776           100.0     $  169,511           100.0          (4.0 )
Cost of sales                     136,842            84.1        153,846            90.8         (11.1 )
Gross profit                       25,934            15.9         15,665             9.2          65.6
SG&A                               12,625             7.8         12,508             7.4           0.9
Benefit for bad debts                (259 )          (0.2 )         (258 )          (0.2 )         0.4
Other operating expense, net          476             0.3            854             0.5         (44.3 )
Operating income                   13,092             8.0          2,561             1.5            nm
Interest expense, net                 646             0.4            889             0.5         (27.3 )
Equity in (earnings) loss of
unconsolidated affiliates            (130 )          (0.1 )          756             0.5        (117.2 )
Income before income taxes         12,576             7.7            916             0.5            nm
Provision for income taxes          5,112             3.1            507             0.3            nm
Net income                     $    7,464             4.6     $      409             0.2            nm




nm - Not meaningful

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

The reconciliations of the amounts reported under GAAP for Net income to EBITDA
and Adjusted EBITDA were as follows:

                                                                For the 

Three Months Ended

                                                        December 27, 2020         December 29, 2019
Net income                                             $             7,464       $               409
Interest expense, net                                                  646                       889
Provision for income taxes                                           5,112                       507
Depreciation and amortization expense (1)                            6,016                     5,863
EBITDA                                                              19,238                     7,668

Equity in loss of PAL                                                    -                       837
EBITDA excluding PAL                                                19,238                     8,505

Severance (2)                                                            -                       383
Adjusted EBITDA                                        $            19,238       $             8,888



(1) Within this reconciliation, depreciation and amortization expense excludes

the amortization of debt issuance costs, which are reflected in interest

expense, net. Within the accompanying condensed consolidated statements of

cash flows, amortization of debt issuance costs is reflected in depreciation

and amortization expense.

(2) In the second quarter of fiscal 2020, UNIFI commenced a wind-down plan for

    its operations in Sri Lanka. The adjustment primarily reflects accrued
    severance and exit costs.


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Adjusted Net Income and Adjusted EPS (Non-GAAP Measures)

The tables below set forth reconciliations of (i) Income before income taxes
("Pre-tax Income"), Provision for income taxes ("Tax Impact") and Net Income to
Adjusted Net Income and (ii) Diluted EPS to Adjusted EPS.

                                For the Three Months Ended December 27, 2020                          For the Three Months Ended December 29, 2019
                       Pre-tax                                                               Pre-tax
                        Income         Tax Impact         Net Income       Diluted EPS       Income         Tax Impact         Net Income        Diluted EPS
GAAP results          $   12,576$    (5,112 )$      7,464$        0.40$     916$      (507 )$        409$        0.02
Severance (1)                  -                 -                  -                 -           383               (80 )              303               0.02
Adjusted results      $   12,576$    (5,112 )$      7,464$        0.40$   1,299$      (587 )$        712$        0.04

Weighted average common shares outstanding                                       18,732                                                                18,772



(1) In the second quarter of fiscal 2020, UNIFI commenced a wind-down plan for

its operations in Sri Lanka. The adjustment primarily reflects accrued

    severance and exit costs.


Net Sales

Consolidated net sales decreased $6,735, or 4.0%, for the current period in
comparison to the prior period primarily attributable to (i) the COVID-19
pandemic, (ii) lower average selling prices, and (iii) unfavorable foreign
currency translation.

Consolidated sales volumes increased 1.0%, primarily attributable to the Brazil
Segment, which was agile and responsive to COVID-19 pandemic-related demand
fluctuations in the current period, and generated volume growth by capturing
market share from competitors. The increase was partially offset by the adverse
impact of the COVID-19 pandemic on U.S. product demand, as our Americas and Asia
markets have experienced significant, but not full recovery, since the June 2020
quarter.

Once the COVID-19 pandemic subsides, we believe incremental revenue for the
Polyester Segment will be generated from our polyester textured yarn trade
petitions (i) completed in early calendar 2020 and (ii) recently filed. However,
our Nylon Segment results continue to reflect the current global trend of
declining demand for nylon socks, ladies’ hosiery and intimate apparel.

Consolidated average sales prices decreased 5.0%, primarily attributable to (i)
sales price declines associated with polyester raw material cost changes, and
(ii) unfavorable foreign currency translation.

REPREVE® Fiber products for the current period comprised 37% of consolidated net
sales, up from 34% for the prior period and 31% for fiscal 2020.

Gross Profit

Gross profit for the current period increased by $10,269, or 65.6%, as compared
to the prior period. Although the COVID-19 pandemic adversely impacted sales
volumes in our Polyester Segment and Asia Segment, favorable raw material costs
and manufacturing efficiencies helped drive gross profit improvement. Further,
the Brazil Segment has outperformed in the current period, primarily due to a
temporarily improved competitive position.

• For the Polyester Segment, gross profit benefited from manufacturing

      efficiencies, an improved conversion margin and an improved sales mix.


   •  For the Asia Segment, gross profit benefited from cost and sales mix

improvements, partially offset by lower demand levels driven by the COVID-19

pandemic.

• For the Brazil Segment, gross profit benefited from higher sales volumes and

      stronger local pricing due to temporary market share capture.


   •  For the Nylon Segment, gross profit increased due to improved cost
      management on low sales volumes.

SG&A

SG&A increased from the prior period, primarily due to higher accrued incentive
compensation, partially offset by lower professional fees and travel and
entertainment expenses in the current period.

Benefit for Bad Debts

The current period benefit for bad debts reflects general improvement in
customer payment frequency following the adverse effects of the COVID-19
pandemic on customer health.

Other Operating Expense, Net

The current period and prior period both reflect foreign currency transaction
losses of $324 in the current period and $486 in the prior period along with
severance charges in the prior period.

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Interest Expense, Net

Interest expense, net decreased from the prior period to the current period,
primarily attributable to a lower average debt principal. The components of
consolidated interest expense, net were as follows:


                                                                For the Three Months Ended
                                                        December 27, 2020         December 29, 2019
Interest and fees on the ABL Facility                  $               743       $               937
Other interest                                                          78                       127
Subtotal of interest on debt obligations                               821                     1,064
Other components of interest expense                                    12                        37
Total interest expense                                                 833                     1,101
Interest income                                                       (187 )                    (212 )
Interest expense, net                                  $               646       $               889

Equity in (Earnings) Loss of Unconsolidated Affiliates

The components of equity in (earnings) loss of unconsolidated affiliates were as
follows:

                                                                For the Three Months Ended
                                                        December 27, 2020         December 29, 2019
Loss from PAL                                          $                 -       $               837
Earnings from nylon joint ventures                                    (130 )                     (81 )
Total equity in (earnings) loss of unconsolidated
affiliates                                             $              (130 )     $               756

As a percentage of consolidated income before income
taxes

                                                                  1.0 %                   (82.5 )%


On April 29, 2020, UNIFI sold its 34% non-controlling partnership interest in
PAL. The comparative decrease in loss from PAL reflects a loss recorded in the
prior period with no results recorded in the current period.

Income Taxes

Provision for income taxes and the effective tax rate were as follows:


                                      For the Three Months Ended
                              December 27, 2020         December 29, 2019
Provision for income taxes   $             5,112       $               507
Effective tax rate                          40.6 %                    55.3 %




The effective tax rate is subject to variation due to numerous factors,
including variability in the amount of income before income taxes, the mix of
income by jurisdiction, changes in deferred tax valuation allowances and changes
in statutes, regulations and case law.  Additionally, the impacts of discrete
and other rate impacting items are greater when income before income taxes is
lower.



The decrease in the effective tax rate from the prior period to the current
period is primarily attributable to higher earnings in the current period, which
lessens the impact of rate reconciling items including (i) current U.S. tax on
GILTI, (ii) losses in tax jurisdictions for which no benefit can be recognized,
and (iii) foreign withholding taxes. The comparative decrease is partially
offset by certain foreign tax credits favorably impacting the prior period.

Net Income

Net income for the current period was $7,464, or $0.40 per share, compared to
net income of $409 or $0.02 per share, for the prior period. The change in net
income was primarily due to (i) higher gross profit in the current period and
(ii) the loss from PAL in the prior period.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA increased from the prior period to the current period,
commensurate with higher gross profit.

Segment Overview

Following is a discussion and analysis of the revenue and profitability
performance of UNIFI’s reportable segments for the current period.

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Polyester Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior period amounts for the
Polyester Segment, were as follows:

                                              For the Three Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $   76,696           100.0     $   82,750           100.0          (7.3 )
Cost of sales                      65,801            85.8         76,090            92.0         (13.5 )
Gross profit                       10,895            14.2          6,660             8.0          63.6
Depreciation expense                4,470             5.8          4,183             5.1           6.9
Segment Profit                 $   15,365            20.0     $   10,843            13.1          41.7

Segment net sales as a
percentage of
  consolidated amounts               47.1 %                         48.8 %
Segment Profit as a
percentage of
  consolidated amounts               49.0 %                         52.0 %

The change in net sales for the Polyester Segment was as follows:

Net sales for the prior period                      $ 82,750

Net change in average selling price and sales mix (5,128 )
Decrease in sales volumes

                               (926 )
Net sales for the current period                    $ 76,696

The decrease in net sales for the Polyester Segment from the prior period to the
current period was primarily attributable to lower average selling prices
associated with lower polyester raw material costs.

The change in Segment Profit for the Polyester Segment was as follows:

Segment Profit for the prior period     $ 10,843
Net increase in underlying margins         4,643
Decrease in sales volumes                   (121 )

Segment Profit for the current period $ 15,365


The increase in Segment Profit for the Polyester Segment from the prior period
to the current period was primarily attributable to improved conversion margin,
manufacturing efficiencies, and a better sales mix.

Asia Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior period amounts for the
Asia Segment, were as follows:

                                              For the Three Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $   44,692           100.0     $   47,918           100.0          (6.7 )
Cost of sales                      38,164            85.4         42,401            88.5         (10.0 )
Gross profit                        6,528            14.6          5,517            11.5          18.3
Depreciation expense                    -               -              -               -             -
Segment Profit                 $    6,528            14.6     $    5,517            11.5          18.3

Segment net sales as a
percentage of
  consolidated amounts               27.5 %                         28.3 %
Segment Profit as a
percentage of
  consolidated amounts               20.8 %                         26.5 %

The change in net sales for the Asia Segment was as follows:

Net sales for the prior period                            $ 47,918

Decrease in sales volumes of Chip and staple fiber (5,090 )
Change in average selling price and sales mix

               (4,180 )

Net increase in sales volumes of certain other products 3,034
Favorable foreign currency translation effects

               3,010
Net sales for the current period                          $ 44,692


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The decrease in net sales for the Asia Segment from the prior period to the
current period was primarily attributable to overall lower sales volumes and
average selling prices driven by the adverse impacts of the COVID-19 pandemic,
partially offset by the continued momentum of REPREVE®-branded products and
favorable foreign currency translation effects.

The RMB weighted average exchange rate was 6.62 RMB/USD and 7.04 RMB/USD for the
current period and the prior period, respectively.

The change in Segment Profit for the Asia Segment was as follows:

Segment Profit for the prior period              $ 5,517

Change in underlying margins and sales mix 1,177
Favorable foreign currency translation effects 343
Decrease in sales volumes

                           (509 )
Segment Profit for the current period            $ 6,528

Segment Profit for the Asia Segment increased from the prior period to the
current period as raw material cost benefits achieved on certain product lines
and sales mix improvements were partially offset by the decrease in sales
volumes described in the net sales analysis above.

Brazil Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior period amounts for the
Brazil Segment, were as follows:

                                              For the Three Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $   24,253           100.0     $   20,862           100.0          16.3
Cost of sales                      16,276            67.1         17,432            83.6          (6.6 )
Gross profit                        7,977            32.9          3,430            16.4         132.6
Depreciation expense                  321             1.3            357             1.8         (10.1 )
Segment Profit                 $    8,298            34.2     $    3,787            18.2         119.1

Segment net sales as a
percentage of
  consolidated amounts               14.9 %                         12.3 %
Segment Profit as a
percentage of
  consolidated amounts               26.5 %                         18.2 %

The change in net sales for the Brazil Segment was as follows:

Net sales for the prior period                     $ 20,862
Increase in sales volumes                             4,514
Increase in average selling price                     3,943

Unfavorable foreign currency translation effects (5,066 )
Net sales for the current period

                   $ 24,253




The increase in net sales for the Brazil Segment from the prior period to the
current period was primarily attributable to an improvement in sales volumes due
to the Brazil Segment's ability to capture market share from competitors and
maintain pricing levels, partially offset by unfavorable foreign currency
translation effects.

The BRL weighted average exchange rate was 5.41 BRL/USD and 4.12 BRL/USD for the
current period and the prior period, respectively.

The change in Segment Profit for the Brazil Segment was as follows:

Segment Profit for the prior period                $ 3,787
Increase in underlying margins                       4,624
Increase in sales volumes                              816

Unfavorable foreign currency translation effects (929 )
Segment Profit for the current period

              $ 8,298

The increase in Segment Profit for the Brazil Segment from the prior period to
the current period was primarily attributable to the segment’s ability to
achieve favorable pricing and utilization levels under a temporarily
strengthened competitive position.

                                       24

--------------------------------------------------------------------------------

Nylon Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior period amounts for the
Nylon Segment, were as follows:

                                              For the Three Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $   16,008           100.0     $   17,084           100.0          (6.3 )
Cost of sales                      15,613            97.5         17,038            99.7          (8.4 )
Gross profit                          395             2.5             46             0.3         758.7
Depreciation expense                  438             2.7            503             2.9         (12.9 )
Segment Profit                 $      833             5.2     $      549             3.2          51.7

Segment net sales as a
percentage of
  consolidated amounts                9.8 %                         10.1 %
Segment Profit as a
percentage of
  consolidated amounts                2.7 %                          2.6 %



The change in net sales for the Nylon Segment was as follows:

Net sales for the prior period                      $ 17,084

Net change in average selling price and sales mix (957 )
Decrease in sales volumes

                               (119 )
Net sales for the current period                    $ 16,008

The decrease in net sales for the Nylon Segment from the prior period to the
current period was primarily attributable to a shift in sales mix following
declines in hosiery demand.

The change in Segment Profit for the Nylon Segment was as follows:

Segment Profit for the prior period     $ 549
Net increase in underlying margins        288
Decrease in sales volumes                  (4 )

Segment Profit for the current period $ 833

Segment Profit for the Nylon Segment in the current period was comparably
stronger primarily due to manufacturing efficiencies.

Review of Results of Operations

Six Months Ended December 27, 2020 Compared to Six Months Ended December 29,
2019

Consolidated Overview

The below tables provide:

• the components of net income and the percentage increase or decrease over

      the prior fiscal year amounts,


  • a reconciliation from net income to EBITDA and Adjusted EBITDA, and

• a reconciliation from net income to Adjusted Net Income and Adjusted EPS.


Following the tables is a discussion and analysis of the significant components
of net income.

Net income

                                               For the Six Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $  304,281           100.0     $  349,460           100.0         (12.9 )
Cost of sales                     263,786            86.7        316,352            90.5         (16.6 )
Gross profit                       40,495            13.3         33,108             9.5          22.3
SG&A                               23,989             7.9         23,488             6.7           2.1
Benefit for bad debts              (1,146 )          (0.4 )         (249 )          (0.1 )          nm
Other operating expense, net        1,654             0.5            962             0.3          71.9
Operating income                   15,998             5.3          8,907             2.6          79.6
Interest expense, net               1,392             0.5          1,936             0.6         (28.1 )
Equity in (earnings) loss of
unconsolidated affiliates            (223 )          (0.1 )        1,622             0.5        (113.7 )
Income before income taxes         14,829             4.9          5,349             1.5         177.2
Provision for income taxes          3,933             1.3          1,228             0.3            nm
Net income                     $   10,896             3.6     $    4,121             1.2         164.4


nm - Not meaningful

                                       25
--------------------------------------------------------------------------------

EBITDA and Adjusted EBITDA (Non-GAAP Financial Measures)

The reconciliations of the amounts reported under GAAP for Net income to EBITDA
and Adjusted EBITDA were as follows:

                                                                 For the 

Six Months Ended

                                                        December 27, 2020         December 29, 2019
Net income                                             $            10,896       $             4,121
Interest expense, net                                                1,392                     1,936
Provision for income taxes                                           3,933                     1,228
Depreciation and amortization expense (1)                           12,068                    11,485
EBITDA                                                              28,289                    18,770

Equity in loss of PAL                                                    -                     2,012
EBITDA excluding PAL                                                28,289                    20,782

Severance (2)                                                            -                       383
Adjusted EBITDA                                        $            28,289       $            21,165



(1) Within this reconciliation, depreciation and amortization expense excludes

the amortization of debt issuance costs, which are reflected in interest

expense, net. Within the accompanying condensed consolidated statements of

cash flows, amortization of debt issuance costs is reflected in depreciation

and amortization expense.

(2) In the second quarter of fiscal 2020, UNIFI commenced a wind-down plan for

    its operations in Sri Lanka. The adjustment primarily reflects accrued
    severance and exit costs.



Adjusted Net Income and Adjusted EPS (Non-GAAP Measures)

The tables below set forth reconciliations of (i) Income before income taxes
("Pre-tax Income"), Provision for income taxes ("Tax Impact") and Net Income to
Adjusted Net Income and (ii) Diluted EPS to Adjusted EPS.

                                For the Six Months Ended December 27, 2020                           For the Six Months Ended December 29, 2019
                       Pre-tax                                                             Pre-tax
                        Income         Tax Impact       Net Income       Diluted EPS        Income         Tax Impact         Net Income       Diluted EPS
GAAP results          $   14,829$    (3,933 )$     10,896$        0.58$    5,349$    (1,228 )$      4,121$        0.22
Severance (1)                  -                 -                -                 -            383               (80 )              303              0.02
Adjusted results      $   14,829$    (3,933 )$     10,896$        0.58$    5,732$    (1,308 )$      4,424$        0.24

Weighted average common shares outstanding                                     18,729                                                                18,745



(1) In the second quarter of fiscal 2020, UNIFI commenced a wind-down plan for

its operations in Sri Lanka. The adjustment primarily reflects accrued

    severance and exit costs.


Net Sales

Consolidated net sales decreased $45,179, or 12.9%, for the current six-month
period in comparison to the prior six-month period primarily attributable to (i)
the COVID-19 pandemic, (ii) lower nylon sales volumes, (iii) lower average
selling prices, and (iv) unfavorable foreign currency translation.

Consolidated sales volumes decreased 4.1%, primarily attributable to (i) the
adverse impact of the COVID-19 pandemic on product demand and (ii) lower sales
in the Nylon Segment. However, the overall volume decrease was partially offset
by the Brazil Segment, which was agile and responsive to COVID-19
pandemic-related demand fluctuations in the current six-month period and
generated volume growth by capturing market share from competitors.

Once the COVID-19 pandemic subsides, we believe incremental revenue for the
Polyester Segment will be generated from our polyester textured yarn trade
petitions (i) completed in early calendar 2020 and (ii) recently filed. However,
our Nylon Segment results continue to reflect the adverse impacts of (i)
customers shifting certain programs to overseas garment production and (ii) the
current global trend of declining demand for nylon socks, ladies' hosiery and
intimate apparel.

Consolidated average sales prices decreased 8.8%, primarily attributable to (i)
a decline in higher-priced nylon product sales, (ii) sales price declines
associated with polyester raw material cost changes, and (iii) unfavorable
foreign currency translation.

REPREVE® Fiber products for the current six-month period comprised 36% of
consolidated net sales, up from 32% for the prior six-month period and 31% for
fiscal 2020.

Gross Profit

Gross profit for the current six-month period increased by $7,387, or 22.3%, as
compared to the prior six-month period. The COVID-19 pandemic adversely impacted
sales and production volumes in our Polyester and Nylon Segments, driving
comparably lower profitability in the U.S. during the September 2020 quarter.
However, the Brazil Segment outperformed the prior six-month period by capturing
market share and maintaining strong conversion margin. The COVID-19 pandemic
also adversely impacted sales volumes in the Asia Segment.

                                       26

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• For the Polyester Segment, gross profit benefited from a better sales mix,

higher conversion margin and manufacturing cost improvements, but was

adversely impacted by lower fixed cost absorption due to lower demand in the

September 2020 quarter.

• For the Asia Segment, gross profit increased from the prior six-month period

primarily due to supply chain efficiencies driving lower costs for certain

products and sales mix improvements, partially offset by lower demand levels

driven by the COVID-19 pandemic.

• For the Brazil Segment, gross profit increased from the prior six-month

period primarily due to higher sales volumes and conversion margin due to

temporary market share capture, partially offset by unfavorable foreign

currency translation impacts.

• For the Nylon Segment, gross profit decreased primarily due to lower demand

levels driven by the COVID-19 pandemic.

SG&A

SG&A increased from the prior six-month period, primarily due to higher accrued
incentive compensation, partially offset by lower professional fees and travel
and entertainment expenses in the current six-month period.

Benefit for Bad Debts

The current six-month period benefit for bad debts reflects general improvement
in customer payment frequency following the adverse effects of the COVID-19
pandemic on customer health.

Other Operating Expense, Net

The current six-month period and the prior six-month period both reflect
severance charges, along with foreign currency transaction losses of $606 and
$30 in the current six-month period and in the prior six-month period,
respectively.

Interest Expense, Net

Interest expense, net decreased from the prior six-month period to the current
six-month period, primarily attributable to a lower average debt principal. The
components of consolidated interest expense, net were as follows:



                                                                 For the Six Months Ended
                                                        December 27, 2020         December 29, 2019
Interest and fees on the ABL Facility                  $             1,497       $             2,049
Other interest                                                         180                       240
Subtotal of interest on debt obligations                             1,677                     2,289
Other components of interest expense                                    27                        69
Total interest expense                                               1,704                     2,358
Interest income                                                       (312 )                    (422 )
Interest expense, net                                  $             1,392       $             1,936

Equity in (Earnings) Loss of Unconsolidated Affiliates

The components of equity in (earnings) loss of unconsolidated affiliates were as
follows:



                                                                 For the Six Months Ended
                                                        December 27, 2020         December 29, 2019
Loss from PAL                                          $                 -       $             2,012
Earnings from nylon joint ventures                                    (223 )                    (390 )
Total equity in (earnings) loss of unconsolidated
affiliates                                             $              (223 )     $             1,622

As a percentage of consolidated income before income
taxes

                                                                  1.5 %                   (30.3 )%


On April 29, 2020, UNIFI sold its 34% non-controlling partnership interest in
PAL. The comparative decrease in loss from PAL reflects a loss recorded in the
prior six-month period with no results recorded in the current six-month period.

Income Taxes

Provision for income taxes and the effective tax rate were as follows:


                                       For the Six Months Ended
                              December 27, 2020         December 29, 2019
Provision for income taxes   $             3,933       $             1,228
Effective tax rate                          26.5 %                    23.0 %




The effective tax rate is subject to variation due to numerous factors,
including variability in the amount of income before income taxes, the mix of
income by jurisdiction, changes in deferred tax valuation allowances and changes
in statutes, regulations and case law.  Additionally, the impacts of discrete
and other rate impacting items are greater when income before income taxes is
lower.



                                       27
--------------------------------------------------------------------------------




The increase in the effective tax rate from the prior six-month period to the
current six-month period is primarily attributable to (i) an expense recorded in
the current six-month period to increase the valuation allowance for deferred
tax assets, (ii) a higher rate impact of U.S. tax on GILTI in the current
six-month period, and (iii) a benefit for foreign tax credits in the prior
six-month period. This increase is partially offset by a discrete benefit in the
current six-month period for the retroactive GILTI high-tax exclusion for prior
periods.

Net Income

Net income for the current six-month period was $10,896, or $0.58 per share,
compared to net income of $4,121 or $0.22 per share, for the prior six-month
period. The change in net income was primarily attributable to higher gross
profit in the Brazil and Asia Segments in the current six-month period and a
loss from PAL in the prior six-month period, partially offset by unfavorable
foreign currency impacts.

Adjusted EBITDA (Non-GAAP Financial Measure)

Adjusted EBITDA increased from the prior six-month period to the current
six-month period, primarily attributable to higher gross profit.

Segment Overview

Following is a discussion and analysis of the revenue and profitability
performance of UNIFI’s reportable segments for the current six-month period.

Polyester Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior six-month period amounts
for the Polyester Segment, were as follows:



                                               For the Six Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $  145,772           100.0     $  171,445           100.0         (15.0 )
Cost of sales                     130,245            89.4        156,990            91.6         (17.0 )
Gross profit                       15,527            10.6         14,455             8.4           7.4
Depreciation expense                8,873             6.1          8,224             4.8           7.9
Segment Profit                 $   24,400            16.7     $   22,679            13.2           7.6

Segment net sales as a
percentage of
 consolidated amounts                47.9 %                         49.1 %
Segment Profit as a
percentage of
 consolidated amounts                47.5 %                         52.5 %

The change in net sales for the Polyester Segment was as follows:



Net sales for the prior six-month period            $ 171,445

Net change in average selling price and sales mix (13,377 )
Decrease in sales volumes

                             (12,296 )

Net sales for the current six-month period $ 145,772


The decrease in net sales for the Polyester Segment from the prior six-month
period to the current six-month period was primarily attributable to (i) the
adverse impact of COVID-19 pandemic on market demand, (ii) lower average selling
prices associated with lower polyester raw material costs, and (iii) a higher
proportion of Flake sales, which carry lower sales prices than other products.

The change in Segment Profit for the Polyester Segment was as follows:

Segment Profit for the prior six-month period $ 22,679
Change in underlying margins and sales mix

           3,347
Decrease in sales volumes                           (1,626 )

Segment Profit for the current six-month period $ 24,400


The increase in Segment Profit for the Polyester Segment from the prior
six-month period to the current six-month period was primarily attributable to a
better sales mix, stable conversion margin and manufacturing cost improvements,
partially offset by lower sales volumes experienced in the September 2020
quarter in connection with the COVID-19 pandemic.

Asia Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior six-month period amounts
for the Asia Segment, were as follows:



                                       28

--------------------------------------------------------------------------------


                                               For the Six Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $   82,415           100.0     $   93,875           100.0         (12.2 )
Cost of sales                      71,309            86.5         84,076            89.6         (15.2 )
Gross profit                       11,106            13.5          9,799            10.4          13.3
Depreciation expense                    -               -              -               -             -
Segment Profit                 $   11,106            13.5     $    9,799            10.4          13.3

Segment net sales as a
percentage of
 consolidated amounts                27.1 %                         26.9 %
Segment Profit as a
percentage of
 consolidated amounts                21.6 %                         22.7 %

The change in net sales for the Asia Segment was as follows:



Net sales for the prior six-month period                  $  93,875

Decrease in sales volumes of Chip and staple fiber (12,332 )
Change in average selling price and sales mix

                (6,900 )

Net increase in sales volumes of certain other products 4,083
Favorable foreign currency translation effects

                3,689
Net sales for the current six-month period                $  82,415


The decrease in net sales for the Asia Segment from the prior six-month period
to the current six-month period was primarily attributable to overall lower
sales volumes and average selling prices driven by the adverse impacts of the
COVID-19 pandemic, partially offset by the continued momentum of
REPREVE®-branded products.

The RMB weighted average exchange rate was 6.75 RMB/USD and 7.03 RMB/USD for the
current six-month period and the prior six-month period, respectively.

The change in Segment Profit for the Asia Segment was as follows:

Segment Profit for the prior six-month period $ 9,799
Change in underlying margins and sales mix

           1,840

Favorable foreign currency translation effects 406
Decrease in sales volumes

                             (939 )

Segment Profit for the current six-month period $ 11,106


The increase in Segment Profit for the Asia Segment from the prior six-month
period to the current six-month period was primarily attributable to raw
material cost benefits achieved on certain product lines and sales mix
improvements, partially offset by the decrease in sales volumes described in the
net sales analysis above.

Brazil Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior six-month period amounts
for the Brazil Segment, were as follows:



                                               For the Six Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales        Change
Net sales                      $   46,859           100.0     $   45,034           100.0            4.1
Cost of sales                      34,269            73.1         37,445            83.1           (8.5 )
Gross profit                       12,590            26.9          7,589            16.9           65.9
Depreciation expense                  751             1.6            732             1.6            2.6
Segment Profit                 $   13,341            28.5     $    8,321            18.5           60.3

Segment net sales as a
percentage of
 consolidated amounts                15.4 %                         12.9 %
Segment Profit as a
percentage of
 consolidated amounts                26.0 %                         19.3 %


                                       29
--------------------------------------------------------------------------------

The change in net sales for the Brazil Segment was as follows:

Net sales for the prior six-month period                    $  45,034
Increase in sales volumes                                       9,129

Increase in average selling price and change in sales mix 4,052
Unfavorable foreign currency translation effects

              (11,356 )
Net sales for the current six-month period                  $  46,859




The increase in net sales for the Brazil Segment from the prior six-month period
to the current six-month period was primarily attributable to an improvement in
sales volumes due to the Brazil Segment's ability to capture market share from
competitors during the first six months of fiscal 2021, partially offset by
unfavorable foreign currency translation effects.

The BRL weighted average exchange rate was 5.40 BRL/USD and 4.04 BRL/USD for the
current six-month period and the prior six-month period, respectively.

The change in Segment Profit for the Brazil Segment was as follows:

Segment Profit for the prior six-month period $ 8,321
Increase in underlying margins

                        5,437
Increase in sales volumes                             1,685

Unfavorable foreign currency translation effects (2,102 )
Segment Profit for the current six-month period $ 13,341


The increase in Segment Profit for the Brazil Segment from the prior six-month
period to the current six-month period was primarily attributable to an improved
sales mix and conversion margin combined with higher sales volumes stemming from
a temporarily improved competitive position in Brazil, partially offset by
unfavorable foreign currency translation effects.

Nylon Segment

The components of Segment Profit, each component as a percentage of net sales
and the percentage increase or decrease over the prior six-month period amounts
for the Nylon Segment, were as follows:



                                               For the Six Months Ended
                                   December 27, 2020              December 29, 2019
                                                 % of                           % of             %
                                               Net Sales                      Net Sales       Change
Net sales                      $   27,037           100.0     $   37,286           100.0         (27.5 )
Cost of sales                      25,977            96.1         36,062            96.7         (28.0 )
Gross profit                        1,060             3.9          1,224             3.3         (13.4 )
Depreciation expense                  880             3.3            994             2.7         (11.5 )
Segment Profit                 $    1,940             7.2     $    2,218             6.0         (12.5 )

Segment net sales as a
percentage of
 consolidated amounts                 8.9 %                         10.7 %
Segment Profit as a
percentage of
 consolidated amounts                 3.8 %                          5.1 %



The change in net sales for the Nylon Segment was as follows:



Net sales for the prior six-month period            $ 37,286
Decrease in sales volumes                             (7,982 )

Net change in average selling price and sales mix (2,267 )
Net sales for the current six-month period $ 27,037


The decrease in net sales for the Nylon Segment from the prior six-month period
to the current six-month period was primarily attributable to (i) demand
declines in connection with the COVID-19 pandemic and (ii) a customer shifting
certain programs to overseas garment production subsequent to the prior
six-month period, contributing to (iii) a weaker sales mix following declines in
hosiery demand.

The change in Segment Profit for the Nylon Segment was as follows:

Segment Profit for the prior six-month period $ 2,218
Decrease in sales volumes

                            (475 )
Net increase in underlying margins                    197

Segment Profit for the current six-month period $ 1,940

The decrease in Segment Profit for the Nylon Segment from the prior six-month
period to the current six-month period was primarily attributable to lower
sales, as described in the net sales analysis above.

                                       30

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Liquidity and Capital Resources

UNIFI's primary capital requirements are for working capital, capital
expenditures, debt service and share repurchases. UNIFI's primary sources of
capital are cash generated from operations and borrowings available under the
ABL Revolver of its credit facility. For the current six-month period, cash
generated from operations was $19,726, and, at December 27, 2020, excess
availability under the ABL Revolver was $56,039.

As of December 27, 2020, all of UNIFI's$92,896 of debt obligations were
guaranteed by certain of its domestic operating subsidiaries, while 40% of
UNIFI's cash and cash equivalents were held by its foreign subsidiaries. Cash
and cash equivalents held by foreign subsidiaries may not be presently available
to fund UNIFI's domestic capital requirements, including its domestic debt
obligations. UNIFI employs a variety of strategies to ensure that its worldwide
cash is available in the locations where it is needed. The following table
presents a summary of cash and cash equivalents, borrowings available under
financing arrangements, liquidity, working capital and total debt obligations as
of December 27, 2020 for domestic operations compared to foreign operations:



                                                    Domestic       Foreign        Total
Cash and cash equivalents                           $  50,180$  33,141$  83,321
Borrowings available under financing arrangements      56,039             -        56,039
Liquidity                                           $ 106,219$  33,141$ 139,360

Working capital                                     $ 105,791$ 110,756$ 216,547
Total debt obligations                              $  92,896     $       -     $  92,896

COVID-19 Pandemic Liquidity Considerations

Because global economic activity slowed within a short period of time, the
COVID-19 pandemic introduced liquidity risk that was not present prior to
calendar 2020. UNIFI believes that aggressive and prudent actions are necessary
to preserve liquidity in the current economic environment, which is pressured by
global demand declines that began in March 2020. Accordingly, to minimize the
disruption to operations that could result from outbreaks among UNIFI employees,
UNIFI has prioritized health and safety measures that include restricting travel
and group meetings, enforcing social distancing and healthy habits, increased
sanitation and disinfection and increased wellness monitoring. Additionally, the
following aid in reducing risk and ensuring adequate cash is available to fund
ongoing operations and obligations:

• Managing working capital levels and ensuring higher inventory turns.

• Participating in the supply chain for personal protective equipment and new

customer programs.

• Lowering discretionary expenses that focus on long-term returns, such as

marketing, event and other commercial expenses.

• Maintaining significant cash reserves from the proceeds from the PAL

Investment sale in April 2020.


While we currently expect our significant cash balances and available borrowings
to provide adequate liquidity during the on-going COVID-19 pandemic, should
global demand and economic activity remain subdued beyond the short-term, UNIFI
maintains the ability to (i) pursue aid and lending programs from governmental
entities, (ii) seek additional credit or financing arrangements or extensions of
existing arrangements, and (iii) implement further cost reduction initiatives to
preserve cash and secure the longevity of the business and operations.

The following further describe the current strength of UNIFI’s liquidity
position and access to capital resources:

• We have not accessed public or private capital markets for recent liquidity

needs.

• We do not currently expect our cost of or access to existing capital and

funding sources to materially change as a result of the COVID-19 pandemic;

however, new capital and funding sources (if any) may carry higher costs

than our current structure.

• We have not taken advantage of rent, lease or debt deferrals, forbearance

periods or other concessions, nor have we modified any material agreements

to provide concessions.

• We have not relied on supply chain financing, structured trade payables or

      vendor financing.


  • We are not at material risk of not meeting our financial covenants.

• We continue to maintain significant borrowing availability on our existing

credit facility.


Lastly, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act")
allowed UNIFI to defer certain employer payroll tax payments to future periods,
extend utilization of a net operating loss carryback, and attain certain
employee retention credits, all of which are not material to our short- and
long-term liquidity position. We have not applied for or obtained any other
material federal or state assistance.

                                       31

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Debt Obligations

The following table presents the total balances outstanding for UNIFI's debt
obligations, their scheduled maturity dates and the weighted average interest
rates for borrowings as well as the applicable current portion of long-term
debt:



                                                Weighted Average
                                Scheduled      Interest Rate as of               Principal Amounts as of
                              Maturity Date     December 27, 2020        December 27, 2020         June 28, 2020
ABL Revolver                  December 2023           0.0%              $                 -       $             -
ABL Term Loan (1)             December 2023           3.3%                           82,500                87,500
Finance lease obligations          (2)                3.6%                           10,396                11,381
Total debt                                                                           92,896                98,881
Current ABL Term Loan                                                               (10,000 )             (10,000 )
Current portion of finance
lease obligations                                                                    (3,683 )              (3,563 )
Unamortized debt issuance
costs                                                                                  (592 )                (711 )
Total long-term debt                                                    $            78,621       $        84,607

(1) Includes the effects of interest rate swaps.

(2) Scheduled maturity dates for finance lease obligations range from May 2022
to November 2027.

As of December 27, 2020:

UNIFI was in compliance with all financial covenants in the Credit Agreement,

  • excess availability under the ABL Revolver was $56,039,

• the Trigger Level (as defined in the Credit Agreement) was $22,813, and

$0 of standby letters of credit were outstanding.


UNIFI currently maintains three interest rate swaps that fix LIBOR at
approximately 1.9% on $75,000 of variable-rate debt. Such swaps are scheduled to
terminate in May 2022. Management will continue to monitor the potential
termination of LIBOR and the potential impact on UNIFI's operations. However,
management does not expect (i) significant efforts are necessary to accommodate
a termination of LIBOR or (ii) a significant impact to UNIFI's operations upon a
termination of LIBOR.

In addition to making payments in accordance with the scheduled maturities of
debt required under its existing debt obligations, UNIFI may, from time to time,
elect to repay additional amounts borrowed under the ABL Facility. Funds to make
such repayments may come from the operating cash flows of the business or other
sources and will depend upon UNIFI's strategy, prevailing market conditions,
liquidity requirements, contractual restrictions and other factors.

Scheduled Debt Maturities

The following table presents the scheduled maturities of UNIFI's outstanding
debt obligations for the remainder of fiscal 2021, the following four fiscal
years and thereafter:

                             Fiscal 2021       Fiscal 2022       Fiscal 2023       Fiscal 2024       Fiscal 2025       Thereafter
ABL Revolver                $           -     $           -     $           -     $           -     $           -     $          -
ABL Term Loan                       5,000            10,000            10,000            57,500                 -                -
Finance lease obligations           1,921             3,545             1,257             1,301             1,195            1,177
Total                       $       6,921$      13,545$      11,257$      58,801$       1,195$      1,177

Net Debt (Non-GAAP Financial Measure)

The reconciliations for Net Debt are as follows:

                                     December 27, 2020       June 28, 2020
Long-term debt                      $            78,621     $        84,607
Current portion of long-term debt                13,683              13,563
Unamortized debt issuance costs                     592                 711
Debt principal                                   92,896              98,881
Less: cash and cash equivalents                  83,321              75,267
Net Debt                            $             9,575     $        23,614


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Working Capital and Adjusted Working Capital (Non-GAAP Financial Measures)

The following table presents the components of working capital and the
reconciliation of working capital to Adjusted Working Capital:


                                   December 27, 2020       June 28, 2020
Cash and cash equivalents         $            83,321     $        75,267
Receivables, net                               83,124              53,726
Inventories                                   111,489             109,704
Income taxes receivable                         9,283               4,033
Other current assets                           10,282              11,763
Accounts payable                              (38,786 )           (25,610 )
Accrued expenses                              (20,331 )           (13,689 )
Other current liabilities                     (21,835 )           (15,695 )
Working capital                   $           216,547     $       199,499

Less: Cash and cash equivalents               (83,321 )           (75,267 )
Less: Income taxes receivable                  (9,283 )            (4,033 )
Less: Other current liabilities                21,835              15,695
Adjusted Working Capital          $           145,778     $       135,894




Working capital increased from $199,499 as of June 28, 2020 to $216,547 as of
December 27, 2020, while Adjusted Working Capital increased from $135,894 to
$145,778.



The increase in cash and cash equivalents was driven by the operating cash flows
generated by our global operations. The increase in receivables, net was
primarily attributable to increased sales in the current six-month period
following low sales activity in the June 2020 quarter due to significantly
suppressed demand levels caused by the COVID-19 pandemic. The increase in
inventories was insignificant. The decrease in other current assets was
primarily due to the amount and timing of contract assets revenue recognition.
The increase in accounts payable was consistent with the increase in sales and
production activity. The increase in accrued expenses was primarily attributable
to an increase in deferred revenue for increased sales activity in the Asia
Segment and higher incentive compensation accruals in the current six-month
period.

Capital Projects

During the current six-month period, UNIFI invested $6,035 in capital projects,
primarily relating to (i) further improvements in production capabilities and
technology enhancements in the Americas, (ii) eAFK Evo texturing machinery, and
(iii) routine annual maintenance capital expenditures. Maintenance capital
expenditures are necessary to support UNIFI's current operations, capacities and
capabilities and exclude expenses relating to repairs and costs that do not
extend an asset's useful life.

For the remainder of fiscal 2021, we expect to invest approximately $18,000 in
capital projects for an aggregate annual estimate of approximately $24,000, to
include (i) making further improvements in production capabilities and
technology enhancements in the Americas, (ii) continuing the purchase and
installation of new eAFK Evo texturing machines, and (iii) annual maintenance
capital expenditures.

The total amount ultimately invested for fiscal 2021 could be more or less than
the currently estimated amount depending on the timing and scale of contemplated
initiatives and is expected to be funded primarily by existing cash and cash
equivalents. UNIFI expects recent and future capital projects to provide
benefits to future profitability. The additional assets from these capital
projects consist primarily of machinery and equipment.

Share Repurchase Program

On October 31, 2018, the Board approved the 2018 SRP under which UNIFI is
authorized to acquire up to $50,000 of its common stock. Under the 2018 SRP,
purchases will be made from time to time in the open market at prevailing market
prices or through private transactions or block trades. The timing and amount of
repurchases will depend on market conditions, share price, applicable legal
requirements and other factors. The share repurchase authorization is
discretionary and has no expiration date.



As of December 27, 2020, UNIFI repurchased a total of 84 shares, at an average
price of $23.72 (for a total of $1,994 inclusive of commission costs) pursuant
to the 2018 SRP. $48,008 remains available under the 2018 SRP as of December 27,
2020.

Liquidity Summary

UNIFI has met its historical liquidity requirements for working capital, capital
expenditures, debt service requirements and other operating needs from its cash
flows from operations and available borrowings. UNIFI believes that its existing
cash balances, cash provided by operating activities and borrowings available
under the ABL Revolver will enable UNIFI to comply with the terms of its
indebtedness and meet its foreseeable liquidity requirements. Domestically,
UNIFI's cash balances, cash provided by operating activities and borrowings
available under the ABL Revolver continue to be sufficient to fund UNIFI's
domestic operating activities as well as cash commitments for its investing and
financing activities. For its foreign operations, UNIFI expects its existing
cash balances and cash provided by operating activities will provide the needed
liquidity to fund its foreign operating activities and any foreign investing
activities, such as future capital expenditures. However, expansion of our
foreign operations may require cash sourced from our domestic subsidiaries.

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Operating Cash Flows

The significant components of net cash provided by operating activities are
summarized below.



                                                                   For the Six Months Ended
                                                          December 27, 2020         December 29, 2019
Net income                                               $            10,896       $             4,121
Equity in (earnings) loss of unconsolidated affiliates                  (223 )                   1,622
Depreciation and amortization expense                                 12,187                    11,610
Non-cash compensation expense                                          1,816                     1,837
Deferred income taxes                                                 (1,700 )                    (878 )
Subtotal                                                              22,976                    18,312

Distributions received from unconsolidated affiliates                      -                    10,437
Other changes                                                         (3,250 )                    (114 )
Net cash provided by operating activities                $            19,726       $            28,635



The decrease in net cash provided by operating activities from the prior
six-month period was primarily due to $10,437 of distributions received from PAL
in September 2019, while higher Adjusted EBITDA was partially offset by an
increase in Adjusted Working Capital in the current six-month period, both
commensurate with business recovery since June 2020.

Investing Cash Flows

Investing activities include $6,035 for capital expenditures, which primarily
relate to ongoing maintenance capital expenditures along with production
capabilities and technology enhancements in the Americas.

Financing Cash Flows

Financing activities include payments against the ABL Term Loan and finance
leases during fiscal 2021.

Contractual Obligations

UNIFI has incurred various financial obligations and commitments in its normal
course of business. Financial obligations are considered to represent known
future cash payments that UNIFI is required to make under existing contractual
arrangements, such as debt and lease agreements.

There have been no material changes in the scheduled maturities of UNIFI’s
contractual obligations as disclosed in the table under the heading “Contractual
Obligations” in “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in the 2020 Form 10-K.

Off-Balance Sheet Arrangements

UNIFI is not a party to any off-balance sheet arrangements that have, or are
reasonably likely to have, a current or future material effect on UNIFI’s
financial condition, results of operations, liquidity or capital expenditures.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. The SEC has defined a company's
most critical accounting policies as those involving accounting estimates that
require management to make assumptions about matters that are highly uncertain
at the time and where different reasonable estimates or changes in the
accounting estimate from quarter to quarter could materially impact the
presentation of the financial statements. UNIFI's critical accounting policies
are discussed in the 2020 Form 10-K. There were no material changes to these
policies during the current six-month period.

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