Note 21 - Investments in Unconsolidated Affiliates and Variable Interest Entities

9 Months Ended

Mar. 30, 2014

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

21. 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 is a limited liability company treated as a partnership for income tax reporting purposes, and PAL’s fiscal year end is the Saturday nearest to December 31. 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 74% of total revenues and 78% of total gross accounts receivable outstanding.

During August 2008, a federal government program commenced providing economic adjustment assistance to domestic users of upland cotton (the “EAP program”). The EAP program offered 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. In February 2014, the federal government extended the EAP program for five years.  The cotton subsidy will remain at three cents per pound for the life of the program.  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.

As of March 30, 2014, the Company’s investment in PAL was $94,752 and shown within investments in unconsolidated affiliates in the Condensed 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 March 2014	$	113,173
Initial excess capital contributions		53,363
Impairment charge recorded by the Company in 2007		(74,106	)
Antitrust lawsuit against PAL in which the Company did not participate		2,652
EAP adjustments		(330	)
Investment balance as of March 2014	$	94,752

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 March 30, 2014, the Company’s open purchase orders related to this agreement were $3,060.

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

	For the Nine Months Ended
	March 30, 2014		March 24, 2013
UNF	$	8,177	$	8,792
UNF America		18,065		16,936
Total	$	26,242	$	25,728

As of March 30, 2014 and June 30, 2013, the Company had combined accounts payable due to UNF and UNF America of $3,621 and $2,890, respectively.

The Company has determined that UNF and UNF America are variable interest entities (“VIEs”) and has also determined that the Company is the primary beneficiary of these entities, based on the terms of the supply agreement. As a result, these entities should be consolidated in the Company’s financial results. As the Company purchases substantially all of the output from the two entities, the two entities’ balance sheets constitute 3% or less of the Company’s current assets, total assets and total liabilities, and such balances are not expected to comprise a larger portion in the future, the Company has not included the accounts of UNF and UNF America in its consolidated financial statements. As of March 30, 2014, the Company’s combined investments in UNF and UNF America were $3,678 and are shown within investments in unconsolidated affiliates in the Condensed 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.

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.

	As of March 30, 2014
	PAL		Other		Total
Current assets	$	268,929	$	8,300	$	277,229
Noncurrent assets		123,184		3,087		126,271
Current liabilities		48,170		4,180		52,350
Noncurrent liabilities		11,081		—		11,081
Shareholders’ equity and capital accounts		332,862		7,207		340,069
The Company’s portion of undistributed earnings		24,120		769		24,889

	As of June 30, 2013
	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

	For the Three Months Ended March 30, 2014
	PAL		Other		Total
Net sales	$	211,657	$	8,631	$	220,288
Gross profit		13,560		1,161		14,721
Income from operations		8,394		741		9,135
Income to members		9,453		781		10,234
Depreciation and amortization		5,485		25		5,510
Cash received by PAL under EAP program		3,836		—		3,836
Earnings recognized by PAL for EAP program		3,836		—		3,836
Dividends and cash distributions received		6,023		750		6,773

As of the end of PAL’s fiscal March 2014 period, PAL’s amount of deferred revenues related to the EAP program was $0.

	For the Three Months Ended March 24, 2013
	PAL		Other		Total
Net sales	$	197,242	$	8,188	$	205,430
Gross profit		20,956		944		21,900
Income from operations		12,053		549		12,602
Income to members		12,553		573		13,126
Depreciation and amortization		6,577		25		6,602
Cash received by PAL under EAP program		4,439		—		4,439
Earnings recognized by PAL for EAP program		2,576		—		2,576
Dividends and cash distributions received		7,807		—		7,807

	For the Nine Months Ended March 30, 2014
	PAL		Other		Total
Net sales	$	624,823	$	26,542	$	651,365
Gross profit		50,315		3,286		53,601
Income from operations		38,314		1,990		40,304
Income to members		40,869		2,110		42,979
Depreciation and amortization		19,771		75		19,846
Cash received by PAL under EAP program		11,329		—		11,329
Earnings recognized by PAL for EAP program		20,120		—		20,120
Dividends and cash distributions received		8,582		1,250		9,832

	For the Nine Months Ended March 24, 2013
	PAL		Other		Total
Net sales	$	567,854	$	26,423	$	594,277
Gross profit		30,445		4,322		34,767
Income from operations		12,823		3,053		15,876
Income to members		14,439		3,068		17,507
Depreciation and amortization		22,577		75		22,652
Cash received by PAL under EAP program		13,208		—		13,208
Earnings recognized by PAL for EAP program		6,444		—		6,444
Dividends and cash distributions received		10,031		500		10,531