Note 24 - Investments in Unconsolidated Affiliates and Variable Interest Entities

12 Months Ended

Jun. 30, 2013

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

24. Investments in Unconsolidated Affiliates and Variable Interest Entities

Parkdale America, LLC

In June 1997, the Company and Parkdale Mills, Inc. (“Mills”) entered into a Contribution Agreement that set forth the terms and conditions by which the two companies contributed all of the assets of their spun cotton yarn operations utilizing open-end and air-jet spinning technologies to create Parkdale America, LLC (“PAL”). In exchange for its contribution, the Company received a 34% ownership interest in PAL which is accounted for using the equity method of accounting. Effective January 1, 2012, Mills’ interest in PAL was assigned to Parkdale Incorporated. PAL’s fiscal year end is the Saturday nearest to December 31 and PAL is a limited liability company treated as a partnership for income tax reporting purposes. PAL is a producer of cotton and synthetic yarns for sale to the textile industry and apparel market, both foreign and domestic. PAL has 13 manufacturing facilities located primarily in the southeast region of the U.S. According to its most recently issued audited financial statements, PAL’s five largest customers accounted for approximately 82% of total revenues and 77% of total gross accounts receivable outstanding, with the largest customer accounting for approximately 38% of revenues and 35% of accounts receivable.

During August 2008, a federal government program commenced providing economic adjustment assistance to domestic users of upland cotton (the “EAP program”). The program offers a subsidy for cotton consumed in domestic production and the subsidy is paid the month after the eligible cotton is consumed. The subsidy must be used within eighteen months after the marketing year in which it is earned to purchase qualifying capital expenditures in the U.S. for production of goods from upland cotton. The marketing year is from August 1 to July 31. The program provided a subsidy of four cents per pound through July 31, 2012 and thereafter provides a subsidy of three cents per pound. The Company recognizes its share of PAL’s income for the cotton subsidy when the cotton has been consumed and the qualifying assets have been acquired with an appropriate allocation methodology considering the dual criteria of the subsidy.

PAL is subject to price risk related to anticipated fixed-price yarn sales. To protect the gross margin of these sales, PAL may enter into cotton futures to manage changes in raw material prices in order to protect the gross margin of fixed-priced yarn sales. The derivative instruments used are listed and traded on an exchange and are thus valued using quoted prices classified within Level 1 of the fair value hierarchy. As of June 2013, PAL had no futures contracts designated as cash flow hedges.

As of June 30, 2013, the Company’s investment in PAL was $89,385 and shown within Investments in unconsolidated affiliates in the Consolidated Balance Sheets. The reconciliation between the Company’s share of the underlying equity of PAL and its investment is as follows:

Underlying equity as of June 2013	$	107,860
Initial excess capital contributions		53,363
Impairment charge recorded by the Company in 2007		(74,106	)
Anti-trust lawsuit against PAL in which the Company did not participate		2,652
EAP adjustments		(384	)
Investment as of June 2013	$	89,385

U.N.F. Industries, Ltd.

In September 2000, the Company and Nilit Ltd. (“Nilit”) formed a 50/50 joint venture, U.N.F. Industries Ltd. (“UNF”), for the purpose of operating nylon extrusion assets to manufacture nylon POY. All raw material and production services for UNF are provided by Nilit under separate supply and services agreements. UNF’s fiscal year end is December 31 and it is a registered Israeli private company located in Migdal Ha-Emek, Israel.

UNF America, LLC

In October 2009, the Company and Nilit America Inc. (“Nilit America”) formed a 50/50 joint venture, UNF America LLC (“UNF America”), for the purpose of operating a nylon extrusion facility which manufactures nylon POY. All raw material and production services for UNF America are provided by Nilit America under separate supply and services agreements. UNF America’s fiscal year end is December 31 and it is a limited liability company treated as a partnership for income tax reporting purposes located in Ridgeway, Virginia.

In conjunction with the formation of UNF America, the Company entered into a supply agreement with UNF and UNF America whereby the Company agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNF America. The agreement has no stated minimum purchase quantities and pricing is negotiated every six months, based on market rates. As of June 30, 2013, the Company’s open purchase orders related to this agreement were $4,100.

The Company’s raw material purchases under this supply agreement consist of the following:

	For the Fiscal Years Ended
	June 30, 2013		June 24, 2012		June 26, 2011
UNF	$	11,752	$	12,875	$	18,698
UNF America		22,601		17,956		17,570
Total	$	34,353	$	30,831	$	36,268

As of June 30, 2013 and June 24, 2012, the Company had combined accounts payable due to UNF and UNF America of $2,890 and $4,184, respectively.

The Company is the primary beneficiary of these entities based on the terms of the supply agreement discussed above. As a result, the Company has determined that UNF and UNF America are variable interest entities (“VIEs”) and, in accordance with U.S. GAAP, should be consolidated in the Company’s financial results. As the Company purchases substantially all of the output from the two entities, and, as the two entities’ balance sheets constitutes 3% or less of the Company’s current assets, total assets and total liabilities, the Company has not included the accounts of UNF and UNF America in its consolidated financial statements. As of June 30, 2013, the Company’s combined investments in UNF and UNF America were $3,876 and are shown within Investments in unconsolidated affiliates in the Consolidated Balance Sheets. The financial results of UNF and UNF America are included in the Company’s financial statements with a one month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with the Company’s accounting policy. Other than the supply agreement discussed above, the Company does not provide any other commitments or guarantees related to either UNF or UNF America.

Unaudited, condensed balance sheet and income statement information for the Company’s unconsolidated affiliates is presented in the following tables. As PAL is defined as significant, its information is separately disclosed. The operating results of Renewables are included through the end of the Company’s first quarter of fiscal year 2012, and thereafter Renewables’ results have been consolidated.

	As of June 30, 2013 (Unaudited)
	PAL		Other		Total
Current assets	$	266,300	$	11,343	$	277,643
Noncurrent assets		111,061		3,163		114,224
Current liabilities		44,517		4,910		49,427
Noncurrent liabilities		15,609		—		15,609
Shareholders’ equity and capital accounts		317,235		9,596		326,831
The Company’s portion of undistributed earnings		18,806		751		19,557

	As of June 24, 2012 (Unaudited)
	PAL		Other		Total
Current assets	$	259,558	$	12,018	$	271,576
Noncurrent assets		130,677		759		131,436
Current liabilities		56,899		4,512		61,411
Noncurrent liabilities		7,717		—		7,717
Shareholders’ equity and capital accounts		325,619		8,265		333,884

	For the Fiscal Year Ended June 30, 2013 (Unaudited)
	PAL		Other		Total
Net sales	$	785,351	$	35,190	$	820,541
Gross profit		46,918		4,997		51,915
Income from operations		25,809		3,283		29,092
Net income		27,575		3,330		30,905
Depreciation and amortization		29,500		101		29,601
Cash received by PAL under EAP program		17,369		—		17,369
Earnings recognized by PAL for EAP program		8,744		—		8,744
Dividends and cash distributions received		13,440		1,500		14,940

As of the end of PAL’s fiscal June 2013 and fiscal June 2012 periods, PAL’s amounts of deferred revenues related to the EAP program were $8,791 and $166, respectively. There was no deferred EAP revenue as of the end of PAL’s fiscal June 2011 period.

	For the Fiscal Year Ended June 24, 2012 (Unaudited)
	PAL		Other		Total
Net sales	$	1,063,126	$	31,958	$	1,095,084
Gross profit		66,266		3,589		69,855
Income from operations		57,203		1,414		58,617
Net income		56,069		1,461		57,530
Depreciation and amortization		33,549		131		33,680
Cash received by PAL under EAP program		22,090		—		22,090
Earnings recognized by PAL for EAP program		21,769		—		21,769
Dividends and cash distributions received		9,616		1,000		10,616

	For the Fiscal Year Ended June 26, 2011 (Unaudited)
	PAL		Other		Total
Net sales	$	1,110,184	$	38,292	$	1,148,476
Gross profit		80,754		5,739		86,493
Income from operations		70,132		2,545		72,677
Net income		68,946		1,794		70,740
Depreciation and amortization		31,979		1,185		33,164
Cash received by PAL under EAP program		28,795		—		28,795
Earnings recognized by PAL for EAP program		40,160		—		40,160
Dividends and cash distributions received		4,500		1,400		5,900