Business Segment Information

12 Months Ended

Jun. 28, 2020

26. Business Segment Information

UNIFI defines operating segments as components of the organization for which discrete financial information is available and operating results are evaluated on a regular basis by UNIFI’s principal executive officer, who is the chief operating decision maker (the “CODM”), in order to assess performance and allocate resources. Characteristics of UNIFI which were relied upon in making the determination of reportable segments include the nature of the products sold, the internal organizational structure, the trade policies in the geographic regions in which UNIFI operates and the information that is regularly reviewed by the CODM for the purpose of assessing performance and allocating resources.

UNIFI has four reportable segments.

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The operations within the Polyester Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA, NAFTA and CAFTA (collectively, the regions comprising these economic trading zones are referred to as “NACA”) to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing polyester-based products with sales primarily to other yarn manufacturers and knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, automotive, industrial and other end-use markets. The Polyester Segment consists of sales and manufacturing operations in the U.S. and El Salvador.

•

The operations within the Asia Segment exhibit similar long-term economic characteristics and sell to similar customers utilizing similar methods of distribution primarily in Asia and Europe, which are outside of the NACA region. The Asia Segment primarily sources polyester-based products from third-party suppliers and sells to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, automotive, industrial and other end-use markets principally in Asia. The Asia Segment includes sales offices in China.

•

The Brazil Segment primarily manufactures and sells polyester-based products to knitters and weavers that produce fabric for the apparel, automotive, home furnishings, industrial and other end-use markets principally in South America. The Brazil Segment includes a manufacturing location and sales offices in Brazil.

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The operations within the Nylon Segment exhibit similar long-term economic characteristics and primarily sell into the NACA region to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing nylon-based products with sales to knitters and weavers that produce fabric primarily for the apparel, hosiery and medical markets. The Nylon Segment includes an immaterial operating segment in Colombia that sells similar nylon-based textile products to similar customers in Colombia and Mexico utilizing similar methods of distribution. The Nylon Segment consists of sales and manufacturing operations in the U.S. and Colombia.

In addition to UNIFI’s reportable segments, an All Other category is included in the tables below. All Other consists primarily of for-hire transportation services. For-hire transportation services revenue is derived from performing common carrier services utilizing UNIFI’s fleet of transportation equipment.

The operations within All Other (i) are not subject to review by the CODM at a level consistent with UNIFI’s other operations, (ii) are not regularly evaluated using the same metrics applied to UNIFI’s other operations, and (iii) do not qualify for aggregation with an existing reportable segment. Therefore, such operations are excluded from reportable segments.

UNIFI evaluates the operating performance of its segments based upon Segment Profit, which represents segment gross profit (loss) plus segment depreciation expense. This measurement of segment profit or loss best aligns segment reporting with the current assessments and evaluations performed by, and information provided to, the CODM.

The accounting policies for the segments are consistent with UNIFI’s accounting policies. Intersegment sales are omitted from segment disclosures, as they are (i) insignificant to UNIFI’s segments and eliminated from consolidated reporting and (ii) excluded from segment evaluations performed by the CODM. However, an intersegment technologies expense charged from the Polyester Segment to the Asia Segment is not eliminated from segment results. The technologies expense (i) reflects the sharing of certain manufacturing know-how, processes and product technical information and design and (ii) is included in the segment evaluations performed by the CODM.

Selected financial information is presented below:

	For the Fiscal Year Ended June 28, 2020
	Polyester		Asia		Brazil		Nylon			All Other		Total
Net sales	$	309,184	$	153,032	$	73,339	$	67,381		$	3,573	$	606,509
Cost of sales		297,096		136,349		62,144		68,359			3,521		567,469
Gross profit (loss)		12,088		16,683		11,195		(978	)		52		39,040
Segment depreciation expense		16,904		—		1,385		1,917			453		20,659
Segment Profit	$	28,992	$	16,683	$	12,580	$	939		$	505	$	59,699

	For the Fiscal Year Ended June 30, 2019
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	370,770	$	132,866	$	102,877	$	98,127	$	4,164	$	708,804
Cost of sales		346,951		117,166		84,298		90,231		3,850		642,496
Gross profit		23,819		15,700		18,579		7,896		314		66,308
Segment depreciation expense		16,068		—		1,537		2,083		229		19,917
Segment Profit	$	39,887	$	15,700	$	20,116	$	9,979	$	543	$	86,225

	For the Fiscal Year Ended June 24, 2018
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	364,169	$	97,297	$	110,587	$	102,639	$	4,220	$	678,912
Cost of sales		330,975		80,677		84,726		92,155		3,951		592,484
Gross profit		33,194		16,620		25,861		10,484		269		86,428
Segment depreciation expense		15,893		—		1,648		2,197		256		19,994
Segment Profit	$	49,087	$	16,620	$	27,509	$	12,681	$	525	$	106,422

The reconciliations of segment gross profit to consolidated (loss) income before income taxes are as follows:

	For the Fiscal Year Ended
	June 28, 2020			June 30, 2019			June 24, 2018
Polyester	$	12,088		$	23,819		$	33,194
Asia		16,683			15,700			16,620
Brazil		11,195			18,579			25,861
Nylon		(978	)		7,896			10,484
All Other		52			314			269
Segment gross profit		39,040			66,308			86,428
SG&A expenses		43,814			52,690			56,077
Provision (benefit) for bad debts		1,739			308			(38	)
Other operating expense, net		2,308			2,350			1,590
Operating (loss) income		(8,821	)		10,960			28,799
Interest income		(722	)		(628	)		(560	)
Interest expense		4,779			5,414			4,935
Equity in loss (earnings) of unconsolidated affiliates		477			(3,968	)		(5,787	)
Gain on sale of investment in unconsolidated affiliate		(2,284	)		—			—
Impairment of investment in unconsolidated affiliate		45,194			—			—
Loss on extinguishment of debt		—			131			—
(Loss) income before income taxes	$	(56,265	)	$	10,011		$	30,211

The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows:

	For the Fiscal Year Ended
	June 28, 2020		June 30, 2019		June 24, 2018
Polyester	$	16,904	$	16,068	$	15,893
Asia		—		—		—
Brazil		1,385		1,537		1,648
Nylon		1,917		2,083		2,197
All Other		453		229		256
Segment depreciation expense		20,659		19,917		19,994
Other depreciation and amortization expense		2,994		3,086		2,591
Depreciation and amortization expense	$	23,653	$	23,003	$	22,585

The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows:

	For the Fiscal Year Ended
	June 28, 2020		June 30, 2019		June 24, 2018
Polyester	$	13,714	$	17,291	$	16,605
Asia		60		32		36
Brazil		2,332		2,574		3,063
Nylon		249		624		1,366
Segment capital expenditures		16,355		20,521		21,070
Other capital expenditures		2,154		4,350		3,959
Capital expenditures	$	18,509	$	24,871	$	25,029

The reconciliations of segment total assets to consolidated total assets are as follows:

	June 28, 2020		June 30, 2019
Polyester	$	263,496	$	287,608
Asia		41,452		35,219
Brazil		49,967		67,490
Nylon		42,020		57,055
Segment total assets		396,935		447,372
Other current assets		48,600		10,327
Other PP&E		23,676		18,664
Other operating lease assets		1,503		—
Other non-current assets		1,277		1,468
Investments in unconsolidated affiliates		2,171		114,320
Total assets	$	474,162	$	592,151

Product sales (excluding the All Other category) are as follows, based on categorization into REPREVE^® Fiber sales and non-REPREVE^® Fiber sales.

	For the Fiscal Year Ended
	June 28, 2020		June 30, 2019		June 24, 2018
REPREVE^® Fiber	$	186,141	$	180,254	$	160,366
Non-REPREVE^® Fiber		416,795		524,386		514,326
Total	$	602,936	$	704,640	$	674,692

Geographic Data

	For the Fiscal Year Ended
Net Sales	June 28, 2020		June 30, 2019		June 24, 2018
U.S.	$	342,350	$	426,725	$	420,920
China		148,923		125,667		90,998
Brazil		73,339		102,877		110,587
Remaining Foreign Countries		41,897		53,535		56,407
Total	$	606,509	$	708,804	$	678,912

Export sales from UNIFI’s U.S. operations to external customers	$	64,305	$	84,707	$	94,205

The net sales amounts are based on the operating locations from where the items were produced or distributed.

Long-Lived Assets	June 28, 2020		June 30, 2019		June 24, 2018
U.S.	$	195,874	$	305,483	$	305,229
Brazil		10,805		13,218		12,679
China		779		78		92
Remaining Foreign Countries		9,859		5,169		6,225
Total	$	217,317	$	323,948	$	324,225

Long-lived assets are comprised of PP&E, net; operating lease assets; intangible assets, net; investments in unconsolidated affiliates; and other non-current assets.

Total Assets	June 28, 2020		June 30, 2019		June 24, 2018
U.S.	$	352,869	$	457,571	$	455,963
Brazil		49,967		67,490		59,657
China		39,238		30,982		32,703
Remaining Foreign Countries		32,088		36,108		53,484
Total	$	474,162	$	592,151	$	601,807