Business Segment Information

9 Months Ended

Mar. 28, 2021

Segment Reporting [Abstract]

Business Segment Information

21.  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’s operating segments are aggregated into four reportable segments (the Polyester Segment, the Asia Segment, the Brazil Segment and the Nylon Segment) based on similarities between the operating segments’ economic characteristics, nature of products sold, type of customer, methods of distribution and regulatory environment.

• The operations within the Polyester Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the United States-Mexico-Canada Agreement (“USMCA”), North American Free Trade Agreement (“NAFTA”) and Dominican Republic—Central America Free Trade Agreement (“CAFTA-DR”) (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 a sales office 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.

• 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.

Selected financial information is presented below:

	For the Three Months Ended March 28, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	82,668	$	48,483	$	25,704	$	20,778	$	1,233	$	178,866
Cost of sales		75,446		41,330		15,106		20,341		1,048		153,271
Gross profit		7,222		7,153		10,598		437		185		25,595
Segment depreciation expense		5,036		—		299		441		161		5,937
Segment Profit	$	12,258	$	7,153	$	10,897	$	878	$	346	$	31,532

	For the Three Months Ended March 29, 2020
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	89,767	$	38,621	$	21,060	$	20,567	$	979	$	170,994
Cost of sales		82,735		34,038		17,644		20,234		960		155,611
Gross profit		7,032		4,583		3,416		333		19		15,383
Segment depreciation expense		4,301		—		421		471		137		5,330
Segment Profit	$	11,333	$	4,583	$	3,837	$	804	$	156	$	20,713

	For the Nine Months Ended March 28, 2021
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	228,440	$	130,898	$	72,563	$	47,815	$	3,431	$	483,147
Cost of sales		205,691		112,639		49,375		46,318		3,034		417,057
Gross profit		22,749		18,259		23,188		1,497		397		66,090
Segment depreciation expense		13,909		—		1,050		1,321		489		16,769
Segment Profit	$	36,658	$	18,259	$	24,238	$	2,818	$	886	$	82,859

	For the Nine Months Ended March 29, 2020
	Polyester		Asia		Brazil		Nylon		All Other		Total
Net sales	$	261,212	$	132,496	$	66,094	$	57,853	$	2,799	$	520,454
Cost of sales		239,725		118,114		55,089		56,296		2,739		471,963
Gross profit		21,487		14,382		11,005		1,557		60		48,491
Segment depreciation expense		12,525		—		1,153		1,465		300		15,443
Segment Profit	$	34,012	$	14,382	$	12,158	$	3,022	$	360	$	63,934

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

	For the Three Months Ended						For the Nine Months Ended
	March 28, 2021			March 29, 2020			March 28, 2021			March 29, 2020
Polyester	$	7,222		$	7,032		$	22,749		$	21,487
Asia		7,153			4,583			18,259			14,382
Brazil		10,598			3,416			23,188			11,005
Nylon		437			333			1,497			1,557
All Other		185			19			397			60
Segment gross profit		25,595			15,383			66,090			48,491
Selling, general and administrative expenses		14,581			11,720			38,570			35,208
(Benefit) provision for bad debts		(184	)		580			(1,330	)		331
Other operating expense (income), net		2,582			(62	)		4,236			900
Operating income		8,616			3,145			24,614			12,052
Interest income		(159	)		(173	)		(471	)		(595	)
Interest expense		885			1,231			2,589			3,589
Equity in earnings of unconsolidated affiliates		(528	)		(3,526	)		(751	)		(1,904	)
Impairment of investment in unconsolidated affiliate		—			45,194			—			45,194
Income (loss) before income taxes	$	8,418		$	(39,581	)	$	23,247		$	(34,232	)

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

	March 28, 2021		June 28, 2020
Polyester	$	271,682	$	263,496
Asia		61,494		41,452
Brazil		62,898		49,967
Nylon		42,357		42,020
Segment total assets		438,431		396,935
Other current assets		62,460		48,600
Other PP&E		22,036		23,676
Other operating lease assets		1,210		1,503
Other non-current assets		4,235		3,448
Total assets	$	528,372	$	474,162