The following is management's discussion and analysis of certain significant
factors that have affected UNIFI's operations, along with material changes in
financial condition, during the periods included in the accompanying
consolidated financial statements. Management's discussion and analysis should
be read in conjunction with the remainder of this Annual Report, with the
understanding that forward-looking statements may be present. A reference to a
"note" refers to the accompanying notes to consolidated financial statements.

Strategic Priorities



We believe UNIFI's underlying performance during recent fiscal years reflects
the strength of our global initiative to deliver differentiated solutions to
customers and brand partners throughout the world. Our supply chain has been
developed and enhanced in multiple regions around the globe, allowing us to
deliver a diverse range of fibers and polymers to key customers in the markets
we serve, especially apparel. These textile products are supported by quality
assurance, product development, product and fabric certifications, hangtags,
co-marketing, and technical and customer service teams across UNIFI's operating
subsidiaries. We have developed this successful operating platform by improving
operational and business processes and deriving value from sustainability-based
initiatives, including polyester and nylon recycling.

We believe that further commercial expansion will require a continued stream of
new technology and innovation that generates products with meaningful consumer
benefits. Along with our recycled platform, UNIFI has significant yarn
technologies that provide optimal performance characteristics for today's
marketplace, including moisture management, temperature moderation, stretch,
ultra-violet protection and fire retardation, among others. To achieve further
growth, UNIFI remains focused on innovation, bringing to market the next wave of
fibers and polymers for tomorrow's applications. As we invest and grow,
sustainability remains at our core. We believe that increasing the awareness for
recycled solutions in applications across fibers and polymers and furthering
sustainability-based initiatives with like-minded brand partners will be key to
our future success. We also believe that our manufacturing processes and our
technical knowledge and capabilities will allow us to grow market share and
develop new textile programs with new and existing customers. Ultimately,
combining leading edge innovation with our prominent, high-quality brand and
agile regional business model will allow for underlying sales and profitability
growth.

Significant Developments and Trends



During the last five fiscal years, several key drivers affected our financial
results. During fiscal 2018 and 2019, our operations in the U.S. were
unfavorably impacted by (i) rising raw material costs and (ii) a surge of
imported polyester textured yarn that depressed our pricing, market share, and
fixed cost absorption. During fiscal 2020, our financial results began to
improve following more stable import and raw material cost environments.
However, the COVID-19 pandemic had a significant unfavorable impact to product
demand and our annual profitability suffered accordingly. Near the end of fiscal
2020, we divested a minority interest investment and significantly improved our
liquidity position, supporting business preservation and the ability to better
capture long-term growth opportunities. Throughout fiscal 2021, our businesses
experienced sequential improvement alongside global demand and economic
recovery, and we capitalized on profitable opportunities that fueled strong
consolidated results. Throughout fiscal 2022, we experienced adverse pressure
from rising input costs and a weakening of labor productivity primarily in our
domestic operations. Looking ahead, our operations remain well positioned to
capture long-term growth opportunities and we are working to mitigate any
potential recession impacts.

Once global economic pressures subside, we believe incremental revenue for the
Americas Segment will be generated from both the polyester textured yarn trade
petitions, along with continued demand for innovative and sustainable products.
The Asia Segment continues to capture demand for recycled products and serves as
a significant component of future growth. The Brazil Segment performed
extraordinarily well in fiscal 2021 and 2022, and while pricing and margins
normalized from near historical levels, the momentum captured in fiscal 2021 and
2022 could provide a new, elevated level of long-term performance for the
segment.

The following positive developments and trends occurred or were occurring in fiscal 2022.


    •   Demand levels for the majority of our business lines experienced
        significant recovery since the onset of the COVID-19 pandemic.

• Our REPREVE family of products continued to gain momentum with brands,

retailers, and mill partners who value sustainability and UNIFI's ability

to produce leading edge products with in-demand technologies.

• Although raw material costs rose throughout fiscal 2022, we have been able

to implement cost-responsive selling price adjustments intended to protect

our gross profit.

• Our Brazil Segment was able to opportunistically capture market share from


        competitors and secure favorable pricing levels during the economic
        recovery in Brazil.

• Our Asia Segment returned to sales growth, driven by demand for REPREVE,

generating continued portfolio expansion.

Raw Material and Foreign Currency

Raw material costs represent a significant portion of UNIFI's manufactured product costs. The prices for the principal raw materials used by UNIFI continually fluctuate, and it is difficult or impossible to predict trends or upcoming developments.



During much of fiscal 2020, the raw material cost environment shifted to be more
favorable and reached significantly lower levels during the early weeks of the
COVID-19 pandemic.

                                       21


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The first half of fiscal 2021 included stable, low levels of raw material costs,
while economic recovery, weather events, and supply chain challenges generated
raw material cost increases during the second half of fiscal 2021 and the first
half of fiscal 2022. For the majority of our portfolio, we were able to
implement selling price adjustments throughout fiscal 2021 and 2022. However,
recycled inputs in the U.S. experienced continued cost increases during fiscal
2022. Despite the selling price increases, we still experienced meaningful gross
profit pressure during fiscal 2022, primarily from the U.S. labor shortage and
speed at which input costs increased.

The continuing volatility in global crude oil prices is likely to impact UNIFI's
polyester and nylon raw material costs. While it is not possible to predict the
timing or amount of the impact or whether the recent fluctuations in crude oil
prices will stabilize, increase or decrease, UNIFI monitors these dynamic
factors closely. In addition, UNIFI attempts to pass on to its customers
increases in raw material costs but due to market pressures, this is not always
possible. When price increases can be implemented, there is typically a time lag
that adversely affects UNIFI and its margins during one or more quarters.
Certain customers are subject to an index-based pricing model in which UNIFI's
prices are adjusted based on the change in the cost of certain raw materials in
the prior quarter. Pricing adjustments for other customers must be negotiated
independently. In ordinary market conditions in which raw material cost
increases have stabilized and sales volumes are consistent with traditional
levels, UNIFI has historically been successful in implementing price adjustments
within one or two fiscal quarters of the raw material price increase for all of
its customers.

UNIFI is also impacted by significant fluctuations in the value of the Brazilian
Real ("BRL") and the Chinese Renminbi ("RMB"), the local currencies for our
operations in Brazil and China, respectively. Appreciation of the BRL and the
RMB improves our net sales and gross profit metrics when the results of our
subsidiaries are translated into USDs at comparatively favorable rates. However,
such strengthening may cause adverse impacts to the value of USDs held in these
foreign jurisdictions. UNIFI expects continued volatility in the value of the
BRL and the RMB to impact our key performance metrics and actual financial
results, although the magnitude of the impact is dependent upon the significance
of the volatility, and it is not possible to predict the timing or amount of the
impact.

The BRL to USD weighted average exchange rate was 5.21, 5.38, and 4.29 for fiscal 2022, 2021 and 2020, respectively. The RMB to USD weighted average exchange rate was 6.45, 6.60, and 7.03 for fiscal 2022, 2021 and 2020, respectively.

Key Performance Indicators and Non-GAAP Financial Measures

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

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

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




  • net income (loss) and earnings per share;


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

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

raw material costs, for UNIFI and for each reportable segment;

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

• Earnings Before Interest, Taxes, Depreciation and Amortization

("EBITDA"), which represents net income (loss) before net interest


          expense, income tax expense and depreciation and amortization expense;


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

loss of PAL and, from time to time, certain other adjustments necessary


          to understand and compare the underlying results of UNIFI;


     •    Adjusted Net Income (Loss), which represents net income (loss)
          calculated under GAAP, adjusted to exclude certain amounts which
          management believes do not reflect the ongoing operations and
          performance of UNIFI and/or for which exclusion may be necessary to
          understand and compare the underlying results of UNIFI;

• Adjusted EPS, which represents Adjusted Net Income (Loss) divided by

UNIFI's weighted average common shares outstanding;

Adjusted Working Capital, which equals receivables plus inventories and


          other current assets, less accounts payable and other current
          liabilities; and

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




EBITDA, Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, Adjusted
Working Capital, and Net Debt (collectively, the "non-GAAP financial measures")
are not determined in accordance with GAAP and should not be considered a
substitute for performance measures determined in accordance with GAAP. The
calculations of the non-GAAP financial measures are subjective, based on
management's belief as to which items should be included or excluded in order to
provide the most reasonable and comparable view of the underlying operating
performance of the business. We may, from time to time, modify the amounts used
to determine our non-GAAP financial measures. When applicable, management's
discussion and analysis includes specific consideration for items that comprise
the reconciliations of its non-GAAP financial measures.

                                       22


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We believe that these non-GAAP financial measures better reflect UNIFI's underlying operations and performance and that their use, as operating performance measures, provides investors and analysts with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets, among otherwise comparable companies.



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

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

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



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

See "Non-GAAP Reconciliations" below for reconciliations of non-GAAP metrics to the most directly comparable GAAP metric.

Review of Results of Operations for Fiscal 2022, 2021 and 2020



Fiscal 2022 contained 53 weeks and fiscal 2021 and 2020 were each comprised of
52 weeks. The additional week in fiscal 2022 included approximately $8,700 of
net sales, an insignificant impact to gross profit, and approximately $400 of
selling, general and administrative expenses.

Consolidated Overview

The below tables provide:

• the components of net income (loss) and the percentage increase or

decrease over the prior fiscal year amounts,

• a reconciliation from net income (loss) to EBITDA and Adjusted EBITDA, and

• a reconciliation from net income (loss) to Adjusted Net Income (Loss) and

Adjusted EPS.




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

Net income (loss)
                                Fiscal 2022      % Change       Fiscal 2021      % Change       Fiscal 2020
Net sales                      $     815,758          22.2     $     667,592          10.1     $     606,509
Cost of sales                        735,273          28.1           574,098           1.2           567,469
Gross profit                          80,485         (13.9 )          93,494         139.5            39,040
SG&A expenses                         52,489           2.2            51,334          17.2            43,814
(Benefit) provision for bad
debts                                   (445 )       (66.2 )          (1,316 )      (175.7 )           1,739
Other operating (income)
expense, net                            (158 )      (103.2 )           4,865         110.8             2,308
Operating income (loss)               28,599         (25.9 )          38,611            nm            (8,821 )
Interest expense, net                  1,561         (42.6 )           2,720         (33.0 )           4,057
(Earnings) loss from
unconsolidated affiliates               (605 )       (18.1 )            (739 )          nm               477
Recovery of non-income
taxes, net                               815        (108.4 )          (9,717 )          nm                 -
Gain on sale of investment
in unconsolidated
 affiliate                                 -             -                 -            nm            (2,284 )
Impairment of investment in
unconsolidated
 affiliate                                 -             -                 -            nm            45,194
Income (loss) before income
taxes                                 26,828         (42.1 )          46,347        (182.4 )         (56,265 )
Provision for income taxes            11,657         (32.5 )          17,274            nm               972
Net income (loss)              $      15,171         (47.8 )   $      29,073        (150.8 )   $     (57,237 )



nm - not meaningful

                                       23


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EBITDA and Adjusted EBITDA (Non-GAAP Measures)




                                                 Fiscal 2022       Fiscal 2021       Fiscal 2020
Net income (loss)                               $      15,171     $      29,073     $     (57,237 )
Interest expense, net                                   1,561             2,720             4,057
Provision for income taxes                             11,657            17,274               972
Depreciation and amortization expense (1)              25,986            25,293            23,406
EBITDA                                                 54,375            74,360           (28,802 )

Equity in loss of PAL                                       -                 -               960
EBITDA excluding PAL                                   54,375            74,360           (27,842 )

Recovery of non-income taxes, net (2)                     815            (9,717 )               -
Gain on sale of investment in unconsolidated
affiliate (3)                                               -                 -            (2,284 )
Impairment of investment in unconsolidated
affiliate (3)                                               -                 -            45,194
Severance (4)                                               -                 -             1,485
Adjusted EBITDA                                 $      55,190     $      64,643     $      16,553

The reconciliations of the amounts reported under GAAP for Net Income (Loss) to EBITDA and Adjusted EBITDA are as follows.

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

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

expense, net. Within the accompanying condensed consolidated statements of

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

and amortization expense.

(2) In fiscal 2021, UNIFI recorded a recovery of non-income taxes of $9,717

related to favorable litigation results for its Brazilian operations,

generating overpayments that resulted from excess social program taxes paid

in prior fiscal years. For fiscal 2022, UNIFI reduced the estimated benefit

based on additional clarity and review of the recovery process during the

months following the decision.

(3) In fiscal 2020, UNIFI recorded an impairment charge of $45,194 relating to

the April 29, 2020 sale of its 34% interest in PAL. UNIFI's 34% share of

PAL's loss subsequent to the date of the impairment charge (March 29, 2020)

and through the date of transaction closing (April 29, 2020) was $2,284 and

generated a gain on sale.

(4) In fiscal 2020, UNIFI incurred certain severance costs in connection with (i)

overall cost reduction efforts in the U.S. and (ii) a wind-down plan for its

operations in Sri Lanka.

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



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

                                                     For the Fiscal Year Ended July 3, 2022
                                       Pre-tax Income       Tax Impact       Net Income       Diluted EPS
GAAP results                          $         26,828     $    (11,657 )   $     15,171     $        0.80
Recovery of non-income taxes, net
(1)                                                815             (257 )            558              0.03
Recovery of income taxes, net (2)                    -           (1,446 )         (1,446 )           (0.07 )
Adjusted results                      $         27,643     $    (13,360 )

$ 14,283 $ 0.76



Weighted average common shares outstanding                                                          18,868

                                                    For the Fiscal Year Ended June 27, 2021
                                       Pre-tax Income       Tax Impact       Net Income       Diluted EPS
GAAP results                          $         46,347     $    (17,274 )   $     29,073     $        1.54
Recovery of non-income taxes, net
(1)                                             (9,717 )          3,304           (6,413 )           (0.34 )
Adjusted results                      $         36,630     $    (13,970 )   $     22,660     $        1.20

Weighted average common shares outstanding                                                          18,856

                                                    For the Fiscal Year Ended June 28, 2020
                                        Pre-tax Loss        Tax Impact        Net Loss        Diluted EPS
GAAP results                          $        (56,265 )   $       (972 )   $    (57,237 )   $       (3.10 )
Impairment of investment in
unconsolidated affiliate (3)                    45,194                -           45,194              2.45
Severance (4)                                    1,485             (312 )          1,173              0.06
Adjusted results                      $         (9,586 )   $     (1,284 )   $    (10,870 )   $       (0.59 )

Weighted average common shares outstanding                                                          18,475


                                       24


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(1) In fiscal 2021, UNIFI recorded a recovery of non-income taxes of $9,717

related to favorable litigation results for its Brazilian operations,

generating overpayments that resulted from excess social program taxes paid

in prior fiscal years. For fiscal 2022, UNIFI reduced the estimated benefit

based on additional clarity and review of the recovery process during the

months following the decision.

(2) In fiscal 2022, UNIFI recorded a recovery of income taxes following a Brazil

Supreme Court decision regarding certain income taxes paid in prior fiscal

years.

(3) In fiscal 2020, UNIFI recorded an impairment charge of $45,194 before tax,

related to the April 2020 sale of its 34% interest in PAL.

(4) In fiscal 2020, UNIFI incurred certain severance costs in connection with (i)

overall cost reduction efforts in the U.S. and (ii) a wind-down plan for its


    operations in Sri Lanka.


Net Sales

Fiscal 2022 vs. Fiscal 2021

Consolidated net sales for fiscal 2022 increased by $148,166, or 22.2%, and
consolidated sales volumes increased 2.7%, compared to fiscal 2021. The
increases occurred primarily due to (i) higher selling prices in response to
increasing raw material costs and (ii) underlying sales growth led by the Asia
Segment and REPREVE products.

Consolidated weighted average sales prices increased 19.5%, primarily attributable to higher selling prices in response to increasing raw material costs.

REPREVE Fiber products for fiscal 2022 comprised 36%, or $293,080, of consolidated net sales, down from 37%, or $245,832, for fiscal 2021. The decrease was primarily due to the pandemic lockdowns in China during the fourth quarter of fiscal 2022, reducing recycled product sales for the Asia Segment.

Fiscal 2021 vs. Fiscal 2020



Consolidated net sales for fiscal 2021 increased by $61,083, or 10.1%, and
consolidated sales volumes increased 13.5%, compared to fiscal 2020. The
increases occurred primarily due to (i) a fiscal 2021 rebound in product demand
following the adverse impact of the COVID-19 pandemic on sales volumes in late
fiscal 2020, (ii) incremental sales growth for the Asia Segment led by REPREVE
branded products, and (iii) opportunistically improved market share and pricing
levels in Brazil during demand restoration in that region.

Consolidated average sales prices decreased 3.4%, primarily attributable to (i) a decline in higher-priced nylon product sales and (ii) unfavorable foreign currency translation.



Gross Profit

Fiscal 2022 vs. Fiscal 2021

Gross profit for fiscal 2022 decreased by $13,009, or 13.9%, compared to fiscal
2021. Although we experienced a significant increase in net sales, input cost
and labor challenges muted our Americas gross profit, primarily in the last nine
months of fiscal 2022.

• For the Americas Segment, gross profit decreased due to

higher-than-expected input costs primarily for raw material, labor,

packaging, and supplies, along with weaker labor productivity, offsetting

the benefit from the restoration of U.S. demand following the negative

impact the COVID-19 pandemic had on fiscal 2021.

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

volumes and a more normalized market environment in fiscal 2022 following


        the exceptional performance of the Brazil Segment in fiscal 2021.

• For the Asia Segment, gross profit increased primarily due to higher sales


        volumes.


Fiscal 2021 vs. Fiscal 2020

Gross profit for fiscal 2021 increased by $54,454, or 139.5%, compared to fiscal 2020.

• For the Americas Segment, gross profit benefited from the restoration of

U.S. demand following the worst months of the COVID-19 pandemic and a
        better sales mix.

• For the Asia Segment, gross profit increased from fiscal 2020 primarily


        due to (i) higher sales, (ii) supply chain efficiencies driving lower
        costs for certain products, and (iii) sales mix improvements.

• For the Brazil Segment, gross profit increased from fiscal 2020 primarily


        due to higher sales volumes and conversion margin due to temporary market
        share capture, partially offset by unfavorable foreign currency
        translation impacts.


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SG&A

The changes in SG&A were as follows:



SG&A expenses for fiscal 2020                               $ 43,814

Net increase in incentive and other compensation expenses 8,474 Other net decreases

                                             (954 )
SG&A expenses for fiscal 2021                               $ 51,334

SG&A expenses for fiscal 2021                               $ 51,334
Net increase in marketing expenses                             2,007
Other net increases                                            3,319

Net decrease in incentive and other compensation expenses (4,171 ) SG&A expenses for fiscal 2022

$ 52,489

Fiscal 2022 vs. Fiscal 2021

SG&A increased from fiscal 2021, primarily due to higher discretionary expenses, including marketing, advertising, and travel, partially offset by lower incentive compensation for fiscal 2022.

Fiscal 2021 vs. Fiscal 2020



SG&A increased from fiscal 2020, primarily due to higher incentive compensation
in fiscal 2021 in connection with consolidated out-performance. The increase was
partially offset by lower discretionary expenses in fiscal 2021 due to COVID-19
pandemic related restrictions and cost control.

(Benefit) Provision for Bad Debts

Fiscal 2022 vs. Fiscal 2021



The provision for bad debts decreased from a benefit of $1,316 in fiscal 2021 to
a benefit of $445 in fiscal 2022. The provision reflected no material activity
in fiscal 2022. Fiscal 2021 reflected lower-than-expected credit losses on
outstanding receivables following the adverse effects of the COVID-19 pandemic
on customer financial health.

Fiscal 2021 vs. Fiscal 2020

The provision for bad debts decreased from a provision of $1,739 in fiscal 2020 to a benefit of $1,316 in fiscal 2021. The decrease primarily reflected lower-than-expected credit losses on outstanding receivables following the adverse effects of the COVID-19 pandemic on customer financial health.

Other Operating (Income) Expense, Net

Fiscal 2022 vs. Fiscal 2021



Other operating (income) expense, net was expense of $4,865 in fiscal 2021 and
income of $158 in fiscal 2022, which primarily reflects (i) foreign currency
transaction gains in fiscal 2022 and such transaction losses in fiscal 2021 and
(ii) a predominantly non-cash loss on disposal of assets of $2,809 was recorded
in fiscal 2021, primarily relating to the removal of existing texturing
machinery to allow for the future installation of new eAFK Evo texturing
machinery.

Fiscal 2021 vs. Fiscal 2020



Other operating expense, net was $2,308 in fiscal 2020 and $4,865 in fiscal
2021, which primarily reflects severance expenses and foreign currency
transaction losses in both fiscal years, plus, in fiscal 2021, a predominantly
non-cash loss on disposal of assets of $2,809 was recorded, primarily relating
to the removal of existing texturing machinery to allow for the future
installation of new eAFK Evo texturing machinery.

                                       26


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Interest Expense, Net

Fiscal 2022 vs. Fiscal 2021

Interest expense, net decreased from fiscal 2021 to fiscal 2022. The decrease
was attributable to greater interest income in fiscal 2022, primarily generated
from foreign cash on deposit.

Fiscal 2021 vs. Fiscal 2020

Interest expense, net decreased from fiscal 2020 to fiscal 2021 primarily as a result of a lower average debt principal during fiscal 2021.

(Earnings) Loss from Unconsolidated Affiliates



The components of (earnings) loss from unconsolidated affiliates are as follows:

                                                 Fiscal 2022       Fiscal 2021       Fiscal 2020
Loss from PAL                                   $           -     $           -     $         960
Earnings from nylon joint ventures                       (605 )            (739 )            (483 )
Total equity in (earnings) loss of
unconsolidated affiliates                       $        (605 )   $        

(739 ) $ 477



As a percentage of consolidated income (loss)
before income taxes                                       2.3 %             1.6 %             0.8 %


Fiscal 2022 vs. Fiscal 2021

There was no material activity for fiscal 2021 or fiscal 2022.

Fiscal 2021 vs. Fiscal 2020

On April 29, 2020, UNIFI sold its 34% non-controlling interest in PAL and, accordingly, no earnings from PAL were recorded in fiscal 2021. The earnings from the nylon joint ventures increased from fiscal 2020 to fiscal 2021, primarily due to higher sales and capacity utilization.

Recovery of Non-Income Taxes, Net



Brazilian companies are subject to various taxes on business operations,
including turnover taxes used to fund social security and unemployment programs,
commonly referred to as PIS/COFINS taxes. UNIFI, along with numerous other
companies in Brazil, challenged the constitutionality of certain state taxes
historically included in the PIS/COFINS tax base.

On May 13, 2021, Brazil's Supreme Federal Court ("SFC") ruled in favor of
taxpayers, and on July 7, 2021, the Brazilian Internal Revenue Service withdrew
its existing appeal. Following the SFC decision, the federal government will not
issue refunds for these taxes but will instead allow for the overpayments and
associated interest to be applied as credits against future PIS/COFINS tax
obligations.

There are no limitations or restrictions on UNIFI's ability to recover the
associated overpayment claims as future income is generated. Thus, during fiscal
2021, UNIFI recorded a $9,717 recovery of non-income taxes comprised of an
estimate of prior fiscal year PIS/COFINS overpayments of $6,167 and associated
interest of $3,550.

During fiscal 2022, UNIFI reduced the estimated recovery by $815 based on additional clarity and the review of the recovery process during the months following the associated SFC decision.

Impairment of Investment in Unconsolidated Affiliate and Gain on Divestiture



As of March 29, 2020, UNIFI owned a 34% interest in the PAL Investment and
Parkdale owned the majority 66% interest. In April 2020, UNIFI and Parkdale
finalized negotiations to sell the PAL Investment to Parkdale for $60,000 and
UNIFI recorded an impairment charge of $45,194 to adjust the PAL Investment to
fair value. The transaction closed on April 29, 2020 and UNIFI received $60,000
in cash.

UNIFI's 34% share of PAL's loss subsequent to the date of the impairment charge
(March 29, 2020) and through the date of transaction closing (April 29, 2020)
was $2,284 and generated a gain on divestiture.

                                       27


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Provision for Income Taxes

The change in consolidated income taxes is as follows:



                                     Fiscal 2022       Fiscal 2021       Fiscal 2020
Income (loss) before income taxes   $      26,828     $      46,347     $     (56,265 )
Provision for income taxes                 11,657            17,274               972
Effective tax rate                           43.5 %            37.3 %            (1.7 )%

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




Fiscal 2022 vs. Fiscal 2021

The increase in the effective tax rate from fiscal 2021 to fiscal 2022 is
primarily attributable to (i) an increase in the valuation allowance in fiscal
2022 and (ii) a discrete benefit in fiscal 2021 for the retroactive GILTI
high-tax exclusion. These increases are partially offset by (i) lower U.S. tax
on GILTI in in fiscal 2022 and (ii) a discrete benefit in fiscal 2022 related to
a favorable Supreme Court ruling in Brazil.



Fiscal 2021 vs. Fiscal 2020



The increase in the effective tax rate from fiscal 2020 to fiscal 2021 is
primarily attributable to (i) an impairment charge in fiscal 2020 for which
UNIFI does not expect to realize a future benefit, (ii) an increase in foreign
earnings taxed at higher rates in fiscal 2021, (iii) a higher rate impact of
U.S. tax on GILTI in fiscal 2021, and (iv) the reversal of UNIFI's permanent
reinvestment assertion in fiscal 2021 with regards to certain unrepatriated
foreign earnings. This increase is partially offset by a benefit in fiscal 2021
for the retroactive GILTI high-tax exclusion for prior periods.

Net Income (Loss)

Fiscal 2022 vs. Fiscal 2021



Net income for fiscal 2022 was $15,171, or $0.80 per diluted share, compared to
net income of $29,073, or $1.54 per diluted share, for fiscal 2021. The decrease
in net income was primarily attributable to (i) lower gross profit, (ii) a
higher effective tax rate in fiscal 2022, and (iii) the favorable impact of the
recovery of non-income taxes in fiscal 2021.

Fiscal 2021 vs. Fiscal 2020



Net income for fiscal 2021 was $29,073, or $1.54 per diluted share, compared to
a net loss of $57,237, or $3.10 per diluted share, for fiscal 2020. The increase
was primarily attributable to the impairment charge for the PAL Investment sale
recorded in fiscal 2020. Excluding the impairment charge, the increase was
attributable to higher gross profit and a recovery of non-income taxes in Brazil
in fiscal 2021, partially offset by the fiscal 2021 impacts of (i) higher SG&A,
(ii) a higher effective tax rate, and (iii) the loss on the disposal of assets.

Adjusted EBITDA

Adjusted EBITDA decreased from $64,643 for fiscal 2021 to $55,190 for fiscal 2022, consistent with the decrease in gross profit.



Adjusted EBITDA increased from $16,553 for fiscal 2020 to $64,643 for fiscal
2021. The increase was primarily attributable to higher gross profit due to the
recovery from the economic impacts of the COVID-19 pandemic, partially offset by
the fiscal 2021 impacts of higher SG&A and the loss on the disposal of assets of
$2,809.

Adjusted Net Income (Loss)

Adjusted Net Income decreased from $22,660 for fiscal 2021 to $14,283 for fiscal 2022, commensurate with lower gross profit and a higher effective tax rate.

Adjusted Net Income (Loss) increased from $(10,870) for fiscal 2020 to $22,660 for fiscal 2021, following the improvement in Adjusted EBITDA.


                                       28


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Segment Overview

Following is a discussion and analysis of the revenue and profitability performance of UNIFI's reportable segments for fiscal 2022, 2021 and 2020.

Americas Segment



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


                          Fiscal 2022       % Change       Fiscal 2021       % Change       Fiscal 2020
Net sales                $     483,085           24.9     $     386,779            1.7     $     380,138
Cost of sales                  458,617           30.9           350,373           (5.0 )         368,976
Gross profit                    24,468          (32.8 )          36,406          226.2            11,162
Depreciation expense            21,153            0.5            21,054            9.2            19,274
Segment Profit           $      45,621          (20.6 )   $      57,460           88.8     $      30,436

Gross margin                       5.1 %                            9.4 %                            2.9 %
Segment margin                     9.4 %                           14.9 %                            8.0 %

Segment net sales as a
percentage
 of consolidated
amount                            59.2 %                           57.9 %                           62.7 %

Segment Profit as a
percentage
 of consolidated
amount                            44.2 %                           49.6 %                           51.0 %



The changes in net sales for the Americas Segment are as follows:



Net sales for fiscal 2020                                    $ 380,138
Increase in sales volumes                                        3,333
Net change in average selling price and sales mix                3,308
Net sales for fiscal 2021                                    $ 386,779

Net sales for fiscal 2021                                    $ 386,779
Net change in average selling price and sales mix               80,337

Increase due to an additional week of sales in fiscal 2022 8,703 Increase in sales volumes

                                        7,266
Net sales for fiscal 2022                                    $ 483,085


The increase in net sales for the Americas Segment from fiscal 2021 to fiscal
2022 was primarily attributable to (i) higher average selling prices in response
to increasing input costs and (ii) an additional week of sales in fiscal 2022.

The increase in net sales for the Americas Segment from fiscal 2020 to fiscal
2021 was primarily attributable to the pandemic recovery that led to a better
sales mix and higher sales volumes in fiscal 2021.

The changes in Segment Profit for the Americas Segment are as follows:



Segment Profit for fiscal 2020               $  30,436

Change in underlying margins and sales mix 26,757 Increase in sales volumes

                          267
Segment Profit for fiscal 2021               $  57,460

Segment Profit for fiscal 2021               $  57,460

Change in underlying margins and sales mix (12,918 ) Increase in sales volumes

                        1,079
Segment Profit for fiscal 2022               $  45,621

The decrease in Segment Profit for the Americas Segment from fiscal 2021 to fiscal 2022 was primarily attributable to the adverse impacts of higher input costs outpacing selling price adjustments and weaker labor productivity.

The increase in Segment Profit for the Americas Segment from fiscal 2020 to fiscal 2021 was primarily attributable to the pandemic recovery that led to improved manufacturing productivity and conversion margin.


                                       29


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Brazil Segment



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

                          Fiscal 2022       % Change       Fiscal 2021       % Change       Fiscal 2020
Net sales                $     126,066           31.4     $      95,976           30.9     $      73,339
Cost of sales                   98,925           53.9            64,281            3.4            62,144
Gross profit                    27,141          (14.4 )          31,695          183.1            11,195
Depreciation expense             1,500           14.1             1,315           (5.1 )           1,385
Segment Profit           $      28,641          (13.2 )   $      33,010          162.4     $      12,580

Gross margin                      21.5 %                           33.0 %                           15.3 %
Segment margin                    22.7 %                           34.4 %                           17.2 %

Segment net sales as a
percentage
 of consolidated
amount                            15.5 %                           14.4 %                           12.1 %

Segment Profit as a
percentage
 of consolidated
amount                            27.8 %                           28.5 %                           21.1 %



The changes in net sales for the Brazil Segment are as follows:



Net sales for fiscal 2020                                   $  73,339

Increase in average selling price and change in sales mix 20,459 Increase in sales volumes

                                      17,297
Unfavorable foreign currency translation effects              (15,119 )
Net sales for fiscal 2021                                   $  95,976

Net sales for fiscal 2021                                   $  95,976

Increase in average selling price and change in sales mix 26,343 Favorable foreign currency translation effects

                  2,757
Increase in sales volumes                                         990
Net sales for fiscal 2022                                   $ 126,066




The increase in net sales for the Brazil Segment from fiscal 2021 to fiscal 2022
was primarily attributable to higher selling prices associated with higher input
costs and favorable foreign currency translation effects.



The increase in net sales for the Brazil Segment from fiscal 2020 to fiscal 2021
was primarily attributable to the Brazil Segment's ability to (i) capture market
share from competitors during Brazil's economic recovery following the most
severe impacts of the COVID-19 pandemic and (ii) an increase in selling prices,
partially offset by unfavorable foreign currency translation effects.

The changes in Segment Profit for the Brazil Segment are as follows:



Segment Profit for fiscal 2020                     $ 12,580
Increase in underlying margins                       20,318
Increase in sales volumes                             2,908

Unfavorable foreign currency translation effects (2,796 ) Segment Profit for fiscal 2021

$ 33,010

Segment Profit for fiscal 2021                     $ 33,010
Decrease in underlying margins                       (5,773 )

Favorable foreign currency translation effects 1,063 Increase in sales volumes

                               341
Segment Profit for fiscal 2022                     $ 28,641


The decrease in Segment Profit for the Brazil Segment from fiscal 2021 to fiscal
2022 was primarily attributable to an overall decrease in gross margin following
the normalization of the competitive environment in Brazil, which was
exceptionally favorable for the Brazil Segment during the fiscal 2021 economic
recovery.

The increase in Segment Profit for the Brazil Segment from fiscal 2020 to fiscal
2021 was primarily attributable to an improved sales mix and conversion margin
combined with higher sales volumes stemming from a temporarily improved
competitive position in Brazil, partially offset by unfavorable foreign currency
translation effects.

                                       30


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Asia Segment



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


                          Fiscal 2022       % Change       Fiscal 2021       % Change       Fiscal 2020
Net sales                $     206,607           11.8     $     184,837           20.8     $     153,032
Cost of sales                  177,731           11.5           159,444           16.9           136,349
Gross profit                    28,876           13.7            25,393           52.2            16,683
Depreciation expense                 -              -                 -              -                 -
Segment Profit           $      28,876           13.7     $      25,393           52.2     $      16,683

Gross margin                      14.0 %                           13.7 %                           10.9 %
Segment margin                    14.0 %                           13.7 %                           10.9 %

Segment net sales as a
percentage
 of consolidated
amount                            25.3 %                           27.7 %                           25.2 %

Segment Profit as a
percentage
 of consolidated
amount                            28.0 %                           21.9 %                           27.9 %



The changes in net sales for the Asia Segment are as follows:




Net sales for fiscal 2020                        $ 153,032

Change in average selling price and sales mix (16,074 ) Net increase in sales volumes

                       39,320

Favorable foreign currency translation effects 8,559 Net sales for fiscal 2021

$ 184,837

Net sales for fiscal 2021                        $ 184,837

Change in average selling price and sales mix 9,686 Net increase in sales volumes

                        8,298

Favorable foreign currency translation effects 3,786 Net sales for fiscal 2022

$ 206,607


The increase in net sales for the Asia Segment from fiscal 2021 to fiscal 2022
was primarily attributable to the continued momentum of REPREVE-branded products
contributing to underlying sales growth, partially offset by supply chain and
shipping challenges in Asia in connection with pandemic-related lockdowns during
the fourth quarter of fiscal 2022.

The increase in net sales for the Asia Segment from fiscal 2020 to fiscal 2021
was primarily attributable to the continued momentum of REPREVE-branded products
contributing to underlying sales growth, partially offset by (i) overall lower
sales volumes during the first half of fiscal 2021, driven by the adverse
impacts of the COVID-19 pandemic on global demand and (ii) a lower-priced sales
mix.

The changes in Segment Profit for the Asia Segment are as follows:



Segment Profit for fiscal 2020                   $ 16,683

Change in underlying margins and sales mix 4,584 Increase in sales volumes

                           3,156

Favorable foreign currency translation effects 970 Segment Profit for fiscal 2021

$ 25,393

Segment Profit for fiscal 2021                   $ 25,393

Change in underlying margins and sales mix 1,824 Increase in sales volumes

                           1,140

Favorable foreign currency translation effects 519 Segment Profit for fiscal 2022

$ 28,876


The increase in Segment Profit for the Asia Segment from fiscal 2021 to fiscal
2022 was primarily attributable to higher sales volumes with a stronger sales
mix in fiscal 2022.

The increase in Segment Profit for the Asia Segment from fiscal 2020 to fiscal 2021 was primarily attributable to raw material cost benefits achieved on certain product lines, an improved sales mix, and higher sales volumes.


                                       31


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Liquidity and Capital Resources

UNIFI's primary capital requirements are for working capital, capital
expenditures, debt service and share repurchases. UNIFI's primary sources of
capital are cash generated from operations and borrowings available under the
ABL Revolver (as defined below) of its credit facility.

As of July 3, 2022, all of UNIFI's $114,290 of debt obligations were guaranteed
by certain of its domestic operating subsidiaries, and 99% of UNIFI's cash and
cash equivalents were held by its foreign subsidiaries. Cash and cash
equivalents held by foreign subsidiaries may not be presently available to fund
UNIFI's domestic capital requirements, including its domestic debt obligations.
UNIFI employs a variety of strategies to ensure that its worldwide cash is
available in the locations where it is needed.

The following table presents a summary of cash and cash equivalents, borrowings
available under financing arrangements, liquidity, working capital and total
debt obligations as of July 3, 2022 for domestic operations compared to foreign
operations:

                                                    Domestic       Foreign        Total
Cash and cash equivalents                           $     527     $  52,763     $  53,290
Borrowings available under financing arrangements      51,409             -        51,409
Liquidity                                           $  51,936     $  52,763     $ 104,699

Working capital                                     $  90,963     $ 152,511     $ 243,474
Total debt obligations                              $ 114,290     $       -     $ 114,290


For fiscal 2022, cash generated from operations was $380 and at July 3, 2022,
excess availability under the ABL Revolver was $51,409. In fiscal 2022, demand
recovery and inflation generated an increase in our working capital, and when
combined with capital expenditures, debt service and routine tax payments, we
had a net use of cash in fiscal 2022. However, our liquidity position
(calculated in the table above) remains elevated and is expected to be adequate
to allow UNIFI to manage through the current macro-economic environment and to
quickly respond to demand recovery.

UNIFI considers $26,253 of its unremitted foreign earnings to be permanently
reinvested to fund working capital requirements and operations abroad, and has
therefore not recognized a deferred tax liability for the estimated future taxes
that would be incurred upon repatriation. If these earnings were distributed in
the form of dividends or otherwise, or if the shares of the relevant foreign
subsidiaries were sold or otherwise transferred, UNIFI could be subject to
additional tax liabilities of approximately $6,046.

Liquidity Considerations



Operationally, UNIFI navigated the impact on liquidity of the COVID-19 pandemic
by diligently managing the balance sheet and operational spending, in addition
to utilizing cash received from a minority interest divestiture in April 2020.
Following the COVID-19 pandemic, global demand recovery allowed for strong
results and cash generation in fiscal 2021. However, inflationary pressures and
demand uncertainty throughout fiscal 2022 and entering into fiscal 2023 have
created new risks to liquidity.

Currently, UNIFI's cash and liquidity positions are sufficient to sustain its
operations and meet its long-term financial targets. However, further
degradation in the macro-economic environment could introduce additional
liquidity risk and require UNIFI to limit cash outflows for capital expenditures
and discretionary activities, while also utilizing available and additional
forms of credit. Thus far we:

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

needs;

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

funding sources to change materially; however, new capital and funding

sources (if any) may carry higher costs than our current structure;

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


        periods, or other concessions, nor have we modified any material
        agreements to provide concessions; and

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

vendor financing.




Although short-term global demand appears somewhat uncertain, we do not
currently anticipate that any adverse events or circumstances will place
critical pressure on (i) our liquidity position; (ii) our ability to fund our
operations, capital expenditures, and expected business growth; or (iii) the
financial targets we have set for fiscal 2025. Should global demand, economic
activity, or input availability decline considerably for a prolonged period of
time (for example, in connection with the Russia-Ukraine conflict or the
macro-economic factors leading to inflation and a potential recession), UNIFI
maintains the ability to (i) seek additional credit or financing arrangements or
extensions of existing arrangements and/or (ii) re-implement cost reduction
initiatives to preserve cash and secure the longevity of the business and
operations.

Additionally, UNIFI considers opportunities to deploy existing cash to preserve
or enhance liquidity. In August 2022, we repatriated approximately $14,000 from
our operations in Asia to the U.S. via an existing intercompany note and, after
remitting the appropriate withholding taxes, utilized the cash to reduce our
outstanding revolver borrowings, thereby increasing the availability.

During fiscal 2023, we expect the majority of our capital will be deployed to
(i) upgrade the machinery in our U.S., El Salvador and Brazil manufacturing
facilities via capital expenditures and (ii) support further working capital
needs associated with increased sales. Nonetheless, we understand the current
global economic risks and we are prepared to act swiftly and diligently to
ensure the vitality of the business.

                                       32


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Debt Obligations



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

                                                    Weighted Average
                                    Scheduled     Interest Rate as of          Principal Amounts as of
                                  Maturity Date       July 3, 2022       July 3, 2022         June 27, 2021
ABL Revolver                      December 2023              3.2%        $      41,300       $             -
ABL Term Loan                     December 2023              3.2%               65,000                77,500
Finance lease obligations              (1)                   3.6%                7,261                 8,475
Construction financing                 (2)                   1.9%                  729                   882
Total debt                                                                     114,290                86,857
Current ABL Term Loan                                                          (10,000 )             (12,500 )
Current portion of finance
lease obligations                                                               (1,726 )              (3,545 )
Unamortized debt issuance costs                                                   (255 )                (476 )
Total long-term debt                                                     $     102,309       $        70,336

(1) Scheduled maturity dates for finance lease obligations range from March 2025

to November 2027, as further outlined in Note 4, "Leases."

(2) Refer to the discussion below under the subheading "Construction Financing"


     for further information.


ABL Facility and Amendments

On December 18, 2018, Unifi, Inc. and certain of its subsidiaries entered into a
Third Amendment to Amended and Restated Credit Agreement and Second Amendment to
Amended and Restated Guaranty and Security Agreement (the "2018 Amendment"). The
2018 Amendment amended the Amended and Restated Credit Agreement, dated as of
March 26, 2015, by and among Unifi, Inc. and a syndicate of lenders, as
previously amended (together with all previous and subsequent amendments, the
"Credit Agreement"). The Credit Agreement provides for a $200,000 senior secured
credit facility (the "ABL Facility"), including a $100,000 revolving credit
facility (the "ABL Revolver") and a term loan that can be reset up to a maximum
amount of $100,000, once per fiscal year, if certain conditions are met (the
"ABL Term Loan"). The ABL Facility has a maturity date of December 18, 2023.

The 2018 Amendment made the following changes to the Credit Agreement, among
others: (i) extended the maturity date from March 26, 2020 to December 18, 2023
and (ii) decreased the Applicable Margin (as defined in the Credit Agreement)
pricing structure for Base Rate Loans (as defined in the Credit Agreement) and
LIBOR Rate Loans (as defined in the Credit Agreement) by 25 basis points.

In connection and concurrent with the sale of UNIFI's 34% interest in PAL on
April 29, 2020, UNIFI entered into the Fourth Amendment to Amended and Restated
Credit Agreement (the "Fourth Amendment").  The Fourth Amendment, among other
things, revised the: (i) definition of permitted dispositions within the Credit
Agreement to include the sale by Unifi Manufacturing, Inc. of its equity
interest in PAL so long as the aggregate net cash proceeds received equaled or
exceeded $60,000 and such sale occurred on or before May 15, 2020; (ii) terms of
the Credit Agreement to allow the net cash proceeds from the sale of PAL to be
applied to the outstanding principal amount of the ABL Revolver until paid in
full with the remaining net cash proceeds retained by UNIFI, so long as certain
conditions were met; and (iii) terms of the Credit Agreement to allow the
lenders to make changes to the benchmark interest rate without further amendment
should LIBOR temporarily or permanently cease to exist and a transition to a new
benchmark interest rate such as the Secured Overnight Financing Rate ("SOFR") be
required for future ABL Facility borrowings.

On February 5, 2021, UNIFI entered into the Fifth Amendment to Amended and
Restated Credit Agreement (the "Fifth Amendment"). The Fifth Amendment generally
allowed for share repurchases up to $5,000 to be conducted from cash on-hand
through June 30, 2021.

The ABL Facility is secured by a first-priority perfected security interest in
substantially all owned property and assets (together with all proceeds and
products) of Unifi, Inc., Unifi Manufacturing, Inc., and a certain subsidiary
guarantor (collectively, the "Loan Parties"). It is also secured by a
first-priority security interest in all (or 65% in the case of UNIFI's
first-tier controlled foreign subsidiary, as required by the lenders) of the
stock of (or other ownership interests in) each of the Loan Parties (other than
Unifi, Inc.) and certain subsidiaries of the Loan Parties, together with all
proceeds and products thereof.

If excess availability under the ABL Revolver falls below the Trigger Level (as
defined in the Credit Agreement), a financial covenant requiring the Loan
Parties to maintain a fixed charge coverage ratio on a quarterly basis of at
least 1.05 to 1.00 becomes effective. The Trigger Level as of July 3, 2022 was
$20,625. In addition, the ABL Facility contains restrictions on particular
payments and investments, including certain restrictions on the payment of
dividends and share repurchases. Subject to specific provisions, the ABL Term
Loan may be prepaid at par, in whole or in part, at any time before the maturity
date, at UNIFI's discretion.

                                       33


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ABL Facility borrowings bear interest at LIBOR plus an applicable margin of
1.25% to 1.75%, or the Base Rate (as defined below) plus an applicable margin of
0.25% to 0.75%, with interest currently being paid on a monthly basis. The
applicable margin is based on (i) the excess availability under the ABL Revolver
and (ii) the consolidated leverage ratio, calculated as of the end of each
fiscal quarter. The Base Rate means the greater of (i) the prime lending rate as
publicly announced from time to time by Wells Fargo Bank, National Association,
(ii) the Federal Funds Rate (as defined in the Credit Agreement) plus 0.5%, and
(iii) LIBOR plus 1.0%. UNIFI's ability to borrow under the ABL Revolver is
limited to a borrowing base equal to specified percentages of eligible accounts
receivable and inventories and is subject to certain conditions and limitations.
There is also a monthly unused line fee under the ABL Revolver of 0.25%.

As of July 3, 2022: UNIFI was in compliance with all financial covenants in the
Credit Agreement; excess availability under the ABL Revolver was $51,409; UNIFI
had $0 of standby letters of credit; and the fixed charge coverage ratio was
(0.24) to 1.00. Management maintains the capability to improve the fixed charge
coverage ratio utilizing existing foreign cash and cash equivalents.

UNIFI had maintained three interest rate swaps that fix LIBOR at approximately 1.9% on $75,000 of variable-rate debt. Such swaps terminated in May 2022.

UNIFI currently utilizes variable-rate borrowings under the ABL Facility that
are made with reference to USD LIBOR Rate Loans. Management will continue to
monitor the potential termination of LIBOR and the potential impact on UNIFI's
operations. However, as a result of the Fourth Amendment, management does not
expect (i) significant efforts are necessary to accommodate a termination of
LIBOR or (ii) a significant impact to UNIFI's operations upon a termination of
LIBOR.

Finance Lease Obligations

During fiscal 2022, UNIFI entered into finance lease obligations totaling $2,493
for eAFK Evo texturing machines. The maturity dates of these obligations occur
during fiscal 2027 with interest rates between 3.0% and 4.4%.

During fiscal 2021, UNIFI entered into finance lease obligations totaling $740
for certain transportation equipment. The maturity date of these obligations is
June 2025 with an interest rate of 3.8%.

Construction Financing

In May 2021, UNIFI entered into an agreement with a third party lender that provides for construction-period financing for eAFK Evo texturing machines included in our capital allocation plans. UNIFI records project costs to construction in progress and the corresponding liability to construction financing (within long-term debt). The agreement provides for monthly, interest-only payments during the construction period, at a rate of SOFR plus 1.25%, and contains terms customary for a financing of this type.



Each borrowing under the agreement provides for 60 monthly payments, which will
commence upon the completion of the construction period with an interest rate at
fiscal year-end of approximately 4.4%. In connection with this construction
financing arrangement, UNIFI has borrowed a total of $3,222 and transitioned
$2,493 of completed asset costs to finance lease obligations as of July 3, 2022.

Scheduled Debt Maturities

The following table presents the scheduled maturities of UNIFI's outstanding debt obligations for the following five fiscal years and thereafter.



                              Fiscal 2023       Fiscal 2024       Fiscal 2025       Fiscal 2026       Fiscal 2027       Thereafter
ABL Revolver                 $           -     $      41,300     $           -     $           -     $           -     $          -
ABL Term Loan                       10,000            55,000                 -                 -                 -                -
Finance lease obligations            1,726             1,787             1,699             1,255               732               62
Total (1)                    $      11,726     $      98,087     $       1,699     $       1,255     $         732     $         62


(1) Total reported excludes $729 for construction financing, described above.






Further discussion of the terms and conditions of the Credit Agreement and the
Company's existing indebtedness is outlined in Note 12, "Long-Term Debt," to the
accompanying consolidated financial statements.

                                       34


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Net Debt (Non-GAAP Financial Measure)

The reconciliations for Net Debt are as follows:



                                     July 3, 2022       June 27, 2021
Long-term debt                      $      102,309     $        70,336
Current portion of long-term debt           11,726              16,045
Unamortized debt issuance costs                255                 476
Debt principal                             114,290              86,857
Less: cash and cash equivalents             53,290              78,253
Net Debt                            $       61,000     $         8,604


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

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



                                             Fiscal 2022       Fiscal 2021
Cash and cash equivalents                   $      53,290     $      78,253
Receivables, net                                  106,565            94,837
Inventories                                       173,295           141,221
Income taxes receivable                               160             2,392
Other current assets                               18,956            12,364
Accounts payable                                  (73,544 )         (54,259 )
Other current liabilities                         (19,806 )         (31,638 )
Income taxes payable                               (1,526 )          (1,625 )
Current operating lease liabilities                (2,190 )          (1,856 )
Current portion of long-term debt                 (11,726 )         (16,045 )
Working capital                             $     243,474     $     223,644

Less: Cash and cash equivalents                   (53,290 )         (78,253 )
Less: Income taxes receivable                        (160 )          (2,392 )
Less: Income taxes payable                          1,526             1,625
Less: Current operating lease liabilities           2,190             1,856
Less: Current portion of long-term debt            11,726            16,045
Adjusted Working Capital                    $     205,466     $     162,525




Working capital increased from $223,644 as of June 27, 2021 to $243,474 as of
July 3, 2022, while Adjusted Working Capital increased from $162,525 to
$205,466, both primarily in connection with business recovery and higher input
costs. Working capital and Adjusted Working Capital are within the range of
management's expectations based on the composition of the underlying business
and global structure.



The decrease in cash and cash equivalents was primarily driven by capital
expenditures and scheduled debt service. The increase in receivables, net was
due primarily to an increase in selling prices as a result of higher raw
material costs in fiscal 2022, partially offset by a decrease in banker's
acceptance notes held by our Asia Segment. The increase in inventories was
primarily attributable to higher raw material costs in fiscal 2022. The increase
in other current assets was primarily due to the reclassification of Brazil's
recovery of non-income taxes from long-term to current based on an accelerated
recovery timeline. The increase in accounts payable was consistent with higher
raw material costs in fiscal 2022. The decrease in other current liabilities was
primarily attributable to less incentive compensation earned in fiscal 2022.
Income taxes receivable and income taxes payable are immaterial to working
capital and Adjusted Working Capital. The change in current operating lease
liabilities was insignificant. The change in current portion of long-term debt
primarily reflects the five quarterly principal payments occurring within the
53-week fiscal 2022 year reflected as current at the end of fiscal 2021.

Capital Projects



In fiscal 2022, UNIFI invested $39,631 in capital projects, primarily relating
to (i) eAFK Evo texturing machinery, (ii) further improvements in production
capabilities and technology enhancements in the Americas, and (iii) routine
annual maintenance capital expenditures. Maintenance capital expenditures are
necessary to support UNIFI's current operations, capacities, and capabilities
and exclude expenses relating to repairs and costs that do not extend an asset's
useful life.

In fiscal 2021, UNIFI invested $21,178 in capital projects, primarily relating
to (i) further improvements in production capabilities and technology
enhancements in the Americas, (ii) eAFK Evo texturing machines, and (iii)
routine annual maintenance capital expenditures. Maintenance capital
expenditures are necessary to support UNIFI's current operations, capacities,
and capabilities and exclude expenses relating to repairs and costs that do not
extend an asset's useful life.

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In fiscal 2020 and in response to the adverse liquidity impacts of COVID-19, we
invested approximately $18,500 in capital projects that included (i) a priority
on safety and maintenance capital expenditures to allow continued efficient
production and (ii) making further improvements in production capabilities and
technology enhancements in the Americas. We also added approximately $6,000 of
transportation equipment under new finance leases.

In fiscal 2023, UNIFI expects to invest between $35,000 and $40,000 in capital
projects, to include (i) making further improvements in production capabilities
and technology enhancements in the Americas, including the continued purchase
and installation of new eAFK Evo texturing machines, and (ii) annual maintenance
capital expenditures. UNIFI will seek to ensure maintenance capital expenditures
are sufficient to allow continued production at high efficiencies.

The total amount ultimately invested for fiscal 2023 could be more or less than
the currently estimated amount depending on the timing and scale of contemplated
initiatives and is expected to be funded primarily by cash provided by operating
activities and other borrowings. UNIFI expects recent and future capital
projects to provide benefits to future profitability. The additional assets from
these capital projects consist primarily of machinery and equipment.

Share Repurchase Program



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

As of July 3, 2022, UNIFI repurchased 701 shares at an average price of $15.90,
leaving $38,859 available for repurchase under the 2018 SRP. UNIFI will continue
to evaluate opportunities to use excess cash flows from operations or existing
borrowings to repurchase additional stock, while maintaining sufficient
liquidity to support its operational needs and to fund future strategic growth
opportunities.

Liquidity Summary

UNIFI has met its historical liquidity requirements for working capital, capital
expenditures, debt service requirements, and other operating needs from its cash
flows from operations and available borrowings. UNIFI believes that its existing
cash balances, cash provided by operating activities, and credit facility will
enable UNIFI to meet its foreseeable liquidity requirements. Domestically,
UNIFI's cash balances, cash provided by operating activities and borrowings
available under the ABL Revolver continue to be sufficient to fund UNIFI's
domestic operating activities as well as cash commitments for its investing and
financing activities. For its foreign operations, UNIFI expects its existing
cash balances, cash provided by operating activities and available foreign
financing arrangements will provide the needed liquidity to fund the associated
operating activities and investing activities, such as future capital
expenditures. UNIFI's foreign operations in Asia and Brazil are in a position to
obtain local country financing arrangements due to the strong operating results
of each subsidiary.

Cash Provided by Operating Activities

The significant components of net cash provided by operating activities are summarized below. UNIFI analyzes net cash provided by operating activities utilizing the major components of the statements of cash flows prepared under the indirect method.



                                                  Fiscal 2022       Fiscal 2021       Fiscal 2020
Net income (loss)                                $      15,171     $      29,073     $     (57,237 )
Depreciation and amortization expense                   26,207            25,528            23,653
Equity in (earnings) loss of unconsolidated
affiliates                                                (605 )            (739 )             477
Recovery of non-income taxes, net                          815            (9,717 )               -
Impairment of investment in unconsolidated
affiliate                                                    -                 -            45,194
Gain on sale of investment in unconsolidated
affiliate                                                    -                 -            (2,284 )
Non-cash compensation expense                            3,555             3,462             3,999
Deferred income taxes                                   (3,119 )           5,087            (4,011 )
Subtotal                                                42,024            52,694             9,791

Distributions received from unconsolidated
affiliates                                                 750               750            10,437
Change in inventories                                  (34,749 )         (28,069 )          15,792
Other changes in assets and liabilities                 (7,645 )          11,306            16,704

Net cash provided by operating activities $ 380 $ 36,681 $ 52,724

Fiscal 2022 Compared to Fiscal 2021



The decrease in net cash provided by operating activities from fiscal 2021 to
fiscal 2022 was primarily due to an increase in working capital associated with
(i) higher raw material costs and consolidated sales activity driving higher
inventory and accounts receivable balances and (ii) lower other current
liabilities resulting from the payment of incentive compensation earned in
fiscal 2021.

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Fiscal 2021 Compared to Fiscal 2020



The decrease in net cash provided by operating activities from fiscal 2020 to
fiscal 2021 was primarily due to (i) the impact on working capital created by
the contrast in business activity at the end of each fiscal year and (ii) the
$10,437 of distributions received from PAL in fiscal 2020. The decrease was
partially offset by a significant increase in Adjusted EBITDA from fiscal 2020
to fiscal 2021.

Cash (Used) Provided by Investing Activities and Financing Activities

Fiscal 2022

UNIFI used $41,734 for investing activities and provided $17,965 for financing
activities during fiscal 2022. Significant investing activities included $39,631
for capital expenditures, which primarily relate to ongoing maintenance capital
expenditures along with production capabilities and technology enhancements in
the Americas. Significant financing activities included $28,800 of net
borrowings against the ABL Facility, along with $3,707 of payments on finance
lease obligations and $9,151 for share repurchases during fiscal 2022.

Fiscal 2021

UNIFI used $24,621 for investing activities and used $12,875 for financing
activities during fiscal 2021. Significant investing activities included (i)
approximately $21,000 for capital expenditures that primarily relate to ongoing
maintenance capital expenditures along with production capabilities and
technology enhancements in the Americas and (ii) approximately $3,600 for
intangible asset purchases in connection with two bolt-on asset acquisitions in
an effort to expand our customer portfolios in the U.S. Significant financing
activities included $10,000 of net payments against the ABL Facility, along with
$3,646 of payments on finance lease obligations.

Fiscal 2020

UNIFI generated $41,574 from net investing activities and utilized $37,922 for
net financing activities during fiscal 2020. Significant investing activities
included the $60,000 sale of the PAL Investment, partially offset by $18,509 for
capital expenditures, which primarily relate to ongoing maintenance capital
expenditures, along with production capabilities and technology enhancements in
the Americas. Significant financing activities included $29,400 of net payments
against the ABL Facility using approximately half of the PAL Investment sale
proceeds, along with $6,035 of payments on finance lease obligations.

Contractual Obligations



In addition to management's discussion and analysis surrounding our liquidity
and capital resources, long-term debt, finance leases, operating leases, and the
associated principal and interest components thereof, as of July 3, 2022,
UNIFI's contractual obligations consisted of the following additional concepts
and considerations.


    1.  Capital purchase obligations relate to contracts with vendors for the
        construction or purchase of assets, primarily for the normal course
        operations in our manufacturing facilities. Such obligations are
        approximately $32,000 and $12,000 for fiscal years 2023 and 2024,
        respectively.


2. Purchase obligations are agreements that are enforceable and legally

binding and that specify all significant terms, including fixed or minimum

quantities to be purchased; fixed, minimum or variable price provisions;


        and the approximate timing of the transaction. Such obligations,
        predominantly related to ongoing operations and service contracts in
        support of normal course business, range from approximately $5,000 to
        $10,000 per annum and vary based on the renewal timing of specific
        commitments and the range of services received.



    3.  Non-capital purchase orders totaled approximately $75,000 at the end of
        fiscal 2022 and are expected to be settled in fiscal 2023. Such open

purchase orders are in the ordinary course of business for the procurement

of (i) raw materials used in the production of inventory, (ii) certain


        consumables and outsourced services used in UNIFI's manufacturing
        processes, and (iii) selected finished goods for resale sourced from
        third-party suppliers.



    4.  Other balance sheet items are detailed within the notes to the

consolidated financial statements, including but not limited to annual

incentive compensation, severance agreements, post-employment plan

liabilities, unpaid invoice and contract amounts, interest rate swaps, and


        other balances and charges that primarily relate to normal course
        operations.


UNIFI does not engage in off-balance sheet arrangements and only enters into material contracts in the ordinary course of business and/or to hedge the associated risks (e.g. interest rate swaps).

Recent Accounting Pronouncements

Issued and Pending Adoption



Upon review of each Accounting Standards Update ("ASU") issued by the Financial
Accounting Standards Board (the "FASB") through the date of this report, UNIFI
identified no newly applicable accounting pronouncements that are expected to
have a significant impact on UNIFI's consolidated financial statements.

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Recently Adopted



In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit
Losses, with an effective date consistent with UNIFI's fiscal 2021. The new
guidance requires an organization to measure all expected credit losses for
financial assets held at the reporting date based on historical experience,
current conditions and reasonable and supportable forecasts. Financial
institutions and other organizations have begun to use forward-looking
information to inform their credit loss estimates. UNIFI adopted the ASU in
fiscal 2021 using the modified retrospective approach and the adoption did not
have a material impact to UNIFI's financial position or results of operations.

There have been no other newly issued or newly applicable accounting pronouncements that have had, or are expected to have, a significant impact on UNIFI's consolidated financial statements.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies



The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. The SEC has defined a company's
most critical accounting policies as those involving accounting estimates that
require management to make assumptions about matters that are highly uncertain
at the time and where different reasonable estimates or changes in the
accounting estimate from quarter to quarter could materially impact the
presentation of the financial statements. The following discussion provides
further information about accounting policies critical to UNIFI and should be
read in conjunction with Note 2, "Summary of Significant Accounting Policies,"
to the accompanying consolidated financial statements.

Inventory Net Realizable Value Adjustment



The inventory net realizable value adjustment is established based on many
factors, including: historical recovery rates, inventory age, expected net
realizable value of specific products, and current economic conditions. Specific
reserves are established based on a determination of the obsolescence of the
inventory and whether the inventory cost exceeds net realizable
value. Anticipating selling prices and evaluating the condition of the
inventories require judgment and estimation, which may impact the resulting
inventory valuation and gross margins. UNIFI uses current and historical
knowledge to record reasonable estimates of its markdown percentages and
expected sales prices. UNIFI believes it is unlikely that differences in actual
demand or selling prices from those forecasted by management would have a
material impact on UNIFI's financial condition or results of operations. UNIFI
has not made any material changes to the methodology used in establishing its
inventory net realizable value adjustment during the past three fiscal years. A
plus or minus 10% change in the inventory net realizable value adjustment would
not have been material to UNIFI's consolidated financial statements for the past
three fiscal years.

                                   July 3, 2022       June 27, 2021       June 28, 2020
Net realizable value adjustment   $       (3,487 )   $        (2,407 )   $  

(4,224 )

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