UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 29, 2022, there were
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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, strategies, initiatives or earnings, are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs, assumptions and expectations about our future performance, considering the information currently available to management. The words “believe,” “may,” “could,” “will,” “should,” “would,” “anticipate,” “plan,” “estimate,” “project,” “expect,” “intend,” “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 not statements of historical fact; and they involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition that we express or imply in any forward-looking statement. Factors that could contribute to such differences include, but are not limited to:
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the competitive nature of the textile industry and the impact of global competition; |
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changes in the trade regulatory environment and governmental policies and legislation; |
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the availability, sourcing and pricing of raw materials; |
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general domestic and international economic and industry conditions in markets where the Company competes, including economic and political factors over which the Company has no control; |
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changes in consumer spending, customer preferences, fashion trends and end uses for the Company’s products; |
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the financial condition of the Company’s customers; |
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the loss of a significant customer or brand partner; |
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natural disasters, industrial accidents, power or water shortages, extreme weather conditions and other disruptions at one of the Company’s facilities; |
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the disruption of operations, global demand, or financial performance as a result of catastrophic or extraordinary events, including epidemics or pandemics such as the recent strains of coronavirus (“COVID-19”); |
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the success of the Company’s strategic business initiatives; |
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the volatility of financial and credit markets; |
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the ability to service indebtedness and fund capital expenditures and strategic business initiatives; |
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the availability of and access to credit on reasonable terms; |
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changes in foreign currency exchange, interest and inflation rates; |
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fluctuations in production costs; |
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the ability to protect intellectual property; |
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the strength and reputation of the Company’s brands; |
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employee relations; |
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the ability to attract, retain and motivate key employees; |
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the impact of climate change or environmental, health and safety regulations; |
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the impact of tax laws, the judicial or administrative interpretations of tax laws and/or changes in such laws or interpretations; and |
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other factors discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2021 or in the Company’s other periodic reports and information filed with the Securities and Exchange Commission (“SEC”). |
All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors 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 the Company. Any forward-looking statement speaks only as of the date on which such statement is made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, except as may be required by federal securities laws.
In light of all the above considerations, we reiterate that forward-looking statements are not guarantees of future performance, and we caution you not to rely on them as such.
UNIFI, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS AND NINE MONTHS ENDED MARCH 27, 2022
TABLE OF CONTENTS
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Item 1. |
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1 |
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Condensed Consolidated Balance Sheets as of March 27, 2022 and June 27, 2021 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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34 |
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Item 4. |
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35 |
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Item 1. |
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36 |
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Item 2. |
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36 |
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Item 6. |
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37 |
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38 |
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PART I—FINANCIAL INFORMATION
Item 1. |
Financial Statements |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
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March 27, 2022 |
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June 27, 2021 |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net |
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Inventories |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease assets |
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Deferred income taxes |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Accounts payable |
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$ |
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$ |
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Income taxes payable |
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Current operating lease liabilities |
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Current portion of long-term debt |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Non-current operating lease liabilities |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies |
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Common stock, $ shares issued and outstanding as of March 27, 2022 and June 27, 2021, respectively) |
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Capital in excess of par value |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
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For the Three Months Ended |
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For the Nine Months Ended |
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March 27, 2022 |
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March 28, 2021 |
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March 27, 2022 |
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March 28, 2021 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses |
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Benefit for bad debts |
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Other operating (income) expense, net |
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( |
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Operating income |
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Interest income |
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Interest expense |
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Equity in earnings of unconsolidated affiliates |
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Recovery of non-income taxes, net |
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— |
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— |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Net income per common share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
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For the Three Months Ended |
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For the Nine Months Ended |
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March 27, 2022 |
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March 28, 2021 |
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March 27, 2022 |
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March 28, 2021 |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments |
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( |
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Changes in interest rate swaps, net of tax of $ |
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Other comprehensive income (loss), net |
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( |
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands)
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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Balance at December 26, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Options exercised |
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— |
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— |
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— |
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— |
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— |
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— |
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Conversion of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Common stock repurchased and retired under publicly announced program |
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( |
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( |
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( |
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( |
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— |
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( |
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Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
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( |
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— |
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( |
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— |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Balance at March 27, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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Balance at June 27, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Options exercised |
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( |
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— |
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— |
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— |
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Conversion of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Common stock repurchased and retired under publicly announced program |
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( |
) |
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( |
) |
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( |
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( |
) |
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— |
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( |
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Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
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( |
) |
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( |
) |
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( |
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— |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Balance at March 27, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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Balance at December 27, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Options exercised |
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— |
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— |
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— |
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— |
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— |
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— |
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Conversion of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
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( |
) |
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— |
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( |
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— |
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— |
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( |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net income |
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— |
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— |
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— |
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— |
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Balance at March 28, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Shares |
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Common Stock |
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Capital in Excess of Par Value |
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Retained Earnings |
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Accumulated Other Comprehensive Loss |
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Total Shareholders’ Equity |
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Balance at June 28, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Options exercised |
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— |
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— |
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— |
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— |
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— |
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Conversion of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
|
|
|
|
|
Common stock withheld in satisfaction of tax withholding obligations under net share settle transactions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
Balance at March 28, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
See accompanying notes to condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
|
For the Nine Months Ended |
|
|||||
|
|
March 27, 2022 |
|
|
March 28, 2021 |
|
||
Cash and cash equivalents at beginning of period |
|
$ |
|
|
|
$ |
|
|
Operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash (used) provided by operating activities: |
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated affiliates |
|
|
( |
) |
|
|
( |
) |
Distribution received from unconsolidated affiliate |
|
|
|
|
|
|
— |
|
Depreciation and amortization expense |
|
|
|
|
|
|
|
|
Non-cash compensation expense |
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
( |
) |
|
|
( |
) |
Loss on disposal of assets |
|
|
|
|
|
|
|
|
Other, net |
|
|
( |
) |
|
|
( |
) |
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Receivables, net |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
( |
) |
|
|
( |
) |
Other current assets |
|
|
( |
) |
|
|
|
|
Income taxes |
|
|
|
|
|
|
|
|
Accounts payable and other current liabilities |
|
|
|
|
|
|
|
|
Other, net |
|
|
|
|
|
|
|
|
Net cash (used) provided by operating activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Purchases of intangible assets |