Business Segment Information

12 Months Ended

Jul. 03, 2022

Segment Reporting [Abstract]

Business Segment Information

24. 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.

In the fourth quarter of fiscal 2022, UNIFI realigned its operating and reportable segments to correspond with changes to its operating model, management structure, and organizational responsibilities, reflecting the manner in which business performance is evaluated, resources are allocated, and financial statement users can best understand the results of operations. Accordingly, UNIFI is now reporting the Americas Segment, Brazil Segment, and Asia Segment. The Americas Segment represents the combination of the previously reported Polyester Segment, Nylon Segment, and All Other category. There are no changes to the composition of the historical Brazil Segment and Asia Segment. Comparative prior period disclosures have been updated to conform to the new presentation.

UNIFI has three reportable segments.

• The operations within the Americas Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA and CAFTA-DR to similar customers utilizing similar methods of distribution. These operations derive revenues primarily from manufacturing synthetic and recycled textile products with sales primarily to yarn manufacturers, knitters and weavers that produce yarn and/or fabric for the apparel, hosiery, automotive, home furnishings, industrial, medical, and other end-use markets principally in North and Central America. The Americas Segment consists of sales and manufacturing operations in the U.S., El Salvador, and Colombia.

• 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 Brazil.  The Brazil Segment includes a manufacturing location and sales offices in Brazil.

• 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. The Asia Segment primarily sources synthetic and recycled textile products from third-party suppliers and sells to other yarn manufacturers, knitters, and weavers that produce fabric for the apparel, automotive, home furnishings, industrial, and other end-use markets principally in Asia.  The Asia Segment includes sales offices in China, Turkey, and Hong Kong.

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 Americas 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 July 3, 2022
	Americas		Brazil		Asia		Total
Net sales	$	483,085	$	126,066	$	206,607	$	815,758
Cost of sales		458,617		98,925		177,731		735,273
Gross profit		24,468		27,141		28,876		80,485
Segment depreciation expense		21,153		1,500		—		22,653
Segment Profit	$	45,621	$	28,641	$	28,876	$	103,138

	For the Fiscal Year Ended June 27, 2021
	Americas		Brazil		Asia		Total
Net sales	$	386,779	$	95,976	$	184,837	$	667,592
Cost of sales		350,373		64,281		159,444		574,098
Gross profit		36,406		31,695		25,393		93,494
Segment depreciation expense		21,054		1,315		—		22,369
Segment Profit	$	57,460	$	33,010	$	25,393	$	115,863

	For the Fiscal Year Ended June 28, 2020
	Americas		Brazil		Asia		Total
Net sales	$	380,138	$	73,339	$	153,032	$	606,509
Cost of sales		368,976		62,144		136,349		567,469
Gross profit		11,162		11,195		16,683		39,040
Segment depreciation expense		19,274		1,385		—		20,659
Segment Profit	$	30,436	$	12,580	$	16,683	$	59,699

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

	For the Fiscal Year Ended
	July 3, 2022			June 27, 2021			June 28, 2020
Americas	$	24,468		$	36,406		$	11,162
Brazil		27,141			31,695			11,195
Asia		28,876			25,393			16,683
Segment gross profit		80,485			93,494			39,040
SG&A expenses		52,489			51,334			43,814
(Benefit) provision for bad debts		(445	)		(1,316	)		1,739
Other operating (income) expense, net		(158	)		4,865			2,308
Operating income (loss)		28,599			38,611			(8,821	)
Interest income		(1,524	)		(603	)		(722	)
Interest expense		3,085			3,323			4,779
Equity in (earnings) loss of unconsolidated affiliates		(605	)		(739	)		477
Recovery of non-income taxes, net		815			(9,717	)		—
Gain on sale of investment in unconsolidated affiliate		—			—			(2,284	)
Impairment of investment in unconsolidated affiliate		—			—			45,194
Income (loss) before income taxes	$	26,828		$	46,347		$	(56,265	)

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

	For the Fiscal Year Ended
	July 3, 2022		June 27, 2021		June 28, 2020
Americas	$	21,153	$	21,054	$	19,274
Brazil		1,500		1,315		1,385
Asia		—		—		—
Segment depreciation expense		22,653		22,369		20,659
Other depreciation and amortization expense		3,554		3,159		2,994
Depreciation and amortization expense	$	26,207	$	25,528	$	23,653

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

	For the Fiscal Year Ended
	July 3, 2022		June 27, 2021		June 28, 2020
Americas	$	29,841	$	16,053	$	15,087
Brazil		9,253		3,461		2,332
Asia		236		666		60
Segment capital expenditures		39,330		20,180		17,479
Other capital expenditures		301		998		1,030
Capital expenditures	$	39,631	$	21,178	$	18,509

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

	July 3, 2022		June 27, 2021
Americas	$	379,898	$	327,445
Brazil		98,731		85,950
Asia		81,322		68,034
Segment total assets		559,951		481,429
Other current assets		5,145		48,587
Other PP&E		17,809		21,175
Other operating lease assets		756		1,116
Other non-current assets		2,985		902
Investments in unconsolidated affiliates		2,072		2,159
Total assets	$	588,718	$	555,368

Geographic Data

	For the Fiscal Year Ended
Net Sales	July 3, 2022		June 27, 2021		June 28, 2020
U.S.	$	430,381	$	341,897	$	342,350
China		185,558		171,261		148,923
Brazil		126,066		95,976		73,339
Remaining Foreign Countries		73,753		58,458		41,897
Total	$	815,758	$	667,592	$	606,509
Export sales from UNIFI’s U.S. operations to external customers	$	74,589	$	59,055	$	64,305

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

Long-Lived Assets	July 3, 2022		June 27, 2021		June 28, 2020
U.S.	$	196,885	$	191,733	$	195,874
Brazil		21,927		21,733		10,805
China		2,211		1,919		779
Remaining Foreign Countries		12,932		9,708		9,859
Total	$	233,955	$	225,093	$	217,317

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

We have revised amounts reported in previously issued financial statements as of June 27, 2021 presented in this Annual Report on Form 10-K to correct an immaterial error. The error relates to the transposition of the disclosure of reportable segment assets for the Asia segment and the previously-reported Nylon segment. We evaluated the effect of the error to our previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the error was not material to the previously issued financial statements and disclosure included in our Annual Reports on Form 10-K for the year ended June 27, 2021, or for comparative period amount (i.e. the amounts as of June 27, 2021) reflected in our quarterly report for the quarterly period ended September 30, 2021.