Unifi
Annual Report 2015

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OFTHE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 28, 2015 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____to_____Commission file number 1-10542 UNIFI, INC.(Exact name of registrant as specified in its charter) New York11-2165495 (State or other jurisdiction of (I.R.S. Employer incorporation or organization)Identification No.) 7201 West Friendly Avenue27419-9109 Greensboro, NC(Zip Code) (Address of principal executive offices) Registrant’s telephone number, including area code:(336) 294-4410 Securities registered pursuant to Section 12(b) of the Act: Title of each className of each exchange on which registered Common StockNew York Stock Exchange Securities registered pursuant to Section 12(g) of the Act:None Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X] Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [ ] No [X] 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 1934during 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 filingrequirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for suchshorter period that the registrant was required to submit and post such files). Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seethe definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ]Accelerated filer [X]Non-accelerated filer [ ]Smaller reporting company [ ] (Do not check if a smaller reportingcompany) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] As of December 28, 2014, the aggregate market value of the registrant’s voting common stock held by non-affiliates of the registrant was $473,658,614.The registrant has no non-voting stock. As of August 28, 2015, the number of shares of the registrant’s common stock outstanding was 17,833,722. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Definitive Proxy Statement to be filed with the Securities and Exchange Commission (the “SEC”) in connection with the solicitation ofproxies for the Annual Meeting of Shareholders of Unifi, Inc., to be held on October 21, 2015, are incorporated by reference into Part III. (With theexception of those portions which are specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed orincorporated by reference as part of this report.)  UNIFI, INC.ANNUAL REPORT ON FORM 10-KTABLE OF CONTENTS Page FORWARD-LOOKING STATEMENTS1 Part I Item 1.Business 2Item 1A.Risk Factors 11Item 1B.Unresolved Staff Comments 15Item 1C.Executive Officers of the Registrant 15Item 2.Properties 17Item 3.Legal Proceedings 17Item 4.Mine Safety Disclosures 17 Part II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 18Item 6.Selected Financial Data 21Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations 23Item 7A.Quantitative and Qualitative Disclosures About Market Risk 50Item 8.Financial Statements and Supplementary Data 51Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 51Item 9A.Controls and Procedures 51Item 9B.Other Information 51 Part III Item 10.Directors, Executive Officers and Corporate Governance 52Item 11.Executive Compensation 52Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52Item 13.Certain Relationships and Related Transactions, and Director Independence 52Item 14.Principal Accountant Fees and Services 52 Part IV Item 15.Exhibits and Financial Statement Schedules 53 Signatures 58 Exhibit Index 59 i FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to our plans, objectives, estimates and goals.Statements expressing expectations regarding our future, or projections or estimates relating to products, sales, revenues, expenditures, costs or earnings,are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based onmanagement’s beliefs, assumptions and expectations about our future economic performance, considering the information currently available tomanagement. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “strive,”and words of similar import, or the negative of such words, identify or signal the presence of forward-looking statements. These statements are notstatements of historical fact; they involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materiallyfrom the expectations of future results, performance or financial condition that we express or imply in any forward-looking statement. Factors that couldcontribute to such differences include, but are not limited to: ●the competitive nature of the textile industry and the impact of worldwide competition; ●changes in the trade regulatory environment and governmental policies and legislation; ●the availability, sourcing and pricing of raw materials; ●general domestic and international economic and industry conditions in markets where the Company competes, such as recession and othereconomic and political factors over which the Company has no control; ●changes in consumer spending, customer preferences, fashion trends and end-uses for products; ●the financial condition of the Company’s customers; ●the loss of a significant customer; ●the success of the Company’s strategic business initiatives; ●the continuity of the Company’s leadership; ●volatility of financial and credit markets; ●the ability to service indebtedness and fund capital expenditures and strategic initiatives; ●availability of and access to credit on reasonable terms; ●changes in currency exchange, interest or inflation rates; ●the ability to reduce production costs; ●the ability to protect intellectual property; ●employee relations; ●the impact of environmental, health and safety regulations; ●the operating performance of joint ventures and other equity investments; ●the accurate financial reporting of information from equity method investees; and ●other factors discussed below in “Item 1A. Risk Factors” or the Company’s other periodic reports and information filed with the Securitiesand Exchange Commission (the “SEC”). 1 All such factors are difficult to predict, and they contain uncertainties that may materially affect actual results and may be beyond our control. Newfactors emerge from time to time, and it is not possible for management to predict all such factors or to assess the impact of each such factor on theCompany. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to updateany forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federalsecurities law. In light of all the above considerations, we reiterate that forward-looking statements are not guarantees of future performance, and we caution you not torely on them as such. PART I Fiscal YearThe Company’s fiscal year ends on the last Sunday in June. The Company’s Brazilian, Colombian and Chinese subsidiaries’ fiscal years end on June 30.The Company’s fiscal years 2015, 2014 and 2013 ended on June 28, 2015, June 29, 2014 and June 30, 2013, respectively, and there were no significanttransactions or events that occurred between the Company’s fiscal year ends and its subsidiaries’ fiscal year ends. The Company’s fiscal years 2015, 2014and 2013 consisted of 52 weeks, 52 weeks and 53 weeks, respectively. PresentationAll dollar and other currency amounts, as well as share amounts (except per share amounts), are presented in thousands (000s), except as otherwise noted. Item 1. BUSINESS Unifi, Inc., a New York corporation formed in 1969 (together with its subsidiaries, “we”, the “Company” or “Unifi”), is a multi-national manufacturingcompany that processes and sells high-volume commodity yarns, specialized yarns designed to meet certain customer specifications, and premier value-added (“PVA”) yarns with enhanced performance characteristics. The Company sells yarns made from polyester and nylon to other yarn manufacturersand knitters and weavers that produce fabric for the apparel, hosiery, home furnishings, automotive upholstery, industrial and other end-use markets. TheCompany’s polyester products include polyester polymer beads (“Chip”), partially oriented yarn (“POY”), textured, solution and package dyed, twisted,beamed and draw wound yarns; each is available in virgin or recycled varieties (the latter made from both pre-consumer yarn waste and post-consumerwaste, including plastic bottles). The Company’s nylon products include textured, solution dyed and spandex covered products. The Company maintains one of the textile industry’s most comprehensive yarn product offerings, and has ten manufacturing operations in four countriesand participates in joint ventures in Israel and the United States (“U.S.”). The Company’s principal geographic markets for its products are located in theU.S., Canada, Mexico, Central America and South America. In addition, the Company has a wholly-owned subsidiary in the People’s Republic of China(“China”) that focuses on the sale and promotion of the Company’s PVA and other specialty products in the Asian textile market, primarily in China, aswell as in the European market. The Company has three reportable segments. Operations and revenues for each segment are described below: ●The Polyester Segment manufactures Chip, POY, textured, dyed, twisted, beamed and draw wound yarns, both virgin and recycled, with salesprimarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive upholstery,home furnishings, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the U.S. and ElSalvador. ●The Nylon Segment manufactures textured yarns (both nylon and polyester) and spandex covered yarns, with sales to knitters and weavers thatproduce fabric primarily for the apparel and hosiery markets. The Nylon Segment consists of sales and manufacturing operations in the U.S. andColombia. ●The International Segment’s products primarily include textured polyester and various types of resale yarns and staple fiber. The InternationalSegment sells its yarns to knitters and weavers that produce fabric for the apparel, automotive upholstery, home furnishings, industrial and otherend-use markets primarily in the South American and Asian regions. This segment includes a manufacturing location and sales offices in Braziland a sales office in China. 2th Other information for the Company’s reportable segments, including revenues, a measurement of profit or loss, and total assets by segment, is provided in“Note 26. Business Segment Information” to the Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data”of this Annual Report on Form 10-K. In addition to the Company’s reportable segments, the Company conducts certain revenue-producing activitiesoutside of its core business, classified within an All Other category. The operations within All Other do not relate to the direct production or sale of yarnand are insignificant to the consolidated financial statements. Principal Strategic and Operating Focus For the sixth consecutive fiscal year, the Company reported net income, which was $42,151 or $2.32 per basic share for fiscal year 2015. The currentyear’s results reflect increased demand for textured yarn in the principal geographic regions served by our Polyester and Nylon Segments, growth in salesof PVA products, and lower polyester raw material costs. Our International Segment, which was resilient in a difficult economic environment, showedimprovement as the year progressed (especially PVA sales), despite unfavorable impacts from devaluation of the Brazilian currency and weakeningeconomic conditions in China. Strong PVA sales are expected to continue to drive positive growth in the International Segment, even under challengingeconomic conditions. Core Business Strategies The Company’s successful performance over this extended six-year period reflects its establishment of (and sustained commitments to) operating andgrowth strategies that transformed the Company’s historical business model in several significant regards. These transformational changes andcommitments form the basis of the Company’s current core business strategies, which include: continuously improving all operational and businessprocesses, both to enhance product quality and customer responsiveness and to derive cost efficiencies; enriching our product mix by aggressivelygrowing our higher-margin PVA products and increasing our market share of compliant yarns (as defined later); deriving value from sustainability-basedinitiatives, including polyester and nylon recycling; increasing sales in global growth markets, including Central America, Brazil, and China; andmaintaining our beneficial joint venture relationships. The Company remains committed to these core business strategies, which it believes will increaseour profitability and generate improved cash flows from operations to fund select strategic opportunities that will enhance shareholder value. PVA Products and REPREVE The Company remains committed to growing the business for its value-added products and believes its research and development work with brands andretailers continues to create new, world-wide sales opportunities. The Company believes it can continue to increase its PVA sales as a percentage of itsoverall sales volume and grow its global PVA sales, by more than 10% per year, to create overall mix enrichment and margin gains. The Company’s PVAproducts now represent approximately 30% of consolidated net sales. The Company’s strategy of enriching its product mix through a focus on PVAproducts helps insulate it from the pressures of imports of low-priced commodity yarn and helps to establish the Company as an innovation leader in itscore markets. REPREVE is the flagship brand in the Company’s PVA portfolio, and continues to grow at a faster pace than other PVA products. As part of our effortsto expand consumer brand recognition of REPREVE, the Company has developed new recycling-focused sponsorships with Marvel Universe LIVE!, theNational Football League’s Detroit Lions, the University of North Carolina at Chapel Hill and The North Face Endurance Challenge Series. Theincreasing success and consumer awareness of our REPREVE brand continues to provide new opportunities for growth, allowing us to expand into newend-uses and markets for REPREVE, as well as continuing to grow the brand with current customers. Expanding consumer engagement, awareness andactivation includes the Company’s latest “REPREVE National Mobile Tour”, an event spanning from October 2015 to April 2016 in which REPREVEwill appear at our sponsored events throughout the U.S., as well as at retail and customer locations, to encourage consumers and others to take an activerole in recycling and connecting with the REPREVE brand. PVA Expansion and Capital Projects During fiscal year 2015, we invested approximately $35,000 in capital projects, as we increased (i) our polyester yarn capacity by adding texturingmachines to the Company’s locations in Yadkinville and Madison, North Carolina, and El Salvador, (ii) increased our air jet texturing capacity, with theobjective of becoming that market’s largest domestic supplier, (iii) completed the installation of additional polymer storage silos, increasing the breadthand flexibility of our POY production facility, and (iv) improved our manufacturing flexibility to include small production run capabilities. Theseinitiatives are designed to support the Company’s mix enrichment strategies, while also improving our ability to better service customers and handle anincreasingly complex product mix. 3®®®®®®®® We have also commenced a major expansion of the Company’s REPREVE Recycling Center in Yadkinville, North Carolina, to add a fourth productionline, which will allow the Company (i) to increase production and marketing of REPREVE brand products and (ii) to enhance its development andcommercialization of other PVA products that meet the sustainability demands of brands and retailers. The Company expects to invest approximately$85,000 in capital projects over the course of fiscal years 2016 and 2017. This estimate includes construction of our recently-announced bottleprocessing facility at our existing location in Reidsville, North Carolina as well as expansion and support of the REPREVE Recycling Center,enhancements to our current capacity, flexibility and infrastructure, and annual maintenance capital expenditures. Developments in Principal Markets Apparel production is growing in the regions covered by the North American Free Trade Agreement (“NAFTA”) and the Central American Free TradeAgreement (“CAFTA”), which regions comprise the principal markets for the Company’s Polyester and Nylon Segments. The share of apparel productionfor these regions as a percentage of U.S. retail has stabilized at approximately 18%, while retail consumption has grown – especially for apparel madewith synthetic yarns. The CAFTA region, which continues to be a competitive alternative to Asian supply chains for textile products, has maintained itsshare of synthetic apparel supply to U.S. retailers. The share of synthetic apparel versus cotton apparel has increased and provided growth for theconsumption of synthetic yarns within the CAFTA region. The Company expects incremental growth into the foreseeable future, as retailers and brandsmaintain regional sourcing as part of their overall sourcing plans, retail sales grow, and consumer preferences continue to move from cotton to syntheticapparel. Our Brazilian subsidiary is primarily impacted by price pressures from imported fiber, fabric and finished goods; the inflation rate in Brazil; anddevaluation of the Brazilian Real. The Company continues to work on (i) aggressively pursuing mix enrichment by working with customers to developprograms using our differentiated products as well as our branded PVA yarns, including REPREVE, and (ii) implementing process improvements andmanufacturing efficiency gains that will help lower per-unit costs. Our Chinese subsidiary remains an important part of the Company’s global PVA strategy, as it enhances our ability to service customers who have globalsupply chains. This subsidiary was recently impacted by soft market conditions and low capacity utilization rates throughout the Chinese textileindustry. However, interest and demand for the Company’s PVA products in the region help support strong sales volumes. We are encouraged by projectswith key brands and retailers, which includes certain PVA programs that have recently transitioned from the Company’s domestic operations. Stock Repurchases Pursuant to an initial stock repurchase program approved by the Board of Directors (“Board”) in January 2013, the Company began periodic strategicrepurchases of its common stock. That $50,000 repurchase program was completed in March of 2014. In April 2014, the Board approved a second$50,000 stock repurchase program. As of August 28, 2015, the Company has repurchased a total of 3,120 shares, at an average price of $22.96, underthese repurchase programs. The Company will continue to evaluate opportunities to use excess cash flow from operations or existing borrowings torepurchase additional stock, while maintaining sufficient liquidity to support its operational needs and fund future strategic growth opportunities. Industry Overview The Company operates in the textile industry and, within it, the respective markets for yarns, fabrics, fibers and end-use products such as apparel andhosiery, automotive upholstery, industrial products and home furnishings. The textile industry is global, although there are several distinctive regional orother geographic markets that often shape the business strategies and operations of participants in the industry. Because of free trade agreements andother trade regulations by the U.S. government, the U.S. textile industry, which is otherwise a distinctive geographic market on its own, is oftenconsidered in conjunction with other geographic markets or regions in North, South and Central America, such as the regions covered by either or both ofNAFTA and CAFTA. As discussed above and elsewhere, the Company’s principal markets for its domestic operations are in the regions covered byNAFTA and CAFTA, which together include the countries of Canada, Mexico, Costa Rica, Guatemala, Honduras, El Salvador, Nicaragua, the DominicanRepublic and the U.S. Dollar amounts for market or industry data in this section are actual and not in thousands (000s). 4®®®®11 According to data compiled by Petrochemical Consultants International, global demand for polyester yarns, which includes both filament and stapleyarns, has grown steadily since 1980, and in calendar year 2003, polyester replaced cotton as the fiber with the largest percentage of worldwide sales. Incalendar year 2014, global polyester consumption accounted for an estimated 54% of global fiber consumption, and demand is projected to increase byapproximately 3% annually through 2020. In calendar year 2014, global nylon consumption accounted for an estimated 5% of global fiber consumption,and demand is projected to increase by approximately 1-2% annually through 2020. The polyester and nylon fiber sectors together accounted forapproximately 61% of U.S. textile consumption during calendar year 2014. According to the National Council of Textile Organizations, the U.S. textile industry’s total shipments were $56.7 billion for calendar year 2014. Duringcalendar year 2014, the U.S. textile industry exported nearly $18.3 billion of textile products, and the textile exports have grown by 45% since 2009, anincrease of over $5.7 billion. The U.S. textile industry remains a large manufacturing employer in the U.S. Trade Regulation and Rules of Origin The duty rate on imports into the U.S. of finished apparel categories that utilize polyester and nylon yarns generally range from 16% to 32%. For manyyears now, imports of fabric and finished goods into the U.S. have increased significantly from countries that do not participate in free trade agreements ortrade preference programs, despite duties charged on those imports. The primary drivers for that growth were lower overseas operating costs, foreigngovernment subsidization of textile industries, increased overseas sourcing by U.S. retailers, the entry of China into the World Trade Organization, andthe staged elimination of all textile and apparel quotas. Although global apparel imports represent a significant percentage of the U.S. market, RegionalFTAs (as described below), which follow general “yarn forward” rules of origin, provide duty free advantages for apparel made from regional fibers, yarnsand fabrics, allowing the Company opportunities to participate in this growing market. A significant number of the Company’s customers in the apparel market produce finished goods that meet the eligibility requirements for duty-freetreatment in the regions covered by NAFTA, CAFTA, and the Colombia and Peru free trade agreements (collectively, the “Regional FTAs”). TheseRegional FTAs contain rules of origin requirements in order for products covered by them to be eligible for duty-free treatment. In the case of textilessuch as fabric, yarn (such as POY), fibers (filament and staple) and certain garments made from them, the products are generally required to be fully formedwithin the respective regions. The Company is the largest filament yarn manufacturer, and one of the few producers of qualifying synthetic yarns, in theregions covered by these agreements. U.S. legislation commonly referred to as the “Berry Amendment” stipulates that certain textile and apparel articles purchased by the U.S. Department ofDefense must be manufactured in the U.S. and must consist of yarns and fibers produced in the U.S. The Company is the largest producer of syntheticyarns for Berry Amendment compliant programs. The Company refers to fibers sold with specific rules of origin requirements under the Regional FTAs and the Berry Amendment, as “Compliant Yarns”.Approximately 62% of the Company’s sales within the Polyester and Nylon Segments are sold as Compliant Yarns under the terms of the Regional FTAsor the Berry Amendment. The Company believes the requirements of the rules of origin and the associated duty-free cost advantages in the Regional FTAs, together with the BerryAmendment and the growing demand for supplier responsiveness and improved inventory turns, will ensure that a portion of the existing textile industrywill remain based in the Americas. The Company expects that the NAFTA and CAFTA regions will continue to maintain their share of apparel productionas a percentage of U.S. retail. The Company believes the remaining synthetic apparel production within these regional markets is more specialized anddefensible, and, in some cases, apparel producers are bringing programs back to the regions as part of a balanced sourcing strategy of some retailers andbrands. Because the Company is the largest of only a few significant producers of Compliant Yarns under these Regional FTAs, one of the Company’sbusiness strategies is to continue to leverage its eligibility status for duty-free processing to increase its share of business with regional and domesticfabric producers who ship their products into these regions. Over the longer term, however, the textile industry in the U.S. and the NAFTA and CAFTA regions is likely to be impacted when and if negotiations areconcluded for the proposed TransPacific Partnership Free Trade Agreement (“TPP”). Countries currently participating in the TPP negotiations, whichhave been ongoing for several years, include Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore, Vietnam and theU.S. The U.S. government has presented a yarn forward rule of origin for inclusion in the TPP, which (if accepted) would provide certain protections fortextile and apparel producers in the U.S. and NAFTA and CAFTA regions, but negotiations on that and other important market access issues for textilesand apparel have not been completed. Several of these countries, including Vietnam, are seeking immediate duty-free treatment (or the lack of a yarnforward rule of origin), which could have significant adverse effects on the textile 5 industry and the apparel market in the U.S. and the NAFTA and CAFTA regions. While the completion of negotiations for the implementation of TPP isnot expected to occur during fiscal year 2016, numerous participants in the U.S. textile industry are actively engaged in initiatives to eliminate or reducethe likelihood of such an adverse outcome, or at least to delay the full potential of its impact. The Company’s long-term business strategies are alsofocused on ways to maintain the Company’s profitability when and if the TPP is concluded and implemented. Competition The industry in which the Company operates is global and highly competitive. The Company competes not only as a global yarn producer, but also aspart of a regional supply chain for certain textile products. For sales of Compliant Yarns, the Company competes with a limited number of foreign anddomestic producers of polyester and nylon yarns. For sales of non-Compliant Yarns, the Company competes with a larger number of foreign and domesticproducers of polyester and nylon yarns, who can meet the required customer specifications of quality, reliability and timeliness. The Company is affectedby imported textile, apparel and hosiery products, which adversely impacts demand for polyester and nylon yarns from the Company in certain of itsmarkets. Several foreign competitors in the Company’s supply chain have significant competitive advantages, including lower wages, raw material costsand capital costs, and favorable currency exchange rates against the U.S. dollar, any of which could make the Company’s products, or the related supplychains, less competitive. While competitors have traditionally focused on high volume commodity products, they are now increasingly focused onspecialty and value-added products for which the Company has been able to generate higher margins. The Company’s major competitors for polyester yarns are O’Mara, Inc. and NanYa Plastics Corp. of America (“NanYa”) in the U.S.; AKRA, S.A. de C.V. inthe NAFTA region; and C S Central America S.A. de C.V. in the CAFTA region. The Company’s major competitors in Brazil include Avanti IndustriaComercio Importacao e Exportacao Ltda., and Polyenka Ltda., among other traders of imported yarns and fibers. The Company’s major competitors fornylon yarns are Sapona Manufacturing Company, Inc. and McMichael Mills, Inc. in the U.S. Raw Materials, Suppliers and Sourcing The primary raw material supplier for the Polyester Segment is NanYa for Chip and POY. For the International Segment, Reliance Industries, Ltd(“Reliance”) is the main supplier for POY. The primary suppliers of POY to the Nylon Segment are HN Fibers, Ltd., U.N.F. Industries Ltd. (“UNF”), UNFAmerica, LLC (“UNF America”), Invista S.a.r.l. (“INVISTA”), Universal Premier Fibers, LLC, and Nilit US (“Nilit”). (Each of UNF and UNF America is a50/50 joint venture between the Company and Nilit.) Currently, there are numerous domestic and foreign suppliers available to fulfill the Company’ssourcing requirements for its recycled products. The Company produces and buys certain of its raw material fibers for Compliant Yarns from a variety of sources in both the U.S. and Israel. The Companyproduces a portion of its Chip requirements in its REPREVE Recycling Center and purchases the remainder of its requirements from external suppliersfor use in its spinning facility. In addition, the Company purchases nylon and polyester products for resale from various suppliers. Although the Companydoes not generally have difficulty obtaining its raw material requirements, the Company has, in the past, experienced interruptions or limitations in thesupply of certain raw materials. The price of the principal raw materials used by the Company fluctuates frequently, and it is difficult, and often impossible, to predict trends or upcomingdevelopments. During fiscal year 2015, the Company operated under a predominantly declining raw material environment with respect to averagepolyester raw material costs. We believe that polyester raw material costs during most of fiscal year 2015 were impacted by lower crude oil values, softdemand and increased inventories for polyester raw materials in China and Asia, and the relative absence or declining impact of factors that in otherperiods may have impacted prices, such as supply chain or utilization issues, plant downtime, or weather. However, during the fourth quarter of fiscal year2015, there was an increase in polyester raw material costs, which the Company believes was due to a short-term increase in crude oil values and increasedproduction and summer demand for refinery and petrochemical products for gasoline. The recent global decline in crude oil prices is likely to impact theCompany’s polyester raw material costs, but it is not possible to predict the timing or amount of the impact or whether the decline in crude oil prices willstabilize, continue or reverse. In any event, the Company monitors these dynamic factors closely. Products, Technologies and Related Markets The Company manufactures polyester yarn and related products in the U.S., El Salvador and Brazil, and nylon yarns in the U.S. and Colombia, for a widerange of end-uses. In addition, the Company purchases certain yarns and staple fiber for resale to its customers. The Company processes and sells POY, aswell as high-volume commodity yarns, and PVA and other specialty yarns in both domestic and international markets, with PVA yarns comprisingapproximately 30%, 27% and 25% 6® of consolidated net sales for fiscal years 2015, 2014 and 2013, respectively. The Company provides products to a variety of end-use markets, theprincipal ones of which are the apparel market, the industrial market, the furnishings market and the automotive upholstery market. The apparel market, which includes hosiery, represents approximately 65% of the Company’s sales. Apparel retail sales, supply chain inventory levelsand strength of the regional supply base are vital to this market. Generally, synthetic apparel consumed in the U.S. grows 4% to 6% per year and, over thelast five years, the Regional FTAs share of supply of U.S. synthetic apparel has remained constant at approximately 18%. The industrial market represents approximately 15% of the Company’s sales. This market includes medical, belting, tapes, filtration, ropes, protectivefabrics and awnings. The furnishings market, which includes both contract and home furnishings, represents approximately 9% of the Company’s sales. Furnishings sales arelargely dependent upon the housing market, which in turn is influenced by consumer confidence and credit availability. The automotive upholstery market represents approximately 7% of the Company’s sales and has been less susceptible to import penetration because ofthe exacting specifications and quality requirements often imposed on manufacturers of automotive upholstery and the just-in-time deliveryrequirements. Effective customer service and prompt response to customer feedback are logistically more difficult for an importer to provide. The Company also adds value to the overall supply chain for textile products, and increases consumer demand for the Company’s own products, throughthe development and introduction of branded yarns and technologies that provide unique sustainability, performance, comfort and aesthetic advantages.The Company’s branded portion of its yarn portfolio continues to provide product differentiation to brands, retailers and consumers, and it includesproducts such as: ●REPREVE, a family of eco-friendly yarns made from recycled materials. Since its introduction in 2006, REPREVE has been theCompany’s most successful branded product. The Company’s recycled fibers are manufactured to provide certain performance and/orfunctional properties to various types of fabrics and end products. REPREVE can be found in the products of well-known brands andretailers, including Ford, Haggar, Polartec, The North Face, Patagonia, Quiksilver, Roxy, Volcom, Perry Ellis, Greg Norman, Pottery Barn,adidas, Nike, Dockers/Levi, H&M, TARGET, Wal-mart, Costco Wholesale, REI, Cabela’s, Sears, Macy’s, Kohl’s, Belk department stores andmore. ●Sorbtek a permanent moisture management yarn primarily used in performance base layer applications, compression apparel, athletic bras,sports apparel, socks and other non-apparel related items. Sorbtek can be found in many well-known apparel brands, including adidas,Kirkland, Dickies and asics, and is also used by MJ Soffe and New Balance for certain U.S. military products. ●Reflexx, a family of stretch yarns that can be found in a wide array of end-use applications, from home furnishings to performance wear andfrom hosiery and socks to work wear and denim. ●aio all-in-one performance yarns combine multiple performance properties into a single yarn used by brands such as Reebok. ●Augusta, a cotton-like yarn with a soft, lofty hand that looks and feels like cotton, but offers the superior performance of synthetic and nofading. ●A.M.Y. , a yarn with permanent antimicrobial properties for odor control. In addition to the above brands and products, the Company combines its research and development efforts with the demands of customers and markets todevelop innovative technologies that enhance yarn characteristics. Application of these technologies allows for various, separate benefits, including,among other things, water repellency, flame retardation, enhanced color-fastness achieved with less water use and protection from ultra-violet rays. 7®®®®,®®®®® Customers The Company’s Polyester Segment has approximately 350 customers, its Nylon Segment has approximately 170 customers and its International Segmenthas approximately 590 customers in a variety of geographic markets. The Company’s products are manufactured according to customer specifications andare shipped based upon customer order requirements. Customer payment terms are generally consistent across the segments and are based on prevailingindustry practices for the sale of yarn domestically or internationally. The Company’s consolidated net sales are not materially dependent on a single customer or a small group of customers; no single customer accounts forten percent or more of the Company’s consolidated net sales. The Company’s top ten customers accounted for approximately 33% of consolidated netsales for fiscal year 2015 and approximately 32% of receivables as of June 28, 2015. The Company’s net sales within its Nylon Segment are materiallydependent upon Hanesbrands, Inc., a domestic customer that accounted for approximately 31% of the Nylon Segment’s net sales for fiscal year 2015. Sales and Marketing The Company employs an internal sales force of approximately 40 persons operating out of sales offices in the U.S., Brazil, China, El Salvador andColombia. The Company relies on independent sales agents for sales in several other countries. The Company seeks to create strong customerrelationships and ways to build and strengthen those relationships throughout the supply chain. Through frequent communications with customers,partnering with customers in product development and engaging key downstream brands and retailers, the Company has created significant pull-throughsales and brand recognition for its products. For example, the Company works with brands and retailers to educate and create demand for its value-addedproducts. The Company then works with key fabric mill partners to develop specific fabric for those brands and retailers utilizing its PVA products. Inmany of these regards, the Company draws upon and integrates the resources of its research and development personnel. In addition, the Company isenhancing co-branding activations with integrated point-of-sale and online marketing with popular brands and retailers to further enable consumers tofind REPREVE and other PVA brands in multiple retail channels. Based on the establishment of many commercial and branded programs, this strategyhas been successful for the Company. Product Customization and Manufacturing Processes The Company uses advanced production processes to manufacture its high quality yarns cost-effectively. The Company believes that its flexibility andknow-how in producing specialty yarns provides important development and commercialization advantages. The Company produces polyester POY forits commodity, PVA and other specialty yarns in its polyester spinning facility located in Yadkinville, North Carolina. The POY can be sold externally orfurther processed internally. The Company produces recycled polyester Chip at the REPREVE Recycling Center in Yadkinville. This facility allows theCompany to improve the availability of recycled raw materials and significantly increase product capabilities and competitiveness in the growing marketfor REPREVE. Additional processing of the Company’s polyester yarn products includes texturing, package dyeing, twisting, beaming and draw winding. The texturingprocess, which is common to both polyester and nylon, involves the use of high-speed machines to draw, heat and false-twist POY to produce yarn withdifferent physical characteristics, depending on its ultimate end-use. Texturing gives the yarn greater bulk, strength, stretch, consistent dye-ability and asofter feel, thereby making it suitable for use in the knitting and weaving of fabric. Package dyeing allows for matching of customer-specific colorrequirements for yarns sold into the automotive, home furnishings and apparel markets. Twisting incorporates real twist into filament yarns, which can besold for a variety of uses, such as sewing thread, home furnishings and apparel. Beaming places both textured and covered yarns onto beams to be used bycustomers in warp knitting and weaving applications. The draw winding process utilizes heat and draws POY to produce mid-tenacity, flat yarns. The Company produces its textured nylon yarn products at its Madison, North Carolina location. Additional processing of the Company’s nylon yarnproducts primarily includes covering, which involves the wrapping or air entangling of filament or spun yarn around a core yarn, primarily spandex. Thisprocess enhances a fabric’s ability to stretch, recover its original shape and resist wrinkles while maintaining a softer feel. 8®®® Research and Development The Company employs approximately 90 persons who work closely with the Company’s customers and others to develop a variety of yarns andimprovements to the performance properties of existing yarns and fabrics. Among other things, the Company evaluates trends and uses the latesttechnology to create innovative specialty and PVA yarns that meet the needs of evolving consumer preferences. Most of the Company’s branded yarnsdiscussed above, including its flagship REPREVE brand, were derived from its research and development initiatives. The Company also includes, as part of its research and development initiatives, the use of continuous improvement methodologies to increase itsmanufacturing and other operational efficiencies, both to enhance product quality and to derive cost savings. For fiscal years 2015, 2014 and 2013, theCompany incurred $8,113, $7,921 and $6,938, respectively, for research and development (including salaries and benefits of the personnel involved inthose efforts). Intellectual Property The Company has numerous U.S. registered trademarks. Due to its current brand recognition and potential growth opportunities, the Company believesthat REPREVE is its most significant trademark. Ownership rights in U.S. registered trademarks do not expire if the trademarks are continued in use andproperly protected. The Company licenses certain trademarks, including Dacron and Softec™, from INVISTA. See “— Repreve Renewables, LLC” below for discussion regarding intellectual property held by a limited liability company in which the Companyholds a 60% membership interest. Employees The Company has approximately 2,500 employees. The number of employees in the Polyester Segment, Nylon Segment, International Segment andcorporate office are approximately 1,400, 500, 500 and 100, respectively. While employees of the Company’s Brazilian operations are unionized, none ofthe labor force employed by the Company’s domestic or other foreign subsidiaries is currently covered by a collective bargaining agreement. Geographic Data Geographic information reported in conformance with generally accepted accounting principles is included in “Note 26. Business Segment Information”to the Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Seasonality The Company is not significantly impacted by seasonality. Excluding the effects of fiscal years with 53 weeks rather than 52 weeks, the most significanteffects on the Company’s results of operations for particular periods during a year are due to planned manufacturing shutdowns by either the Company orits customers for certain holiday or traditional shutdown periods, which are not concentrated in any one particular season. Backlog The Company’s level of unfilled orders is affected by many factors, including the timing of specific orders and the delivery time for specific products, aswell as the customer’s ability or inability to cancel the related order. As such, the Company does not consider the amount of unfilled orders, or backlog, tobe a meaningful indicator of expected levels of future sales or to be material to an understanding of the Company’s business as a whole. Inflation The Company expects costs to continue to rise for certain consumables used to produce and ship its products, as well as for its utilities and certainemployee costs and benefits. While the Company attempts to mitigate the impacts of such rising costs through its operational efficiencies and increasedselling prices, inflation may become a factor that negatively impacts the Company’s profitability. 9®®® Environmental Matters The Company is subject to various federal, state and local environmental laws and regulations limiting the use, storage, handling, release, discharge anddisposal of a variety of hazardous substances and wastes used in or resulting from its operations (and to potential remediation obligations thereunder).These laws include the Federal Water Pollution Control Act, the Clean Air Act, the Resource Conservation and Recovery Act (including provisionsrelating to underground storage tanks) and the Comprehensive Environmental Response, Compensation, and Liability Act, commonly referred to as“Superfund” or “CERCLA”, and various state counterparts. The Company’s operations are also governed by laws and regulations relating to workplacesafety and worker health, principally the Occupational Safety and Health Act and regulations thereunder, which, among other things, establish exposurestandards regarding hazardous materials and noise standards, and regulate the use of hazardous chemicals in the workplace. The Company believes that it has obtained, and is in compliance in all material respects with, all significant permits required to be issued by federal, stateor local law in connection with the operation of its business. The Company also believes that the operation of its production facilities and the disposal ofwaste materials are substantially in compliance with applicable federal, state and local laws and regulations, and that there are no material ongoing oranticipated capital expenditures associated with environmental control facilities necessary to remain in compliance with such provisions. The Companyincurs normal operating costs associated with the discharge of materials into the environment, but does not believe that these costs are material orinconsistent with its domestic competitors. On September 30, 2004, the Company completed its acquisition of the polyester filament manufacturing assets located in Kinston, North Carolina fromINVISTA S.a.r.l (“Invista”). The land for the Kinston site was leased pursuant to a 99 year ground lease (“Ground Lease”) with E.I. DuPont de Nemours(“DuPont”). Since 1993, DuPont has been investigating and cleaning up the Kinston site under the supervision of the U.S. Environmental ProtectionAgency (“EPA”) and the North Carolina Department of Environment and Natural Resources (“DENR”) pursuant to the Resource Conservation andRecovery Act Corrective Action program. The Corrective Action program requires DuPont to identify all potential areas of environmental concern(“AOCs”), to assess the extent of containment at the identified AOCs and to clean it up to comply with applicable regulatory standards. Effective March20, 2008, the Company entered into a Lease Termination Agreement associated with conveyance of certain assets at Kinston to DuPont. This agreementterminated the Ground Lease and relieved the Company of any future responsibility for environmental remediation, other than participation with DuPont,if so called upon, with regard to the Company’s period of operation of the Kinston site, which was from 2004 to 2008. However, the Company continuesto own a satellite service facility acquired in the INVISTA transaction that has contamination from DuPont’s operations and is monitored by DENR. Thissite has been remediated by DuPont, and DuPont has received authority from DENR to discontinue remediation, other than natural attenuation. DuPont’sduty to monitor and report to DENR will be transferred to the Company in the future, at which time DuPont must pay the Company for seven years ofmonitoring and reporting costs and the Company will assume responsibility for any future remediation and monitoring of the site. At this time, theCompany has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potentialliability for the same. Repreve Renewables, LLC Repreve Renewables, LLC (“Renewables”), in which the Company has a 60% membership interest (and which is separate from and unrelated to theCompany’s REPREVE brand of yarn products), is an agricultural company focused on the development, production and commercialization of dedicatedbiomass feedstock for use in the animal bedding, bio energy and bio-based products markets. Renewables’ core crop is giant miscanthus, a high yielding,low input, perennial crop capable of growing on marginal and underutilized land not suited for most food crops. Renewables developed a proprietarysuite of establishment (planting) technology marketed as ACCU YIELD System™ which allows giant miscanthus rhizomes to be dug, processed andplanted mechanically. Renewables has a global license from Mississippi State University (“MSU”) for the use of FREEDOM Giant Miscanthus (“FGM”), which license isexclusive through April 26, 2020 and non-exclusive thereafter. The term of the license agreement is through March 5, 2030, which is the term of therelated patent. Renewables may elect to extend the exclusive license rights through the term of the agreement by making a one-time payment to MSUequal to 25% of the royalties paid to MSU attributable to the ninth year of the agreement. Renewables has been chosen to provide the agricultural and business development services for the University of Iowa’s Biomass Fuel Project, which isintended to reduce the use of fossil fuels by growing local, renewable biomass to be used to generate electricity for the University from its power plant,with a goal of achieving 40% renewable energy production by 2020. Renewables currently has approximately 350 acres of giant miscanthus planted nearthe University, and ultimately may grow as much as 2,500 acres to supply the University’s power plant in the next few years. 10®® Renewables’ primary focus, however, has been supplying THRIVEZ, a bedding product made from its proprietary varieties of giant miscanthus, to theU.S. poultry bedding market, which consists of approximately 85,000 poultry houses. Poultry houses consume approximately 2.9 million tons of beddingannually, spending in excess of $300 million in the U.S. Renewables’ THRIVEZ bedding product offers many competitive advantages, includingsupply reliability, price stability and consistently dry and absorbent properties. Renewables has been testing THRIVEZ in poultry houses for eleven ofthe largest poultry integrators that represent more than 60% of the U.S. poultry market. THRIVEZ has been validated by four university studies andmillions of birds raised on it. Renewables has approximately 1,900 acres planted (on leased land and through contract grower agreements) across Georgia, Iowa, Mississippi, NorthCarolina, Oklahoma, and Wisconsin. Contract negotiations are underway with several poultry integrators, including three of the top five U.S. brands.Renewables is planning to significantly increase planted acreage near its target customers during fiscal year 2016. Unconsolidated Affiliates The Company participates in two joint ventures that are suppliers to the Company’s Nylon Segment, with one located in the U.S. and one in Israel. TheCompany also participates in Parkdale America, LLC (“PAL”), which is a joint venture between the Company and Parkdale Incorporated (“Parkdale”) thatis a domestic cotton and synthetic spun yarn manufacturer. As of June 28, 2015, the Company had $113,901 recorded for these investments inunconsolidated affiliates. For fiscal year 2015, $19,475 of the Company’s $53,812 of income before income taxes was generated from its investments inthese unconsolidated affiliates, of which $17,403 was attributable to PAL. Other information regarding the Company’s unconsolidated affiliates isprovided in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in “Note 23. Investments inUnconsolidated Affiliates and Variable Interest Entities” to the Consolidated Financial Statements included in “Item 8. Financial Statements andSupplementary Data” of this Annual Report on Form 10-K. Available Information The Company’s website is: www.unifi.com. The information on our website is available for informational purposes and convenience only, and is notincorporated by reference in this Annual Report on Form 10-K or any other filing we make with the SEC. We make available, without charge, on our website certain reports and amendments to those reports, as applicable, that the Company files with orfurnishes to the SEC pursuant to the Exchange Act as soon as practicable after such material is electronically filed with or furnished to the SEC. Theseinclude our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, many of our corporate governancedocuments are available on our website, including our Corporate Governance and Nominating Committee Charter, Compensation Committee Charter,Audit Committee Charter, Corporate Governance Guidelines and Policies, Code of Business Conduct and Ethics, and Ethical Business Conduct PolicyStatement. Copies of such materials, as well as any of our SEC reports, may also be obtained without charge by writing to Unifi, Inc., 7201 West FriendlyAvenue, Greensboro, North Carolina 27419-9109, Attention: Office of the Secretary. Item 1A. RISK FACTORS Our business, operations and financial condition, and the textile industry in which we operate, are subject to various risks. Some of these risks aredescribed below, but they do not constitute all of the risks that may be applicable to us, our business or our industry. New risks may emerge from time totime, and it is not possible for us to predict all potential risks or to assess with certainty the likely impact of all risks. The discussion below is intended asa summary only of certain material risk factors. More detailed information concerning certain of the risk factors described below is contained in othersections of this Annual Report on Form 10-K, including in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations.” You should consider all such risks in evaluating the Company or making any investment decision involving the Company. 11®®®® Risks Relating to Our Business The Company faces intense competition from a number of domestic and foreign yarn producers and importers of textile and apparel products. Becausethe Company and the supply chains in which the Company operates do not typically operate on the basis of long-term contracts with textile andapparel customers, these competitive factors could cause the Company’s customers to shift rapidly to other producers. The Company competes not only against domestic and foreign yarn producers, but also against importers of foreign-sourced fabric and apparel into theU.S. and other countries in which the Company does business (particularly in Brazil with respect to commodity yarn products). The primary competitivefactors in the textile industry include price, quality, product styling and differentiation, flexibility of production and finishing, delivery time andcustomer service. The needs of certain customers and the characteristics of particular products determine the relative importance of these various factors.A large number of the Company’s foreign competitors have significant competitive advantages, including lower labor and raw materials costs,government subsidies, and favorable currency exchange rates against the U.S. dollar. If any of these advantages increase, or if new and/or largercompetitors emerge in the future, the Company’s products could become less competitive, and its sales and profits may decrease as a result. In particular,devaluation of Chinese currency against the U.S. Dollar could result in the Company’s products becoming less competitive from a pricing standpointand/or could result in the regions covered by NAFTA and CAFTA losing market share to Chinese imports, thereby adversely impacting the Company’ssales and profits. Also, while these foreign competitors have traditionally focused on commodity production, they are now increasingly focused on value-added products, where the Company has been able to generate higher margins. The Company may not be able to continue to compete effectively withimported foreign-made textile and apparel products, which would materially adversely affect its business, financial condition, results of operations orcash flows. In Brazil, Petrosuape-Companhia Petroquimica de Pernambuco (“Petrosuape”), a subsidiary of Petrobras Petroleo Brasileiro S.A., a public oil companycontrolled by the Brazilian government, had constructed a polyester manufacturing complex located in the northeast sector of the country. Petrosuapewas expected to produce PTA, polyethylene terephthalate (“PET”) resin, POY and textured polyester, with the potential to become a significantcompetitor of the Company’s Brazilian operations. While there have been recent negative developments involving Petrosuape and its manufacturingcomplex, if the facility were to reach full commercial production of textured polyester, its operations could significantly impact the synthetic textilefilament market in Brazil, thereby negatively impacting the operating results of the Company. Significant price volatility of the Company’s raw materials and rising energy costs may result in increased production costs, which the Company maynot be able to pass on to its customers, or be able to pass on without a time lag that adversely affects the Company during one or more periods. A significant portion of the Company’s raw materials are derived from petroleum-based chemicals. The prices for petroleum and petroleum-relatedproducts (and energy costs) are volatile and dependent on global supply and demand dynamics, including geo-political risks. While the Company entersinto raw material supply agreements from time to time, these agreements typically provide index pricing based on quoted market prices. Therefore, supplyagreements provide only limited protection against price volatility. While the Company has, at times in the past, been able to increase sales prices inresponse to increased raw material costs, the Company has not always been able to do so. The Company has lost in the past (and expects that it may losein the future) customers to its competitors as a result of price increases. In addition, competitors may be able to obtain raw materials at a lower cost due tomarket regulations that favor local producers in certain foreign locations where the Company operates, and certain other market regulations that favor theCompany over other producers may be amended or repealed. Additionally, inflation can have a long-term impact by increasing the costs of materials,labor and/or energy, any of which costs may adversely impact the Company’s ability to maintain satisfactory margins. If the Company is not able to fullypass on such cost increases to customers in a timely manner (or if it loses a large number of customers to competitors as a result of price increases), theresult could be material and adverse to its business, financial condition, results of operations or cash flows. Depending on the price volatility of the Company’s petroleum-based raw materials, the price gap between virgin raw materials and recycled bottle flakecould make virgin raw materials more cost-effective than recycled raw materials, which could result in an adverse effect on the Company’s ability to sellits REPREVE brand recycled products profitably. The Company depends upon limited sources for certain of its raw materials, and interruptions in supply could increase its costs of production, causeproduction inefficiencies, or lead to a halt in production in an extreme case. The Company depends on a limited number of third parties for certain raw material supplies, such as POY and Chip. Although alternative sources of rawmaterials exist, the Company may not be able to obtain adequate supplies of such materials on acceptable terms, or at all, from other sources. TheCompany is dependent on NAFTA, CAFTA and Berry Amendment 12® qualified suppliers of raw material for the production of Compliant Yarns. These suppliers are also at risk with their raw material supply chains. Anysignificant disruption or curtailment in the supply of any of its raw materials could cause the Company to reduce (or cease, in an extreme case) itsproduction for an extended period, or require the Company to increase its pricing, which could have a material adverse effect on its business, financialcondition, results of operations or cash flows. The Company has significant foreign operations, and its consolidated results of operations may be adversely affected by the risks associated with doingbusiness in foreign locations, including the risk of fluctuations in foreign currency exchange rates. The Company has operations in Brazil, China, Colombia and El Salvador, and participates in a foreign joint venture located in Israel. The Companyserves customers in Canada, Mexico and various countries in Europe, Central America, South America and Asia. The Company’s foreign operations aresubject to certain political, tax, economic and other uncertainties not encountered by its domestic operations that can materially impact the Company’ssupply chains or other aspects of its foreign operations. The risks of international operations include trade barriers, duties, exchange controls, nationaland regional labor strikes, social and political unrest, general economic risks, compliance with a variety of foreign laws (including tax laws), the difficultyof enforcing agreements and collecting receivables through foreign legal systems, taxes on distributions or deemed distributions to the Company or anyof its U.S. subsidiaries, maintenance of minimum capital requirements, and import and export controls. The Company’s results of operations and businesscould be adversely affected as a result of a significant adverse development with respect to any of these matters. Through its foreign operations, the Company is also exposed to currency exchange rate fluctuations. Fluctuations in foreign exchange rates will impactperiod-to-period comparisons of the Company’s reported results. Additionally, the Company operates in countries with foreign exchange controls. Thesecontrols may limit the Company’s ability to transfer funds from its international operations and joint venture or otherwise to convert local currencies intoU.S. dollars. These limitations could adversely affect the Company’s ability to access cash from these operations. Unforeseen or recurring operational problems at any of the Company’s facilities may cause significant lost production. The Company’s manufacturing processes could be affected by operational problems that could impair its production capability. Disruptions at any of itsfacilities could be caused by maintenance outages; prolonged power failures or reductions; a breakdown, failure or substandard performance ofequipment; the effect of noncompliance with material environmental requirements or permits; disruptions in the transportation infrastructure, includingrailroads, bridges, tunnels or roads; fires, floods, earthquakes or other catastrophic disasters; labor difficulties (including hiring and retention of skilledwage laborers in manufacturing facilities); or other operational problems. Any prolonged disruption in operations at any of its facilities could causesignificant lost production, which would have a material adverse effect on the Company’s business, financial condition, results of operations or cashflows. The Company is implementing various strategic business initiatives, and the success of the Company’s business will depend on its ability to effectivelydevelop and implement these initiatives. The Company is exploring, developing and implementing various strategic business initiatives to improve the Company’s competitive advantage andprofitability and enhance shareholder value. These initiatives include expanding branded PVA yarns, increasing the market penetration of REPREVEproduct offerings, expanding production capabilities for recycled yarn products and constructing and operating a plastic bottle processing facility. Theseactivities require significant financial and management commitments, outside of day-to-day operations, and the Company has not previously operated abottle processing facility. If the Company is unable to implement an important initiative in a timely manner, or if those initiatives turn out to beineffective or are executed improperly, the Company’s business, financial condition, results of operations or cash flows could be adversely affected. The Company’s future success will depend in part on its ability to protect its intellectual property rights, and the Company’s inability to enforce theserights could cause it to lose sales and its competitive advantage. The Company’s success depends in part upon its ability to protect and preserve its rights in the trademarks and other intellectual property it owns orlicenses, including its proprietary know-how, methods and processes, and the intellectual property related to its REPREVE brand. The Company relieson the trademark, copyright and trade secret laws of the U.S. and other countries, as well as nondisclosure and confidentiality agreements, to protect itsintellectual property rights. However, the Company may be unable to prevent third parties, employees or contractors from using its intellectual propertywithout authorization, breaching nondisclosure or confidentiality agreements with it, or independently developing technology that is similar to theCompany’s property. The use of the Company’s intellectual property by others without authorization may reduce any competitive advantage that theCompany has developed, cause it to lose sales or otherwise harm its business. 13®® The success of the Company depends on the ability of its senior management team, as well as the Company’s ability to attract and retain other keypersonnel. The Company’s success is highly dependent on the abilities of its management team. The management team must be able to work together effectively tosuccessfully conduct the Company’s current operations, as well as implement the Company’s important strategic initiatives. The Company does not haveemployment agreements with the members of its management team and cannot ensure investors that any of these individuals will remain with theCompany. The Company does not have key man life insurance policies on any of the members of the management team. The failure to retain keymanagers or key members of the Company’s design, product development, manufacturing, merchandising or marketing staff, or to hire additionalqualified personnel for its operations, could be detrimental to the Company’s operations and ability to execute its strategic business initiatives. The Economic Adjustment Assistance to Users of Upland Cotton may be discontinued, which could adversely affect PAL and thereby the Company’searnings and cash flows from that joint venture. PAL, which is one of the Company’s joint ventures, receives economic adjustment payments (“EAP”) from the Commodity Credit Corporation under theEconomic Adjustment Assistance to Users of Upland Cotton. The economic assistance received under this program must be used to acquire, construct,install, modernize, develop, convert or expand land, plant, buildings, equipment or machinery directly attributable to the purpose of manufacturingupland cotton into eligible cotton products in the U.S. Should PAL no longer meet the criteria to receive economic assistance under the program, orshould the program be discontinued, PAL’s business could be significantly impacted, which would adversely affect the Company. The Company has an investment in PAL, an entity that the Company does not control, which subjects the Company to uncertainties about PAL’soperating performance and PAL’s ability and willingness to make distributions of profits or cash flow to the Company, and to risks from reliance onPAL’s financial information. The Company has a minority interest investment in PAL, an entity that the Company does not control. While this investment is designed to advanceimportant business interests of the Company, the Company does not have majority voting control of PAL or the ability otherwise to control PAL’spolicies, management or affairs. The interests of persons who control PAL may differ from the Company’s, and those persons may cause PAL to takeactions that are not in the Company’s best interest. Among other things, the Company’s inability to control PAL may adversely affect its ability to receivedistributions from PAL or to fully implement its business plan. The incurrence of debt or entry into other agreements by PAL may result in restrictions orprohibitions on PAL’s ability to make distributions to the Company. Even where PAL is not restricted by contract or by law from making distributions,the Company may not be able to influence the timing or amount of such distributions. In addition, if the controlling investor in PAL fails to observe itscommitments, PAL may not be able to operate according to its business plan, or the Company may need to increase its level of investment commitment. Ifany of these events were to occur, the Company’s business, results of operations, financial condition or cash flows could be adversely affected. The Company also relies on accurate financial reporting from PAL for preparation of the Company’s quarterly and annual financial statements. Errors inthe financial information reported by PAL could be material to the Company and may require it to restate past financial statements. Any such restatementscould have a material adverse effect on the Company or the market price of its common stock. The Company requires cash to service its indebtedness and fund capital expenditures and strategic initiatives, and its ability to generate sufficient cashfor those purposes depends on many factors beyond its control. The Company’s principal sources of liquidity are cash flows generated from operations and borrowings under its credit facility. The Company’s ability tomake payments on its indebtedness, to fund planned capital expenditures and to fund strategic initiatives will depend on its ability to generate futurecash flows from operations. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors thatare beyond the Company’s control. The business may not generate sufficient cash flows from operations, and future borrowings may not be available tothe Company in amounts sufficient, to enable the Company to pay its indebtedness and to fund its other liquidity needs. Any such development wouldhave a material adverse effect on the Company. 14 Risks Relating to the Textile Industry A decline in general economic or political conditions, and changes in consumer spending, could cause a decline in demand for textile products. The Company’s products are used in the production of fabric primarily for the apparel, hosiery, home furnishings, automotive, industrial and other end-use markets. Demand for furniture and durable goods is often affected significantly by economic conditions that have global or regional industry-wideconsequences. Demand for a number of categories of apparel also tends to be tied to economic cycles and customer preferences that affect the textileindustry in general. Demand for textile products, therefore, tends to vary with the business cycles of the U.S. and other economies, as well as changes inglobal trade flows, and economic and political conditions. Changes in trade policy could weaken the Company’s competitive position significantly and have a material adverse effect on its business. A number of markets within the textile industry in which the Company sells its products – particularly the apparel, hosiery and home furnishings markets– are subject to intense foreign competition. Other markets within the textile industry in which the Company sells its products may in the future becomesubject to more intense foreign competition. There are currently a number of trade regulations and duties in place to protect the U.S. textile industryagainst competition from low-priced foreign producers, such as those in China and Vietnam. Changes in such trade regulations or duties may make theprice of the Company’s products less attractive than the goods of its competitors or the finished products of a competitor in the supply chain, which couldhave a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. An increase of illegal transshipments of textile and apparel goods into the U.S. (or into the NAFTA or CAFTA regions) could have a material adverseeffect on the Company’s business. According to industry experts and trade associations, there has been a significant amount of illegal transshipments of apparel products into the U.S. andinto certain other countries in the NAFTA and CAFTA regions. Such illegal transshipments, at whatever level they reach, may negatively impact themarkets in which the Company competes. Illegal transshipment involves circumventing duties by falsely claiming that textiles and apparel are productsof a particular country of origin (or include yarn of a particular country of origin) to avoid paying higher duties or to receive benefits from regional freetrade agreements, such as NAFTA and CAFTA. If illegal transshipments are not monitored, and if enforcement is not effective to limit them, theseshipments could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. The outcome of negotiations for a trade agreement among the TPP participating countries is unpredictable and could lead to provisions thatmaterially and adversely affect the U.S. textile industry and apparel market in future years. The U.S. government is engaged in negotiations that have been ongoing for several years relating to the TPP. Other countries participating in the TPPnegotiations include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Several of these countries,including Vietnam, are seeking immediate duty-free treatment (or the lack of a yarn forward rule of origin) in the final TPP with respect to yarns, fabricsand most apparel. Such an outcome in the TPP, when and if the TPP is concluded and implemented, could materially and adversely affect the U.S. textileindustry and apparel market and Western Hemisphere supply chains in future years. Item 1B. UNRESOLVED STAFF COMMENTS None. Item 1C. EXECUTIVE OFFICERS OF THE REGISTRANT The following is a description of the name, age, position and offices held, and the period served in such position or offices, for each of the executiveofficers of the Company. Chairman of the Board and Chief Executive Officer WILLIAM L. JASPER — Age: 62 – Mr. Jasper has been Chairman of the Board since February 2011 and Chief Executive Officer since September 2007.From September 2007 to February 2011, he was also President of the Company. Mr. Jasper joined the Company in September 2004, was appointed as theGeneral Manager of the Polyester Division in June 2005, and 15 in April 2006 was promoted to Vice President of Sales. Prior to joining the Company, he was the Director of INVISTA’s Dacron polyester filamentbusiness. Before working at INVISTA, Mr. Jasper had held various management positions in operations, technology, sales and business for DuPont since1980. He has been a member of the Board since September 2007 and is Chair of the Board’s Executive Committee. President and Chief Operating Officer R. ROGER BERRIER, JR. — Age: 46 – Mr. Berrier has been President and Chief Operating Officer since February 2011. Mr. Berrier had been theExecutive Vice President of Sales, Marketing and Asian Operations of the Company from September 2007 until his promotion in 2011. Prior to 2007, Mr.Berrier had been Vice President of Commercial Operations (since April 2006) and Commercial Operations Manager responsible for corporate productdevelopment, marketing and brand sales management (from April 2004 to April 2006). Mr. Berrier joined the Company in 1991 and had held variousother management positions within operations, including international operations, machinery technology, research and development and quality controlbefore assuming the above positions. He has been a member of the Board since September 2007 and is a member of the Board’s Executive Committee. Vice President and Chief Financial Officer JAMES M. OTTERBERG — Age: 44 – Mr. Otterberg has been Vice President and Chief Financial Officer since October 23, 2013, having served as interimChief Financial Officer from August 12, 2013. Mr. Otterberg is also the Company’s principal accounting officer, a role he has held since October 2011.Mr. Otterberg was employed by the Company’s principal operating subsidiary, Unifi Manufacturing, Inc. (“UMI”), from June 2011 to October 2013 as itsVice President and Chief Accounting Officer, and previously from October 1999 to December 2003 as Director – Joint Ventures and Alliances andCorporate Financial Analyst. Mr. Otterberg also held various financial positions for Polymer Group, Inc. from 2004 to 2011, including Vice President –Finance U.S. from February 2008 through May 2011. Vice President of Manufacturing THOMAS H. CAUDLE, JR. — Age: 63 – Mr. Caudle has been the Company’s Vice President of Manufacturing since October 2006. Before that time, hewas Vice President of Global Operations of the Company (from April 2003 until October 2006), UMI’s Senior Vice President in charge of manufacturing(since July 2000) and Vice President of Manufacturing Services (since January 1999). Mr. Caudle has been an employee of the Company since 1982. Each of the executive officers was reelected to his current position by the Board at its meeting on October 22, 2014. Each executive officer serves in hisposition at the pleasure of the Board. No executive officer has a family relationship as close as first cousin with any other executive officer or director. 16® Item 2. PROPERTIES The following table contains information about the principal properties owned or leased by the Company as of June 28, 2015: LocationDescriptionPolyester Segment Properties Domestic Yadkinville, NCFive plants (1) and five warehouses (2)Reidsville, NCOne plant (1) Foreign Ciudad Arce, El SalvadorOne plant and one warehouse (3) Nylon Segment Properties Domestic Madison, NCOne plant and one warehouse (1) Foreign Bogota, ColombiaOne plant (1) International Segment Properties Foreign Alfenas, BrazilOne plant and one warehouse (1)Sao Paulo, Americana and Blumenau, BrazilOne corporate office (3) and two sales offices (3)Suzhou, ChinaOne sales office (3) and two warehouses (3)(1) Owned in fee simple (2) Two warehouses are owned in fee simple and three warehouses are leased (3) Leased facilities In addition to the above properties, the Company owns property located at 7201 West Friendly Avenue in Greensboro, North Carolina, which includes abuilding that serves as the Company's corporate headquarters and administrative offices for all of its segments and a sales office. Such property consists ofa tract of land containing approximately nine acres, and the building contains approximately 100,000 square feet. As of June 28, 2015, the Company owned approximately 4.3 million square feet of manufacturing, warehouse and office space. In addition, RepreveRenewables, LLC has approximately 2,100 acres of farm land under lease or contract grower arrangements located in Georgia, Iowa, Mississippi, NorthCarolina, Oklahoma, and Wisconsin. Management believes all of the Company’s operating properties are well maintained and in good condition. In fiscal year 2015, the Company’s plants inthe Polyester, Nylon and International Segments operated below capacity. Management does not perceive any capacity constraints in the foreseeablefuture. Item 3. LEGAL PROCEEDINGS There are no pending legal proceedings, other than ordinary routine litigation incidental to the Company’s business, to which the Company is a party orto which any of its property is the subject. Item 4. MINE SAFETY DISCLOSURES Not applicable. 17 PART II Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES The Company’s common stock is listed for trading on the New York Stock Exchange (“NYSE”) under the symbol “UFI.” The following table sets forththe closing, high and low sales prices of the common stock for the Company’s two most recent fiscal years. Close High Low Fiscal year 2015: Fourth quarter ended June 28, 2015 $33.94 $37.54 $30.93 Third quarter ended March 29, 2015 36.08 36.30 28.55 Second quarter ended December 28, 2014 30.04 30.97 24.51 First quarter ended September 28, 2014 26.42 30.93 25.50 Fiscal year 2014: Fourth quarter ended June 29, 2014 $27.52 $28.52 $20.76 Third quarter ended March 30, 2014 22.33 27.58 20.82 Second quarter ended December 29, 2013 27.40 27.97 22.24 First quarter ended September 29, 2013 23.63 24.26 20.47 As of August 28, 2015, there were 194 record holders of the Company’s common stock. A significant number of the outstanding shares of common stockthat are beneficially owned by individuals and entities are registered in the name of Cede & Co. Cede & Co. is a nominee of the Depository TrustCompany, a securities depository for banks and brokerage firms. The Company estimates that there are approximately 5,300 beneficial owners of itscommon stock. No dividends were paid in the past two fiscal years, and the Company does not intend to pay cash dividends in the foreseeable future. The Company’scurrent debt obligations contain certain restricted payment and restricted investment provisions, including a restriction on the payment of dividends andshare repurchases should its borrowing capacity fall below certain thresholds. Information regarding the Company’s debt obligations is provided in “Note12. Long-Term Debt” to the Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” of this AnnualReport on Form 10-K. Purchases of Equity Securities On January 22, 2013, the Board approved a stock repurchase program (the “2013 SRP”) to acquire up to $50,000 of the Company’s common stock. TheCompany completed its repurchase of shares under the 2013 SRP in March 2014. On April 23, 2014, the Board approved a new stock repurchase program (the “2014 SRP”) to acquire up to an additional $50,000 of the Company’scommon stock. Under the 2014 SRP (as was the case under the 2013 SRP), the Company has been authorized to repurchase shares at prevailing marketprices, through open market purchases or privately negotiated transactions at such times and prices and in such manner as determined by management,subject to market conditions, applicable legal requirements, contractual obligations and other factors. Repurchases, if any, are expected to be financedthrough cash generated from operations and borrowings, and are subject to applicable limitations and restrictions as set forth in the credit agreementgoverning the Company’s debt obligations. The 2014 SRP has no stated expiration or termination date, and there is no time limit or specific time frameotherwise for repurchases. The Company may discontinue repurchases at any time that management determines additional purchases are not beneficial oradvisable. Through August 28, 2015, the Company has repurchased 3,120 shares of common stock at a total cost of $71,665, including all associated commissioncosts, since the inception of the 2013 SRP and the 2014 SRP. 18 The following table summarizes the Company’s purchases of its common stock during the fiscal quarter ended June 28, 2015, all of which were madeunder the 2014 SRP. Period Total Number ofShares Purchased Average Price Paidper Share Total Number ofShares Purchased asPart ofPublicly AnnouncedPlans or Programs MaximumApproximateDollar Value of Sharesthat May Yet BePurchased Under thePlans or Programs 3/30/15 – 4/28/15 — $— — 4/29/15 – 5/28/15 — $— — 5/29/15 – 6/28/15 200 $31.00 200 33,811 Total 200 $31.00 200 19 PERFORMANCE GRAPH - SHAREHOLDER RETURN ON COMMON STOCK Set forth below is a line graph comparing the cumulative total shareholder return on the Company’s common stock with (i) the New York Stock ExchangeComposite Index, a broad equity market index, and (ii) a peer group selected by the Company in good faith (the “Peer Group”), assuming, in each case,the investment of $100 on June 27, 2010 and reinvestment of dividends. Including the Company, the Peer Group consists of ten publicly traded textilecompanies, the other nine of which are: Albany International Corp., Culp, Inc., Dixie Group, Inc., Hampshire Group, Limited, Interface, Inc., Joe’s JeansInc., JPS Industries, Inc., Lydall, Inc., and Mohawk Industries, Inc. The Hallwood Group, Inc., which was included in the peer group in prior years, has nowbeen removed from all years in the presentation below as it is no longer a public company. All per share prices of the Company’s common stock have been retroactively adjusted to reflect the Company’s November 3, 2010 1-for-3 reverse stocksplit. June 27, 2010 June 26, 2011 June 24, 2012 June 30, 2013 June 29, 2014 June 28, 2015 Unifi, Inc. $100.00 $100.58 $99.42 $171.39 $228.19 $281.43 NYSE Composite 100.00 120.56 118.21 146.03 179.17 184.55 Peer Group 100.00 122.60 118.50 200.49 242.60 327.71 20 Item 6. SELECTED FINANCIAL DATA The following table presents selected historical consolidated financial data (with dollars in thousands, except per share data). The data should be read inconjunction with the Company’s historical consolidated financial statements for each of the periods presented, as well as “Management’s Discussion andAnalysis of Financial Condition and Results of Operations” included elsewhere in this Annual Report on Form 10-K. For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 June 24, 2012 June 26, 2011 Number of fiscal weeks 52 52 53 52 52 Operations Data: Net sales $687,121 $687,902 $713,962 $705,086 $712,812 Gross profit 90,705 83,262 73,104 54,396 74,652 Selling, general and administrative expenses 49,672 46,203 47,386 43,482 44,659 Operating income 38,486 31,483 22,463 8,632 28,692 Interest expense 4,025 4,329 4,489 16,073 19,190 Equity in earnings of unconsolidated affiliates (1) (19,475) (19,063) (11,444) (19,740) (24,352)Income from continuing operations before income taxes 53,812 47,881 29,014 8,849 32,422 Provision (benefit) for income taxes (2) 13,346 20,161 13,344 (1,979) 7,333 Income from continuing operations, net of tax 40,466 27,720 15,670 10,828 25,089 Net income attributable to Unifi, Inc. 42,151 28,823 16,635 11,491 25,089 Per common share (3): Net income from continuing operations attributable to Unifi,Inc. Basic $2.32 $1.52 $0.84 $0.57 $1.25 Diluted $2.24 $1.47 $0.80 $0.56 $1.22 Cash Flow Data: Net cash provided by operating activities $38,903 $56,357 $50,509 $43,309 $11,880 Depreciation and amortization expenses 18,043 17,896 24,584 27,135 25,977 Capital expenditures 25,966 19,091 8,809 6,354 20,539 Distributions received from unconsolidated affiliates 3,718 13,214 14,940 10,616 5,900 Cash paid for share repurchases 10,360 36,551 19,315 — — Cash dividends declared per common share $— $— $— $— $— June 28, 2015 June 29, 2014 June 30, 2013 June 24, 2012 June 26, 2011 Balance Sheet Data: Cash and cash equivalents $10,013 $15,907 $8,755 $10,886 $27,490 Property, plant and equipment, net 136,222 123,802 115,164 127,090 151,027 Total assets 476,372 469,067 455,466 482,233 537,376 Total debt 104,110 99,488 97,753 121,552 168,664 Total shareholders’ equity 299,093 286,738 286,480 290,780 299,655 Working capital (4) 140,623 150,925 161,885 166,485 212,969 (1)Equity in earnings of unconsolidated affiliates for fiscal year 2015 includes two bargain purchase gains recognized by Parkdale America, LLC for acombined impact to the Company of $4,696. (2)Provision for income taxes for fiscal year 2015 includes, among other items, the change of $7,639 for the deferred tax liability related to theCompany’s indefinite reinvestment assertion, a $3,008 impact related to certain intercompany foreign currency transactions that originated in prioryears and were settled in the fourth quarter of fiscal year 2015, the release of $3,009 from the valuation allowance primarily in connection with anunconsolidated affiliate, renewable energy credits of $1,036 and net expense recognized for uncertain tax positions of $2,879. 21 During fiscal year 2014, the Company increased the valuation allowance for certain deferred tax assets, generating additional tax expense of $1,925. During fiscal year 2013, the Company increased the valuation allowance for certain deferred tax assets, generating additional tax expense of $3,243. During fiscal year 2012, the Company released previously recorded valuation allowances against certain of its domestic deferred tax assets, resultingin a $6,017 benefit recorded to income tax expense. (3)All amounts per share have been retroactively adjusted to reflect the November 3, 2010 1-for-3 reverse stock split. (4)Working capital represents current assets less current liabilities. 22 Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview and Significant General Matters The Company processes and sells high-volume commodity yarns, specialized yarns designed to meet certain customer specifications, and PVA yarns withenhanced performance characteristics. The Company sells yarns made from polyester and nylon to other yarn manufacturers and knitters and weavers thatproduce fabric for the apparel, hosiery, home furnishings, automotive upholstery, industrial and other end-use markets. The Company’s polyesterproducts include Chip, POY, textured, solution and package dyed, twisted, beamed and draw wound yarns; each is available in virgin or recycledvarieties (the latter made from both pre-consumer yarn waste and post-consumer waste, including plastic bottles). The Company’s nylon products includetextured, solution dyed and spandex covered products. The Company maintains one of the textile industry’s most comprehensive yarn product offerings, and has ten manufacturing operations in four countriesand participates in joint ventures in Israel and the U.S. The Company’s principal geographic markets for its products are located in the U.S., Canada,Mexico, Central America and South America. In addition, the Company has a wholly-owned subsidiary in China focused on the sale and promotion of theCompany’s PVA and other specialty products in the Asian textile market, primarily in China, as well as in the European market. The Company has threereportable segments for its operations - the Polyester Segment, the Nylon Segment and the International Segment – as well as certain ancillary operationsthat include Repreve Renewables, LLC (“Renewables”), for-hire transportation services and consulting services, which comprise an All Other category.The ancillary operations classified within All Other are insignificant for all periods presented, therefore, the Company’s discussion and analysis of thoseactivities is generally limited to their impact on consolidated results, where appropriate. For the sixth consecutive fiscal year, the Company reported net income, which was $42,151, or $2.32 per basic share, for fiscal year 2015, reflectingincreased demand for textured polyester and nylon yarns in the NAFTA and CAFTA regions served by the Polyester and Nylon Segments, growth in PVAproducts as part of our continued mix enrichment strategy, and lower polyester raw material costs. Our International Segment was resilient in difficulteconomic conditions and showed improvement as the year progressed, despite unfavorable impacts from devaluation of the Brazilian currency andweakening economic conditions in China. Strong PVA sales are expected to continue to drive positive growth in the International Segment, even underchallenging economic conditions. Focus on Core Business Strategies The Company’s operations in fiscal year 2015 remained focused on making improvements to its core business, growing the market for its value-addedproducts, and using cash flow from operations to fund select capital projects, strategic growth opportunities and share repurchases. This focus led to thecontinuing increase in the Company’s PVA sales as a percentage of its overall sales volume, with sales of PVA products representing approximately 30%,27% and 25% of consolidated net sales for fiscal years 2015, 2014 and 2013, respectively. The Company’s strategy of enriching its product mix througha focus on PVA products helps insulate it from the pressures of low-priced commodity yarn imports and helps to establish the Company as an innovationleader in its core markets. The Company’s REPREVE flagship brand continued to grow at a faster pace than other PVA products during fiscal year 2015. The increasing successand consumer awareness of our REPREVE brand continues to provide new opportunities for growth, allowing us to expand into new end-uses andmarkets for REPREVE, as well as continuing to grow the brand with current customers. During fiscal year 2015, we invested approximately $35,000 in capital projects, as we increased our polyester yarn capacity by adding texturingmachines to the Company’s locations in Yadkinville and Madison, North Carolina and El Salvador and improved our manufacturing flexibility toinclude small production run capabilities. These initiatives are designed to support the Company’s mix enrichment strategies, while also improving ourability to better service customers and handle an increasingly complex product mix. The Company expects to invest approximately $85,000 in capital projects over the course of fiscal years 2016 and 2017. This estimate includesconstruction of our recently-announced bottle processing facility at our existing location in Reidsville, North Carolina, further expansion of ourREPREVE Recycling Center to add a fourth production line, enhancements to our current capacity, flexibility and infrastructure, and annualmaintenance capital expenditures. 23®®®® During fiscal year 2015, the Company continued its strategic repurchases of shares of its common stock pursuant to its second $50,000 stock repurchaseprogram approved by the Board of Directors (“Board”) in April 2014. The Company repurchased a total of 349 shares during fiscal year 2015, at anaverage price of $29.72. The Company will continue to evaluate opportunities to use excess cash flow from operations or existing borrowings torepurchase additional stock, while maintaining sufficient liquidity to support its operational needs and fund future strategic growth opportunities. Key Performance Indicators and Non-GAAP Financial Measures The Company continuously reviews performance indicators to measure its success. The following are the indicators management uses to assessperformance of the Company’s business: ●sales volume for the Company and for each of its reportable segments; ●unit conversion margin, which represents unit net sales price less unit raw material costs, for the Company and for each of its reportablesegments; ●gross profit and gross margin for the Company and for each of its reportable segments; ●working capital, which represents current assets less current liabilities; ●Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), which represents net income or loss attributable to Unifi, Inc.before net interest expense, income tax expense and depreciation and amortization expense; ●Adjusted EBITDA Including Equity Affiliates, which represents EBITDA adjusted to exclude non-cash compensation expense, gains orlosses on extinguishment of debt, loss on previously held equity interest and certain other adjustments. Such other adjustments includeoperating expenses for Repreve Renewables, restructuring charges and start-up costs, gains or losses on sales or disposals of property, plantand equipment, currency and derivative gains or losses, and other operating or non-operating income or expense items necessary tounderstand and compare the underlying results of the Company; ●Adjusted EBITDA, which represents Adjusted EBITDA Including Equity Affiliates adjusted to exclude equity in earnings and losses ofunconsolidated affiliates (the Company may, from time to time, change the items included within Adjusted EBITDA); ●Segment Adjusted Profit, which equals segment gross profit, plus segment depreciation and amortization, less segment selling, general andadministrative expenses (“SG&A”), net of segment other adjustments; ●Adjusted Net Income, which excludes certain amounts management believes do not reflect the ongoing operations and performance of theCompany. Adjusted Net Income represents Net income attributable to Unifi, Inc. calculated under GAAP, adjusted to exclude theapproximate after-tax impact of changes in the deferred tax valuation allowances, change in deferred tax liability for indefinite reinvestmentassertion, tax impact of settlement of certain intercompany foreign currency transactions, bargain purchase gains for an equity affiliate,change in uncertain tax positions, renewable energy tax credits, loss on extinguishment of debt, net restructuring charges, interest incomerelated to a judicial claim and net gains or losses on sale or disposal of assets. Such amounts are excluded from Adjusted Net Income in orderto better reflect the Company’s underlying operations and performance; ●Adjusted EPS (earnings per share), which represents Adjusted Net Income divided by the Company’s basic weighted average common sharesoutstanding; and ●Adjusted Working Capital (receivables plus inventory, less accounts payable and certain accrued expenses), which is an indicator of theCompany’s production efficiency and ability to manage its inventory and receivables. EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, Segment Adjusted Profit, Adjusted Net Income, Adjusted EPS and AdjustedWorking Capital are not determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered a substitute forperformance measures determined in accordance with GAAP. EBITDA, Adjusted EBITDA Including Equity Affiliates, Adjusted EBITDA, SegmentAdjusted Profit, Adjusted Net Income, Adjusted EPS and Adjusted Working Capital are non-GAAP financial measurements that management uses to 24 facilitate its analysis and understanding of the Company’s business operations. Management believes they are useful to investors because they provide asupplemental way to understand the underlying operating performance and debt service capacity of the Company. The calculations of EBITDA, AdjustedEBITDA Including Equity Affiliates, Adjusted EBITDA, Segment Adjusted Profit, Adjusted Net Income, Adjusted EPS and Adjusted Working Capital aresubjective measures based on management’s belief as to which items should be included or excluded in order to provide the most reasonable view of theunderlying operating performance of the business. Results of Operations Fiscal years 2015, 2014 and 2013 are comprised of 52 weeks, 52 weeks and 53 weeks, respectively. The following table presents a summary of Netincome attributable to Unifi, Inc.: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Net sales $687,121 $687,902 $713,962 Cost of sales 596,416 604,640 640,858 Gross profit 90,705 83,262 73,104 Selling, general and administrative expenses 49,672 46,203 47,386 Provision (benefit) for bad debts 947 287 (154)Other operating expense, net 1,600 5,289 3,409 Operating income 38,486 31,483 22,463 Interest expense, net 3,109 2,539 3,791 Loss on extinguishment of debt 1,040 — 1,102 Other non-operating expense — 126 — Equity in earnings of unconsolidated affiliates (19,475) (19,063) (11,444)Income before income taxes 53,812 47,881 29,014 Provision for income taxes 13,346 20,161 13,344 Net income including non-controlling interest 40,466 27,720 15,670 Less: net (loss) attributable to non-controlling interest (1,685) (1,103) (965)Net income attributable to Unifi, Inc. $42,151 $28,823 $16,635 The reconciliations of Net income attributable to Unifi, Inc. to EBITDA, Adjusted EBITDA Including Equity Affiliates and Adjusted EBITDA arepresented below. Certain line items below are not reflective of consolidated amounts due to the impact of non-controlling interest. For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Net income attributable to Unifi, Inc. $42,151 $28,823 $16,635 Interest expense, net 3,109 2,539 3,791 Provision for income taxes 13,346 20,161 13,344 Depreciation and amortization expense 17,367 17,334 23,860 EBITDA $75,973 $68,857 $57,630 Non-cash compensation expense 3,148 2,690 2,287 Loss on extinguishment of debt 1,040 — 1,102 Operating expenses for Renewables 1,463 1,440 1,293 Foreign currency transaction losses (gains) 448 504 (132)Net loss on sale or disposal of assets 245 475 243 Restructuring charges, net — 1,273 813 Other, net 860 1,420 858 Adjusted EBITDA Including Equity Affiliates $83,177 $76,659 $64,094 Equity in earnings of unconsolidated affiliates (19,475) (19,063) (11,444)Adjusted EBITDA $63,702 $57,596 $52,650 25 The reconciliations of Adjusted EBITDA to Segment Adjusted Profit are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Adjusted EBITDA $63,702 $57,596 $52,650 Non-cash compensation expense (3,148) (2,690) (2,287)Provision (benefit) for bad debts 947 287 (154)Bad debt recovery adjustment — — 383 Other, net (excluding depreciation) (986) (135) (174)Segment Adjusted Profit $60,515 $55,058 $50,418 Segment Adjusted Profit consists of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $32,341 $30,696 $23,900 Nylon 13,326 12,801 11,437 International 14,848 11,561 15,081 Segment Adjusted Profit $60,515 $55,058 $50,418 Selected financial information for the Company’s three reportable segments and, for fiscal year 2015, the All Other category is presented below: For the Fiscal Year Ended June 28, 2015 Polyester Nylon International All Other (1) Total Net sales $377,281 $168,570 $134,992 $6,278 $687,121 Cost of sales 328,575 147,531 113,556 6,754 596,416 Gross profit (loss) 48,706 21,039 21,436 (476) 90,705 SG&A expenses 29,403 9,903 8,689 1,677 49,672 Other operating expense, net 84 16 111 19 230 Segment operating profit (loss) $19,219 $11,120 $12,636 $(2,172) $40,803 (1)Net sales in the All Other category includes $921, $5,233 and $124 for Renewables, for-hire transportation services and consulting services,respectively. The Company does not evaluate the All Other category using a measure of segment profit or loss, therefore segment operating loss forAll Other is provided here for presentation purposes only. Any comparative amounts for All Other in prior year periods are insignificant. For the Fiscal Year Ended June 29, 2014 Polyester Nylon International Total Net sales $389,172 $163,824 $134,906 $687,902 Cost of sales 342,393 143,649 118,598 604,640 Gross profit 46,779 20,175 16,308 83,262 SG&A expenses 28,422 9,531 8,250 46,203 Other operating expense, net 438 (24) — 414 Segment operating profit $17,919 $10,668 $8,058 $36,645 For the Fiscal Year Ended June 30, 2013 Polyester Nylon International Total Net sales $398,707 $164,085 $151,170 $713,962 Cost of sales 363,545 146,033 131,280 640,858 Gross profit 35,162 18,052 19,890 73,104 SG&A expenses 29,114 9,930 8,342 47,386 Other operating expense, net — (93) — (93)Segment operating profit $6,048 $8,215 $11,548 $25,811 26 The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $12,789 $11,702 $17,234 Nylon 2,080 2,276 3,070 International 2,101 3,151 3,418 Segment depreciation and amortization expense 16,970 17,129 23,722 Other depreciation and amortization expense 1,073 767 862 Depreciation and amortization expense $18,043 $17,896 $24,584 Other depreciation and amortization expense for fiscal year 2015 includes $429 and $139 for Renewables and for-hire transportation services,respectively. Segment other adjustments for each of the reportable segments consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $249 $637 $618 Nylon 110 (119) 245 International — 352 115 Segment other adjustments $359 $870 $978 Segment other adjustments include severance charges, restructuring charges and recoveries, start-up costs and other adjustments necessary to understandand compare the underlying results of the segment. The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $21,267 $14,701 $5,730 Nylon 2,392 2,284 482 International 1,468 1,637 1,336 Segment capital expenditures 25,127 18,622 7,548 Other capital expenditures 839 469 1,261 Capital expenditures $25,966 $19,091 $8,809 Other capital expenditures for fiscal year 2015 includes $90 and $183 for Renewables and for-hire transportation services, respectively. 27 The reconciliations of Income before income taxes, Net income attributable to Unifi, Inc. (“Net Income”) to Adjusted Net Income and Basic Earnings PerShare (“Basic EPS”) to Adjusted EPS are detailed in the tables below. Excluding the GAAP results in the tables below, amounts reported under the NetIncome columns are generally calculated by applying the statutory tax rate of the jurisdiction for which the amount relates, or, when no impact to Incomebefore income taxes exists, amounts represent components of the respective period’s provision for income taxes. Fiscal Year 2015 Income BeforeIncome Taxes Net Income Basic EPS GAAP results $53,812 $42,151 $2.32 Change in tax valuation allowances — (3,009) (0.17)Change in deferred tax liability for indefinite reinvestment assertion — (7,639) (0.42)Settlement of certain intercompany foreign currency transactions — 3,008 0.17 Change in uncertain tax positions — 2,879 0.16 Renewable energy tax credits — (1,036) (0.06)Bargain purchase gains for an equity affiliate (4,696) (2,888) (0.16)Loss on extinguishment of debt 1,040 676 0.03 Net loss on sale or disposal of assets 778 134 0.01 Adjusted results $50,934 $34,276 $1.88 Weighted average common shares outstanding 18,207 Fiscal Year 2014 Income BeforeIncome Taxes Net Income Basic EPS GAAP results $47,881 $28,823 $1.52 Change in tax valuation allowances — 1,925 0.10 Change in deferred tax liability for indefinite reinvestment assertion — 249 0.01 Change in uncertain tax positions — (174) (0.01)Net restructuring charges 1,273 827 0.05 Interest income related to judicial claim (1,084) (715) (0.04)Net loss on sale or disposal of assets 475 309 0.02 Adjusted results $48,545 $31,244 $1.65 Weighted average common shares outstanding 18,919 Fiscal Year 2013 Income BeforeIncome Taxes Net Income Basic EPS GAAP results $29,014 $16,635 $0.84 Change in tax valuation allowances — 3,243 0.16 Change in deferred tax liability for indefinite reinvestment assertion — 390 0.02 Change in uncertain tax positions — (440) (0.02)Other tax credits — (1,020) (0.05)Loss on extinguishment of debt 1,102 716 0.03 Net restructuring charges 813 528 0.03 Net loss on sale or disposal of assets 243 158 0.01 Adjusted results $31,172 $20,210 $1.02 Weighted average common shares outstanding 19,909 28 Review of Fiscal Year 2015 Results of Operations Compared to Fiscal Year 2014 Consolidated Overview The components of Net income attributable to Unifi, Inc., each component as a percentage of net sales, and the percentage increase or decrease over theprior year amounts are presented in the table below. Fiscal years 2015 and 2014 both are comprised of 52 weeks. For the Fiscal Years Ended June 28, 2015 June 29, 2014 % of NetSales % of NetSales % Change Net sales $687,121 100.0 $687,902 100.0 (0.1)Cost of sales 596,416 86.8 604,640 87.9 (1.4)Gross profit 90,705 13.2 83,262 12.1 8.9 Selling, general and administrative expenses 49,672 7.2 46,203 6.7 7.5 Provision for bad debts 947 0.2 287 — 230.0 Other operating expense, net 1,600 0.2 5,289 0.8 (69.7) Operating income 38,486 5.6 31,483 4.6 22.2 Interest expense, net 3,109 0.4 2,539 0.4 22.4 Loss on extinguishment of debt 1,040 0.2 — — nm Other non-operating expense — — 126 — nm Earnings from unconsolidated affiliates (19,475) (2.8) (19,063) (2.8) 2.2 Income before income taxes 53,812 7.8 47,881 7.0 12.4 Provision for income taxes 13,346 1.9 20,161 3.0 (33.8)Net income including non-controlling interest 40,466 5.9 27,720 4.0 46.0 Less: net (loss) attributable to non-controlling interest (1,685) (0.2) (1,103) (0.2) 52.8 Net income attributable to Unifi, Inc. $42,151 6.1 $28,823 4.2 46.2 nm – change is not meaningful Consolidated Net Sales Consolidated net sales for fiscal year 2015 decreased by $781, or 0.1%, as compared to the prior fiscal year. The slight decrease was attributable to (i)unfavorable currency translation due to the devaluation of the Brazilian Real versus the U.S. Dollar and (ii) lower average pricing in the Polyester andNylon Segments, driven by a reduction in raw material costs and a decline in sales volumes for certain product lines, partially offset by higher salesvolumes for (a) regional texturing and (b) the Nylon and International Segments, in addition to revenues from ancillary activities categorized under AllOther. Consolidated sales volumes increased 2.2% from the prior fiscal year as volumes increased 7.6% in the Nylon Segment, driven by textured polyester yarnand covered nylon yarn, along with a volume increase of 9.2% in the International Segment, driven by higher manufactured product volume in Brazil andthe success of new programs in China. Polyester Segment sales volumes declined 1.7% as the Company shifted certain production volumes from externalsales to internal consumption. This decrease was partially offset by increased textured polyester sales volumes (driven by higher demand for our PVAyarns, primarily REPREVE brand products), coupled with growth in the NAFTA and CAFTA regions. Consolidated sales pricing declined 2.3%, primarily due to (i) the devaluation of the Brazilian Real versus the U.S. Dollar, (ii) lower pricing in thePolyester Segment due to lower raw material costs and (iii) lower pricing in the Nylon Segment (driven by a higher proportion of textured polyester),partially offset by pricing improvements attributable to continued success of PVA programs. Consolidated Gross Profit Gross profit for fiscal year 2015 increased by $7,443, or 8.9%, as compared to the prior fiscal year, reflecting increases in all three reportable segments.Gross profit improvement for the Polyester Segment was primarily driven by higher margins attributable to increased demand for our PVA yarns, coupledwith periods of declining raw material costs. Gross profit increased for the Nylon Segment due to increased sales volume for textured and coveredproducts as a result of strong demand 29® from the NAFTA and CAFTA regions, partially offset by lower margins due to a shift in sales mix driven by certain sales programs transitioning from theNylon Segment to the International Segment. Increased gross profit for the International Segment reflects (i) higher sales volumes for Brazil due tofavorable pricing conditions for manufactured product, (ii) higher sales volumes in China due to the transition of certain PVA programs from the NylonSegment and (iii) improved margins and lower converting costs in Brazil on a local currency basis, partially offset by unfavorable currency translationdue to the devaluation of the Brazilian Real against the U.S. Dollar. Unfavorable currency translation, in the International Segment, negatively impactedgross profit by $1,606. Further details regarding the changes in net sales and gross profit from the prior fiscal year follow. Polyester Segment The components of segment gross profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior year amountsfor the Polyester Segment are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 % of NetSales % of NetSales %Change Net sales $377,281 100.0 $389,172 100.0 (3.1)Cost of sales 328,575 87.1 342,393 88.0 (4.0)Gross profit $48,706 12.9 $46,779 12.0 4.1 The change in net sales from fiscal year 2014 to fiscal year 2015 for the Polyester Segment is as follows: Net sales for the fiscal year ended June 29, 2014 $389,172 Decrease in sales volumes (6,740)Decrease in average selling price (5,151)Net sales for the fiscal year ended June 28, 2015 $377,281 The overall decrease in net sales is primarily attributable to (i) lower sales volumes for POY, Chip and dyed yarn and a lower average denier and (ii) alower average selling price for several product lines related to lower raw material costs, partially offset by mix related improvements. These effects werepartially offset by (i) improved sales of textured polyester yarn due to continued growth in the NAFTA and CAFTA regions and greater demand for theCompany’s PVA yarns and (ii) $612 of incremental sales associated with acquiring a draw winding business in December 2013. The average denier of ourproduct mix continues to decrease as demand for finer or lighter weight yarns, driven by consumer preference in performance apparel, continues to grow. The change in gross profit from fiscal year 2014 to fiscal year 2015 for the Polyester Segment is as follows: Gross profit for the fiscal year ended June 29, 2014 $46,779 Improvements in underlying gross margins 4,050 Decrease in sales volumes (811)Increase in depreciation expense (1,312)Gross profit for the fiscal year ended June 28, 2015 $48,706 The increase in gross profit was primarily a result of (i) higher underlying gross margins driven by (a) a higher mix of PVA yarns due to increased demandand (b) declining raw material costs (average polyester raw material pricing decreased approximately 14% as compared to the prior fiscal year), partiallyoffset by (ii) a decrease in sales volumes driven by the factors described in the net sales analysis above, and (iii) higher depreciation expense for theREPREVE Recycling Center, the addition of texturing machines and other projects driving expanded flexibility for textured yarn, especially PVAyarns. Polyester Segment net sales and gross profit as a percentage of total consolidated amounts were 54.9% and 53.7% for fiscal year 2015, compared to 56.6%and 56.2% for fiscal year 2014, respectively. 30® Nylon Segment The components of segment gross profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior year amountsfor the Nylon Segment are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 % of NetSales % of NetSales %Change Net sales $168,570 100.0 $163,824 100.0 2.9 Cost of sales 147,531 87.5 143,649 87.7 2.7 Gross profit $21,039 12.5 $20,175 12.3 4.3 The change in net sales from fiscal year 2014 to fiscal year 2015 for the Nylon Segment is as follows: Net sales for the fiscal year ended June 29, 2014 $163,824 Increase in sales volumes 12,418 Decrease in pricing and change in sales mix (7,672)Net sales for the fiscal year ended June 28, 2015 $168,570 The increase in net sales is attributable to (i) increased volumes for textured yarn (including polyester) and nylon covered yarn due to increased demandin the NAFTA and CAFTA regions, partially offset by (ii) a decrease in pricing due to (a) changes in sales mix as a result of the transitioning of certainPVA sales programs from the U.S. to China, (b) lower raw material costs and (c) a higher portion of textured polyester sales volume compared to the prioryear. The change in gross profit from fiscal year 2014 to fiscal year 2015 for the Nylon Segment is as follows: Gross profit for the fiscal year ended June 29, 2014 $20,175 Increase in sales volumes 1,530 Decrease in depreciation expense 204 Decrease in underlying gross margins (870)Gross profit for the fiscal year ended June 28, 2015 $21,039 The increase in gross profit was primarily due to (i) an increase in sales volumes driven by the factors in the above net sales analysis and (ii) lowerdepreciation expense (due to certain assets becoming fully depreciated during fiscal year 2015), partially offset by (iii) lower underlying gross marginsrelated to a shift in sales mix and (iv) the transitioning of certain PVA sales programs from the U.S. to China. Lower underlying gross margins werepartially offset by the benefit of lower raw material costs. Nylon Segment net sales and gross profit as a percentage of total consolidated amounts were 24.5% and 23.2% for fiscal year 2015, compared to 23.8%and 24.2% for fiscal year 2014, respectively. International Segment The components of segment gross profit, each component as a percentage of net sales, and the percentage increase or decrease over the prior year amountsfor the International Segment are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 % of NetSales % of NetSales %Change Net sales $134,992 100.0 $134,906 100.0 0.1 Cost of sales 113,556 84.1 118,598 87.9 (4.3)Gross profit $21,436 15.9 $16,308 12.1 31.4 31 The change in net sales from fiscal year 2014 to fiscal year 2015 for the International Segment is as follows: Net sales for the fiscal year ended June 29, 2014 $134,906 Increase in sales volumes 11,469 Improvement in pricing and change in sales mix 4,097 Unfavorable currency translation effects (15,480)Net sales for the fiscal year ended June 28, 2015 $134,992 The increase in net sales is primarily attributable to a 9.2% increase in sales volumes, reflecting volume increases for both Brazil and China. Brazil’svolumes increased due to (i) growth in PVA sales of air covered and solution dyed polyester yarns for apparel and automotive end-uses, respectively and(ii) volumes captured as a result of favorable pricing conditions, as devaluation of the local currency made locally manufactured product a more attractivealternative to U.S. Dollar-based competitive imports. China’s sales volumes increased 36.8%, benefiting from several new sales programs, including thetransitioning of certain PVA sales programs from the Company’s U.S. operations. The benefit of increased sales volumes and improved pricing and salesmix was partially offset by unfavorable currency translation effects primarily due to the devaluation of the Brazilian Real against the U.S. Dollar (using aweighted average exchange rate of 2.65 Real/U.S. Dollar versus 2.29). China’s average sales price increased 12.6% due to higher volumes of PVAproducts. The change in gross profit from fiscal year 2014 to fiscal year 2015 for the International Segment is as follows: Gross profit for the fiscal year ended June 29, 2014 $16,308 Improvements in underlying operating margins 3,253 Increase in sales volumes 1,502 Decrease in depreciation expense 1,034 Decrease in net utility costs 945 Unfavorable currency translation effects (1,606)Gross profit for the fiscal year ended June 28, 2015 $21,436 The increase in gross profit was attributable to (i) an increase in sales volumes for both Brazil and China, driven by the factors described in the net salesanalysis above, (ii) improved margins on certain PVA products for China, along with improved unit conversion margin in Brazil on a local currency basisdue to a higher proportion of manufactured product in the sales mix and lower raw material costs, (iii) lower manufacturing costs in Brazil, primarily dueto lower net utility costs (which are not expected to continue into fiscal year 2016) and (iv) lower depreciation expense (due to certain assets becomingfully depreciated during fiscal year 2015). This increase was partially offset by unfavorable currency translation effects due to the devaluation of theBrazilian Real against the U.S. Dollar. International Segment net sales and gross profit as a percentage of total consolidated amounts were 19.6% and 23.6% for fiscal year 2015, compared to19.6% and 19.6% for fiscal year 2014, respectively. Consolidated Selling, General & Administrative Expenses The change in selling, general and administrative (“SG&A”) expenses from fiscal year 2014 to fiscal year 2015 is as follows: Selling, general and administrative expenses for the fiscal year ended June 29, 2014 $46,203 Increase for Renewables 1,396 Increase in consumer marketing and branding expenses 1,022 Increase in professional fees 1,255 Increase in non-cash compensation 458 Decrease in depreciation and amortization expenses (142)Other, net (520)Selling, general and administrative expenses for the fiscal year ended June 28, 2015 $49,672 Total SG&A expenses were higher versus the prior year period, with changes among various components, including (as quantified in the table above): (i)an increase in expenses recorded for Renewables classified as SG&A (in the prior year, all expenses for Renewables were recorded to other operatingexpense, net), (ii) an increase in consumer marketing and branding expenses resulting from new sponsorship agreements involving Marvel UniverseLIVE!, the National Football League’s Detroit Lions, the University of North Carolina at Chapel Hill and the North Face Endurance Challenge Series,which exceeded the prior year period expenses related to the Company’s sponsorship of the ESPN X Games Aspen 2014, (iii) an increase in professionalfees related to out-sourced auxiliary services for tax and legal services (not expected to continue in 32 future periods) and (iv) an increase in non-cash compensation primarily due to an increase in (a) the number of equity awards granted and (b) the fairvalue of equity awards granted as a result of the higher price of the Company’s common stock on the respective grant dates. These increases were partiallyoffset by a decrease in depreciation and amortization expenses due to lower amortization of customer lists and a net decrease among other items,including the impact of currency translation, employee costs, community relations, insurance, and office and facilities expenses. Consolidated Provision for Bad Debts Provision for bad debts increased from $287 for fiscal year 2014 to $947 for fiscal year 2015. The increase is primarily attributable to the net write-off of acustomer receivable for $498 originating in the Company’s Brazilian operations, for which recovery has been deemed unlikely. Consolidated Other Operating Expense, Net Other operating expense, net decreased from $5,289 for fiscal year 2014 to $1,600 for fiscal year 2015, and reflected the following components: For the Fiscal Years Ended June 28, 2015 June 29, 2014 Net loss on sale or disposal of assets $778 $475 Foreign currency transaction losses 448 504 Operating expenses for Renewables — 2,749 Restructuring charges, net — 1,273 Other, net 374 288 Other operating expense, net $1,600 $5,289 During fiscal year 2015, Renewables recorded a loss on disposal of assets of $1,322 (before non-controlling interest) relating to certain biomassfoundation and feedstock which would not be used in the future. Also in fiscal year 2015, the Company recognized a gain on sale of assets of $630relating to the sale of certain land and building assets historically utilized for warehousing in the Polyester Segment. The operating expenses for Renewables in fiscal year 2015 were charged to cost of sales and SG&A expenses for $2,396 and $1,396, respectively. In theprior year, all operating expenses for Renewables of $2,749 (net of $144 of revenues) were charged to other operating expense, net. Restructuring charges of $1,273 were recorded in fiscal year 2014 for certain (i) equipment relocation and reinstallation costs and (ii) severance charges inconnection with a former executive officer. There were no restructuring charges recorded in fiscal year 2015. Consolidated Interest Expense, Net Interest expense, net increased from $2,539 for fiscal year 2014 to $3,109 for fiscal year 2015, and reflected the following components: For the Fiscal Years Ended June 28, 2015 June 29, 2014 Interest on ABL Facility $3,290 $3,292 Other 273 192 Subtotal of interest on debt obligations 3,563 3,484 Amortization of debt financing fees 505 424 Mark-to-market adjustment for interest rate swap (83) 39 Reclassification adjustment for interest rate swap 231 554 Interest capitalized to property, plant and equipment, net (191) (172)Subtotal of other components of interest expense 462 845 Total interest expense 4,025 4,329 Interest income (916) (1,790)Interest expense, net $3,109 $2,539 33 Although comparatively flat, interest on debt obligations was impacted by (i) an increase in the annual average debt balance from $97,566 for fiscal year2014 to $110,640 for fiscal year 2015, while (ii) the annual weighted average interest rate declined from 3.4% to 3.1%. The $13,074 increase in theaverage outstanding debt balance was primarily a result of new capital leases recognized in fiscal year 2015, along with incremental capital expenditures.The annual weighted average interest rate decline is primarily due to favorable amended terms of the Company’s credit facility. Interest income in each period includes earnings recognized on cash equivalents held globally. Interest income in fiscal year 2014 also includes $1,084of interest received related to the settlement of a judicial claim involving the Company’s Brazilian subsidiary and $141 of interest received on the returnof a deposit with a domestic utility company. Loss on Extinguishment of Debt The Company’s amendment of its credit facility during fiscal year 2015 established substantially different terms for the ABL Term Loan portion of thefacility (including the replacement of an existing lender), and led the Company to record a loss on extinguishment of debt of $1,040 for the write-off ofcertain debt financing fees related to the previous credit agreement. Consolidated Earnings from Unconsolidated Affiliates For fiscal year 2015, the Company generated $53,812 of income before income taxes, of which $19,475 was generated from its investments inunconsolidated affiliates. For fiscal year 2014, the Company generated $47,881 of income before income taxes, of which $19,063 was generated from itsinvestments in unconsolidated affiliates. For the Company’s fiscal year 2015, PAL’s corresponding fiscal period consisted of 53 weeks. The Company’s 34% share of PAL’s earnings decreased from $17,846 in fiscal year 2014 to $17,403 in fiscal year 2015, primarily attributable to lowerearnings recognized under the Farm Bill’s economic adjustment assistance program (of approximately $6,100 for PAL, which equates to approximately$2,100 for the Company) in the current year as compared to the prior year and lower operating margins. The decrease is partially offset by two bargainpurchase gains (combined total of approximately $14,000 for PAL, which equates to approximately $4,700 for the Company) from PAL’s acquisition of(i) a yarn manufacturer based in Mexico for which PAL previously held a 50% ownership interest and (ii) two cotton spinning facilities in the U.S. The remaining change in earnings from unconsolidated affiliates relates to higher combined operating results, due to improved margins, for theCompany’s two nylon extrusion joint ventures that supply POY to the Company’s Nylon Segment. Consolidated Income Taxes The components of income before income taxes consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 United States $38,341 $38,816 Foreign 15,471 9,065 Income before income taxes $53,812 $47,881 The components of provision for income taxes consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 Federal $3,979 $14,646 State 1,119 1,935 Foreign 8,248 3,580 Provision for income taxes $13,346 $20,161 34 The provision for income taxes as reconciled from the federal statutory tax rate to the effective tax rate is as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 Federal statutory tax rate 35.0% 35.0%State income taxes, net of federal tax benefit 1.8 2.8 Foreign income taxed at different rates (3.2) (1.2)Settlement of certain intercompany foreign currency transactions 5.6 — Repatriation of foreign earnings and withholding taxes (0.3) 0.4 Indefinite reinvestment assertion (14.2) 0.5 Change in valuation allowance (5.6) 4.0 Domestic production activities deduction (1.3) (2.3)Renewable energy credits (1.9) — Research and other credits (0.4) (0.3)Change in uncertain tax positions 5.4 (0.5)Nondeductible expenses and other 3.9 3.7 Effective tax rate 24.8% 42.1% The effective income tax rate for fiscal year 2015 was primarily impacted by, among other things, (i) a decrease in the valuation allowance reflecting therecognition of lower taxable income versus book income for the Company’s investment in PAL (for which the Company maintains a full valuationallowance), which was partially offset by an increase in the valuation allowance for net operating losses, including Renewables, for which no tax benefitcould be recognized; (ii) the change in the Company’s indefinite reinvestment assertion, which provides for foreign earnings permanently reinvested atJune 28, 2015; (iii) a lower overall effective tax rate for the Company’s foreign earnings (reflecting free-trade zone sales in El Salvador and lowerstatutory tax rates in both Brazil and China); (iv) net federal and state credits, including renewable energy credits; and (v) the domestic productionactivities deduction. These items were partially offset by (i) taxes associated with settlement of certain intercompany foreign currency transactions inBrazil; (ii) a change in uncertain tax positions related to certain intercompany foreign currency transactions in Brazil; and (iii) state and local taxes net ofthe assumed federal benefit. The Company believes activity related to the indefinite reinvestment assertion, combined tax impacts from certain intercompany foreign currencytransactions and renewable energy credits are unlikely to continue in future periods at such magnitude. However, identifying trends in the deferred taxvaluation allowance and other components of the provision for income taxes is impracticable. The effective income tax rate for fiscal year 2014 was primarily impacted by, among other things, (i) state and local taxes net of the assumed federalbenefit; (ii) an increase in the valuation allowance reflecting the recognition of higher taxable versus book income for PAL (for which the Companymaintains a full valuation allowance); (iii) foreign dividends taxed in the U.S.; and (iv) losses for which no tax benefit could be recognized, including aloss for Renewables. These items were partially offset by the domestic production activities deduction. Consolidated Net Income Attributable to Unifi, Inc. Net income attributable to Unifi, Inc. for fiscal year 2015 was $42,151, or $2.32 per basic share, compared to $28,823, or $1.52 per basic share, for fiscalyear 2014. As discussed earlier, the increase is primarily attributable to higher gross profits and a lower effective tax rate, partially offset by higher SG&Aexpenses. Consolidated Adjusted EBITDA Adjusted EBITDA increased to $63,702 in fiscal year 2015 from $57,596 in fiscal year 2014. As discussed earlier, the improvement in cash gross profitwas the primary driver for the increase. 35 Review of Fiscal Year 2014 Results of Operations Compared to Fiscal Year 2013 Consolidated Overview The components of net income attributable to Unifi, Inc., each component as a percentage of net sales, and the percentage increase or decrease over theprior year amounts are presented in the table below. Fiscal year 2014 contained 52 weeks, while fiscal year 2013 contained 53 weeks. For the Fiscal Years Ended June 29, 2014 June 30, 2013 % of NetSales % of Net Sales %Change Net sales $687,902 100.0 $713,962 100.0 (3.7)Cost of sales 604,640 87.9 640,858 89.8 (5.7)Gross profit 83,262 12.1 73,104 10.2 13.9 Selling, general and administrative expenses 46,203 6.7 47,386 6.6 (2.5)Provision (benefit) for bad debts 287 — (154) — (286.4)Other operating expense, net 5,289 0.8 3,409 0.5 55.1 Operating income 31,483 4.6 22,463 3.1 40.2 Interest expense, net 2,539 0.4 3,791 0.5 (33.0)Loss on extinguishment of debt — — 1,102 0.1 nm Other non-operating expense 126 — — — nm Earnings from unconsolidated affiliates (19,063) (2.8) (11,444) (1.6) 66.6 Income before income taxes 47,881 7.0 29,014 4.1 65.0 Provision for income taxes 20,161 3.0 13,344 1.9 51.1 Net income including non-controlling interest 27,720 4.0 15,670 2.2 76.9 Less: net (loss) attributable to non-controlling interest (1,103) (0.2) (965) (0.1) 14.3 Net income attributable to Unifi, Inc. $28,823 4.2 $16,635 2.3 73.3 nm – change is not meaningful Consolidated Net Sales Net sales for fiscal year 2014 decreased by $26,060, or 3.7%, as compared to the prior fiscal year. The decrease was driven by (i) the impact of theadditional week of sales included in fiscal year 2013 for operations in the U.S. and El Salvador and (ii) a decline in the International Segment due tocompetition from low-priced Asian imports, weaker market conditions in China and unfavorable currency translation effects. The decrease was partiallyoffset by improvements in pricing and continued growth for the Company’s PVA products. Consolidated sales volume decreased by 3.7% due to lower sales volumes in all reportable segments. Polyester Segment volumes declined 4.0% due toone less week in fiscal 2014, a finer denier sales mix and a shift away from low-margin commodity yarns. Nylon Segment volumes declined only 1.6% asthe success of new PVA programs helped to offset the impact of one less sales week. International Segment volumes declined 3.7% due to soft marketconditions for the Asian market, driving lower volumes in China, and cheaper yarn imports creating competitive challenges in Brazil. Consolidated sales pricing in fiscal year 2014 was unchanged from the prior year due primarily to the success of PVA programs and higher-marginproduct sales, offset by unfavorable currency translation effects in the International Segment. Pricing improvements of 1.6% and 1.4% in the Polyesterand Nylon Segments, respectively, were related to mix enrichment efforts and increased PVA product sales. International Segment pricing was primarilyimpacted by unfavorable currency translation effects as a result of the weakening of the Brazilian Real against the U.S. dollar. Consolidated Gross Profit Gross profit for fiscal year 2014 increased by $10,158, or 13.9%, as compared to the prior fiscal year. The overall changes in gross profit were due to thefluctuation in sales volumes and pricing described above, lower average polyester raw material costs and a decrease in domestic depreciation expense,partially offset by one less sales week for certain of the Company’s operations and the negative impact of currency translation in the InternationalSegment. 36 In the Polyester and Nylon Segments, depreciation expense in fiscal year 2014 decreased by a total of $6,401 as compared to the prior fiscal year due tothe timing at which certain assets in each segment became fully depreciated. Unfavorable currency translation, primarily in the International Segment,negatively impacted gross profit by $1,605. Further details regarding the changes in net sales and gross profit from the prior fiscal year follow. Polyester Segment The components of fiscal year 2014 segment gross profit, each component as a percentage of net sales, and the percentage increase or decrease over theprior year amounts for the Polyester Segment are as follows: For the Fiscal Years Ended June 29, 2014 June 30, 2013 % of NetSales % of NetSales %Change Net sales $389,172 100.0 $398,707 100.0 (2.4)Cost of sales 342,393 88.0 363,545 91.2 (5.8)Gross profit $46,779 12.0 $35,162 8.8 33.0 The change in net sales from fiscal year 2013 to fiscal year 2014 for the Polyester Segment is as follows: Net sales for the fiscal year ended June 30, 2013 $398,707 Decrease in sales volumes (10,753)Decrease due to an additional week of sales in fiscal year 2013 (7,826)Improved pricing and mix 5,381 Acquisition of draw winding business 3,663 Net sales for the fiscal year ended June 29, 2014 $389,172 The overall decrease in net sales is primarily attributable to a decrease in volumes due to a shift away from commodity-based to value-added productofferings, a finer denier sales mix and 53 weeks of sales in fiscal year 2013 compared to 52 weeks in fiscal year 2014. These decreases were offset by (i)improved pricing and mix as a result of the shift to higher-margin value-added products and (ii) the acquisition of a draw winding business in December2013. The draw winding acquisition increased the Company’s polyester production capacity and has allowed the Company to expand its presence intargeted industrial, belting, hose and thread markets by increasing its product offerings to include mid-tenacity flat yarns. The change in gross profit from fiscal year 2013 to fiscal year 2014 for the Polyester Segment is as follows: Gross profit for the fiscal year ended June 30, 2013 $35,162 Improvements in underlying operating margins 7,902 Decrease in depreciation expense 5,594 Decrease in sales volumes (942)Decrease due to an additional week of sales in fiscal year 2013 (937)Gross profit for the fiscal year ended June 29, 2014 $46,779 The increase in fiscal year 2014 gross profit was primarily a result of a higher-margin sales mix driven by PVA programs with a shift away fromcommodity-based products, lower average raw material costs and lower depreciation expense due to certain machinery and equipment within theYadkinville, North Carolina spinning facility becoming fully depreciated (predominantly equipment placed in service in 1998 with a depreciable life offifteen years). These favorable changes were partially offset by lower sales volumes resulting from the Segment’s shift towards more value-added products,along with the impact of one less sales week in fiscal year 2014 as compared to fiscal year 2013. Polyester Segment net sales and gross profit as a percentage of total consolidated amounts were 56.6% and 56.2% for fiscal year 2014, compared to 55.8%and 48.1% for fiscal year 2013, respectively. 37 Nylon Segment The components of fiscal year 2014 segment gross profit, each component as a percentage of net sales, and the percentage increase or decrease over theprior year amounts for the Nylon Segment are as follows: For the Fiscal Years Ended June 29, 2014 June 30, 2013 % of NetSales % of NetSales %Change Net sales $163,824 100.0 $164,085 100.0 (0.2)Cost of sales 143,649 87.7 146,033 89.0 (1.6)Gross profit $20,175 12.3 $18,052 11.0 11.8 The change in net sales from fiscal year 2013 to fiscal year 2014 for the Nylon Segment is as follows: Net sales for the fiscal year ended June 30, 2013 $164,085 Improved pricing and mix 2,617 Increase in sales volumes 784 Decrease due to an additional week of sales in fiscal year 2013 (3,279)Negative currency translation effects (383)Net sales for the fiscal year ended June 29, 2014 $163,824 The slight decrease in net sales is attributable to the impact of 53 weeks of sales in fiscal year 2013 compared to 52 weeks in fiscal year 2014 andnegative currency translation effects due to the weakening of the Colombian Peso against the U.S. Dollar, partially offset by an improved pricing andsales mix resulting from the benefits of new PVA products with higher sales pricing and an increase in sales volumes due to the success of PVA programs. The change in gross profit from fiscal year 2013 to fiscal year 2014 for the Nylon Segment is as follows: Gross profit for the fiscal year ended June 30, 2013 $18,052 Improvements in underlying operating margins 1,697 Decrease in depreciation expense 807 Increase in sales volumes 85 Decrease due to an additional week of sales in fiscal year 2013 (364)Negative currency translation effects (102)Gross profit for the fiscal year ended June 29, 2014 $20,175 The increase in gross profit was primarily due to improved margins associated with new PVA programs, a decrease in depreciation expense and anincrease in sales volumes when excluding the impact of the additional week of sales in fiscal year 2013. The decrease in depreciation expense is due tocertain assets within the Madison, North Carolina facility becoming fully depreciated. These favorable changes were partially offset by one less salesweek in fiscal year 2014 as compared to fiscal year 2013 and unfavorable currency translation effects. Nylon Segment net sales and gross profit as a percentage of total consolidated amounts were 23.8% and 24.2% for fiscal year 2014, compared to 23.0%and 24.7% for fiscal year 2013, respectively. International Segment The components of fiscal year 2014 segment gross profit, each component as a percentage of net sales, and the percentage increase or decrease over theprior year amounts for the International Segment are as follows: For the Fiscal Years Ended June 29, 2014 June 30, 2013 % of NetSales % of NetSales %Change Net sales $134,906 100.0 $151,170 100.0 (10.8)Cost of sales 118,598 87.9 131,280 86.8 (9.7)Gross profit $16,308 12.1 $19,890 13.2 (18.0) 38 The change in net sales from fiscal year 2013 to fiscal year 2014 for the International Segment is as follows: Net sales for the fiscal year ended June 30, 2013 $151,170 Negative currency translation effects (12,799)Decrease in sales volumes (5,113)Improved pricing and mix 1,648 Net sales for the fiscal year ended June 29, 2014 $134,906 The overall decrease in net sales is primarily attributable to the unfavorable devaluation of the Brazilian Real versus the U.S. Dollar of approximately12% and a decrease in sales volumes for China, which were partially offset by an improvement in pricing in Brazil (excluding the effects of currencytranslation, net sales in Brazil increased by 2% on a local currency basis). Brazil operated under challenging conditions during fiscal year 2014, as excesscapacity of yarn manufacturers in Asia led to increased competition and pricing pressures from cheaper imported polyester textured yarns. Softer marketconditions led to the sales volume decline in China. The change in gross profit from fiscal year 2013 to fiscal year 2014 for the International Segment is as follows: Gross profit for the fiscal year ended June 30, 2013 $19,890 Negative currency translation effects (1,503)Declines in underlying operating margins (1,400)Decrease in sales volumes (679)Gross profit for the fiscal year ended June 29, 2014 $16,308 Lower fiscal year 2014 gross profit results for the Company’s Brazilian subsidiary can be attributed to the weakened Brazilian Real versus the U.S. dollar,pricing pressures from low-priced yarn imports and the reduction of certain tax incentives for local producers. Competitive pricing pressures, lowoperating rates and soft market conditions in China also drove a gross profit decline for the Company’s Chinese subsidiary. Although net sales increased$1,648 due to improved sales pricing and mix, a corresponding increase in gross profit was not realized due to declines in underlying operating margins. International Segment net sales and gross profit as a percentage of total consolidated amounts were 19.6% and 19.6% for fiscal year 2014, compared to21.2% and 27.2% for fiscal year 2013, respectively. Consolidated Selling, General & Administrative Expenses The change in selling, general and administrative (“SG&A”) expenses from fiscal year 2013 to fiscal year 2014 is as follows: Selling, general and administrative expenses for the fiscal year ended June 30, 2013 $47,386 Decrease in one-time consumer marketing and branding expenses (771)Decrease due to one less week in fiscal year 2014 (680)Decrease due to currency translation effects (644)Decrease in sales commissions and service fees (360)Increase in employee costs 644 Increase in non-cash compensation 403 Increase in depreciation and amortization expenses 99 Other 126 Selling, general and administrative expenses for the fiscal year ended June 29, 2014 $46,203 Total fiscal year 2014 SG&A expenses were slightly lower versus the prior year, with offsetting changes among various components, including (asquantified in the table above): (i) a decrease in various advertising and promotional expenses due to the timing of certain events, (ii) decreases due tocurrency translation effects primarily attributable to the weakening of the Brazilian Real against the U.S. Dollar, (iii) an additional week in fiscal year2013, and (iv) a decrease in sales commission and service fees primarily due to the termination of a sales service agreement with Dillon Yarn Corporation,which were partially offset by (v) an increase in employee costs attributable to annual wage increases, higher variable compensation expenses andincreasing fringe benefit costs and (vi) an increase in non-cash compensation primarily due to an increase in the fair value of awards granted inconnection with the higher price of the Company’s common stock on the respective grant dates. 39 Consolidated Provision (Benefit) for Bad Debts The provision for bad debt expense was $287 for fiscal year 2014, as compared to a benefit of $154 for fiscal year 2013. In fiscal year 2013, the Companyreceived a $383 recovery of accounts previously written off. Consolidated Other Operating Expense, Net Other operating expense, net increased $1,880 from $3,409 for fiscal year 2013 to $5,289 for fiscal year 2014. The increase is related to (i) a year-over-year increase of $636 for foreign currency transaction losses, primarily attributable to the devaluation of the Brazilian Real, (ii) increased operatingexpenses for Renewables of $353 due to the expansion of Miscanthus crop fields, bedding trials conducted at poultry houses and increased depreciationand amortization expense, (iii) $356 for the relocation and reinstallation of certain manufacturing equipment within the Polyester Segment and (iv) anincrease of $535 for other charges, including losses on the sale or disposal of assets and accretion expense applicable to a contingent considerationliability. The components of other operating expense are further described in “Note 21. Other Operating Expense, Net” to the Consolidated Financial Statementsincluded in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Consolidated Interest Expense, Net Interest expense, net decreased from $3,791 for fiscal year 2013 to $2,539 for fiscal year 2014, and consists of the following components: For the Fiscal Years Ended June 29, 2014 June 30, 2013 Interest on ABL Facility $3,292 $3,673 Interest on a prior term loan — 722 Other 192 107 Subtotal 3,484 4,502 Amortization of debt financing fees 424 632 Mark-to-market adjustment for interest rate swap 39 (931)Reclassification adjustment for interest rate swap 554 322 Interest capitalized to property, plant and equipment, net (172) (36)Subtotal 845 (13)Total interest expense 4,329 4,489 Interest income (1,790) (698)Interest expense, net $2,539 $3,791 The decline in fiscal year 2014 total interest expense was due to a lower average outstanding debt balance of $99,183 and a lower weighted averageinterest rate of 3.1%, offset primarily by an unfavorable year-over-year change in the mark-to-market adjustment for an interest rate swap of $970. The$9,678 decrease in the average outstanding debt balance was primarily a result of increased payments on the Company’s revolving credit facility, offsetby the addition of capital lease obligations in fiscal year 2014. The weighted average interest rate for the Company’s outstanding debt obligationsdeclined from 3.8% for fiscal year 2013 to 3.1% for fiscal year 2014 primarily as a result of a loan repayment during fiscal year 2013. The increase in interest income in fiscal year 2014 relates primarily to $1,084 of interest received related to the settlement of a judicial claim involvingthe Company’s Brazilian subsidiary and $141 of interest received on the return of a deposit with a domestic utility company. Consolidated Earnings from Unconsolidated Affiliates For fiscal year 2014, the Company generated $47,881 of income before income taxes, of which $19,063 was generated from its investments inunconsolidated affiliates. For fiscal year 2013, the Company generated $29,014 of income before income taxes, of which $11,444 was generated from itsinvestments in unconsolidated affiliates. The Company’s 34% share of PAL’s earnings increased from $9,481 in fiscal year 2013 to $17,846 in fiscal year2014 primarily attributable to higher amounts of earnings recognized under the Farm Bill’s economic adjustment assistance program and improvedoperating income. The remaining change in earnings from unconsolidated affiliates relates to lower operating results for the Company’s two nylonextrusion joint ventures, which reflect decreased earnings driven by lower gross margins. 40 Consolidated Income Taxes The components of income before income taxes consist of the following: For the Fiscal Years Ended June 29, 2014 June 30, 2013 United States $38,816 $16,900 Foreign 9,065 12,114 Income before income taxes $47,881 $29,014 The components of provision for income taxes consist of the following: For the Fiscal Years Ended June 29, 2014 June 30, 2013 Federal $14,646 $9,485 State 1,935 661 Foreign 3,580 3,198 Provision for income taxes $20,161 $13,344 The Company’s income tax provision for fiscal year 2014 and fiscal year 2013 resulted in tax expense of $20,161 and $13,344, with an effective tax rateof 42.1% and 46.0%, respectively. For both periods, the effective income tax rate is different than the U.S. statutory rate primarily due to foreigndividends taxed in the U.S. and increases in the Company’s valuation allowance for certain deferred tax assets. During fiscal year 2014, the Company’s valuation allowance increased by $1,925. This increase relates to the timing of taxable income versus bookincome for PAL and NOLs for Renewables that were deemed unrealizable. During fiscal year 2013, the Company’s valuation allowance increased by $2,779. This increase relates to the timing of taxable income versus bookincome for PAL, partially offset by a decrease of $649 related to NOL carryforwards for the Company’s Colombian subsidiary. Consolidated Net Income Attributable to Unifi, Inc. Even though fiscal year 2014 had one less week, net income attributable to Unifi, Inc. for fiscal year 2014 was $28,823, or $1.52 per basic share,compared to $16,635, or $0.84 per basic share, for the prior fiscal year period. As discussed above, the Company’s increased profitability was primarilydue to higher gross profit in the Polyester and Nylon Segments, lower SG&A expenses, improved earnings from unconsolidated affiliates, and lower netinterest expense, partially offset by higher other operating expenses and increased income taxes. Consolidated Adjusted EBITDA Although fiscal year 2014 had one less week, Adjusted EBITDA increased $4,946 to $57,596 versus $52,650 for fiscal year 2013. As discussed above, theimprovement in cash gross profit was the primary driver for the increase. Liquidity and Capital Resources The Company’s primary capital requirements are for working capital, capital expenditures, debt service and stock repurchases. The Company’s primarysources of capital are cash generated from operations and borrowings available under the ABL Revolver of its credit facility. For fiscal year 2015, cashgenerated from operations was $38,903, and at June 28, 2015, excess availability under the ABL Revolver was $75,933. 41 As of June 28, 2015, all of the Company’s debt obligations, with the exception of a term loan from one of the Company’s unconsolidated affiliates, wereguaranteed by its domestic subsidiaries, while a substantial portion of the Company’s cash and cash equivalents were held by its foreign subsidiaries.Cash and cash equivalents held by our foreign subsidiaries may not be presently available to fund the Company’s domestic capital requirements,including its domestic debt obligations. The Company employs a variety of tax planning and financing strategies to ensure that its worldwide cash isavailable in the locations where it is needed. For the Company’s U.S., Brazilian and other foreign subsidiaries, the following table presents a summary ofcash and cash equivalents, liquidity, working capital and total debt obligations as of June 28, 2015: U.S. Brazil All Others Total Cash and cash equivalents $12 $3,061 $6,940 $10,013 Borrowings available under ABL Revolver 75,933 — — 75,933 Liquidity $75,945 $3,061 $6,940 $85,946 Working capital $81,335 $37,341 $21,947 $140,623 Total debt obligations $102,860 $— $1,250 $104,110 During the fourth quarter of fiscal year 2015, the Company completed a reorganization of certain foreign subsidiaries that changed the historicalownership structure. As of June 28, 2015, $57,531 of earnings and profits of the Company’s foreign subsidiaries are deemed to be permanently reinvested,including all cash and cash equivalents on-hand at the Company’s foreign operations. In accordance with ASC 740-30-25-17, the Company has nocurrent or deferred tax liabilities recorded (which considers any applicable U.S. federal income taxes and foreign withholding taxes) based on thisindefinite reinvestment assertion. Nevertheless, in future periods, the Company will continue to assess the existing circumstances, including any changes in tax laws, and reevaluate thenecessity for any deferred tax liability. Computation of the potential tax liabilities associated with indefinitely reinvested earnings is not practicable. Debt Obligations On March 26, 2015, the Company and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated Credit Agreement (assubsequently amended on June 26, 2015, the “Amended Credit Agreement”) for a $200,000 senior secured credit facility (the “ABL Facility”) with asyndicate of lenders. The ABL Facility consists of a $100,000 revolving credit facility (the “ABL Revolver”) and an $84,375 term loan that can be resetup to a maximum amount of $100,000 if certain future conditions are met (the “ABL Term Loan”). The ABL Facility has a maturity date of March 26,2020. The Amended Credit Agreement replaced a previous senior secured credit facility dated May 24, 2012 with a similar syndicate of lenders, which, aftermultiple amendments, would have matured on March 28, 2019 and consisted of a $100,000 revolving credit facility and a $90,000 term loan. As usedherein, the terms “ABL Facility,” “ABL Revolver” and “ABL Term Loan” shall mean the senior secured credit facility, the revolving credit facility or theterm loan, respectively, under the Amended Credit Agreement or the previous senior secured credit facility, as applicable. The Amended Credit Agreement includes representations and warranties made by the Loan Parties, affirmative and negative covenants and events ofdefault that are usual and customary for financings of this type. In addition, the ABL Facility contains restrictions on certain payments and investments,including restrictions on the payment of dividends and share repurchases. Subject to certain provisions, the ABL Term Loan may be prepaid at par, inwhole or in part, at any time before the maturity date, at the Company’s discretion. ABL Facility borrowings bear interest at variable rates determined based on a margin applied to a benchmark rate. There is also a monthly unused line feeunder the ABL Revolver of 0.25%. The ABL Term Loan is currently subject to quarterly amortizing payments of $2,250. Additionally, principal increases are available at the Company’sdiscretion, resetting the loan balance up to a maximum amount of $100,000, once per fiscal year upon satisfaction of certain conditions, beginningOctober 1, 2015. As of June 28, 2015, the Company was in compliance with all financial covenants in the Amended Credit Agreement; the excess availability under theABL Revolver was $75,933; the consolidated leverage ratio was 1.6 to 1.0; and the fixed charge coverage ratio was 3.0 to 1.0. 42 The following table presents a summary of the total balances outstanding for the Company’s debt obligations, their scheduled maturity dates and theweighted average interest rate for borrowings as well as the applicable current portion of long-term debt: Weighted AverageInterest Rate as ofJune 28, 2015 (1) Principal Amounts as of ScheduledMaturity Date June 28, 2015 June 29, 2014 ABL Revolver March 2020 1.7% $5,000 $26,000 ABL Term Loan March 2020 2.2% 82,125 68,000 Term loan from unconsolidated affiliate August 2016 3.0% 1,250 1,250 Capital lease obligations (2) (3) 15,735 4,238 Total debt 104,110 99,488 Current portion of long-term debt (12,385) (7,215)Total long-term debt $91,725 $92,273 (1)The weighted average interest rate as of June 28, 2015 for the ABL Term Loan includes the effects of an interest rate swap with a notionalbalance of $50,000. (2)Scheduled maturity dates for capital lease obligations range from January 2017 to November 2027. (3)Fixed interest rates for capital lease obligations range from 2.3% to 4.6%. In addition to payments in accordance with the scheduled maturities of debt required under its existing debt obligations, the Company may, from time totime, elect to repay additional amounts borrowed under the ABL Facility. Funds to make such repayments may come from the operating cash flows of thebusiness or other sources and will depend upon the Company’s strategy, prevailing market conditions, liquidity requirements, contractual restrictions andother factors. Scheduled Debt MaturitiesThe following table presents the scheduled maturities of the Company’s outstanding debt obligations for the following five fiscal years and thereafter: Scheduled Maturities on a Fiscal Year Basis 2016 2017 2018 2019 2020 Thereafter ABL Revolver $— $— $— $— $5,000 $— ABL Term Loan 9,000 9,000 9,000 9,000 46,125 — Capital lease obligations 3,385 3,463 3,301 3,200 1,652 734 Term loan from unconsolidated affiliate — 1,250 — — — — Total $12,385 $13,713 $12,301 $12,200 $52,777 $734 Further discussion of the terms and conditions of the Amended Credit Agreement and Company’s existing indebtedness is outlined in “Note 12. Long-Term Debt” to the Consolidated Financial Statements included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form10-K. Working Capital Working capital decreased from $150,925 as of June 29, 2014 to $140,623 as of June 28, 2015, while Adjusted Working Capital decreased from$137,444 to $133,973. 43 The following table presents the components of the Company’s Adjusted Working Capital and the reconciliation from Adjusted Working Capital toworking capital: June 28, 2015 June 29, 2014 June 30, 2013 Receivables, net $83,863 $93,925 $98,392 Inventories 111,615 113,370 110,667 Accounts payable (45,023) (51,364) (45,544)Accrued expenses (1) (16,482) (18,487) (18,383)Adjusted Working Capital 133,973 137,444 145,132 Cash and cash equivalents 10,013 15,907 8,755 Other current assets 9,856 8,025 9,016 Accrued interest (158) (102) (102)Other current liabilities (13,061) (10,349) (916)Working capital $140,623 $150,925 $161,885 (1)Excludes accrued interest The decrease in receivables, net is primarily attributable to the devaluation of the Brazilian Real versus the U.S. Dollar, and a comparative increase inreceipts in June 2015. The decrease in inventories represents lower polyester raw material costs and devaluation of the Brazilian Real versus the U.S.Dollar, partially offset by higher raw material units on-hand for the Polyester Segment to support growth in our texturing and recycling operations. Thedecrease in accounts payable reflects lower polyester raw material costs and the timing of vendor payments primarily with respect to capital expenditures(as accounts payable at June 29, 2014 was comprised of a larger portion of unpaid capital expenditures). The decrease in accrued expenses is primarilyattributable to a decline in amounts due under variable compensation arrangements. Working capital was further impacted by a decrease in cash and anincrease in other current liabilities, which reflects the short-term payments due under the ABL Facility. Partially offsetting such decreases is an increase inthe income tax receivable for the domestic operations, reflected in the increase in other current assets. Capital Projects In addition to its normal working capital requirements, the Company requires cash to fund capital expenditures. The Company invested approximately$35,000 in property, plant and equipment during fiscal year 2015, which is inclusive of approximately $10,000 of annual maintenance capitalexpenditures (expenditures that extend the useful life of existing assets and/or increase the capabilities or production capacity of the assets). Theadditional assets from these capital projects consist primarily of machinery and transportation equipment. The Company expects to invest approximately $85,000 in capital projects over the course of fiscal years 2016 and 2017. This estimate reflects initiativesto expand our existing business and pursue PVA growth opportunities, including backward integration into plastic bottle processing and bottle flakeproduction, primarily for the Polyester Segment, especially for REPREVE. The total amount for future fiscal years could be more or less depending onthe timing and scale of contemplated initiatives, and is expected to be funded by a combination of cash from operations, borrowings under the ABLRevolver and new capital lease obligations. The Company expects the capital projects undertaken in fiscal year 2015 and over the course of fiscal years2016 and 2017 to provide significant benefits. As a result of our continued focus on REPREVE and other PVA yarns as part of our mix enrichment strategy, we may incur additional expenditures forcapital projects, beyond the currently estimated amount, as we pursue new, currently unanticipated, opportunities in order to expand our manufacturingcapabilities for these products, for other strategic growth initiatives or to further streamline our manufacturing process in which case we may be requiredto increase the amount of our working capital and long-term borrowings. If our strategy is successful, we would expect higher gross profit as a result of thecombination of potentially higher sales volumes and an improved mix from higher-margin yarns. Stock Repurchase Program During fiscal year 2014, the Company completed its repurchase of shares under its initial $50,000 stock repurchase program that had been approved bythe Board on January 22, 2013 (the “2013 SRP”). On April 23, 2014, the Board approved a second stock repurchase program (the “2014 SRP”) toauthorize the Company to acquire up to an additional $50,000 of common stock. Under the 2014 SRP (as was the case under the 2013 SRP), theCompany is authorized to repurchase shares at prevailing market prices, through open market purchases or privately negotiated transactions at such timesand prices and in such manner as determined by management, subject to market conditions, applicable legal requirements, contractual obligations andother factors. Repurchases, if any, are expected to be financed through cash generated from operations and 44®® borrowings under the Company’s ABL Revolver, and are subject to applicable limitations and restrictions as set forth in the ABL Facility. The 2014 SRPhas no stated expiration or termination date, and there is no time limit or specific time frame otherwise for repurchases. The Company may discontinuerepurchases at any time that management determines additional purchases are not beneficial or advisable. The Company repurchased a total of 349 shares during fiscal year 2015, at an average price of $29.72. As of August 28, 2015, the Company hasrepurchased a total of 3,120 shares, at an average price of $22.96 (for a total of $71,665 inclusive of commission costs) pursuant to its two Board-approved stock repurchase programs. $28,376 remains available under the 2014 SRP as of August 28, 2015. Liquidity Summary The Company has met its historical liquidity requirements for working capital, capital expenditures, debt service requirements and other operating needsfrom its cash flows from operations and available borrowings. The Company believes that its existing cash balances, cash provided by operatingactivities, and borrowings available under the ABL Revolver will enable the Company to comply with the terms of its indebtedness and meet itsforeseeable liquidity requirements. Domestically, the Company’s cash balances, cash provided by operating activities and borrowings available under theABL Revolver continue to be sufficient to fund the Company’s domestic operating activities as well as cash commitments for its investing and financingactivities. For its foreign operations, the Company expects its existing cash balances and cash provided by operating activities will provide the neededliquidity to fund its foreign operating activities and any foreign investing activities, such as future capital expenditures. Cash Provided by Operating Activities Net cash provided by operating activities consists of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Cash receipts: Receipts from customers $690,666 $692,200 $713,283 Distributions received from unconsolidated affiliates 3,718 13,214 14,940 Other receipts 1,518 6,762 864 Cash payments: Payments to suppliers and other operating costs 517,584 517,188 552,685 Payments for salaries, wages, and benefits 117,406 116,735 112,268 Payments for taxes 17,208 12,569 8,100 Payments for interest 3,304 3,313 4,701 Payments for restructuring and severance 355 2,353 62 Other 900 128 — Adjusted net cash provided by operating activities 39,145 59,890 51,271 Adjustment for excess tax benefit on stock-based compensation plans (1) (242) (3,533) (762)Net cash provided by operating activities $38,903 $56,357 $50,509 (1)Adjustment for excess tax benefit on stock-based compensation plans represents the classification of the tax benefit realized from share-basedpayment awards within net cash used in financing activities with a corresponding offset to net cash provided by operating activities. Fiscal Year 2015 compared to Fiscal Year 2014 The slight decrease in receipts from customers in fiscal year 2015 is consistent with the decrease in net sales over the prior year. Distributions receivedfrom unconsolidated affiliates decreased due to the lack of discretionary distributions from PAL in the current year as a result of PAL’s capital investmentand acquisition activity during the current year. During the prior year, other receipts included the return of utility and value-added tax deposits of $4,805,plus associated interest of $1,225 (which includes $1,084 of interest related to a judicial claim). The increase in payments to suppliers and other operatingcosts in fiscal year 2015 was primarily attributable to an increase in SG&A expenses and an increase in operating costs for Renewables, partially offset bylower raw material costs and the devaluation of the Brazilian Real. The increase in payments for salaries, wages, and benefits was primarily due to a one-time bonus paid to domestic wage employees in December 2014 and the increase in variable compensation paid (attributable to fiscal year 2014 results).Payments for taxes increased in fiscal year 2015 as compared to the prior year due to (i) a fiscal year 2014 extension payment paid in fiscal year 2015 and(ii) an 45 election by our Brazilian subsidiary to provide current tax payments on certain intercompany foreign currency transactions. Payments for restructuringand severance, which includes payments to two former executive officers and equipment relocation and reinstallation costs, commenced in fiscal year2014. Severance payments for fiscal year 2015 represent final amounts due under these severance agreements. Fiscal Year 2014 compared to Fiscal Year 2013 The decline in receipts from customers in fiscal year 2014 is primarily due to one less week of sales relative to fiscal year 2013 and the negative effects ofcurrency translation due to the weakening of the Brazilian Real against the U.S. dollar, partially offset by sales mix improvements. Other receipts in fiscalyear 2014 include the return of utility and value-added tax deposits of $4,805, plus associated interest of $1,225, and other interest and miscellaneousincome. The decrease in payments to suppliers and other operating costs in fiscal year 2014 is primarily a result of one less week of sales and productionfor operations in the U.S. and El Salvador and softer market conditions for the International Segment. The increase in payments for salaries, wages andbenefits in fiscal year 2014 is primarily due to higher variable compensation, partially offset by lower executive compensation. Payments for restructuringand severance primarily relate to the relocation of certain machinery in the U.S. and El Salvador and payments to two former executive officers. Thedecline in payments for interest in fiscal year 2014 was due to both a lower average outstanding debt balance and a lower weighted average interest rate.The Company’s payments for taxes increased primarily due to increased domestic profitability. Cash Used in Investing Activities and Financing Activities The Company utilized $22,541 for net investing activities and $18,190 for net financing activities during fiscal year 2015. Significant investingactivities include $25,966 for capital expenditures, which primarily relate to improving the Company’s manufacturing flexibility and capability toproduce PVA products and increasing the capacity of the recycling facility, along with adding to the capacity, flexibility and efficiency of theCompany’s facilities in Yadkinville, Madison and El Salvador through the addition of texturing machines. Significant financing activities include netrepayments of $6,875 on the ABL Facility and $10,360 for repurchases of Company stock. The Company utilized $16,869 for net investing activities and $32,410 for net financing activities during fiscal year 2014. Significant investingactivities include $19,091 for capital expenditures, which primarily relate to improving the Company’s manufacturing flexibility and capability toproduce PVA products, adding to the capacity, flexibility and efficiency of the Company’s Yadkinville texturing facility and increasing the capacity ofthe recycling facility. Significant financing outflows include $36,551 for repurchases of Company stock. The Company utilized $9,771 for net investing activities and utilized $41,933 for net financing activities during fiscal year 2013. Significantexpenditures for investing activities include $8,809 for capital expenditures. Significant financing activities include $19,315 for repurchases ofCompany stock, and net cash utilized toward the reduction of long term debt of $25,580. During fiscal year 2013, the Company prepaid a term loan (infull), which included $20,515 in optional and mandatory prepayments and $615 of prepayment call premiums. In addition, the Company paid $7,200 inscheduled principal payments on the ABL Term Loan, received $1,500 in net borrowings from the ABL Revolver and received $1,250 in proceeds fromborrowings under a term loan from an unconsolidated affiliate. 46 Contractual Obligations As of June 28, 2015, the Company’s contractual obligations consist of the following: Cash Payments Due By Period Description of Commitment Total Less Than 1Year 1-3 years 3-5 years More than5 years ABL Revolver $5,000 $— $— $5,000 $— ABL Term Loan 82,125 9,000 18,000 55,125 — Capital lease obligations 15,735 3,385 6,764 4,852 734 Term loan from unconsolidated affiliate 1,250 — 1,250 — — Contingent consideration (1) 2,207 634 1,109 464 — Other long-term obligations (2) 7,475 647 1,097 1,135 4,596 Subtotal 113,792 13,666 28,220 66,576 5,330 Interest on long-term debt and other obligations (3) 12,096 3,037 5,106 3,820 133 Operating leases 6,727 2,547 3,395 773 12 Purchase obligations (4) 26,625 11,876 11,313 3,436 — Total cash payments by period $159,240 $31,126 $48,034 $74,605 $5,475 (1)Contingent consideration payments are reflected at present value based on the expected future payments used in the underlying fair valuedetermination.(2)Other long-term obligations do not include an estimate of the timing of potential tax payments related to uncertain tax positions; therefore, $3,980 hasbeen excluded from the table above.(3)Interest payments on variable-rate debt instruments are calculated for future periods using interest rates and terms in effect at June 28, 2015.(4)Purchase obligations primarily consist of utility, software and other service agreements. For purposes of the above table, purchase obligations are defined as agreements that are enforceable and legally binding and that specify all significantterms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of thetransaction. As of June 28, 2015, the Company’s open purchase orders totaled approximately $51,232 and are expected to be settled in fiscal year 2016. These openpurchase orders are in the ordinary course of business for the procurement of (i) raw materials used in production, (ii) certain consumables and outsourcedservices used in the Company’s manufacturing processes and (iii) selected finished goods for resale sourced from third-party suppliers. As of June 28, 2015, the Company had $235 of standby letters of credit, none of which have been drawn upon. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest—Imputation ofInterest”, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from thecarrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance of debt issuance costs are not affectedby the amendments in this update. The new standard is effective for the Company’s fiscal year 2017 and requires the Company to apply the new guidanceon a retrospective basis upon adoption. In July 2015, the FASB issued ASU No. 2015-11, “Inventory”, which modifies the subsequent measurement of inventories recorded under a first-in-first-out or average cost method. Under the new standard, such inventories are required to be measured at the lower of cost and net realizable value. The newstandard is effective for the Company’s fiscal year 2018, with prospective application. In July 2015, the FASB affirmed a proposal that would (i) defer the effective date of the new revenue recognition standard (ASU 2014-09) by one year and(ii) permit all entities to apply the new standard early, but not before the original effective date. The new guidance is effective for the Company’s fiscalyear 2019. 47 In August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement ofDebt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015EITF Meeting”, which provides clarification from ASU No. 2015-03 regarding the presentation and subsequent measurement of debt issuance costsassociated with line-of-credit arrangements. The Company is evaluating the effect the new guidance will have on its consolidated financial statements and related disclosures. In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss,or a Tax Credit Carryforward Exists”. The guidance requires an entity to present its deferred tax asset for a net operating loss carryforward, similar tax loss,or a tax credit carryforward net of unrecognized tax benefits when settlement in this manner is available under the tax law, which would be based on factsand circumstances as of the balance sheet reporting date and would not consider future events. The Company has adopted the guidance in fiscal year2015 and there is no significant impact on the Company’s financial statements. There have been no other newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on theCompany's financial statements. Off-Balance Sheet Arrangements The Company 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 theCompany’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 amountsreported in the financial statements and accompanying notes. The SEC has defined a company’s most critical accounting policies as those involvingaccounting estimates that require management to make assumptions about matters that are highly uncertain at the time and where different reasonableestimates or changes in the accounting estimate from quarter to quarter could materially impact the presentation of the financial statements. Thefollowing discussion provides further information about accounting policies critical to the Company and should be read in conjunction with “Note 2.Summary of Significant Accounting Policies” to the Consolidated Financial Statements included in “Item 8. Financial Statements and SupplementaryData” of this Annual Report on Form 10-K. Receivables Reserves An allowance for losses is provided for known and potential losses arising from yarn quality claims and for amounts owed by customers. Reserves for yarnquality claims are based on historical claim experience and known pending claims. The collectability of accounts receivable is based on a combination offactors, including the aging of accounts, historical write off experience, present economic conditions such as customer bankruptcy filings, and thefinancial health of specific customers and market sectors. Since losses depend to a large degree on future economic conditions and the health of thetextile industry, a significant level of judgment is required to arrive at the allowance for uncollectible accounts. This allowance is established based onpercentages applied to accounts aged for set periods of time, supplemented by reserves for individual customer accounts where collection is no longercertain. Establishing reserves for yarn claims and uncollectible accounts requires management judgment and estimates. The Company does not believethere is a reasonable likelihood that there will be a material change in the estimates and assumptions it uses to assess the allowance for losses. However,certain unexpected events such as a customer bankruptcy filing could have a material impact on the Company’s results of operations. The Company hasnot made any material changes to the methodology used in establishing its accounts receivable loss reserves during the past three fiscal years. A plus orminus 10% change in the aged accounts receivable reserve percentages would not have been material to the Company’s financial statements for the pastthree years. Inventory Reserves Inventory reserves are established based on many factors including historical recovery rates, the aging of inventories on-hand, inventory movement andexpected net realizable value of specific products, and current economic conditions. Specific reserves are established based on a determination of theobsolescence of the inventory and whether the inventory value exceeds amounts to be recovered through expected sales prices, less selling costs.Estimating sales prices and evaluating the condition of the inventories require judgment and estimates, which may impact the ending inventory valuationand gross margins. The Company uses current and historical knowledge to record reasonable estimates of its markdown percentages 48 and expected sales prices. The Company believes it is unlikely that differences in actual demand or selling prices from those projected by managementwould have a material impact on the Company’s financial condition or results of operations. The Company has not made any material changes to themethodology used in establishing its inventory loss reserves during the past three fiscal years. A plus or minus 10% change in its aged inventory reserveswould not have been material to the Company’s financial statements for the past three fiscal years. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.For assets held for sale, an impairment charge is recognized if the carrying value of the assets exceeds the fair value less costs to sell. Estimates arerequired to determine the fair value, the disposal costs and the time period to dispose of the assets. Such estimates are critical in determining whether anyimpairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary. For assets held and used,impairment may occur if projected undiscounted cash flows are not adequate to cover the carrying value of the assets. In such cases, additional analysis isconducted to determine the amount of loss to be recognized, and the impairment loss is determined as the amount the carrying value of the asset or assetgroup exceeds the estimated fair value, measured by future discounted cash flows. The analysis requires estimates of the amount and timing of projectedcash flows and, where applicable, judgment associated with, among other factors, the appropriate discount rate. Such estimates are critical in determiningwhether any impairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary. The Company’sjudgment regarding the existence of circumstances that indicate the potential impairment of an asset’s carrying value is based on several factors,including, but not limited to, changes in business environment, a decline in operating cash flows or a decision to close a manufacturing facility. Thevariability of these factors depends on a number of conditions, including uncertainty about future events and general economic conditions. Impairment of Investment in Unconsolidated Affiliates The Company evaluates its investments in unconsolidated affiliates whenever events or changes in circumstances indicate that the carrying amount maynot be recoverable. The Company evaluates the ability of an affiliate to generate sufficient earnings and cash flows to justify its carrying value.Reductions in an affiliate’s cash flows that are other than temporary and indicative of a loss of investment value are assessed for impairment purposes. Forfiscal year 2015, the Company determined there were no “other-than-temporary” impairments related to the carrying value of its investments inunconsolidated affiliates. Valuation Allowance for Deferred Tax Assets The Company currently has a valuation allowance against certain of its deferred tax assets in the U.S. and foreign subsidiaries due to negative evidenceconcerning the realization of those deferred tax assets. The deferred tax valuation allowance at June 28, 2015 consists of the following: Investment in a former domestic unconsolidated affiliate $(6,503)Equity-method investment in PAL (3,261)Foreign tax credits (1,680)Book versus tax basis difference in Renewables (1,359)Net operating losses related to Renewables (2,803)Total deferred tax valuation allowance $(15,606) In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred taxassets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the appropriatecharacter during the periods in which those temporary differences reverse. Management considers the scheduled reversal of taxable temporary differences,taxable income in carryback periods, projected future taxable income and tax planning strategies in making this assessment. The Company reviews itsestimates of future taxable income on a quarterly basis to assess if the need for a valuation allowance exists. The Company continually evaluates bothpositive and negative evidence to determine whether and when the valuation allowance, or a portion thereof, should be released. A release of thevaluation allowance could have a material effect on earnings in the period of release. 49 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risks associated with changes in interest rates, fluctuation in currency exchange rates, and raw material andcommodity costs, which may adversely affect its financial position, results of operations or cash flows. The Company does not enter into derivativefinancial instruments for trading purposes, nor is it a party to any leveraged financial instruments. Interest Rate Risk The Company is exposed to interest rate risk through its borrowing activities. As of June 28, 2015, the Company had borrowings under its ABL Revolverand ABL Term Loan that totaled $87,125 and contain variable rates of interest; however, the Company hedges a significant portion of such interest ratevariability using an interest rate swap. As of June 28, 2015, after considering the variable rate debt obligations that have been hedged and the Company’soutstanding debt obligations with fixed rates of interest, the Company’s sensitivity analysis shows that a 50-basis point increase in LIBOR as of June 28,2015 would result in an increase of $186 in annual interest expense. Currency Exchange Rate Risk The Company conducts its business in various foreign countries and in various foreign currencies. Each of the Company’s subsidiaries may enter intotransactions (sales, purchases, fixed purchase commitments, etc.) that are denominated in currencies other than the subsidiary’s functional currency andthereby expose the Company to foreign currency exchange risk. The Company may enter into foreign currency forward contracts to hedge this exposure.The Company may also enter into foreign currency forward contracts to hedge its exposure for certain equipment or inventory purchase commitments. Asof June 28, 2015, the Company had no outstanding foreign forward currency contracts. A significant portion of raw materials purchased by the Company’s Brazilian subsidiary are denominated in U.S. Dollars, requiring the Company toregularly exchange Brazilian Real. During recent years, and most notably in fiscal year 2015, the Company has been negatively impacted by adevaluation of the Brazilian Real. For fiscal year 2015, the Brazilian Real declined approximately 40% in relation to the U.S. Dollar, thereby reducing theutility of cash and cash equivalents held by the Company’s Brazilian subsidiary. Discussion and analysis surrounding the impact of the devaluation ofthe Brazilian Real on the Company’s results of operations is included above in “Item 7. Management’s Discussion and Analysis of Financial Conditionand Results of Operations”. As of June 28, 2015, the Company’s subsidiaries outside the U.S., whose functional currency is other than the U.S. dollar, held approximately 13.4% ofthe Company’s consolidated total assets. The Company does not enter into foreign currency derivatives to hedge its net investment in its foreignoperations. As of June 28, 2015, $9,390, or 93.8%, of the Company’s cash and cash equivalents were held outside the U.S., of which approximately $3,014 were heldin U.S. dollar equivalents. More information regarding the Company’s derivative financial instruments as of June 28, 2015 is provided in “Note 18. Fair Value of FinancialInstruments and Non-Financial Assets and Liabilities” to the Consolidated Financial Statements included in “Item 8. Financial Statements andSupplementary Data” of this Annual Report on Form 10-K. Raw Material and Commodity Cost Risks A significant portion of the Company’s raw materials and energy costs are derived from petroleum-based chemicals. The prices for petroleum andpetroleum-related products and energy costs are volatile and dependent on global supply and demand dynamics, including certain geo-political risks. The Company does not use financial instruments to hedge its exposure to changes in these costs. The costs of the primary raw materials that theCompany uses throughout all of its operations are generally based on U.S. dollar pricing; and such materials are purchased at market or at fixed prices thatare established with individual vendors as part of the purchasing process for quantities expected to be consumed in the ordinary course of business. Other Risks The Company is also exposed to political risk, including changing laws and regulations governing international trade, such as quotas, tariffs and taxlaws. The degree of impact and the frequency of these events cannot be predicted. 50 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company’s financial statements required by this item are included on pages F-1 through F-47 of this Annual Report on Form 10-K. See Item 15(a)(1)for a listing of financial statements provided. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. Item 9A. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. As of June 28, 2015, an evaluation of the effectiveness of the Company's disclosure controls andprocedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) wasperformed under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief FinancialOfficer. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controlsand procedures are effective to ensure that information required to be disclosed by the Company in its reports that it files or submits under the ExchangeAct is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, andthat information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated andcommunicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timelydecisions regarding required disclosure. (b) Management’s annual report on internal control over financial reporting. Management of the Company is responsible for establishing andmaintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act). TheCompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internalcontrol over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a materialeffect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. Management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of theCompany’s internal control over financial reporting as of June 28, 2015, based on the framework set forth by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO) in Internal Control-Integrated Framework (1992). Based on that assessment, management concluded that, as ofJune 28, 2015, the Company’s internal control over financial reporting is effective based on the criteria established in Internal Control-IntegratedFramework (1992). (c) Attestation report of the registered public accounting firm. The effectiveness of the Company’s internal control over financial reporting as of June 28,2015 has been audited by KPMG LLP, an independent registered public accounting firm. Their report, which appears in “Item 8. Financial Statements andSupplementary Data” included herein, expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting asof June 28, 2015. (d) Changes in internal control over financial reporting. During the Company’s fourth quarter of fiscal year 2015, there has been no change in theCompany’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internalcontrols over financial reporting. Item 9B. OTHER INFORMATION None. 51 PART III Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item with respect to executive officers is set forth above in Part I under “Item 1C. Executive Officers of the Registrant.”The other information required by this Item will be set forth in the Company’s definitive proxy statement for its 2015 Annual Meeting of Shareholders tobe filed within 120 days after the Company’s fiscal year end on June 28, 2015 (the “Proxy Statement”), including under the headings “Proposal 1:Election of Directors,” “Nominees for Election as Directors,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Beneficial Ownership ofCommon Stock by Directors and Executive Officers,” “Board of Directors Procedural Matters,” and “Corporate Governance Matters,” and is incorporatedherein by reference. Our non-employee directors and their respective principal occupation or employment, if any, are as follows: William J. Armfield, IV (President,Spotswood Capital, LLC); Archibald Cox, Jr. (Chairman, Sextant Group, Inc.); Kenneth G. Langone (President and Chief Executive Officer, InvemedAssociates LLC); Suzanne M. Present (Co-Founder and Principal, Gladwyne Partners, LLC); and G. Alfred Webster (Retired former Executive VicePresident of the Company). Code of Business Conduct and Ethics; Ethical Business Conduct Policy Statement The Company has adopted a written Code of Business Conduct and Ethics that is applicable to members of the Board and executive officers, includingthe Chief Executive Officer, the Chief Financial Officer and the Chief Accounting Officer (the “Code of Ethics”). The Company has also adopted anEthical Business Conduct Policy Statement (the “Ethical Policy Statement”) that applies to all Company personnel. The Code of Ethics and the EthicalPolicy Statement are available on the Company’s website at www.unifi.com, under the “Investor Relations” section, and paper copies are availablewithout charge to any shareholder that requests a copy by contacting Unifi, Inc., 7201 West Friendly Avenue, Greensboro, North Carolina 27419-9109,Attention: Office of the Secretary. Any amendments to or waivers of the Code of Ethics applicable to the Company’s Chief Executive Officer, ChiefFinancial Officer or Chief Accounting Officer will be disclosed on the Company’s website promptly following the date of such amendment or waiver. Item 11. EXECUTIVE COMPENSATION The information required by this Item will be set forth in the Proxy Statement, including under the headings “Executive Compensation,” “Directors’Compensation,” “Compensation Committee Interlocks and Insider Participation in Compensation Decisions,” “Compensation Committee Report,” and“Compensation Discussion and Analysis,” and is incorporated herein by reference. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item will be set forth in the Proxy Statement, including under the headings “Equity Compensation Plan Information,”“Principal Holders of Common Stock” and “Beneficial Ownership of Common Stock by Directors and Executive Officers,” and is incorporated herein byreference. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item will be set forth in the Proxy Statement, including under the headings “Transactions with Related Parties andCertain Other Persons” and “Corporate Governance Matters – Director Independence,” and is incorporated herein by reference. Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item will be set forth in the Proxy Statement under the heading “Proposal 3: Ratification of the Independent RegisteredPublic Accounting Firm” and is incorporated herein by reference. 52 PART IV Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)1. Financial Statements The financial statements and schedules listed in the accompanying Index to Consolidated Financial Statements on page F-1 are filed as part ofthis Report. 2. Financial Statement Schedules Parkdale America, LLC (“PAL”) is an unconsolidated joint venture in which the Company holds a 34% equity ownership interest. Accordingly,pursuant to Rule 3-09(b)(2) of Regulation S-X under the Exchange Act, the Company will file the required financial statements and relatednotes of PAL via an amendment to this Annual Report on Form 10-K. PAL’s current fiscal year end is January 2, 2016, which is more than 90days after the Company’s corresponding (and current) fiscal year, June 28, 2015. PAL’s financial statements as of January 2, 2016 and January3, 2015 and for the years ended January 2, 2016, January 3, 2015 and December 28, 2013 will be filed on or before April 1, 2016. PAL’s prior fiscal year end was January 3, 2015, which was more than 90 days after the Company’s corresponding fiscal year, which ended June29, 2014. Accordingly, pursuant to Rule 3-09(b)(2) of Regulation S-X under the Exchange Act, the Company filed the required financialstatements and related notes of PAL on April 2, 2015 via an amendment to the Annual Report on Form 10-K for the fiscal year ended June 29,2014. Recently, PricewaterhouseCoopers LLP (“PwC”), the independent registered public accounting firm that issued audit reports on the financialstatements of PAL for PAL’s fiscal years ended January 3, 2015, December 28, 2013 and December 29, 2012, which reports were included in theamendment to the Company’s Annual Reports described above, informed the Company that PwC had performed certain non-audit services, asengaged by the Company that were not in accordance with the auditor independence standards of Regulation S-X. The non-audit servicesperformed by PwC for the Company were related to internal audit associate level staff secondments. Total fees paid by the Company to PwC forthese non-audit services were approximately $151, $108, $147 and $49 for the Company’s fiscal years 2015, 2014, 2013 and 2012,respectively. The Audit Committee of the Company’s Board of Directors and PwC have separately considered the impact that these non-audit services mayhave had on PwC’s independence with respect to PAL. Both the Company’s Audit Committee and PwC have concluded that the servicesidentified above did not affect PwC’s ability to be objective and impartial in the conduct of its audits of the January 3, 2015, December 28,2013 and December 29, 2012 PAL financial statements. In making this determination, both the Company’s Audit Committee and PwCconsidered, among other things, that at all times the Company retained all decision making over the scope of work and the conclusions formed,the insignificant amount of fees involved, the nature of the services provided and that the services were not the subject of, or related to, PwC’saudits of PAL’s financial statements. 3. Exhibits ExhibitNumberDescription 3.1(i)(a)Restated Certificate of Incorporation of Unifi, Inc. (the “Company”), as amended (incorporated by reference to Exhibit 3a to theCompany’s Annual Report on Form 10-K for the fiscal year ended June 27, 2004 (Reg. No. 001-10542) filed on September 17,2004). 3.1(i)(b)Certificate of Change to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’sCurrent Report on Form 8-K (Reg. No. 001-10542) dated July 31, 2006). 3.1(i)(c)Certificate of Amendment to Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated November 3, 2010). 53 ExhibitNumberDescription 3.1(ii)Restated By-laws of the Company (last amended July 23, 2014) (incorporated by reference to Exhibit 3.1 to the Company’s CurrentReport on Form 8-K (Reg. No. 001-10542) dated July 24, 2014). 4.1Registration Rights Agreement dated January 1, 2007 between the Company and Dillon Yarn Corporation (incorporated byreference from Exhibit 7.1 to the Schedule 13D dated January 11, 2007 filed by Dillon Yarn Corporation). 4.2Amended and Restated Credit Agreement, by and among Wells Fargo Bank, National Association, as administrative agent, sole leadarranger, and sole book runner, the lenders that are parties thereto, as the lenders, and the Company and certain of its domesticsubsidiaries, as borrowers, dated as of March 26, 2015 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K (Reg. No. 001-10542) dated March 31, 2015). 4.3First Amendment to Amended and Restated Credit Agreement, dated as of June 26, 2015, by and among the Company and UnifiManufacturing, Inc., as borrowers, and Wells Fargo Bank, National Association, as agent for the Lenders (incorporated by referenceto Exhibit 4.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated June 30, 2015).4.4Amended and Restated Guaranty and Security Agreement, dated as of March 26, 2015, among the Grantors from time to time partythereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.2 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated March 31, 2015). 4.5First Amendment to Amended and Restated Guaranty and Security Agreement, dated as of June 26, 2015, by and among theGrantors from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated byreference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated June 30, 2015). 4.6Trademark Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells FargoBank, N.A., as agent (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated May 25, 2012). 4.7Patent Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells Fargo Bank,N.A., as agent (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) datedMay 25, 2012). 10.1*1999 Unifi, Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 99.1 to the Company’s Registration Statementon Form S-8 (Reg. No. 333-43158) filed on August 7, 2000). 10.2*Form of Option Agreement for Incentive Stock Options granted under the 1999 Unifi, Inc. Long-Term Incentive Plan (incorporatedby reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated July 31, 2006). 10.3*2008 Unifi, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement onForm S-8 (Reg. No. 333-156090) filed on December 12, 2008). 10.4*Form of Option Agreement for Incentive Stock Options granted under the 2008 Unifi, Inc. Long-Term Incentive Plan (incorporatedby reference to Exhibit 10.3 to the Company’s quarterly report on Form 10-Q for the quarterly period ended December 28, 2008(Reg. No. 001-10542) filed on February 6, 2009). 10.5*Form of Restricted Stock Unit Agreement for restricted stock units granted under the 2008 Unifi, Inc. Long-Term Incentive Plan(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period endedDecember 26, 2010 (Reg. No. 001-10542) filed on February 4, 2011). 54 ExhibitNumberDescription 10.6*Form of Restricted Stock Unit Agreement for Employees for restricted stock units granted under the 2008 Unifi, Inc. Long-TermIncentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly periodended September 25, 2011 (Reg. No. 001-10542) filed on November 4, 2011). 10.7*Unifi, Inc. 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K (Reg. No. 001-10542) dated October 23, 2013). 10.8*Form of Restricted Stock Unit Agreement for Non-Employee Directors, for use in connection with Unifi, Inc. 2013 IncentiveCompensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated October 23, 2013). 10.9*Form of Restricted Stock Unit Agreement for Employees, for use in connection with Unifi, Inc. 2013 Incentive Compensation Plan(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period endedDecember 29, 2013 (Reg. No. 001-10542) filed on February 7, 2014). 10.10*Form of Incentive Stock Option Agreement (for Executives and Other Officer-Level Employees), for use in connection with Unifi,Inc. 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013 (Reg. No. 001-10542) filed on February 7, 2014). 10.11*Unifi, Inc. Supplemental Key Employee Retirement Plan, effective July 26, 2006 (incorporated by reference to Exhibit 10.4 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated July 31, 2006). 10.12*Amendment to the Unifi, Inc. Supplemental Key Employee Retirement Plan (incorporated by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5, 2009). 10.13*Unifi, Inc. Director Deferred Compensation Plan, dated as of December 14, 2010 (incorporated by reference to Exhibit 10.2 to theCompany’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010 (Reg. No. 001-10542) filed onFebruary 4, 2011). 10.14*Change in Control Agreement between the Company and William L. Jasper, effective August 14, 2009 (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated August 18, 2009). 10.15*Amendment No. 1 to Change in Control Agreement between the Company and William L. Jasper, effective December 31, 2011(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5,2012). 10.16*Amendment No. 2 to Change in Control Agreement between the Company and William L. Jasper, effective December 31, 2014(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1,2014). 10.17*Change in Control Agreement between the Company and R. Roger Berrier, Jr., effective August 14, 2009 (incorporated by referenceto Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated August 18, 2009). 10.18*Amendment No. 1 to Change in Control Agreement between the Company and R. Roger Berrier, Jr., effective December 31, 2011(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5,2012). 10.19*Amendment No. 2 to Change in Control Agreement between the Company and R. Roger Berrier, Jr., effective December 31, 2014(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1,2014). 55 ExhibitNumberDescription 10.20*Change in Control Agreement between the Company and James M. Otterberg, effective December 31, 2014 (incorporated byreference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1, 2014). 10.21*Change in Control Agreement between the Company and Thomas H. Caudle, Jr., effective August 14, 2009 (incorporated byreference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated August 18, 2009). 10.22*Amendment No. 1 to Change in Control Agreement between the Company and Thomas H. Caudle, Jr., effective December 31, 2011(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5,2012). 10.23*Amendment No. 2 to Change in Control Agreement between the Company and Thomas H. Caudle, Jr., effective December 31, 2014(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1,2014). 10.24Sales and Services Agreement dated January 1, 2007 between the Company and Dillon Yarn Corporation (incorporated by referenceto Exhibit 99.1 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-140580) filed on February 9, 2007). 10.25First Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effective January1, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) datedDecember 2, 2008). 10.26Second Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effectiveJanuary 1, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated December 11, 2009). 10.27Third Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effectiveJanuary 1, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated December 22, 2010). 10.28Fourth Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effectiveJanuary 1, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated December 20, 2011). 10.29Yarn Purchase Agreement effective as of September 1, 2014 between Unifi Manufacturing, Inc. and Hanesbrands Inc. (portions ofthe exhibit have been redacted and filed separately with the Securities and Exchange Commission pursuant to a confidentialtreatment request) (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal yearended June 29, 2014 (Reg. No. 001-10542) filed on September 10, 2014). 10.30Deposit Account Control Agreement, dated as of May 24, 2012, among Unifi Manufacturing, Inc., Wells Fargo Bank, N.A., andBank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated May 25, 2012). 14.1Unifi, Inc. Ethical Business Conduct Policy Statement as amended July 23, 2014 (incorporated by reference to Exhibit 14.1 to theCompany’s Annual Report on Form 10-K for the fiscal year ended June 29, 2014 (Reg. No. 001-10542) filed on September 10,2014). 14.2Unifi, Inc. Code of Business Conduct and Ethics as amended July 23, 2014 (incorporated by reference to Exhibit 14.2 to theCompany’s Annual Report on Form 10-K for the fiscal year ended June 29, 2014 (Reg. No. 001-10542) filed on September 10,2014). 21.1List of Subsidiaries. 56+ ExhibitNumberDescription 23.1Consent of KPMG LLP, Independent Registered Public Accounting Firm. 31.1Chief Executive Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2Chief Financial Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1Chief Executive Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2Chief Financial Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101The following materials from the Company’s Annual Report on Form 10-K for the annual period ended June 28, 2015, formatted ineXtensbile Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii)Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) ConsolidatedStatements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. Filed herewith.*NOTE: These Exhibits are management contracts or compensatory plans or arrangements required to be filed as an exhibit to this Form 10-K pursuant toItem 15(b) of this report. 57+++++++ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. Unifi, Inc. Date: September 3, 2015 By:/s/ WILLIAM L. JASPER William L. Jasper Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated: Signature Title Date /s/ WILLIAM L. JASPER Chairman of the Board and Chief Executive Officer September 3, 2015 William L. Jasper (Principal Executive Officer)and Director /s/ JAMES M. OTTERBERG Vice President and Chief Financial Officer September 3, 2015 James M. Otterberg (Principal Financial Officer andPrincipal Accounting Officer) /s/ R. ROGER BERRIER, JR. Director September 3, 2015 R. Roger Berrier, Jr. /s/ WILLIAM J. ARMFIELD, IV Director September 3, 2015 William J. Armfield, IV /s/ ARCHIBALD COX, JR. Director September 3, 2015 Archibald Cox, Jr. /s/ KENNETH G. LANGONE Director September 3, 2015 Kenneth G. Langone /s/ SUZANNE M. PRESENT Director September 3, 2015 Suzanne M. Present /s/ G. ALFRED WEBSTER Director September 3, 2015 G. Alfred Webster 58 EXHIBIT INDEX ExhibitNumberDescription 3.1(i)(a)Restated Certificate of Incorporation of Unifi, Inc. (the “Company”), as amended (incorporated by reference to Exhibit 3a to theCompany’s Annual Report on Form 10-K for the fiscal year ended June 27, 2004 (Reg. No. 001-10542) filed on September 17,2004). 3.1(i)(b)Certificate of Change to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’sCurrent Report on Form 8-K (Reg. No. 001-10542) dated July 31, 2006). 3.1(i)(c)Certificate of Amendment to Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated November 3, 2010). 3.1(ii)Restated By-laws of the Company (last amended July 23, 2014) (incorporated by reference to Exhibit 3.1 to the Company’s CurrentReport on Form 8-K (Reg. No. 001-10542) dated July 24, 2014). 4.1Registration Rights Agreement dated January 1, 2007 between the Company and Dillon Yarn Corporation (incorporated byreference from Exhibit 7.1 to the Schedule 13D dated January 11, 2007 filed by Dillon Yarn Corporation). 4.2Amended and Restated Credit Agreement, by and among Wells Fargo Bank, National Association, as administrative agent, sole leadarranger, and sole book runner, the lenders that are parties thereto, as the lenders, and the Company and certain of its domesticsubsidiaries, as borrowers, dated as of March 26, 2015 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report onForm 8-K (Reg. No. 001-10542) dated March 31, 2015). 4.3First Amendment to Amended and Restated Credit Agreement, dated as of June 26, 2015, by and among the Company and UnifiManufacturing, Inc., as borrowers, and Wells Fargo Bank, National Association, as agent for the Lenders (incorporated by referenceto Exhibit 4.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated June 30, 2015). 4.4Amended and Restated Guaranty and Security Agreement, dated as of March 26, 2015, among the Grantors from time to time partythereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by reference to Exhibit 4.2 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated March 31, 2015). 4.5First Amendment to Amended and Restated Guaranty and Security Agreement, dated as of June 26, 2015, by and among theGrantors from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated byreference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated June 30, 2015). 4.6Trademark Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells FargoBank, N.A., as agent (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated May 25, 2012). 4.7Patent Security Agreement, dated as of May 24, 2012, among the Grantors from time to time party thereto and Wells Fargo Bank,N.A., as agent (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) datedMay 25, 2012). 10.1*1999 Unifi, Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 99.1 to the Company’s Registration Statementon Form S-8 (Reg. No. 333-43158) filed on August 7, 2000). 10.2*Form of Option Agreement for Incentive Stock Options granted under the 1999 Unifi, Inc. Long-Term Incentive Plan (incorporatedby reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated July 31, 2006). 59 ExhibitNumberDescription 10.3*2008 Unifi, Inc. Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement onForm S-8 (Reg. No. 333-156090) filed on December 12, 2008). 10.4*Form of Option Agreement for Incentive Stock Options granted under the 2008 Unifi, Inc. Long-Term Incentive Plan (incorporatedby reference to Exhibit 10.3 to the Company’s quarterly report on Form 10-Q for the quarterly period ended December 28, 2008(Reg. No. 001-10542) filed on February 6, 2009). 10.5*Form of Restricted Stock Unit Agreement for restricted stock units granted under the 2008 Unifi, Inc. Long-Term Incentive Plan(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period endedDecember 26, 2010 (Reg. No. 001-10542) filed on February 4, 2011). 10.6*Form of Restricted Stock Unit Agreement for Employees for restricted stock units granted under the 2008 Unifi, Inc. Long-TermIncentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly periodended September 25, 2011 (Reg. No. 001-10542) filed on November 4, 2011). 10.7*Unifi, Inc. 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form8-K (Reg. No. 001-10542) dated October 23, 2013). 10.8*Form of Restricted Stock Unit Agreement for Non-Employee Directors, for use in connection with Unifi, Inc. 2013 IncentiveCompensation Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated October 23, 2013). 10.9*Form of Restricted Stock Unit Agreement for Employees, for use in connection with Unifi, Inc. 2013 Incentive Compensation Plan(incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period endedDecember 29, 2013 (Reg. No. 001-10542) filed on February 7, 2014). 10.10*Form of Incentive Stock Option Agreement (for Executives and Other Officer-Level Employees), for use in connection with Unifi,Inc. 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2013 (Reg. No. 001-10542) filed on February 7, 2014). 10.11*Unifi, Inc. Supplemental Key Employee Retirement Plan, effective July 26, 2006 (incorporated by reference to Exhibit 10.4 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated July 31, 2006). 10.12*Amendment to the Unifi, Inc. Supplemental Key Employee Retirement Plan (incorporated by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5, 2009). 10.13*Unifi, Inc. Director Deferred Compensation Plan, dated as of December 14, 2010 (incorporated by reference to Exhibit 10.2 to theCompany’s Quarterly Report on Form 10-Q for the quarterly period ended December 26, 2010 (Reg. No. 001-10542) filed onFebruary 4, 2011). 10.14*Change in Control Agreement between the Company and William L. Jasper, effective August 14, 2009 (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated August 18, 2009). 10.15*Amendment No. 1 to Change in Control Agreement between the Company and William L. Jasper, effective December 31, 2011(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5,2012). 10.16*Amendment No. 2 to Change in Control Agreement between the Company and William L. Jasper, effective December 31, 2014(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1,2014). 60 ExhibitNumberDescription 10.17*Change in Control Agreement between the Company and R. Roger Berrier, Jr., effective August 14, 2009 (incorporated by referenceto Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated August 18, 2009). 10.18*Amendment No. 1 to Change in Control Agreement between the Company and R. Roger Berrier, Jr., effective December 31, 2011(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5,2012). 10.19*Amendment No. 2 to Change in Control Agreement between the Company and R. Roger Berrier, Jr., effective December 31, 2014(incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1,2014). 10.20*Change in Control Agreement between the Company and James M. Otterberg, effective December 31, 2014 (incorporated byreference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1, 2014). 10.21*Change in Control Agreement between the Company and Thomas H. Caudle, Jr., effective August 14, 2009 (incorporated byreference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated August 18, 2009). 10.22*Amendment No. 1 to Change in Control Agreement between the Company and Thomas H. Caudle, Jr., effective December 31, 2011(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated January 5,2012). 10.23*Amendment No. 2 to Change in Control Agreement between the Company and Thomas H. Caudle, Jr., effective December 31, 2014(incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated December 1,2014). 10.24Sales and Services Agreement dated January 1, 2007 between the Company and Dillon Yarn Corporation (incorporated by referenceto Exhibit 99.1 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-140580) filed on February 9, 2007). 10.25First Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effective January1, 2009 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) datedDecember 2, 2008). 10.26Second Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effectiveJanuary 1, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated December 11, 2009). 10.27Third Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effectiveJanuary 1, 2011 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated December 22, 2010). 10.28Fourth Amendment to Sales and Service Agreement between Unifi Manufacturing, Inc. and Dillon Yarn Corporation, effectiveJanuary 1, 2012 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542)dated December 20, 2011). 10.29Yarn Purchase Agreement effective as of September 1, 2014 between Unifi Manufacturing, Inc. and Hanesbrands Inc. (portions ofthe exhibit have been redacted and filed separately with the Securities and Exchange Commission pursuant to a confidentialtreatment request) (incorporated by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K for the fiscal yearended June 29, 2014 (Reg. No. 001-10542) filed on September 10, 2014). 61 Exhibit NumberDescription 10.30Deposit Account Control Agreement, dated as of May 24, 2012, among Unifi Manufacturing, Inc., Wells Fargo Bank, N.A., andBank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Reg. No. 001-10542) dated May 25, 2012). 14.1Unifi, Inc. Ethical Business Conduct Policy Statement as amended July 23, 2014 (incorporated by reference to Exhibit 14.1 to theCompany’s Annual Report on Form 10-K for the fiscal year ended June 29, 2014 (Reg. No. 001-10542) filed on September 10,2014). 14.2Unifi, Inc. Code of Business Conduct and Ethics as amended July 23, 2014 (incorporated by reference to Exhibit 14.2 to theCompany’s Annual Report on Form 10-K for the fiscal year ended June 29, 2014 (Reg. No. 001-10542) filed on September 10,2014). 21.1List of Subsidiaries. 23.1Consent of KPMG LLP, Independent Registered Public Accounting Firm. 31.1Chief Executive Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2Chief Financial Officer’s certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1Chief Executive Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2Chief Financial Officer’s certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101The following materials from the Company’s Annual Report on Form 10-K for the annual period ended June 28, 2015, formatted ineXtensbile Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii)Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) ConsolidatedStatements of Cash Flows, and (vi) Notes to Consolidated Financial Statements. Filed herewith.*NOTE: These Exhibits are management contracts or compensatory plans or arrangements required to be filed as an exhibit to this Form 10-K pursuant toItem 15(b) of this report. 62++++++++ INDEX TO CONSOLIDATED FINANCIAL STATEMENTS UNIFI, INC. Consolidated Financial Statements: Reports of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets as of June 28, 2015 and June 29, 2014F-4 Consolidated Statements of Income for the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013F-5 Consolidated Statements of Comprehensive Income for the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013 F-6 Consolidated Statements of Shareholders’ Equity for the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013F-7 Consolidated Statements of Cash Flows for the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013 F-8 Notes to Consolidated Financial StatementsF-9 F-1 Report of Independent Registered Public Accounting Firm The Board of Directors and ShareholdersUnifi, Inc.: We have audited the accompanying consolidated balance sheets of Unifi, Inc. and subsidiaries as of June 28, 2015 and June 29, 2014, and the relatedconsolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June28, 2015. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion onthese consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Unifi, Inc. andsubsidiaries as of June 28, 2015 and June 29, 2014, and the results of their operations and their cash flows for each of the years in the three-year periodended June 28, 2015, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Unifi, Inc. and subsidiaries’internal control over financial reporting as of June 28, 2015, based on criteria established in Internal Control – Integrated Framework (1992) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated September 3, 2015 expressed an unqualifiedopinion on the effectiveness of the Company’s internal control over financial reporting. /s/ KPMG LLP Greensboro, North CarolinaSeptember 3, 2015 F-2 Report of Independent Registered Public Accounting Firm The Board of Directors and ShareholdersUnifi, Inc.: We have audited Unifi, Inc. and subsidiaries’ internal control over financial reporting as of June 28, 2015, based on criteria established in InternalControl – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Unifi, Inc.’smanagement is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal controlover financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility isto express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internalcontrol over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accuratelyand fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures ofthe company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on thefinancial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. In our opinion, Unifi, Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of June 28, 2015,based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO). We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheets of Unifi, Inc. and subsidiaries as of June 28, 2015 and June 29, 2014, and the related consolidated statements of income, comprehensive income,shareholders’ equity, and cash flows for each of the years in the three-year period ended June 28, 2015, and our report dated September 3, 2015 expressedan unqualified opinion on those consolidated financial statements. /s/ KPMG LLP Greensboro, North CarolinaSeptember 3, 2015 F-3 CONSOLIDATED BALANCE SHEETS(amounts in thousands, except share and per share amounts) June 28, 2015 June 29, 2014 ASSETS Cash and cash equivalents $10,013 $15,907 Receivables, net 83,863 93,925 Inventories 111,615 113,370 Income taxes receivable 1,451 179 Deferred income taxes 2,383 1,794 Other current assets 6,022 6,052 Total current assets 215,347 231,227 Property, plant and equipment, net 136,222 123,802 Deferred income taxes 1,539 2,329 Intangible assets, net 5,388 7,394 Investments in unconsolidated affiliates 113,901 99,229 Other non-current assets 3,975 5,086 Total assets $476,372 $469,067 LIABILITIES AND SHAREHOLDERS’ EQUITY Accounts payable $45,023 $51,364 Accrued expenses 16,640 18,589 Income taxes payable 676 3,134 Current portion of long-term debt 12,385 7,215 Total current liabilities 74,724 80,302 Long-term debt 91,725 92,273 Other long-term liabilities 10,740 7,549 Deferred income taxes 90 2,205 Total liabilities 177,279 182,329 Commitments and contingencies Common stock, $0.10 par (500,000,000 shares authorized, 18,007,749 and 18,313,959 shares outstanding) 1,801 1,831 Capital in excess of par value 44,261 42,130 Retained earnings 278,331 245,673 Accumulated other comprehensive loss (26,899) (4,619)Total Unifi, Inc. shareholders’ equity 297,494 285,015 Non-controlling interest 1,599 1,723 Total shareholders’ equity 299,093 286,738 Total liabilities and shareholders’ equity $476,372 $469,067 See accompanying Notes to Consolidated Financial Statements. F-4 CONSOLIDATED STATEMENTS OF INCOME(amounts in thousands, except per share amounts) For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Net sales $687,121 $687,902 $713,962 Cost of sales 596,416 604,640 640,858 Gross profit 90,705 83,262 73,104 Selling, general and administrative expenses 49,672 46,203 47,386 Provision (benefit) for bad debts 947 287 (154)Other operating expense, net 1,600 5,289 3,409 Operating income 38,486 31,483 22,463 Interest income (916) (1,790) (698)Interest expense 4,025 4,329 4,489 Loss on extinguishment of debt 1,040 — 1,102 Other non-operating expense — 126 — Equity in earnings of unconsolidated affiliates (19,475) (19,063) (11,444)Income before income taxes 53,812 47,881 29,014 Provision for income taxes 13,346 20,161 13,344 Net income including non-controlling interest $40,466 $27,720 $15,670 Less: net (loss) attributable to non-controlling interest (1,685) (1,103) (965)Net income attributable to Unifi, Inc. $42,151 $28,823 $16,635 Net income attributable to Unifi, Inc. per common share: Basic $2.32 $1.52 $0.84 Diluted $2.24 $1.47 $0.80 See accompanying Notes to Consolidated Financial Statements. F-5 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME(amounts in thousands) For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Net income including non-controlling interest $40,466 $27,720 $15,670 Other comprehensive (loss) income: Foreign currency translation adjustments (21,578) 327 (6,585)Foreign currency translation adjustments for an unconsolidated affiliate (933) — — Gain on cash flow hedges, net of reclassification adjustments 231 554 82 Gain on cash flow hedges for an unconsolidated affiliate — — 1,214 Other comprehensive (loss) income before income taxes (22,280) 881 (5,289)Income tax provision on cash flow hedges — — (239)Other comprehensive (loss) income, net (22,280) 881 (5,528)Comprehensive income including non-controlling interest 18,186 28,601 10,142 Less: comprehensive (loss) attributable to non-controlling interest (1,685) (1,103) (965)Comprehensive income attributable to Unifi, Inc. $19,871 $29,704 $11,107 See accompanying Notes to Consolidated Financial Statements F-6 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY(amounts in thousands) Shares CommonStock Capital inExcess ofPar Value RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) TotalUnifi, Inc.Shareholders’Equity Non-controllingInterest TotalShareholders’Equity Balance at June 24, 2012 20,090 $2,009 $34,723 $252,763 $28 $289,523 $1,257 $290,780 Options exercised 174 18 1,280 — — 1,298 — 1,298 Stock-basedcompensation — — 1,533 — — 1,533 — 1,533 Conversion of restrictedstock units 9 1 (1) — — — — — Common stockrepurchased and retiredunder publicly announcedprogram (1,068) (107) (1,922) (17,286) — (19,315) — (19,315)Excess tax benefit onstock-based compensationplans — — 762 — — 762 — 762 Other comprehensive loss,net of tax — — — — (5,528) (5,528) — (5,528)Contributions from non-controlling interest — — — — — — 1,280 1,280 Net income (loss) — — — 16,635 — 16,635 (965) 15,670 Balance at June 30, 2013 19,205 $1,921 $36,375 $252,112 $(5,500) $284,908 $1,572 $286,480 Options exercised 798 79 6,640 — — 6,719 — 6,719 Stock-basedcompensation — — 1,939 — — 1,939 — 1,939 Conversion of restrictedstock units 31 3 (3) — — — — — Common stockrepurchased and retiredunder publicly announcedprograms (1,524) (152) (2,814) (33,585) — (36,551) — (36,551)Common stock tenderedto the Company for theexercise of stock optionsand retired (134) (14) (3,540) (29) — (3,583) — (3,583)Common stock tenderedto the Company forwithholding taxobligations and retired (62) (6) — (1,648) — (1,654) — (1,654)Excess tax benefit onstock-based compensationplans — — 3,533 — — 3,533 — 3,533 Other comprehensiveincome, net of tax — — — — 881 881 — 881 Contributions from non-controlling interest — — — — — — 1,254 1,254 Net income (loss) — — — 28,823 — 28,823 (1,103) 27,720 Balance at June 29, 2014 18,314 $1,831 $42,130 $245,673 $(4,619) $285,015 $1,723 $286,738 Options exercised 11 1 94 — — 95 — 95 Stock-basedcompensation — — 2,631 — — 2,631 — 2,631 Conversion of restrictedstock units 31 3 (3) — — — — — Common stockrepurchased and retiredunder publicly announcedprogram (349) (34) (833) (9,493) — (10,360) — (10,360)Excess tax benefit onstock-based compensationplans — — 242 — — 242 — 242 Other comprehensive loss,net of tax — — — — (22,280) (22,280) — (22,280)Contributions from non-controlling interest — — — — — — 1,561 1,561 Net income (loss) — — — 42,151 — 42,151 (1,685) 40,466 Balance at June 28, 2015 18,007 $1,801 $44,261 $278,331 $(26,899) $297,494 $1,599 $299,093 See accompanying Notes to Consolidated Financial Statements F-7 CONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in thousands) For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Cash and cash equivalents at beginning of year $15,907 $8,755 $10,886 Operating activities: Net income including non-controlling interest 40,466 27,720 15,670 Adjustments to reconcile net income including non-controlling interest to net cashprovided by operating activities: Equity in earnings of unconsolidated affiliates (19,475) (19,063) (11,444)Distributions received from unconsolidated affiliates 3,718 13,214 14,940 Depreciation and amortization expense 18,043 17,896 24,584 Loss on extinguishment of debt 1,040 — 1,102 Non-cash compensation expense, net 3,148 2,690 2,287 Excess tax benefit on stock-based compensation plans (242) (3,533) (762)Deferred income taxes (3,796) 726 6,010 Net loss on sale or disposal of assets 778 475 243 Other, net 663 1,174 521 Changes in assets and liabilities: Receivables, net 4,491 4,514 (858)Inventories (6,171) (2,677) (394)Other current assets and income taxes receivable (1,099) 1,141 (410)Accounts payable and accrued expenses (3,612) 1,157 (559)Income taxes payable (2,395) 5,824 (366)Other non-current assets 76 5,173 (116)Other long-term liabilities 3,270 (74) 61 Net cash provided by operating activities 38,903 56,357 50,509 Investing activities: Capital expenditures (25,966) (19,091) (8,809)Proceeds from sale of assets 3,847 2,719 430 Proceeds from other investments 124 447 694 Other investments — — (1,743)Other, net (546) (944) (343)Net cash used in investing activities (22,541) (16,869) (9,771)Financing activities: Proceeds from revolving credit facilities 149,100 149,300 116,700 Payments on revolving credit facilities (170,100) (175,800) (115,200)Proceeds from term loan 22,000 25,200 — Payments on term loans (7,875) — (28,330)Proceeds from related party term loan — — 1,250 Payments of debt financing fees (1,063) (400) (309)Payments on capital lease obligations (1,286) (319) (69)Common stock repurchased and retired under publicly announced programs (10,360) (36,551) (19,315)Common stock tendered to the Company for withholding tax obligations and retired — (1,654) — Proceeds from stock option exercises 95 3,136 1,298 Excess tax benefit on stock-based compensation plans 242 3,533 762 Contributions from non-controlling interest 1,561 1,254 1,280 Other (504) (109) — Net cash used in financing activities (18,190) (32,410) (41,933) Effect of exchange rate changes on cash and cash equivalents (4,066) 74 (936)Net (decrease) increase in cash and cash equivalents (5,894) 7,152 (2,131)Cash and cash equivalents at end of year $10,013 $15,907 $8,755 See accompanying Notes to Consolidated Financial Statements F-8 Unifi, Inc.Notes to Consolidated Financial Statements 1. Background OverviewUnifi, Inc., a New York corporation formed in 1969 (together with its subsidiaries, “we”, the “Company” or “Unifi”), is a multi-national manufacturingcompany that processes and sells high-volume commodity yarns, specialized yarns designed to meet certain customer specifications, and premier value-added (“PVA”) yarns with enhanced performance characteristics. The Company sells yarns made from polyester and nylon to other yarn manufacturersand knitters and weavers that produce fabric for the apparel, hosiery, home furnishings, automotive upholstery, industrial and other end-use markets. TheCompany’s polyester products include polyester polymer beads (“Chip”), partially oriented yarn (“POY”), textured, solution and package dyed, twisted,beamed and draw wound yarns; each is available in virgin or recycled varieties (the latter made from both pre-consumer yarn waste and post-consumerwaste, including plastic bottles). The Company’s nylon products include textured, solution dyed and spandex covered products. The Company maintains one of the textile industry’s most comprehensive yarn product offerings, and has ten manufacturing operations in four countriesand participates in joint ventures in Israel and the United States (“U.S.”). The Company’s principal geographic markets for its products are located in theU.S., Canada, Mexico, Central America and South America. In addition, the Company has a wholly-owned subsidiary in the People’s Republic of China(“China”) focused on the sale and promotion of the Company’s PVA and other specialty products in the Asian textile market, primarily in China, as wellas in the European market. Fiscal YearThe Company’s fiscal year ends on the last Sunday in June. The Company’s Brazilian, Colombian and Chinese subsidiaries’ fiscal years end on June 30.The Company’s fiscal years 2015, 2014 and 2013 ended on June 28, 2015, June 29, 2014 and June 30, 2013, respectively, and there were no significanttransactions or events that occurred between the Company’s fiscal year ends and its subsidiaries’ fiscal year ends. The Company’s fiscal years 2015, 2014and 2013 consisted of 52 weeks, 52 weeks and 53 weeks, respectively. ReclassificationsCertain reclassifications of prior years’ data have been made to conform to the current year presentation. All dollar and other currency amounts and share amounts, except per share amounts, are presented in thousands (000s), except as otherwise noted. 2. Summary of Significant Accounting Policies The Company follows U.S. generally accepted accounting principles (“U.S. GAAP” or “GAAP”). The significant accounting policies described below,together with the other notes that follow, are an integral part of the consolidated financial statements. Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its subsidiaries in which it maintains a controlling financial interest. Allaccount balances and transactions between the Company and the subsidiaries which it controls have been eliminated. Investments in entities where theCompany is able to exercise significant influence, but not control, are accounted for by the equity method. For transactions with entities accounted forunder the equity method, any intercompany profits on amounts still remaining are eliminated. Amounts originating from any deferral of intercompanyprofits are recorded within either the Company’s investment account or the account balance to which the transaction specifically relates (e.g., inventory).Only upon settlement of the intercompany transaction with a third party is the deferral of the intercompany profit recognized by the Company. Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect thereported amounts of assets and liabilities, certain financial statement disclosures at the date of the financial statements, and the reported amounts ofrevenues and expenses during the period. The Company’s consolidated financial statements include amounts that are based on management’s bestestimates and judgments. Actual results may vary from these estimates. These estimates are reviewed periodically to determine if a change is required. F-9th Unifi, Inc.Notes to Consolidated Financial Statements - (Continued)Cash and Cash EquivalentsCash equivalents are defined as highly liquid, short-term investments having an original maturity of three months or less. Book overdrafts, for which thebank has not advanced cash, if any, are reclassified to accounts payable. ReceivablesReceivables are stated at their net realizable value. Allowances are provided for known and potential losses arising from yarn quality claims and foramounts owed by customers. Reserves for yarn quality claims are based on historical experience and known pending claims and are recorded as areduction of net sales. The allowance for uncollectible accounts is shown as a reduction of operating income and reflects the Company’s best estimate ofprobable losses inherent in its accounts receivable portfolio determined on the basis of historical experience, aging of trade receivables, specificallowances for known troubled accounts and other currently available information. Customer accounts are written off against the allowance foruncollectible accounts when they are no longer deemed to be collectible. InventoriesThe Company’s inventories are valued at the lower of cost or market with the cost for the majority of its inventory determined using the first-in, first-outmethod. Certain foreign inventories and limited categories of supplies inventories are valued using the average cost method. The Company’s estimatesfor inventory reserves for obsolete, slow-moving or excess inventories are based upon many factors including historical recovery rates, the aging ofinventories on-hand, inventory movement and expected net realizable value of specific products, and current economic conditions. Debt Financing FeesThe Company capitalizes costs associated with the financing of its debt obligations. These costs are amortized as additional interest expense followingeither the effective interest method or the straight-line method. In the event of any prepayment of its debt obligations, the Company accelerates therecognition of a pro-rata amount of issuance costs and records an extinguishment of debt. Property, Plant and EquipmentProperty, plant and equipment (“PP&E”) are stated at historical cost less accumulated depreciation. Plant and equipment under capital leases are stated atthe present value of minimum lease payments less accumulated amortization. Additions or improvements that substantially extend the useful life of aparticular asset are capitalized. Depreciation is calculated primarily utilizing the straight-line method over the following useful lives: Asset categoriesUseful lives in yearsLand improvementsTentoTwentyBuildings and improvementsFifteentoFortyMachinery and equipmentThreetoTwenty-fiveComputer, software and office equipmentThreetoSevenInternal software development costs Three Transportation equipmentThreetoFifteen Leasehold improvements are depreciated over the lesser of their estimated useful lives or the remaining term of the lease. Assets under capital leases are amortized in a manner consistent with the Company’s normal depreciation policy if ownership is transferred by the end ofthe lease, or if there is a bargain purchase option. If such ownership criteria are not met, amortization occurs over the shorter of the lease term or the asset'suseful life. The Company capitalizes its costs of developing internal software when the software is used as an integral part of its manufacturing or business processesand the technological feasibility has been established. Internal software costs are amortized over a period of three years and, in accordance with theproject type, charged to cost of sales or selling, general and administrative (“SG&A”) expenses. Fully depreciated assets are retained in cost and accumulated depreciation accounts until they are removed from service. In the case of disposals, assetcosts and related accumulated depreciation amounts are removed from the accounts, and the net amounts, less proceeds from disposal, are included in thedetermination of net income and presented within other operating expense, net. F-10 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Repair and maintenance costs related to PP&E which do not significantly increase the useful life of an existing asset or do not significantly alter, modifyor change the capabilities or production capacity of an existing asset are expensed as incurred. Interest is capitalized for capital projects requiring a construction period. PP&E and other long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the respective carrying amountmay not be recoverable. Long-lived assets to be disposed of by sale within one year are classified as held for sale and are reported at the lower of carryingamount or fair value less cost to sell. Depreciation ceases for all assets classified as held for sale. Long-lived assets to be disposed of other than by sale areclassified as held for use until they are disposed of and these assets are reported at the lower of their carrying amount or estimated fair value. Intangible AssetsFinite-lived intangible assets, such as customer lists, non-compete agreements, licenses, trademarks and patents are amortized over their estimated usefullives. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removedfrom the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amountmay not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. TheCompany has no intangibles with indefinite lives. Biomass foundation and feedstockBiomass foundation and feedstock are stated at historical cost and subject to depreciation at the time that production in commercial quantities begins(which is expected to occur approximately twenty-four months after planting). Cost includes expenditures associated with land and planting bedpreparation, biological materials and overhead. Cultural care costs are capitalized during the development period (up to twenty-four months) and aresubsequently expensed as incurred. Depreciation is calculated utilizing the straight-line method over the estimated productive life of the plantings,generally fifteen years. Investments in Unconsolidated AffiliatesThe Company evaluates its investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. The Company evaluates whether or not the affiliate is able to generate and sustain sufficient earnings and cashflows to justify its carrying value. Derivative InstrumentsAll derivatives are carried on the balance sheet at fair value and are classified according to their asset or liability position and the expected timing ofsettlement. On the date the derivative contract is entered into, the Company may designate the derivative into one of the following categories: ●Fair value hedge – a hedge of the fair value of a recognized asset, liability or a firm commitment. Changes in the fair value of derivativesdesignated and qualifying as fair-value hedges, as well as the offsetting gains and losses on the hedged items, are reported in income in the sameperiod. ●Cash flow hedge – a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset orliability. The effective portion of gains and losses on cash flow hedges are recorded in accumulated other comprehensive loss, until theunderlying transactions are recognized in income. When the hedged item is realized, gains or losses are reclassified from accumulated othercomprehensive loss to current period earnings on the same line item as the underlying transaction. ●Net investment hedge – if a derivative is used as a foreign currency hedge of a net investment in a foreign operation, its changes in fair value, tothe extent effective as a hedge, are recorded in foreign currency translation adjustments in accumulated other comprehensive loss. Any ineffective portion of a designated hedge is immediately recognized in current period earnings. Derivatives that are not designated for hedgeaccounting are marked to market at the end of each period with the changes in fair value recognized in current period earnings. Settlements of any fairvalue or cash flow derivative contracts are classified as cash flows from operating activities. F-11 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Fair Value MeasurementsThe accounting guidance for fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation techniquesused to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transactionbetween market participants in the principal market, or if none exists, the most advantageous market, for the specific asset or liability at the measurementdate (the exit price). Fair value is based on assumptions that market participants would use when pricing the asset or liability. The hierarchy gives thehighest priority to unadjusted quoted prices in active markets and the lowest priority to unobservable inputs. The Company uses the following to measurefair value for its assets and liabilities: ●Level 1 – Observable inputs that reflect quoted prices for identical assets or liabilities in active markets ●Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either indirectly or directly ●Level 3 – Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability The classification of assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair valuemeasurement in its entirety. Income TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recorded to recognize the expected future taxbenefits or costs of events that have been, or will be, reported in different tax years for financial statement purposes than for tax purposes. Deferred taxassets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax ratesin effect for the year in which these items are expected to reverse. The Company recognizes tax benefits related to uncertain tax positions if it believes itis more-likely-than-not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of beingrealized. The Company reviews deferred tax assets to determine if it is more-likely-than-not they will be realized. If the Company determines it is notmore-likely-than-not that a deferred tax asset will be realized, it records a valuation allowance to reverse the previously recognized benefit. Provision ismade for taxes on undistributed earnings of foreign subsidiaries and related companies to the extent that such earnings are not deemed to be permanentlyinvested. The Company accrues for other tax contingencies when it is probable that a liability to a taxing authority has been incurred and the amount ofthe contingency can be reasonably estimated. Income tax expense related to penalties and interest, if incurred, is included in provision for income taxes. Stock-Based CompensationCompensation expense for stock awards is based on the grant date fair value and expensed over the applicable vesting period. The Company has a policyof issuing new shares to satisfy share option exercises. For awards with a service condition and a graded vesting schedule, the Company has elected anaccounting policy of recognizing compensation cost on a straight-line basis over the requisite service period for each separate vesting portion of theaward as if the award was, in-substance, multiple awards. Foreign Currency TranslationAssets and liabilities of foreign subsidiaries whose functional currency is other than the U.S. dollar are translated at exchange rates existing at therespective balance sheet dates. Translation gains and losses are not included in determining net income, but are presented in a separate component ofaccumulated other comprehensive loss. The Company translates the results of operations of its foreign operations at the average exchange rates during therespective periods. Transaction gains and losses are included in determining net income and are presented within other operating expense, net. Revenue RecognitionThe Company recognizes revenue when (a) there is persuasive evidence of an arrangement, (b) the sales price is fixed or determinable, (c) title and therisks of ownership have been transferred to the customer, and (d) collection of the receivable is reasonably assured. For the sale of goods, revenuerecognition occurs primarily upon shipment. For service arrangements, revenue is recognized when (i) transportation services have been completed inaccordance with the bill of lading contract or (ii) in accordance with contractual agreements with customers utilizing the criteria above. Revenue includesamounts for F-12 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) duties and import taxes, interest billed to customers, and shipping and handling costs billed to customers. Revenue excludes value-added taxes or othersales taxes and includes any applicable deductions for returns and allowances, yarn claims, and discounts. Cost of SalesThe major components of cost of sales are: (a) materials and supplies, (b) labor and fringe benefits, (c) utility and overhead costs associated withmanufactured products, (d) cost of products purchased for resale, (e) shipping, handling and warehousing costs, (f) research and development costs, (g)depreciation expense, and (h) all other costs related to production or service activities. Shipping, Handling and Warehousing CostsShipping, handling and warehousing costs include costs to store goods prior to shipment, prepare goods for shipment and physically move goods tocustomers. Research and Development CostsResearch and development costs include employee costs, production costs related to customer samples, operating supplies, consulting fees and othermiscellaneous costs. The cost of research and development is charged to expense as incurred. Research and development costs were as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Research and development costs $8,113 $7,921 $6,938 Selling, General and Administrative ExpensesThe major components of SG&A expenses are: (a) costs of the Company’s sales force, marketing and advertising efforts, as well as commissions and creditinsurance, (b) costs of maintaining the Company’s general and administrative support functions including executive management, informationtechnology, human resources, legal, and finance, (c) amortization of intangible assets, and (d) all other costs required to be classified as SG&A expenses. Advertising CostsAdvertising costs are expensed as incurred and included in SG&A expenses. The Company’s advertising costs include spending for items such asconsumer marketing and branding initiatives, promotional items, trade shows, sponsorships and other programs. Advertising costs were as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Advertising costs $3,975 $2,953 $3,777 Restructuring ChargesRestructuring charges for the relocation of equipment, disposal costs, severance and other exit costs are expensed as incurred. Self InsuranceThe Company self-insures certain risks such as employee healthcare claims. Reserves for incurred but not reported healthcare claims are estimated usinghistorical data, the timeliness of claims processing, medical trends, inflation and any changes, if applicable, in the nature or type of the plan. ContingenciesAt any point in time, the Company may be a party to various pending legal proceedings, claims or environmental actions. Accruals for estimated lossesare recorded at the time information becomes available indicating that losses are probable and estimable. Any amounts accrued are not discounted. Legalcosts such as outside counsel fees and expenses are charged to expense as incurred. F-13 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) 3. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Interest—Imputation ofInterest”, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from thecarrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance of debt issuance costs are not affectedby the amendments in this update. The new standard is effective for the Company’s fiscal year 2017 and requires the Company to apply the new guidanceon a retrospective basis upon adoption. In July 2015, the FASB issued ASU No. 2015-11, “Inventory”, which modifies the subsequent measurement of inventories recorded under a first-in-first-out or average cost method. Under the new standard, such inventories are required to be measured at the lower of cost and net realizable value. The newstandard is effective for the Company’s fiscal year 2018, with prospective application. In July 2015, the FASB affirmed a proposal that would (i) defer the effective date of the new revenue recognition standard (ASU 2014-09) by one year and(ii) permit all entities to apply the new standard early, but not before the original effective date. The new guidance is effective for the Company’s fiscalyear 2019. In August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement ofDebt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015EITF Meeting”, which provides clarification from ASU No. 2015-03 regarding the presentation and subsequent measurement of debt issuance costsassociated with line-of-credit arrangements. The Company is evaluating the effect the new guidance will have on its consolidated financial statements and related disclosures. In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss,or a Tax Credit Carryforward Exists”. The guidance requires an entity to present its deferred tax asset for a net operating loss carryforward, similar tax loss,or a tax credit carryforward net of unrecognized tax benefits when settlement in this manner is available under the tax law, which would be based on factsand circumstances as of the balance sheet reporting date and would not consider future events. The Company has adopted the guidance in fiscal year2015 and there is no significant impact on the Company’s financial statements. There have been no other newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on theCompany's financial statements. 4. Acquisition Acquisition of Draw Winding Business from Dillon Yarn CorporationOn December 2, 2013, the Company acquired certain draw winding assets and the associated business from American Drawtech Company, Inc. (“ADC”), adivision of Dillon Yarn Corporation (“Dillon”), pursuant to the exercise of an option granted to the Company under the terms of a commissioningagreement with Dillon, for $2,934, which included accounts payable and an accrued contingent liability. The assets acquired include Dillon’s drawwinding inventory and production machinery and equipment. This acquisition increased the Company’s polyester production capacity and has allowedthe Company to expand its presence in targeted industrial, belting, hose and thread markets by increasing its product offerings to include mid-tenacityflat yarns. At the time of the acquisition, Mr. Mitchel Weinberger was a member of the Company’s Board of Directors (the “Board”) and was also Dillon’sPresident and Chief Operating Officer and an Executive Vice President and a director of ADC. F-14 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) The acquisition has been accounted for as a business combination, which requires assets acquired and liabilities assumed to be recognized at their fairvalues as of the acquisition date. The Company concluded that the acquisition did not represent a material business combination. The fair values of theassets acquired, liabilities assumed and consideration transferred are as follows: Assets: Inventory $434 Machinery and equipment 835 Customer list 1,615 Non-compete agreement 50 Total assets $2,934 Liabilities: Accounts payable $434 Contingent consideration 2,500 Total liabilities $2,934 The contingent consideration liability represented the present value of the expected future payments due to Dillon over the five-year period following theacquisition date. The payments due are equal to one-half of the operating profit of the draw winding business, as calculated using an agreed-upondefinition. The assumptions used in estimating the contingent consideration liability were based on inputs not observable in the market and representLevel 3 fair value measurements. These estimates are reviewed quarterly and any adjustment is recorded through operating income. See “Note 9. Intangible Assets, Net” for further discussion of the customer list and non-compete agreement. See “Note 18. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities” for further discussion of the recurring measurement of thecontingent consideration. 5. Receivables, Net Receivables, net consists of the following: June 28, 2015 June 29, 2014 Customer receivables $85,731 $95,270 Allowance for uncollectible accounts (1,596) (1,035)Reserves for yarn quality claims (581) (618)Net customer receivables 83,554 93,617 Related party receivables 75 17 Other receivables 234 291 Total receivables, net $83,863 $93,925 Other receivables consist primarily of receivables for duty drawback and refunds due from vendors. F-15 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) The changes in the Company’s allowance for uncollectible accounts and reserves for yarn quality claims were as follows: Allowance forUncollectibleAccounts Reserves for YarnQuality Claims Balance at June 24, 2012 $(1,118) $(939)Charged to costs and expenses 154 (1,881)Charged to other accounts 30 8 Deductions (38) 1,919 Balance at June 30, 2013 $(972) $(893)Charged to costs and expenses (287) (1,726)Charged to other accounts (20) 2 Deductions 244 1,999 Balance at June 29, 2014 $(1,035) $(618)Charged to costs and expenses (947) (1,336)Charged to other accounts 240 29 Deductions 146 1,344 Balance at June 28, 2015 $(1,596) $(581) Amounts charged to costs and expenses for the allowance for uncollectible accounts are reflected in provision for bad debts and deductions representamounts written off which were deemed to not be collectible, net of any recoveries. Amounts charged to costs and expenses for the reserves for yarnquality claims are primarily reflected as a reduction of net sales and deductions represent adjustments to either increase or decrease claims based onnegotiated amounts or actual versus estimated claim differences. Amounts charged to other accounts primarily include the impact of translating theactivity of the Company’s foreign affiliates from their respective local currencies to the U.S. dollar. 6. Inventories Inventories consists of the following: June 28, 2015 June 29, 2014 Raw materials $42,526 $42,244 Supplies 5,404 5,345 Work in process 7,546 7,404 Finished goods 56,844 59,716 Gross inventories 112,320 114,709 Inventory reserves (705) (1,339)Total inventories $111,615 $113,370 The cost for the majority of the Company’s inventories is determined using the first-in, first-out method. Certain foreign inventories and limitedcategories of supplies of $28,426 and $32,822 as of June 28, 2015 and June 29, 2014, respectively, were valued under the average cost method. 7. Other Current Assets Other current assets consists of the following: June 28, 2015 June 29, 2014 Vendor deposits $1,743 $2,369 Prepaid expenses 1,647 1,876 Funds held by qualified intermediary 1,390 — Value added taxes receivable 1,220 1,197 Other 22 610 Total other current assets $6,022 $6,052 F-16 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Vendor deposits primarily relate to down payments made toward the purchase of raw materials by the Company’s U.S., Brazilian and Chinese operations.Value added taxes receivable are recoverable taxes associated with the sales and purchase activities of the Company’s foreign operations. Prepaidexpenses consist of advance payments for insurance, professional fees, membership dues, subscriptions, non-income related tax payments, marketing andinformation technology services. During June 2015, the Company sold certain land and building assets historically utilized for warehousing in the Polyester Segment to an unrelated thirdparty. Net proceeds from the sale of $1,390 were remitted directly to a qualified intermediary in anticipation of an exchange under section 1031 of theInternal Revenue Code of 1986, as amended (“Internal Revenue Code”). 8. Property, Plant and Equipment, Net Property, plant and equipment, net consists of the following: June 28, 2015 June 29, 2014 Land $2,413 $2,957 Land improvements 11,709 11,676 Buildings and improvements 141,259 145,458 Assets under capital leases 17,371 4,587 Machinery and equipment 531,225 532,650 Computers, software and office equipment 16,782 17,404 Transportation equipment 4,736 4,901 Construction in progress 6,710 6,896 Gross property, plant and equipment 732,205 726,529 Less: accumulated depreciation (595,094) (602,436)Less: accumulated amortization – capital leases (889) (291)Total property, plant and equipment, net $136,222 $123,802 Assets under capital leases consists of the following: June 28, 2015 June 29, 2014 Machinery and equipment $12,804 $1,649 Transportation equipment 3,714 2,085 Building improvements 853 853 Gross assets under capital leases $17,371 $4,587 During fiscal year 2015, the Company entered into six capital leases with an aggregate present value of $12,784 for machinery and transportationequipment. During fiscal year 2014, the Company entered into four capital leases with an aggregate present value of $3,353 for building improvements, machineryand transportation equipment. Internal software development costs within PP&E consist of the following: June 28, 2015 June 29, 2014 Internal software development costs $2,473 $2,318 Accumulated amortization (2,221) (2,075)Net internal software development costs $252 $243 F-17 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Depreciation expense, including the amortization of assets under capital leases, internal software development costs amortization, repairs andmaintenance expenses, and capitalized interest were as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Depreciation expense $15,276 $15,031 $21,597 Internal software development costs amortization 146 143 128 Repair and maintenance expenses 17,741 18,319 18,649 Capitalized interest 191 172 36 9. Intangible Assets, Net Intangible assets, net consists of the following: June 28, 2015 June 29, 2014 Customer lists $23,615 $23,615 Non-compete agreements 4,293 4,293 Licenses, trademarks and other 837 766 Total intangible assets, gross 28,745 28,674 Accumulated amortization - customer lists (19,432) (17,838)Accumulated amortization - non-compete agreements (3,537) (3,214)Accumulated amortization – licenses, trademarks and other (388) (228)Total accumulated amortization (23,357) (21,280)Total intangible assets, net $5,388 $7,394 In fiscal year 2007, the Company purchased the texturing operations of Dillon, which are included in the Company’s Polyester Segment. The valuation ofthe customer list acquired was determined by estimating the discounted net earnings attributable to the customer relationships that were purchased afterconsidering items such as possible customer attrition. Based on the length and trend of the projected cash flows, an estimated useful life of thirteen yearswas determined. The customer list is amortized through December 2019, in a manner which reflects the expected economic benefit that will be receivedover its thirteen-year life. The non-compete agreement is amortized through December 2017, using the straight-line method over the period currentlycovered by the agreement. The amortization expense is included within the Polyester Segment’s depreciation and amortization expense. On December 2, 2013, the Company acquired certain draw winding assets and the associated business from Dillon, as described in “Note 4. Acquisition.”A customer list and a non-compete agreement were recorded in connection with the business combination, utilizing similar valuation methods asdescribed above for the fiscal year 2007 transaction. The customer list is amortized over a nine-year estimated useful life based on the expected economicbenefit. The non-compete agreement is amortized using the straight line method over the five-year term of the agreement. The amortization expense isincluded within the Polyester Segment’s depreciation and amortization expense. In fiscal year 2012, the Company acquired a controlling interest (and continues to hold such 60% membership interest) in Repreve Renewables, LLC(“Renewables”), an agricultural company focused on the development, production and commercialization of dedicated biomass feedstock for use in theanimal bedding, bio energy and bio-based products markets. The non-compete agreement for Renewables is amortized using the straight-line methodover the five-year term of the agreement. The FREEDOM Giant Miscanthus (“FGM”) license held by Renewables is amortized using the straight-linemethod over its estimated useful life of eight years. The FGM license is exclusive through April 26, 2020 and non-exclusive thereafter. The term of thelicense agreement is through March 5, 2030, which is the term of the related patent. Renewables may elect to extend the exclusive license rights throughthe term of the agreement by making a one-time payment to Mississippi State University (“MSU”) equal to 25% of the royalties paid to MSU attributableto the ninth year of the agreement. The Company capitalizes costs incurred to register trademarks for REPREVE and other PVA products in various countries. The Company hasdetermined that these trademarks have varying useful lives of up to three years and are being amortized using the straight-line method. F-18®® Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Amortization expense for intangible assets consists of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Customer lists $1,594 $1,845 $1,837 Non-compete agreements 323 319 313 Licenses, trademarks and other 163 134 77 Total amortization expense $2,080 $2,298 $2,227 The following table presents the expected intangible asset amortization for the next five fiscal years: 2016 2017 2018 2019 2020 Expected amortization $1,694 $1,380 $1,041 $693 $350 10. Other Non-Current Assets Other non-current assets consists of the following: June 28, 2015 June 29, 2014 Biomass foundation and feedstock, net $2,151 $2,683 Debt financing fees 1,611 2,093 Other 213 310 Total other non-current assets $3,975 $5,086 Biomass foundation and feedstock are currently being developed and propagated by Renewables for potential markets in the animal bedding andbioenergy industries and are reflected net of accumulated depreciation of $55 and $0 at June 28, 2015 and June 29, 2014, respectively. Other consistsprimarily of vendor deposits. 11. Accrued Expenses Accrued expenses consists of the following: June 28, 2015 June 29, 2014 Payroll and fringe benefits $11,258 $12,406 Utilities 2,823 2,876 Property taxes 790 821 Contingent consideration 634 537 Other 1,135 1,949 Total accrued expenses $16,640 $18,589 Other consists primarily of employee-related claims and payments, interest, marketing expenses, freight expenses, rent, deferred incentives and other non-income related taxes. F-19 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) 12. Long-Term Debt Debt ObligationsThe following table presents the total balances outstanding for the Company’s debt obligations, their scheduled maturity dates and the weighted averageinterest rates for borrowings as well as the applicable current portion of long-term debt: Weighted AverageInterest Rate as ofJune 28, 2015 (1) Principal Amounts as of ScheduledMaturity Date June 28, 2015 June 29, 2014 ABL Revolver March 2020 1.7% $5,000 $26,000 ABL Term Loan March 2020 2.2% 82,125 68,000 Term loan from unconsolidated affiliate August 2016 3.0% 1,250 1,250 Capital lease obligations (2) (3) 15,735 4,238 Total debt 104,110 99,488 Current portion of long-term debt (12,385) (7,215)Total long-term debt $91,725 $92,273 (1)The weighted average interest rate as of June 28, 2015 for the ABL Term Loan includes the effects of the interest rate swap with a notionalbalance of $50,000. (2)Scheduled maturity dates for capital lease obligations range from January 2017 to November 2027. (3)Fixed interest rates for capital lease obligations range from 2.3% to 4.6%. On March 26, 2015, the Company and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated Credit Agreement (the “AmendedCredit Agreement”) for a $200,000 senior secured credit facility (the “ABL Facility”) with a syndicate of lenders. The ABL Facility consists of a $100,000revolving credit facility (the “ABL Revolver”) and an $84,375 term loan that can be reset up to a maximum amount of $100,000 if certain futureconditions are met (the “ABL Term Loan”). The ABL Facility has a maturity date of March 26, 2020. The Company paid $750 to the lenders inconnection with the Amended Credit Agreement. The Amended Credit Agreement replaced a previous senior secured credit facility dated May 24, 2012 with a similar syndicate of lenders, which, aftermultiple amendments, would have matured on March 28, 2019 and consisted of a $100,000 revolving credit facility and a $90,000 term loan. As usedherein, the terms “ABL Facility,” “ABL Revolver” and “ABL Term Loan” shall mean the senior secured credit facility, the revolving credit facility or theterm loan, respectively, under the Amended Credit Agreement or the previous senior secured credit facility, as applicable. ABL FacilityThe ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with proceeds andproducts) of Unifi, Inc., Unifi Manufacturing, Inc. and certain subsidiary guarantors (the “Loan Parties”). It is also secured by a first-priority securityinterest in all (or 65% in the case of certain first tier controlled foreign corporations, as required by the lenders) of the stock of (or other ownershipinterests in) each of the Loan Parties (other than the Company) and certain subsidiaries of the Loan Parties, together with all proceeds and productsthereof. The Amended Credit Agreement includes representations and warranties made by the Loan Parties, affirmative and negative covenants and events ofdefault that are usual and customary for financings of this type. If excess availability under the ABL Revolver falls below the defined Trigger Level, afinancial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a monthly basis of at least 1.05 to 1.0 becomes effective. TheTrigger Level as of June 28, 2015 was $22,766. In addition, the ABL Facility contains restrictions on certain payments and investments, includingrestrictions on the payment of dividends and share repurchases. Subject to certain provisions, the ABL Term Loan may be prepaid at par, in whole or inpart, at any time before the maturity date, at the Company’s discretion. F-20 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) ABL Facility borrowings bear interest at the London Interbank Offer Rate (“LIBOR”) plus an applicable margin of 1.50% to 2.00%, or the Base Rate plusan applicable margin of 0.50% to 1.00%, with interest currently being paid on a monthly basis. The applicable margin is based on (a) the excessavailability under the ABL Revolver and (b) the consolidated leverage ratio, calculated by fiscal quarter. The Base Rate means the greater of (i) the primelending rate as publicly announced from time to time by Wells Fargo, (ii) the Federal Funds Rate plus 0.5%, and (iii) LIBOR plus 1.0%. The Company’sability to borrow under the ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventory andis subject to certain conditions and limitations. There is also a monthly unused line fee under the ABL Revolver of 0.25%. The ABL Term Loan is currently subject to quarterly amortizing payments of $2,250. Additionally, principal increases are available at the Company’sdiscretion, resetting the loan balance up to a maximum amount of $100,000, once per fiscal year upon satisfaction of certain conditions, beginningOctober 1, 2015. As of June 28, 2015, the Company was in compliance with all financial covenants; the excess availability under the ABL Revolver was $75,933; theconsolidated leverage ratio was 1.6 to 1.0; the fixed charge coverage ratio was 3.0 to 1.0; and the Company had $235 of standby letters of credit, none ofwhich have been drawn upon. First AmendmentOn June 26, 2015, the Company entered into the First Amendment to Amended and Restated Credit Agreement dated March 26, 2015 (“FirstAmendment”). The First Amendment modified the composition of subsidiary guarantors in connection with an internal reorganization completed duringthe fourth quarter of fiscal year 2015. There was no impact to the consolidated financial statements as a result of the First Amendment. Term Loan from Unconsolidated AffiliateOn August 30, 2012, a foreign subsidiary of the Company entered into an unsecured loan agreement under which it borrowed $1,250 from the Company’sunconsolidated affiliate, U.N.F. Industries Ltd. The loan does not amortize and bears interest at 3%, payable semi-annually. The entire principal balance isdue August 30, 2016, the revised maturity date. Capital Lease ObligationsDuring fiscal year 2015, the Company entered into six capital leases with an aggregate present value of $12,784. Fixed interest rates and maturity datesfor these capital leases range from 3.1% to 3.8% and August 2019 to August 2020, respectively. During fiscal year 2014, the Company entered into four capital leases with an aggregate present value of $3,353. Scheduled Debt MaturitiesThe following table presents the scheduled maturities of the Company’s outstanding debt obligations for the following five fiscal years and thereafter: Scheduled Maturities on a Fiscal Year Basis 2016 2017 2018 2019 2020 Thereafter ABL Revolver $— $— $— $— $5,000 $— ABL Term Loan 9,000 9,000 9,000 9,000 46,125 — Capital lease obligations 3,385 3,463 3,301 3,200 1,652 734 Term loan from unconsolidated affiliate — 1,250 — — — — Total $12,385 $13,713 $12,301 $12,200 $52,777 $734 F-21 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Debt Financing FeesDebt financing fees are classified within other non-current assets and consist of the following: June 28, 2015 June 29, 2014 Balance at beginning of year $2,093 $2,117 Additions 1,063 400 Amortization charged to interest expense (505) (424)Loss on extinguishment of debt (1,040) — Balance at end of year $1,611 $2,093 Interest ExpenseInterest expense consists of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Interest on ABL Facility $3,290 $3,292 $3,673 Interest on a prior term loan — — 722 Other 273 192 107 Subtotal of interest on debt obligations 3,563 3,484 4,502 Reclassification adjustment for interest rate swap 231 554 322 Amortization of debt financing fees 505 424 632 Mark-to-market adjustment for interest rate swap (83) 39 (931)Interest capitalized to property, plant and equipment, net (191) (172) (36)Subtotal of other components of interest expense 462 845 (13)Total interest expense $4,025 $4,329 $4,489 Loss on Extinguishment of DebtEntering into the Amended Credit Agreement in fiscal year 2015 generated substantially different terms for the ABL Term Loan and resulted in thereplacement of an existing lender. Accordingly, the Company recorded a loss on extinguishment of debt of $1,040 for the write-off of certain debtfinancing fees related to the previous credit agreement. On January 8, 2013, the Company prepaid a $30,000 term loan with a maturity date of May 24, 2017, and recorded a loss on extinguishment of debt of$1,102 to reflect $671 for prepayment costs and $431 for the write-off of related debt financing fees. 13. Other Long-Term Liabilities Other long-term liabilities consists of the following: June 28, 2015 June 29, 2014 Uncertain tax positions $3,980 $1,101 Supplemental post-employment plan 3,690 3,173 Contingent consideration 1,573 2,026 Interest rate swap 280 363 Other 1,217 886 Total other long-term liabilities $10,740 $7,549 The Company maintains an unfunded supplemental post-employment plan for certain management employees. Each employee’s account is creditedannually based upon a percentage of the participant’s base salary, with each participant’s balance adjusted quarterly to reflect returns based upon a stockmarket index. Amounts are paid to participants only after termination of employment. Expenses recorded for this plan for the fiscal years ended June 28,2015, June 29, 2014 and June 30, 2013 were $517, $780 and $775, respectively. F-22 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Contingent consideration represents the present value of the long-term portion of contingent payments associated with the Company’s December 2013acquisition of Dillon’s draw winding business. See “Note 18. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities” for furtherdiscussion. Other primarily includes certain retiree and post-employment medical and disability liabilities and deferred energy incentive credits. 14. Income Taxes Components of income before income taxesThe components of income before income taxes consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 United States $38,341 $38,816 $16,900 Foreign 15,471 9,065 12,114 Income before income taxes $53,812 $47,881 $29,014 Components of provision for income taxesThe components of provision for income taxes consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Current: Federal $7,985 $14,463 $2,399 State 1,231 1,035 119 Foreign 7,926 4,092 5,210 17,142 19,590 7,728 Deferred: Federal (4,006) 183 7,086 State (112) 900 542 Foreign 322 (512) (2,012) (3,796) 571 5,616 Provision for income taxes $13,346 $20,161 $13,344 Utilization of Net Operating Loss CarryforwardsState deferred tax expense includes the utilization of net operating loss (“NOL”) carryforwards of $196, $499 and $825 for fiscal years 2015, 2014 and2013, respectively. Foreign deferred tax expense includes the utilization of NOL carryforwards of $147, $216 and $258 for fiscal years 2015, 2014 and2013, respectively. Federal deferred tax expense includes the utilization of NOL carryforwards of $7,904 for fiscal year 2013. F-23 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Effective income tax rateThe provision for income taxes as reconciled from the federal statutory tax rate to the effective tax rate is as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Federal statutory tax rate 35.0% 35.0% 35.0%State income taxes, net of federal tax benefit 1.8 2.8 2.1 Foreign income taxed at different rates (3.2) (1.2) (0.5)Settlement of certain intercompany foreign currency transactions 5.6 — — Repatriation of foreign earnings and withholding taxes (0.3) 0.4 1.1 Indefinite reinvestment assertion (14.2) 0.5 1.0 Change in valuation allowance (5.6) 4.0 11.2 Domestic production activities deduction (1.3) (2.3) (1.2)Change in uncertain tax positions 5.4 (0.5) (1.4)Renewable energy credits (1.9) — — Research and other credits (0.4) (0.3) (3.5)Nondeductible expenses and other 3.9 3.7 2.2 Effective tax rate 24.8% 42.1% 46.0% The effective income tax rate for fiscal year 2015 was primarily impacted by, among other things (i) a decrease in the valuation allowance reflecting therecognition of lower taxable income versus book income for the Company’s investment in Parkdale America, LLC (for which the Company maintains afull valuation allowance), which was partially offset by an increase in the valuation allowance for net operating losses, including Renewables, for whichno tax benefit could be recognized; (ii) the change in the Company’s indefinite reinvestment assertion, which provides for foreign earnings permanentlyreinvested at June 28, 2015; (iii) a lower overall effective tax rate for the Company’s foreign earnings (reflecting free-trade zone sales in El Salvador andlower statutory tax rates in both Brazil and China); (iv) net federal and state credits, including renewable energy credits; and (v) the domestic productionactivities deduction. These items were partially offset by (i) taxes associated with settlement of certain intercompany foreign currency transactions inBrazil; (ii) a change in uncertain tax positions related to certain intercompany foreign currency transactions in Brazil; and (iii) state and local taxes net ofthe assumed federal benefit. The Company’s effective tax rate for fiscal years 2014 and 2013 was significantly impacted by, among other things, the increase in the valuationallowance primarily related to equity investments and state and local taxes net of the assumed federal benefit, partially offset by the domestic productionactivities deduction, research and development credits and other credits. F-24 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Deferred income taxesThe significant components of the Company’s deferred tax assets and liabilities consist of the following: June 28, 2015 June 29, 2014 Deferred tax assets: Investments, including unconsolidated affiliates $9,675 $13,682 State tax credits 461 85 Accrued liabilities and valuation reserves 2,620 4,187 Net operating loss carryforwards 2,904 1,635 Intangible assets, net 4,964 5,259 Foreign tax credits 2,588 2,588 Incentive compensation plans 3,515 2,896 Other items 4,673 5,167 Total gross deferred tax assets 31,400 35,499 Valuation allowance (15,606) (18,615)Net deferred tax assets 15,794 16,884 Deferred tax liabilities: Property, plant and equipment (11,432) (6,709)Indefinite reinvestment assertion — (7,639)Other (530) (618)Total deferred tax liabilities (11,962) (14,966)Net deferred tax asset $3,832 $1,918 Deferred income taxes - valuation allowanceIn assessing the realizability of deferred tax assets, the Company considers whether it is more-likely-than-not that some portion or all of the deferred taxassets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods inwhich those temporary differences become deductible. The Company considers the scheduled reversal of taxable temporary differences, taxable incomein carryback years, projected future taxable income and tax planning strategies in making this assessment. Since the Company operates in multiplejurisdictions, the assessment is made on a jurisdiction-by-jurisdiction basis, taking into account the effects of local tax law. The balances and activity for the Company’s deferred tax valuation allowance are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Balance at beginning of the year $(18,615) $(16,690) $(13,911)Charged to provision for income taxes 3,009 (1,925) (3,243)Charged to other accounts — — 464 Balance at end of year $(15,606) $(18,615) $(16,690) Components of the Company’s deferred tax valuation allowance are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Investment in a former domestic unconsolidated affiliate $(6,503) $(6,493) $(6,649)Equity-method investment in Parkdale America, LLC (3,261) (7,286) (5,762)Foreign tax credits (1,680) (1,680) (1,680)Book versus tax basis difference in Renewables (1,359) (2,035) (1,846)NOLs related to Renewables (2,803) (1,121) (753)Total deferred tax valuation allowance $(15,606) $(18,615) $(16,690) F-25 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) During fiscal year 2015, the Company’s valuation allowance decreased by $3,009. This decrease consists of $4,025 related to the Company’s investmentin Parkdale America, LLC (“PAL”) due to the timing of PAL’s taxable income versus book income and the impact of two bargain purchase gains, asdescribed in more detail in “Note 23. Investments in Unconsolidated Affiliates and Variable Interest Entities”. The decrease was partially offset by a net$1,006 increase related to the Company’s investment in Renewables and its related NOLs as a result of continued losses for Renewables and the disposalof certain biomass foundation and feedstock, as described in more detail in “Note 21. Other Operating Expense, Net”. During fiscal year 2014, the Company’s valuation allowance increased by $1,925. This increase relates to (i) the timing of taxable income versus bookincome for PAL and (ii) NOLs for Renewables which were deemed unrealizable. During fiscal year 2013, the Company’s valuation allowance increased by $2,779. This increase relates to the timing of taxable income versus bookincome for PAL, partially offset by a decrease of $649 related to NOL carryforwards for the Company’s Colombian subsidiary. Deferred tax expense wasreduced by $424. Unrecognized tax benefitsA reconciliation of beginning and ending gross amounts of unrecognized tax benefits is as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Balance at beginning of the year $983 $964 $1,154 Gross increases related to current period tax positions 3,469 78 250 Gross increases related to tax positions in prior periods 18 68 — Gross decreases related to settlements with tax authorities (178) (2) — Gross decreases related to lapse of applicable statute of limitations (263) (125) (440)Balance at end of year $4,029 $983 $964 Unrecognized tax benefits would generate a favorable impact of $3,927 on the Company’s effective tax rate when recognized. The Company expectsuncertain tax positions to decrease by $308 within the next twelve months due to statute expirations on certain positions. The reversal of interest andpenalties recognized by the Company within the provision for income taxes were $(95), $(193) and $(250) for fiscal years 2015, 2014 and 2013,respectively. The Company has $23, $118 and $311 accrued for interest and/or penalties related to uncertain tax positions as of June 28, 2015, June 29,2014 and June 30, 2013, respectively. Expiration of net operating loss carryforwards and foreign tax creditsAs of June 28, 2015, the Company has $3,972 of state net operating loss carryforwards, for which no valuation allowance is established, that may be usedto offset future taxable income. In addition, the Company has $2,588 of foreign tax credit carryforwards of which $1,680 are offset by a valuationallowance. These carryforwards, if unused, will expire as follows: State net operating loss carryforwards2016 through 2033Foreign tax credit carryforwards2021 Tax years subject to examinationThe Company and its domestic subsidiaries file a consolidated federal income tax return, as well as income tax returns in multiple state and foreignjurisdictions. The tax years subject to examination vary by jurisdiction. The Company regularly assesses the outcomes of both completed and ongoingexaminations to ensure that the Company’s provision for income taxes is sufficient. The Company remains subject to income tax examinations for U.S. federal income taxes for tax years 2011 through 2014, for foreign income taxes for taxyears 2008 through 2014, and for state and local income taxes for tax years 2009 through 2014. The U.S. federal returns and certain state tax returns filedfor the 2011 through 2014 tax years have utilized carryforward tax attributes generated in prior tax years, including net operating losses that couldpotentially be revised upon examination. F-26 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Indefinite reinvestment assertionDuring the fourth quarter of fiscal year 2015, the Company completed a reorganization of certain foreign subsidiaries that changed the historicalownership structure. As of June 28, 2015, $57,531 of earnings and profits of the Company’s foreign subsidiaries are deemed to be permanently reinvested,including all cash and cash equivalents on-hand at the Company’s foreign operations. In accordance with ASC 740-30-25-17, the Company has nocurrent or deferred tax liabilities recorded (which considers any applicable U.S. federal income taxes and foreign withholding taxes) based on thisindefinite reinvestment assertion. Nevertheless, in future periods, the Company will continue to assess the existing circumstances, including any changes in tax laws, and reevaluate thenecessity for any deferred tax liability. Computation of the potential tax liabilities associated with indefinitely reinvested earnings is not practicable. 15. Shareholders’ Equity During fiscal year 2014, the Company completed its repurchase of shares under its $50,000 stock repurchase program that had been approved by theBoard on January 22, 2013 (the “2013 SRP”). On April 23, 2014, the Board approved a new stock repurchase program (“2014 SRP”) to acquire up to anadditional $50,000 of the Company’s common stock. Under the 2014 SRP (as was the case under the 2013 SRP), the Company has been authorized torepurchase shares at prevailing market prices, through open market purchases or privately negotiated transactions at such times and prices and in suchmanner as determined by management, subject to market conditions, applicable legal requirements, contractual obligations and other factors.Repurchases are expected to be financed through cash generated from operations and borrowings under the Company’s ABL Revolver, and are subject toapplicable limitations and restrictions as set forth in the ABL Facility. The 2014 SRP has no stated expiration or termination date, and there is no timelimit or specific time frame otherwise for repurchases. The Company may discontinue repurchases at any time that management determines additionalpurchases are not beneficial or advisable. The following table summarizes the Company’s repurchases and retirements of its common stock under the 2013 SRP and the 2014 SRP. Total Number ofSharesRepurchased asPart of PubliclyAnnounced Plansor Programs Average Price Paidper Share MaximumApproximate DollarValue that May YetBe RepurchasedUnder the 2014 SRP Fiscal year 2013 1,068 $18.08 Fiscal year 2014 1,524 $23.96 Fiscal year 2015 349 $29.72 Total 2,941 $22.51 $33,811 All repurchased shares have been retired and have the status of authorized and unissued shares. The cost of the repurchased shares is recorded as areduction to common stock to the extent of the par value of the shares acquired and the remainder is allocated between capital in excess of par value andretained earnings. The portion of the remainder that is allocated to capital in excess of par value is limited to a pro rata portion of capital in excess of parvalue. No dividends were paid in the three most recent fiscal years. 16. Stock-Based Compensation On October 23, 2013, the Company’s shareholders approved the Unifi, Inc. 2013 Incentive Compensation Plan (the “2013 Plan”). The 2013 Plan replacedthe 2008 Unifi, Inc. Long-Term Incentive Plan (“2008 LTIP”). No additional awards will be granted under the 2008 LTIP; however, prior awardsoutstanding under the 2008 LTIP remain subject to that plan’s provisions. The 2013 Plan authorized the issuance of 1,000 shares of common stock,subject to certain increases in the event outstanding awards under the 2008 LTIP expire, are forfeited or otherwise terminate unexercised. F-27 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Stock optionsDuring fiscal years 2015, 2014 and 2013, the Company granted stock options to purchase 150, 97 and 138 shares of stock, respectively, to certain keyemployees. The stock options vest ratably over the required three-year service period and have ten-year contractual terms. For the fiscal years ended June28, 2015, June 29, 2014 and June 30, 2013, the weighted average exercise price of the options granted was $27.38, $22.31 and $11.15 per share,respectively. The Company used the Black-Scholes model to estimate the weighted average grant date fair value of $17.31, $14.66 and $7.28 per share,respectively. For options granted, the valuation models used the following assumptions: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Expected term (years) 7.3 7.4 7.5 Risk-free interest rate 2.2% 2.1% 1.0% Volatility 62.6% 65.9% 66.9% Dividend yield — — — The Company uses historical data to estimate the expected term and volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effectat the time of the grant for periods corresponding with the expected term of the options. A summary of stock option activity for the fiscal year ended June 28, 2015 is as follows: Stock Options WeightedAverageExercise Price WeightedAverageRemainingContractualLife (Years) AggregateIntrinsicValue Outstanding at June 29, 2014 800 $9.77 Granted 150 $27.38 Exercised (11) $8.48 Forfeited (5) $9.14 Expired — $— Outstanding at June 28, 2015 934 $12.63 5.6 $19,507 Vested and expected to vest as of June 28, 2015 926 $12.53 5.6 $19,439 Exercisable at June 28, 2015 685 $8.61 4.5 $17,059 As of June 28, 2015, all options subject to a market condition were vested. During fiscal year 2015, 10 options subject to a market condition vested whenthe closing price of the Company’s common stock on the New York Stock Exchange was at least $30 per share for thirty consecutive trading days. At June 28, 2015, the remaining unrecognized compensation cost related to the unvested stock options was $1,266, which is expected to be recognizedover a weighted average period of 1.9 years. For the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013, the total intrinsic value of options exercised was $190, $12,963 and $1,937,respectively. The amount of cash received from the exercise of options was $95, $3,136 and $1,298 for the fiscal years ended June 28, 2015, June 29,2014 and June 30, 2013, respectively. The tax benefit realized from stock options exercised was $73, $4,934 and $680 for the fiscal years ended June 28,2015, June 29, 2014 and June 30, 2013, respectively. Restricted stock unitsDuring fiscal years 2014 and 2013, the Company granted 22 and 32 restricted stock units (“RSUs”), respectively, to certain key employees. The employeeRSUs are subject to a vesting restriction and convey no rights of ownership in shares of Company stock until such employee RSUs have vested and beendistributed to the grantee in the form of Company stock. The employee RSUs vest over a three-year period, and will be converted into an equivalentnumber of shares of stock (for distribution to the grantee) on each vesting date, unless the grantee has elected to defer the receipt of the shares of stockuntil separation from service. If, after the first anniversary of the grant date and prior to the final vesting date, the grantee has a F-28 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) separation from service without cause for any reason other than the employee’s resignation, the remaining unvested employee RSUs will become fullyvested and will be converted to an equivalent number of shares of stock and issued to the grantee. The Company estimated the fair value of the employeeRSUs granted during fiscal years 2014 and 2013 to be $22.08 and $11.23 per employee RSU, respectively. During fiscal years 2015, 2014 and 2013, the Company granted 17, 25 and 30 RSUs, respectively, to the Company’s non-employee directors. The directorRSUs became fully vested on the grant date. The director RSUs convey no rights of ownership in shares of Company stock until such director RSUs havebeen distributed to the grantee in the form of Company stock. The vested director RSUs will be converted into an equivalent number of shares ofCompany common stock and distributed to the grantee following the grantee’s termination of service as a member of the Board. The grantee may elect todefer receipt of the shares of stock in accordance with the deferral options provided under the Unifi, Inc. Director Deferred Compensation Plan. TheCompany estimated the fair value of the director RSUs granted during fiscal years 2015, 2014 and 2013 to be $28.58, $23.23 and $13.57 per directorRSU, respectively. The Company estimates the fair value of RSUs based on the market price of the Company’s common stock at the award grant date. A summary of the RSU activity for the fiscal year ended June 28, 2015 is as follows: Non-vested WeightedAverageGrant DateFair Value Vested Total WeightedAverageGrant DateFair Value Outstanding at June 29, 2014 49 $16.11 152 201 $14.19 Granted 17 $28.58 — 17 $28.58 Vested (46) $19.86 46 — $19.86 Converted — $— (31) (31) $15.30 Forfeited — $— — — $— Outstanding at June 28, 2015 20 $18.35 167 187 $15.35 At June 28, 2015, the number of RSUs vested and expected to vest was 187, with an aggregate intrinsic value of $6,292. The aggregate intrinsic value ofthe 167 vested RSUs at June 28, 2015 was $5,593. The remaining unrecognized compensation cost related to the unvested RSUs at June 28, 2015 is $61, which is expected to be recognized over aweighted average period of 1 year. For the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013, the total intrinsic value of RSUs converted was $958, $696 and $114,respectively. The tax benefit realized from the conversion of RSUs was $373, $275 and $45 for the fiscal years ended June 28, 2015, June 29, 2014 andJune 30, 2013, respectively. SummaryThe total cost charged against income related to all stock-based compensation arrangements was as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Stock options $1,955 $1,001 $847 RSUs 676 938 686 Total compensation cost $2,631 $1,939 $1,533 The total income tax benefit recognized for stock-based compensation was $623, $513 and $381 for fiscal years 2015, 2014 and 2013, respectively. As of June 28, 2015, total unrecognized compensation costs related to all unvested stock-based compensation arrangements was $1,327. The weightedaverage period over which these costs are expected to be recognized is 1.8 years. F-29 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) As of June 28, 2015, a summary of the number of securities remaining available for future issuance under equity compensation plans is as follows: Authorized under the 2013 Plan 1,000 Plus: Awards expired, forfeited or otherwise terminated unexercised from the 2008 LTIP 1 Less: Service condition options granted (155)Less: RSUs granted to non-employee directors (42)Available for issuance under the 2013 Plan 804 17. Defined Contribution Plan The Company matches employee contributions made to the Unifi, Inc. Retirement Savings Plan (the “DC Plan”), a 401(k) defined contribution plan,which covers eligible domestic salary and hourly employees. Under the terms of the DC Plan, the Company matches 100% of the first three percent ofeligible employee contributions and 50% of the next two percent of eligible contributions. The following table presents the employer matching contribution expense related to the DC Plan: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Matching contribution expense $2,201 $2,006 $2,015 18. Fair Value of Financial Instruments and Non-Financial Assets and Liabilities Financial InstrumentsThe Company may use derivative financial instruments such as foreign currency forward contracts or interest rate swaps to reduce its ongoing businessexposures to fluctuations in foreign currency exchange rates or interest rates. The Company does not enter into derivative contracts for speculativepurposes. Foreign currency forward contractsThe Company may enter into foreign currency forward contracts as economic hedges for exposures related to certain sales, inventory purchases andequipment purchases which are denominated in currencies that are not its functional currency. Foreign currency forward contracts are not designated ashedges by the Company and are marked to market each period and offset by the foreign exchange (gains) losses included in other operating expense, netresulting from the underlying exposures of the foreign currency denominated assets and liabilities. As of June 28, 2015, there were no outstanding foreigncurrency forward contracts. Interest rate swapOn May 18, 2012, the Company entered into a five year, $50,000 interest rate swap with Wells Fargo to provide a hedge against the variability of cashflows related to LIBOR-based variable rate borrowings under the Company’s ABL Facility. It increased to $85,000 in May 2013 (when certain otherinterest rate swaps terminated) and has decreased $5,000 per quarter since August 2013 to the current notional balance of $50,000, where it will remainthrough the life of the instrument. This interest rate swap allows the Company to fix LIBOR at 1.06% and terminates on May 24, 2017. On November 26, 2012, the Company de-designated the interest rate swap as a cash flow hedge. See “Note 19. Accumulated Other Comprehensive Loss”for detail regarding the reclassifications of amounts from accumulated other comprehensive loss related to the interest rate swap. Contingent considerationOn December 2, 2013, the Company acquired certain assets in a business combination with Dillon and recorded a contingent consideration liability, asdescribed in “Note 4. Acquisition.” The fair value of the contingent consideration is measured at each reporting period using a discounted cash flowmethodology based on inputs not observable in the market (Level 3 classification in the fair value hierarchy). The inputs to the discounted cash flowmodel include the estimated payments through the term of the agreement based on an agreed-upon definition and schedule, adjusted to risk-neutralestimates using a market price of risk factor which considers relevant metrics of comparable entities, discounted using an observable cost of F-30 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) debt over the term of the estimated payments. Any change in the fair value from either the passage of time or events occurring after the acquisition date isrecorded in other operating expense, net. There have been no significant changes to the inputs or assumptions used to develop the fair value measurementsince the acquisition date. A reconciliation of the changes in the fair value follows: Contingent consideration as of June 29, 2014 $2,563 Changes in fair value 148 Payments (504)Contingent consideration as of June 28, 2015 $2,207 Based on the present value of the expected future payments, $634 is reflected in accrued expenses and $1,573 is reflected in other long-term liabilities. The Company’s financial assets and liabilities accounted for at fair value on a recurring basis and the level within the fair value hierarchy used to measurethese items are as follows:As of June 28, 2015 Notional Amount USDEquivalent Balance SheetLocation Fair ValueHierarchy FairValue Foreign currency contracts EUR — $— — Level 2 $— Interest rate swap USD $50,000 $50,000 Other long-termliabilities Level 2 $(280)Contingent consideration — — Accrued expenses andother long-termliabilities Level 3 $(2,207) As of June 29, 2014Notional Amount USDEquivalent Balance SheetLocation Fair ValueHierarchy FairValue Foreign currency contractsEUR 495 $668 Other current assets Level 2 $7 Interest rate swapUSD $65,000 $65,000 Other long-termliabilities Level 2 $(363)Contingent consideration — — Accrued expenses andother long-termliabilities Level 3 $(2,563) (EUR represents the Euro) Estimates for the fair value of the Company’s foreign currency forward contracts and interest rate swaps are obtained from month-end market quotes forcontracts with similar terms. The effects of marked to market hedging derivative instruments are as follows: For the Fiscal Years Ended Derivatives not designated as hedges:Classification: June 28, 2015 June 29, 2014 June 30, 2013 Foreign currency contracts – EUR/USDOther operating expense, net $7 $(10) $— Foreign currency contracts – MXN/USDOther operating expense, net — (3) 46 Interest rate swapInterest expense (83) 39 (931)Total (gain) loss recognized in income $(76) $26 $(885) (EUR represents the Euro; MXN represents the Mexican Peso) F-31 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) By entering into derivative instrument contracts, the Company exposes itself to counterparty credit risk. The Company attempts to minimize this risk byselecting counterparties with investment grade credit ratings, limiting the amount of exposure to any single counterparty and regularly monitoring itsmarket position with each counterparty. The Company’s derivative instruments do not contain any credit-risk-related contingent features. The Company believes that there have been no significant changes to its credit risk profile or the interest rates available to the Company for debtissuances with similar terms and average maturities and the Company estimates that the fair values of its debt obligations approximate the carryingamounts. Other financial instruments include cash and cash equivalents, receivables, accounts payable and accrued expenses. The financial statementcarrying amounts of these items approximate the fair value due to their short-term nature. There were no transfers into or out of the levels of the fair value hierarchy for the fiscal years ended June 28, 2015, June 29, 2014 and June 30, 2013. Non-Financial Assets and LiabilitiesThe Company did not have any non-financial assets or liabilities that were required to be measured at fair value on a recurring basis. 19. Accumulated Other Comprehensive Loss The components of and the changes in accumulated other comprehensive loss, net of tax, as applicable, consist of the following: Derivative Financial Instruments ForeignCurrencyTranslationAdjustments Unrealized(loss) gain oninterest rateswaps Unrealized(loss) gain oncash flowhedges AccumulatedOtherComprehensiveIncome (Loss) Balance at June 24, 2012 $2,017 $(775) $(1,214) $28 Other comprehensive (loss) income, net of tax (6,585) (157) 1,214 (5,528)Balance at June 30, 2013 $(4,568) $(932) $— $(5,500) Other comprehensive income, net of tax 327 554 — 881 Balance at June 29, 2014 $(4,241) $(378) $— $(4,619) Other comprehensive (loss) income, net of tax (22,511) 231 — (22,280)Balance at June 28, 2015 $(26,752) $(147) $— $(26,899)Unrealized (loss) gain on cash flow hedges related to an unconsolidated affiliate F-32(1)(1) Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) A summary of the pre-tax and after-tax effects of the components of other comprehensive (loss) income for the fiscal years ended June 28, 2015, June 29,2014 and June 30, 2013 is provided as follows: Fiscal Year 2015 Fiscal Year 2014 Fiscal Year 2013 Pre-tax After-tax Pre-tax After-tax Pre-tax After-tax Other comprehensive (loss) income: Foreign currency translation adjustments $(21,578) $(21,578) $327 $327 $(6,585) $(6,585) Foreign currency translation adjustmentsfor an unconsolidated affiliate (933) (933) — — — — Unrealized (loss) on interest rate swaps — — — — (240) (479) Unrealized gain on cash flow hedges for anunconsolidated affiliate — — — — 1,214 1,214 Reclassification adjustment for interestrate swap included in net income 231 231 554 554 322 322 Other comprehensive (loss) income $(22,280) $(22,280) $881 $881 $(5,289) $(5,528) 20. Computation of Earnings Per Share The computation of basic and diluted earnings per share (“EPS”) is as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Basic EPS Net income attributable to Unifi, Inc. $42,151 $28,823 $16,635 Weighted average common shares outstanding 18,207 18,919 19,909 Basic EPS $2.32 $1.52 $0.84 Diluted EPS Net income attributable to Unifi, Inc. $42,151 $28,823 $16,635 Weighted average common shares outstanding 18,207 18,919 19,909 Net potential common share equivalents – stock options and RSUs 629 702 796 Adjusted weighted average common shares outstanding 18,836 19,621 20,705 Diluted EPS $2.24 $1.47 $0.80 Excluded from the calculation of common share equivalents: Anti-dilutive common share equivalents 150 91 210 Excluded from the calculation of diluted shares: Unvested options that vest upon achievement of certain market conditions — 13 27 F-33 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) The calculation of earnings per common share is based on the weighted average number of the Company’s common shares outstanding for the applicableperiod. The calculation of diluted earnings per common share presents the effect of all potential dilutive common shares that were outstanding during therespective period, unless the effect of doing so is anti-dilutive. 21. Other Operating Expense, Net Other operating expense, net consists of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Net loss on sale or disposal of assets $778 $475 $243 Foreign currency transaction losses (gains) 448 504 (132)Operating expenses for Renewables — 2,749 2,396 Restructuring charges, net — 1,273 813 Other, net 374 288 89 Other operating expense, net $1,600 $5,289 $3,409 Net Loss on Sale or Disposal of AssetsDuring fiscal year 2015, Renewables disposed of certain biomass foundation and feedstock (primarily established during, and maintained since, fiscalyear 2010) utilized to support certain historical business objectives, resulting in a loss on disposal of assets of $1,322 (before consideration of the non-controlling interest amount of $533). During fiscal year 2015, the Company completed the sale of certain land and building assets historically utilized for warehousing in the Polyestersegment. In connection with the sale, the Company recognized a gain on sale of assets of $630. Net proceeds from the sale were remitted directly to aqualified intermediary in anticipation of an exchange under section 1031 of the Internal Revenue Code. Operating Expenses for RenewablesFor fiscal years 2014 and 2013, operating expenses for Renewables (reported net of insignificant revenues of $144 and $79, respectively) includedamounts incurred for employee costs, land and equipment rental costs, contract labor, freight costs, operating supplies, product testing and administrativecosts, along with $343 and $230 of depreciation and amortization expense, respectively. For fiscal year 2015, such costs are included in cost of sales orselling, general and administrative expenses in the consolidated statement of income. Restructuring charges, netThe components of restructuring charges, net consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Severance $— $941 $948 Equipment relocation and reinstallation costs — 356 — Other — (24) (135)Restructuring charges, net $— $1,273 $813 SeveranceOn May 14, 2013, the Company and one of its executive officers entered into a severance agreement that provided severance and certain other benefitsthrough November 2014. On August 12, 2013, the Company and another of its executive officers entered into a severance agreement that providedseverance payments through November 2014 and certain other benefits through December 2014. The table below presents changes to accrued severance: BalanceJune 29, 2014 Payments Adjustments BalanceJune 28, 2015 Accrued severance $374 (355) (19) $— F-34 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Equipment Relocation and Reinstallation CostsDuring fiscal year 2014, the Company dismantled and relocated certain polyester draw warping equipment from Monroe, North Carolina to a Burlington,North Carolina facility. The Company also dismantled and relocated certain polyester texturing and twisting equipment between locations in NorthCarolina and El Salvador. The costs incurred for the relocation of equipment were charged to other operating expense, net within the Polyester Segmentas incurred. 22. Other Non-Operating Expense During fiscal year 2014, the Company recorded an impairment charge of $126 relating to an investment in a former domestic unconsolidated affiliate. 23. Investments in Unconsolidated Affiliates and Variable Interest Entities Parkdale America, LLCIn June 1997, the Company and Parkdale Mills, Inc. (“Mills”) entered into a Contribution Agreement that set forth the terms and conditions by which thetwo companies contributed all of the assets of their spun cotton yarn operations utilizing open-end and air-jet spinning technologies to create ParkdaleAmerica, LLC (“PAL”). In exchange for its contribution, the Company received a 34% ownership interest in PAL, which is accounted for using the equitymethod of accounting. Effective January 1, 2012, Mills’ interest in PAL was assigned to Parkdale Incorporated. PAL is a limited liability company treatedas a partnership for income tax reporting purposes. PAL is a producer of cotton and synthetic yarns for sale to the textile industry and apparel market, bothforeign and domestic. PAL has 16 manufacturing facilities located primarily in the southeast region of the U.S. and in Mexico. According to its mostrecently issued audited financial statements, PAL’s five largest customers accounted for approximately 76% of total revenues and 78% of total grossaccounts receivable outstanding. As PAL’s fiscal year end is the Saturday nearest to December 31 and its results are considered significant, the Companyfiles an amendment to each Annual Report on Form 10-K on or before 90 days subsequent to PAL’s fiscal year end to provide PAL’s audited financialstatements for PAL’s most recent fiscal year. The Company filed an amendment to its 2014 Form 10-K for the fiscal year ended June 29, 2014 on April 2,2015 to provide PAL’s audited financial statements for PAL’s fiscal year ended January 3, 2015. The Company expects to file an amendment to thisAnnual Report on Form 10-K on or before April 1, 2016 to provide PAL’s audited financial statements for PAL’s fiscal year ending January 2, 2016. The federal government maintains a program providing economic adjustment assistance to domestic users of upland cotton (the “EAP program”). TheEAP program offers a subsidy for cotton consumed in domestic production, and the subsidy is paid the month after the eligible cotton is consumed. Thesubsidy must be used within eighteen months after the marketing year in which it is earned to purchase qualifying capital expenditures in the U.S. forproduction of goods from upland cotton. The marketing year is from August 1 to July 31. The program provides a subsidy of up to three cents per pound.In February 2014, the federal government extended the EAP program for five years. The cotton subsidy will remain at three cents per pound for the life ofthe program. PAL recognizes its share of income for the cotton subsidy when the cotton has been consumed and the qualifying assets have been acquired,with an appropriate allocation methodology considering the dual criteria of the subsidy. PAL is subject to price risk related to anticipated fixed-price yarn sales. To protect the gross margin of these sales, PAL may enter into cotton futures tomanage changes in raw material prices in order to protect the gross margin of fixed-priced yarn sales. The derivative instruments used are listed and tradedon an exchange and are thus valued using quoted prices classified within Level 1 of the fair value hierarchy. As of June 2015, PAL had no futurescontracts designated as cash flow hedges. As of June 28, 2015, the Company’s investment in PAL was $109,919 and reflected within investments in unconsolidated affiliates in the ConsolidatedBalance Sheets. The reconciliation between the Company’s share of the underlying equity of PAL and its investment is as follows: Underlying equity as of June 28, 2015 $128,258 Initial excess capital contributions 53,363 Impairment charge recorded by the Company in 2007 (74,106)Anti-trust lawsuit against PAL in which the Company did not participate 2,652 EAP adjustments (248)Investment as of June 28, 2015 $109,919 F-35 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) On August 28, 2014, PAL acquired the remaining 50% ownership interest in a yarn manufacturer based in Mexico in which PAL was historically a 50%member. The acquisition increases PAL’s regional manufacturing capacity and expands its product offerings and customer base. PAL accounted for thetransaction as a business combination under the acquisition method, recognizing the assets acquired and liabilities assumed at their respective fair valuesas of the acquisition date. The Company and PAL concluded that the acquisition did not represent a material business combination. PAL recognized abargain purchase gain of $4,430 and recorded acquired net assets of $23,644. On February 27, 2015, PAL purchased two manufacturing facilities, plus inventory, for approximately $13,000 cash, and entered into a yarn supplyagreement with the seller. PAL has accounted for the transaction as a business combination under the acquisition method, recognizing the assets acquiredand liabilities assumed at their respective provisional fair values as of the acquisition date. The Company and PAL concluded that the acquisition did notrepresent a material business combination. PAL has recognized a provisional bargain purchase gain of approximately $9,381 in its initial accounting forthe acquisition for all identified assets and liabilities. The Company and PAL will continue to review the acquisition accounting during the measurementperiod, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the assets or liabilitiesinitially recognized, as well as any additional assets or liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflectthe resulting adjustments to the provisional amounts. The acquisition accounting is incomplete, primarily pending final asset valuations. U.N.F. Industries, Ltd.In September 2000, the Company and Nilit Ltd. (“Nilit”) formed a 50/50 joint venture, U.N.F. Industries Ltd. (“UNF”), for the purpose of operating nylonextrusion assets to manufacture nylon POY. Raw material and production services for UNF are provided by Nilit under separate supply and servicesagreements. UNF’s fiscal year end is December 31 and it is a registered Israeli private company located in Migdal Ha-Emek, Israel. UNF America, LLCIn October 2009, the Company and Nilit America Inc. (“Nilit America”) formed a 50/50 joint venture, UNF America LLC (“UNF America”), for thepurpose of operating a nylon extrusion facility which manufactures nylon POY. Raw material and production services for UNF America are provided byNilit America under separate supply and services agreements. UNF America’s fiscal year end is December 31 and it is a limited liability company treatedas a partnership for income tax reporting purposes located in Ridgeway, Virginia. In conjunction with the formation of UNF America, the Company entered into a supply agreement with UNF and UNF America whereby the Companyagreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNF America. Theagreement has no stated minimum purchase quantities and pricing is negotiated every six months, based on market rates. As of June 28, 2015, theCompany’s open purchase orders related to this agreement were $2,584. The Company’s raw material purchases under this supply agreement consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 UNF $3,676 $9,582 $11,752 UNF America 29,922 24,223 22,601 Total $33,598 $33,805 $34,353 As of June 28, 2015 and June 29, 2014, the Company had combined accounts payable due to UNF and UNF America of $4,038 and $3,966, respectively. The Company has determined that UNF and UNF America are variable interest entities (“VIEs”) and has also determined that the Company is the primarybeneficiary of these entities, based on the terms of the supply agreement. As a result, these entities should be consolidated in the Company’s financialresults. As the Company purchases substantially all of the output from the two entities, the two entities’ balance sheets constitute 3% or less of theCompany’s current assets, total assets and total liabilities, and such balances are not expected to comprise a larger portion in the future, the Company hasnot included the accounts of UNF and UNF America in its consolidated financial statements. As of June 28, 2015, the Company’s combined investmentsin UNF and UNF America were $3,982 and are shown within investments in unconsolidated affiliates F-36 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) in the consolidated balance sheets. The financial results of UNF and UNF America are included in the Company’s financial statements with a one monthlag, using the equity method of accounting and with intercompany profits eliminated in accordance with the Company’s accounting policy. Other thanthe supply agreement discussed above, the Company does not provide any other commitments or guarantees related to either UNF or UNF America. Condensed balance sheet and income statement information for the Company’s unconsolidated affiliates is presented in the following tables. As PAL isdefined as significant, its information is separately disclosed. For the Company’s fiscal year ended June 28, 2015, PAL’s corresponding fiscal periodconsisted of 53 weeks. As of June 28, 2015 PAL Other Total Current assets $250,699 $9,273 $259,972 Noncurrent assets 216,708 3,676 220,384 Current liabilities 61,243 4,985 66,228 Noncurrent liabilities 28,935 — 28,935 Shareholders’ equity and capital accounts 377,229 7,964 385,193 The Company’s portion of undistributed earnings 40,138 1,661 41,799 As of June 29, 2014 PAL Other Total Current assets $248,651 $9,187 $257,838 Noncurrent assets 143,720 3,065 146,785 Current liabilities 50,696 5,437 56,133 Noncurrent liabilities 5,432 — 5,432 Shareholders’ equity and capital accounts 336,243 6,815 343,058 For the Fiscal Year Ended June 28, 2015 PAL Other Total Net sales $828,502 $33,496 $861,998 Gross profit 53,042 5,480 58,522 Income from operations 34,873 3,861 38,734 Net income 50,991 4,140 55,131 Depreciation and amortization 33,065 117 33,182 Cash received by PAL under EAP program 18,087 — 18,087 Earnings recognized by PAL for EAP program 17,398 — 17,398 Distributions received 2,468 1,250 3,718 For the Fiscal Year Ended June 29, 2014 PAL Other Total Net sales $841,542 $34,717 $876,259 Gross profit 63,645 3,921 67,566 Income from operations 48,857 2,259 51,116 Net income 52,283 2,529 54,812 Depreciation and amortization 26,222 101 26,323 Cash received by PAL under EAP program 16,909 — 16,909 Earnings recognized by PAL for EAP program 23,509 — 23,509 Distributions received 11,314 1,900 13,214 F-37 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) For the Fiscal Year Ended June 30, 2013 PAL Other Total Net sales $785,351 $35,190 $820,541 Gross profit 46,918 4,997 51,915 Income from operations 25,809 3,283 29,092 Net income 27,575 3,330 30,905 Depreciation and amortization 29,500 101 29,601 Cash received by PAL under EAP program 17,369 — 17,369 Earnings recognized by PAL for EAP program 8,744 — 8,744 Distributions received 13,440 1,500 14,940 As of the end of PAL’s fiscal June 2015, June 2014 and fiscal June 2013 periods, PAL’s amounts of deferred revenues related to the EAP program were $0,$0 and $8,791, respectively. 24. Commitments and Contingencies Collective Bargaining AgreementsWhile employees of the Company’s Brazilian operations are unionized, none of the labor force employed by the Company’s domestic or other foreignsubsidiaries is currently covered by a collective bargaining agreement. EnvironmentalOn September 30, 2004, the Company completed its acquisition of the polyester filament manufacturing assets located in Kinston, North Carolina fromINVISTA S.a.r.l (“Invista”). The land for the Kinston site was leased pursuant to a 99 year ground lease (“Ground Lease”) with E.I. DuPont de Nemours(“DuPont”). Since 1993, DuPont has been investigating and cleaning up the Kinston site under the supervision of the U.S. Environmental ProtectionAgency (“EPA”) and the North Carolina Department of Environment and Natural Resources (“DENR”) pursuant to the Resource Conservation andRecovery Act Corrective Action program. The Corrective Action program requires DuPont to identify all potential areas of environmental concern(“AOCs”), assess the extent of containment at the identified AOCs and to clean it up to comply with applicable regulatory standards. Effective March 20,2008, the Company entered into a Lease Termination Agreement associated with conveyance of certain assets at Kinston to DuPont. This agreementterminated the Ground Lease and relieved the Company of any future responsibility for environmental remediation, other than participation with DuPont,if so called upon, with regard to the Company’s period of operation of the Kinston site which was from 2004 to 2008. However, the Company continuesto own a satellite service facility acquired in the INVISTA transaction that has contamination from DuPont’s operations and is monitored by DENR. Thissite has been remediated by DuPont, and DuPont has received authority from DENR to discontinue remediation, other than natural attenuation. DuPont’sduty to monitor and report to DENR will be transferred to the Company in the future, at which time DuPont must pay the Company for seven years ofmonitoring and reporting costs and the Company will assume responsibility for any future remediation and monitoring of the site. At this time, theCompany has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potentialliability for the same. Operating LeasesThe Company routinely leases sales and administrative office space, warehousing and distribution centers, manufacturing space, transportationequipment, manufacturing equipment, and other information technology and office equipment from third parties. In addition, Renewables leases farmland. Currently, the Company does not sub-lease any of its leased property. F-38 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Future minimum capital lease payments and future minimum lease payments under non-cancelable operating leases (with initial or remaining lease termsin excess of one year) as of June 28, 2015 for the below fiscal years are: Capital leases Operating leases Fiscal year 2016 $3,935 $2,547 Fiscal year 2017 3,904 1,913 Fiscal year 2018 3,632 1,482 Fiscal year 2019 3,423 739 Fiscal year 2020 1,787 34 Fiscal years thereafter 1,422 12 Total minimum lease payments $18,103 $6,727 Less estimated executory costs (930) Less interest (1,438) Present value of net minimum capital lease payments 15,735 Less current portion of capital lease obligations (3,385) Long-term portion of capital lease obligations $12,350 Rental expenses incurred under operating leases and included in operating income consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Rental expenses $4,214 $3,621 $3,412 Unconditional ObligationsThe Company is a party to unconditional obligations for certain utility, equipment purchase and other purchase or service commitments. Thesecommitments are non-cancelable, have remaining terms in excess of one year and qualify as normal purchases. On a fiscal year basis, the minimum payments expected to be made as part of such commitments are as follows: 2016 2017 2018 2019 2020 Thereafter Unconditional purchase obligations $7,352 $6,458 $4,294 $2,224 $1,212 $— Unconditional service obligations 438 385 176 — — — Total unconditional obligations $7,790 $6,843 $4,470 $2,224 $1,212 $— For fiscal years 2015, 2014 and 2013, total costs incurred under these commitments consisted of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Costs for unconditional purchase obligations $28,971 $31,386 $31,953 Costs for unconditional service obligations 7,625 5,932 5,679 Total $36,596 $37,318 $37,632 25. Related Party Transactions Related party receivables consist of the following: June 28, 2015 June 29, 2014 Cupron, Inc. $72 $1 Salem Global Logistics, Inc. 3 12 Dillon Yarn Corporation — 4 Total related party receivables (included within receivables, net) $75 $17 F-39 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Related party payables consist of the following: June 28, 2015 June 29, 2014 Cupron, Inc. $506 $525 Salem Leasing Corporation 277 272 Dillon Yarn Corporation 117 131 Total related party payables (included within accounts payable) $900 $928 Excludes amounts related to the contingent consideration, as detailed in “Note 18. Fair Value of Financial Instruments and Non-Financial Assets andLiabilities” Related party transactions consist of the matters in the table below and the following paragraphs: For the Fiscal Years Ended Affiliated EntityTransaction Type June 28, 2015 June 29, 2014 June 30, 2013 Dillon Yarn CorporationYarn purchases $2,000 $3,042 $2,523 Dillon Yarn CorporationSales service agreement costs — — 349 Dillon Yarn CorporationSales — 1,237 182 Dillon Yarn CorporationReimbursement of equipment relocationcosts — — 75 American Drawtech Company, Inc.Sales — — 884 American Drawtech Company, Inc.Yarn purchases — — 56 Salem Leasing CorporationTransportation equipment costs 3,633 3,607 3,077 Salem Global LogisticsFreight services 179 25 — Cupron, Inc.Sales 925 486 236 Cupron, Inc.Yarn purchases 281 8 — Invemed Associates LLCBrokerage services 3 23 11 Through April 24, 2015, Mr. Mitchel Weinberger was a member of the Company’s Board, President and Chief Operating Officer of Dillon and anExecutive Vice President and a director of ADC. In fiscal year 2007, the Company purchased the polyester and nylon texturing operations of Dillon andentered into an agreement under which the Company agreed to pay Dillon for certain sales and services to be provided by Dillon's sales staff andexecutive management. That agreement expired pursuant to its terms on December 31, 2012. In addition, the Company recorded sales and service incomefrom Dillon and has purchased products from Dillon. On April 8, 2013, the Company entered a commissioning agreement with Dillon. Under the terms of the agreement, the Company agreed to move Dillon’sdraw winding equipment from Dillon’s facility in Dillon, South Carolina and install it in the Company’s polyester texturing facility in Yadkinville, NorthCarolina. Pursuant to the exercise of an option granted to the Company under the terms of the commissioning agreement, the Company acquired the drawwinding equipment and associated business from Dillon on December 2, 2013, as described in “Note 4. Acquisition.” On March 22, 2013, the Company entered into a Stock Purchase Agreement with Dillon. Pursuant to the Stock Purchase Agreement, the Companyrepurchased 500 shares of the Company’s common stock from Dillon for an aggregate amount of $8,500. The Company and Dillon negotiated the $17.00per share price based on an approximately 10% discount to the closing price of the stock on March 20, 2013. On November 1, 2013, the Company entered into a second Stock Purchase Agreement with Dillon, pursuant to which the Company purchased 150 sharesof the Company’s common stock from Dillon, at a negotiated price of $23.00 per share, for $3,450. The purchase price was equal to an approximately 6%discount to the closing price of the common stock on October 31, 2013. F-40(1)(1)  Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) On June 18, 2015, the Company entered into a third Stock Purchase Agreement with Dillon. In connection therewith, the Company repurchased 200shares of the Company’s common stock from Dillon for an aggregate amount of $6,200. The Company and Dillon negotiated the $31.00 per share pricebased on an approximately 3% discount to the closing price of the stock on June 17, 2015. The Board approved these stock repurchase transactions in accordance with its related persons transactions policy. Mr. Weinberger was not involved inany decisions by the Board, or any committee thereof, with respect to these stock repurchase transactions. Mr. Kenneth G. Langone, a member of the Board, is a director, stockholder and non-executive Chairman of the Board of Salem Holding Company. TheCompany leases tractors and trailers from Salem Leasing Corporation, a wholly-owned subsidiary of Salem Holding Company. In addition to the monthlyoperating lease payments, the Company also incurs expenses for routine repair and maintenance, fuel and other expenses. These leases do not containrenewal, purchase options or escalation clauses with respect to the minimum lease charges. Salem Global Logistics, Inc. is also a wholly-owned subsidiary of Salem Holding Company. During fiscal years 2015 and 2014, the Company earnedincome by providing for-hire freight services for Salem Global Logistics, Inc. On November 19, 2012, the Company entered into a capital lease with Salem Leasing Corporation for certain transportation equipment. The present valueof the fifteen-year lease was $1,234 and payments are made monthly. The implicit annual interest rate under the lease is approximately 4.6%. The balanceof the capital lease obligation as of June 28, 2015 was $1,081. Mr. William J. Armfield, IV, a member of the Board, holds an indirect minority equity interest in (and is non-executive Chairman of the Board of) Cupron,Inc. (“Cupron”) and is also a director. Mr. Langone is also the President and Chief Executive Officer of Invemed Associates LLC (“Invemed”). During fiscal years 2015, 2014 and 2013,Invemed provided brokerage services to the Company for the Company’s repurchase of 149, 1,149 and 568 shares of its common stock, respectively,through open market transactions. The Company paid a commission of $.02 per share to Invemed. On December 3, 2013, certain of the Company’s executive officers exercised options to purchase shares of the Company’s common stock underpreviously granted option awards. Pursuant to authorization from the Company’s Board, and as part of the 2013 SRP, the Company repurchased 225shares of common stock issued in those option exercises at a negotiated price of $25.59 per share (which was equal to the average of the closing tradeprices of the Company’s common stock for the 30 days ending December 2, 2013 and represented a 7.1% discount to the $27.56 closing price of thecommon stock on December 2, 2013). 26. Business Segment Information The Company has three reportable segments. Operations and revenues for each segment are described below: ●The Polyester Segment manufactures Chip, POY, textured, dyed, twisted, beamed and draw wound yarns, both virgin and recycled, with salesprimarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive upholstery,home furnishings, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the U.S. and ElSalvador. ●The Nylon Segment manufactures textured yarns (both nylon and polyester) and spandex covered yarns, with sales to knitters and weavers thatproduce fabric primarily for the apparel and hosiery markets. The Nylon Segment consists of sales and manufacturing operations in the U.S. andColombia. ●The International Segment’s products primarily include textured polyester and various types of resale yarns and staple fiber. The InternationalSegment sells its yarns to knitters and weavers that produce fabric for the apparel, automotive upholstery, home furnishings, industrial and otherend-use markets primarily in the South American and Asian regions. This segment includes a manufacturing location and sales offices in Braziland a sales office in China. F-41 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) In addition to its reportable segments, the Company’s selected financial information includes an All Other category. All Other consists primarily ofRenewables (an operating segment which does not meet quantitative thresholds for reporting), for-hire transportation services and consulting services.Revenue for Renewables is primarily derived from (i) facilitating the use of miscanthus grass as biomass feedstock through service agreements and (ii)delivering harvested miscanthus grass to poultry producers for animal bedding. For-hire revenues are derived from performing common carrier servicesutilizing the Company’s fleet of transportation equipment. Revenues for consulting services are derived from providing process improvement and changemanagement consulting services to entities across various industries. The operations within All Other (i) are not subject to review by the chief operating decision maker at a level consistent with the Company’s otheroperations, (ii) are not regularly evaluated using the same metrics applied to the Company’s other operations and (iii) do not qualify for aggregation withan existing reportable segment. Therefore, such operations do not comprise a reportable segment. Any comparative amounts for All Other in prior yearperiods are insignificant. The Company evaluates the operating performance of its reportable segments based upon Segment Adjusted Profit, which is defined as segment grossprofit plus segment depreciation and amortization less segment SG&A expenses plus segment other adjustments. Segment operating profit representssegment net sales less cost of sales, restructuring and other charges and SG&A expenses. The accounting policies for the segments are consistent with theCompany’s accounting policies. Intersegment sales are accounted for at current market prices. For the Polyester Segment, fiscal year 2013 contained one additional fiscal week. For the Nylon Segment's operations in the United States, fiscal year2013 contained one additional fiscal week. Selected financial information is presented below: For the Fiscal Year Ended June 28, 2015 Polyester Nylon International All Other Total Net sales $377,281 $168,570 $134,992 $6,278 $687,121 Cost of sales 328,575 147,531 113,556 6,754 596,416 Gross profit (loss) 48,706 21,039 21,436 (476) 90,705 SG&A expenses 29,403 9,903 8,689 1,677 49,672 Other operating expense, net 84 16 111 19 230 Segment operating profit (loss) $19,219 $11,120 $12,636 $(2,172) $40,803 For the Fiscal Year Ended June 29, 2014 Polyester Nylon International Total Net sales $389,172 $163,824 $134,906 $687,902 Cost of sales 342,393 143,649 118,598 604,640 Gross profit 46,779 20,175 16,308 83,262 SG&A expenses 28,422 9,531 8,250 46,203 Other operating expense, net 438 (24) — 414 Segment operating profit $17,919 $10,668 $8,058 $36,645 For the Fiscal Year Ended June 30, 2013 Polyester Nylon International Total Net sales $398,707 $164,085 $151,170 $713,962 Cost of sales 363,545 146,033 131,280 640,858 Gross profit 35,162 18,052 19,890 73,104 SG&A expenses 29,114 9,930 8,342 47,386 Other operating expense, net — (93) — (93)Segment operating profit $6,048 $8,215 $11,548 $25,811 F-42 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) The reconciliations of segment operating profit to consolidated income before income taxes are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $19,219 $17,919 $6,048 Nylon 11,120 10,668 8,215 International 12,636 8,058 11,548 All Other (2,172) — — Segment operating profit 40,803 36,645 25,811 Provision (benefit) for bad debts 947 287 (154)Other operating expense, net 1,370 4,875 3,502 Operating income 38,486 31,483 22,463 Interest income (916) (1,790) (698)Interest expense 4,025 4,329 4,489 Loss on extinguishment of debt 1,040 — 1,102 Other non-operating expense — 126 — Equity in earnings of unconsolidated affiliates (19,475) (19,063) (11,444)Income before income taxes $53,812 $47,881 $29,014 The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $12,789 $11,702 $17,234 Nylon 2,080 2,276 3,070 International 2,101 3,151 3,418 Segment depreciation and amortization expense 16,970 17,129 23,722 Other depreciation and amortization expense 1,073 767 862 Depreciation and amortization expense $18,043 $17,896 $24,584 Segment other adjustments for each of the reportable segments consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $249 $637 $618 Nylon 110 (119) 245 International — 352 115 Segment other adjustments $359 $870 $978 Segment other adjustments include severance charges, restructuring charges and recoveries, start-up costs and other adjustments necessary to understandand compare the underlying results of the segment. Segment Adjusted Profit consists of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $32,341 $30,696 $23,900 Nylon 13,326 12,801 11,437 International 14,848 11,561 15,081 Segment Adjusted Profit $60,515 $55,058 $50,418 F-43 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) Intersegment sales consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $165 $651 $1,296 Nylon 133 295 773 International 254 1,474 772 Intersegment sales $552 $2,420 $2,841 The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Polyester $21,267 $14,701 $5,730 Nylon 2,392 2,284 482 International 1,468 1,637 1,336 Segment capital expenditures 25,127 18,622 7,548 Other capital expenditures 839 469 1,261 Capital expenditures $25,966 $19,091 $8,809 The reconciliations of segment total assets to consolidated total assets are as follows: June 28, 2015 June 29, 2014 June 30, 2013 Polyester $203,574 $192,697 $185,190 Nylon 71,332 75,397 72,599 International 63,031 81,604 84,151 Segment total assets 337,937 349,698 341,940 Other current assets 5,844 2,549 3,342 Other PP&E 13,544 12,250 11,983 Other non-current assets 5,146 5,341 4,940 Investments in unconsolidated affiliates 113,901 99,229 93,261 Total assets $476,372 $469,067 $455,466 Geographic Data:Geographic information for net sales is as follows: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 U.S. $509,490 $512,496 $519,148 Brazil 101,912 113,448 124,455 Remaining Foreign 75,719 61,958 70,359 Total $687,121 $687,902 $713,962 Export sales from the Company’s U.S. operations to external customers $119,548 $100,546 $93,128 F-44 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) The information for net sales is based on the operating locations from where the items were produced or distributed. Geographic information for long-lived assets is as follows: June 28, 2015 June 29, 2014 June 30, 2013 U.S. $242,042 $215,910 $200,958 Brazil 8,207 12,188 16,150 Remaining Foreign 9,237 7,413 8,658 Total $259,486 $235,511 $225,766 Long-lived assets are comprised of property, plant and equipment, net, intangible assets, net, investments in unconsolidated affiliates and other non-current assets. Geographic information for total assets is as follows: June 28, 2015 June 29, 2014 June 30, 2013 U.S. $388,766 $362,510 $346,651 Brazil 50,300 70,581 72,735 Remaining Foreign 37,306 35,976 36,080 Total $476,372 $469,067 $455,466 27. Quarterly Results (Unaudited) Quarterly financial data and selected highlights are as follows: For the Fiscal Quarters Ended September 28,2014 December 28,2014 March 29,2015 June 28,2015 Net sales (1) $175,561 $164,422 $172,187 $174,951 Gross profit (1) 20,450 22,929 22,007 25,319 Net income including non-controlling interest 6,675 9,122 9,759 14,910 Less: net (loss) attributable to non-controlling interest (402) (296) (257) (730)Net income attributable to Unifi, Inc (2). $7,077 $9,418 $10,016 $15,640 Net income attributable to Unifi, Inc. per common share: Basic (3) $0.39 $0.52 $0.55 $0.86 Diluted (3) $0.37 $0.50 $0.53 $0.83 For the Fiscal Quarters Ended September 29,2013 December 29,2013 March 30,2014 June 29,2014 Net sales $168,669 $160,617 $176,864 $181,752 Gross profit 19,985 18,497 19,759 25,021 Net income including non-controlling interest 8,619 6,211 4,454 8,436 Less: net (loss) attributable to non-controlling interest (251) (232) (289) (331)Net income attributable to Unifi, Inc. $8,870 $6,443 $4,743 $8,767 Net income attributable to Unifi, Inc. per common share: Basic (3) $0.46 $0.34 $0.25 $0.48 Diluted (3) $0.44 $0.32 $0.24 $0.46 F-45 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) (1)Net sales and gross profit for the fiscal quarters ended September 28, 2014, December 28, 2014 and March 29, 2015 have been revised to reflectrevenues presented for All Other (as described in more detail in “Note 26. Business Segment Information”). Such income had been previouslyrecorded as an offset to cost of sales or other operating expense due to the insignificance of the underlying business activities to the consolidatedfinancial statements. (2)Net income attributable to Unifi, Inc. for the quarter ended September 28, 2014 includes a bargain purchase gain recorded by PAL (of which $729is recognized by the Company). Net income attributable to Unifi, Inc. for the quarter ended December 28, 2014 includes a net change in deferred tax valuation allowances of $630recorded as a benefit to the income tax provision. Net income attributable to Unifi, Inc. for the quarter ended March 29, 2015 includes the following: a.a net change in deferred tax valuation allowances of $924 recorded as a benefit to the income tax provision, b.renewable energy tax credits of $782 recorded as a benefit to the income tax provision and c.an after-tax loss on extinguishment of debt of approximately $676. Net income attributable to Unifi, Inc. for the quarter ended June 28, 2015 includes the following: a.a net change in deferred tax valuation allowances of $1,749 recorded as a benefit to the income tax provision, b.a change of $7,822 in the deferred tax liability related to the Company’s indefinite reinvestment assertion, c.the reversal of a $3,008 deferred tax asset related to certain intercompany foreign currency transactions which originated in prior yearsand were settled in the fourth quarter of fiscal year 2015, d.a net change in uncertain tax positions of $3,046 recorded to provision for income taxes and e.a bargain purchase gain recorded by PAL (of which $1,962 is recognized by the Company). (3)Income per share is computed independently for each of the periods presented. The sum of the income per share amounts for the quarters may notequal the total for the year. 28. Supplemental Cash Flow Information Cash payments for interest and taxes consist of the following: For the Fiscal Years Ended June 28, 2015 June 29, 2014 June 30, 2013 Interest, net of capitalized interest $3,304 $3,313 $4,701 Income taxes, net of refunds 17,208 12,569 8,100 Cash payments for taxes shown above consist primarily of income and withholding tax payments made by the Company in both U.S. and foreignjurisdictions. Non-Cash Investing and Financing ActivitiesAs of June 28, 2015, June 29, 2014 and June 30, 2013, $1,726, $5,023 and $1,586, respectively, were included in accounts payable for unpaid capitalexpenditures. During June 2015, the Company sold certain land and building assets. Net proceeds from the sale of $1,390 were remitted directly to a qualifiedintermediary. During fiscal year 2015, the Company entered into six capital leases with an aggregate present value of $12,784. During fiscal year 2014, the Company entered into four capital leases with an aggregate present value of $3,353. On December 3, 2013, the Company received and retired 134 shares of its common stock, with a fair value of $3,583, tendered in lieu of cash for theexercise of 421 employee stock options. F-46 Unifi, Inc.Notes to Consolidated Financial Statements - (Continued) The total fair value of the long-lived assets acquired in the December 2013 purchase of Dillon’s draw winding business was $2,500, and the contingentconsideration liability established at the acquisition date was $2,500. During fiscal year 2013, the Company entered into a capital lease with a present value of $1,234 for certain transportation equipment. F-47Exhibit 21.1 UNIFI, INC. SUBSIDIARIES Unifi Percentage Of VotingNameAddress or LocationIncorporationSecurities Owned Unifi Switzerland GmbH (“USG”)Schaffhausen, SwitzerlandSwitzerland100% - Unifi, Inc. Unifi Holding 1, BV (“UH1”)Amsterdam, NetherlandsNetherlands100% - USG Unifi Holding 2, BV (“UH2”)Amsterdam, NetherlandsNetherlands100% - UH1 Unifi Holding 3, BV (“UH3”)Amsterdam, NetherlandsNetherlands100% - UH2 Unifi Central America Holding, SRL(“UCAH”)St. Michael, BarbadosBarbados100% - UH2 Unifi Textiles Holding, SRL (“UTH”)St. Michael, BarbadosBarbados100% - UH2 Unifi do Brasil, LtdaSao Paulo, BrazilBrazil99.99% - UH1 .01% - UMI Unifi Manufacturing, Inc. (“UMI”)Greensboro, NCNorth Carolina100% - Unifi, Inc. Unifi Textured Polyester, LLCGreensboro, NCNorth Carolina100% - UMI Unifi Kinston, LLCGreensboro, NCNorth Carolina100% - UMI Unifi Sales & Distribution, Inc.Greensboro, NCNorth Carolina100% - Unifi, Inc. Unimatrix Americas, LLCGreensboro, NCNorth Carolina100% - UMI Unifi Latin America, S.A.S.Bogota, ColombiaColombia100% - USG See4 Process Improvement Solutions, LLCGreensboro, NCNorth Carolina100% - UMI Unifi Textiles (Suzhou) Co. Ltd.Suzhou, Jiangsu ProvinceP.R. China100% - UTH Unifi Central America, Ltda. de CVCiudad Arce, El SalvadorEl Salvador99% - UCAH 1% - UH2 Unifi Europe LimitedLondon, U.K.England and Wales100% - UH2 Repreve Renewables, LLCGreensboro, NCDelaware60% - UH3 Exhibit 23.1 Consent of Independent Registered Public Accounting Firm The Board of DirectorsUnifi, Inc.: We consent to the incorporation by reference in the registration statements No. 33-23201, No. 33-53799, No. 333-35001, No. 333-43158, No. 333-156090,and No. 333-191870 on Forms S-8 and No. 333-140580 on Form S-3 of Unifi, Inc. and subsidiaries of our reports dated September 3, 2015, with respect to theconsolidated balance sheets of Unifi, Inc. and subsidiaries as of June 28, 2015 and June 29, 2014, and the related consolidated statements of income,comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended June 28, 2015, and the effectiveness ofinternal control over financial reporting as of June 28, 2015, which reports appear in the June 28, 2015 Annual Report on Form 10-K of Unifi, Inc. /s/ KPMG LLP Greensboro, North CarolinaSeptember 3, 2015 Exhibit 31.1 Certification of Chief Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, William L. Jasper, certify that: 1. I have reviewed this Annual Report on Form 10-K of Unifi, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: September 3, 2015 /s/ WILLIAM L. JASPER William L. Jasper Chairman of the Board and Chief Executive Officer(Principal Executive Officer) Exhibit 31.2 Certification of Chief Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, James M. Otterberg, certify that: 1. I have reviewed this Annual Report on Form 10-K of Unifi, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrantand have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: September 3, 2015 /s/ JAMES M. OTTERBERG James M. Otterberg Vice President and Chief Financial Officer(Principal Financial Officer) Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Unifi, Inc. (the “Company”) Annual Report on Form 10-K for the period ended June 28, 2015 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, William L. Jasper, Chairman of the Board and Chief Executive Officer of the Company, certifypursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: September 3, 2015 /s/ WILLIAM L. JASPER William L. Jasper Chairman of the Board and Chief Executive Officer(Principal Executive Officer) Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Unifi, Inc. (the “Company”) Annual Report on Form 10-K for the period ended June 28, 2015 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, James M. Otterberg, Vice President and Chief Financial Officer of the Company, certify pursuantto 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: September 3, 2015 /s/ JAMES M. OTTERBERG James M. Otterberg Vice President and Chief Financial Officer(Principal Financial Officer) 

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