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Note 21 - Investments in Unconsolidated Affiliates and Variable Interest Entities | 6 Months Ended
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Dec. 28, 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. PAL is a producer of cotton and synthetic yarns for sale to the textile industry and apparel market, both foreign and domestic. PAL has 14 manufacturing facilities located primarily in the southeast region of the U.S. and in Mexico. 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. As PAL’s fiscal year end is the Saturday nearest to December 31 and its results are considered significant, the Company files an amendment to each Annual Report on Form 10-K on or before 90 days subsequent to PAL’s fiscal year end to provide PAL’s audited financial statements for PAL’s most recent fiscal year. The Company filed an amendment to its Annual Report on Form 10-K for the fiscal year ended June 30, 2013 on March 27, 2014 to provide PAL’s audited financial statements for PAL’s fiscal year ended December 28, 2013. The Company will file an amendment to the 2014 Form 10-K on or before April 3, 2015 to provide PAL’s audited financial statements for PAL’s fiscal year ending January 3, 2015. During August 2008, a federal government program commenced providing economic adjustment assistance to domestic users of upland cotton (the “EAP program”). The EAP 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 provides a subsidy of up to 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. PAL recognizes its share of 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 December 2014, PAL had no futures contracts designated as cash flow hedges. As of December 28, 2014, the Company’s investment in PAL was $102,041 and reflected 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 December 28, 2014 |  | $ | 120,412 |
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 |  |  | (280 | )
Investment as of December 28, 2014 |  | $ | 102,041 |
On August 28, 2014, PAL acquired the remaining 50% ownership interest in a yarn manufacturer based in Mexico in which PAL was historically a 50% member. The acquisition is expected to increase PAL’s regional manufacturing capacity and expand its product offerings and customer base. PAL has accounted for the transaction as a business combination under the acquisition method, recognizing the assets acquired and liabilities assumed at their respective provisional fair values as of the acquisition date. The Company and PAL concluded that the acquisition did not represent a material business combination. PAL has recognized a provisional after-tax gain of approximately $4,600 in its initial accounting for the acquisition for all identified assets and liabilities. The Company and PAL will continue to review the acquisition accounting during the measurement period, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the assets or liabilities initially recognized, as well as any additional assets or liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts. The acquisition accounting is incomplete, primarily pending final real estate and other asset valuations, along with a comprehensive assessment of the impact on income taxes. 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. 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. 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 December 28, 2014, the Company’s open purchase orders related to this agreement were $3,276. The Company’s raw material purchases under this supply agreement consist of the following:
|  | For the Six Months Ended |
|  | December 2 8, 2014 |  |  | December 29, 2013 |
UNF |  | $ | 1,817 |  |  | $ | 6,243 |
UNF America |  |  | 14,274 |  |  |  | 11,776 |
Total |  | $ | 16,091 |  |  | $ | 18,019 |
As of December 28, 2014 and June 29, 2014, the Company had combined accounts payable due to UNF and UNF America of $3,764 and $3,966, 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 December 28, 2014, the Company’s combined investments in UNF and UNF America were $3,707 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. For the three months and six months ended December 28, 2014, PAL’s corresponding fiscal periods consisted of 14 weeks and 27 weeks, respectively.
|  | As of December 28, 2014 |
|  | PAL |  |  | Other |  |  | Total |
Current assets |  | $ | 245,637 |  |  | $ | 11,969 |  |  | $ | 257,606 |
Noncurrent assets |  |  | 177,820 |  |  |  | 515 |  |  |  | 178,335 |
Current liabilities |  |  | 42,897 |  |  |  | 5,136 |  |  |  | 48,033 |
Noncurrent liabilities |  |  | 26,406 |  |  |  | — |  |  |  | 26,406 |
Shareholders’ equity and capital accounts |  |  | 354,154 |  |  |  | 7,348 |  |  |  | 361,502 |
The Company’s portion of undistributed earnings |  |  | 31,730 |  |  |  | 1,372 |  |  |  | 33,102 |
|  | As of June 29, 2014 |
|  | PAL |  |  | Other |  |  | Total |
Current assets |  | $ | 248,651 |  |  | $ | 9,187 |  |  | $ | 257,838 |
Noncurrent assets |  |  | 143,720 |  |  |  | 3,065 |  |  |  | 146,785 |
Current liabilities |  |  | 50,696 |  |  |  | 5,437 |  |  |  | 56,133 |
Noncurrent liabilities |  |  | 5,432 |  |  |  | — |  |  |  | 5,432 |
Shareholders’ equity and capital accounts |  |  | 336,243 |  |  |  | 6,815 |  |  |  | 343,058 |
|  | For the Three Months Ended December 28, 2014 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 192,243 |  |  | $ | 8,955 |  |  | $ | 201,198 |
Gross profit |  |  | 12,063 |  |  |  | 1,007 |  |  |  | 13,070 |
Income from operations |  |  | 6,909 |  |  |  | 655 |  |  |  | 7,564 |
Net income |  |  | 9,039 |  |  |  | 685 |  |  |  | 9,724 |
Depreciation and amortization |  |  | 8,161 |  |  |  | 25 |  |  |  | 8,186 |
Cash received by PAL under EAP program |  |  | 4,153 |  |  |  | — |  |  |  | 4,153 |
Earnings recognized by PAL for EAP program |  |  | 3,854 |  |  |  | — |  |  |  | 3,854 |
Distributions received |  |  | — |  |  |  | — |  |  |  | — |
As of the end of PAL’s fiscal December 2014 period, PAL’s amount of deferred revenues related to the EAP program was $0.
|  | For the Three Months Ended December 29, 2013 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 190,629 |  |  | $ | 9,371 |  |  | $ | 200,000 |
Gross profit |  |  | 16,665 |  |  |  | 1,199 |  |  |  | 17,864 |
Income from operations |  |  | 13,348 |  |  |  | 761 |  |  |  | 14,109 |
Net income |  |  | 14,076 |  |  |  | 801 |  |  |  | 14,877 |
Depreciation and amortization |  |  | 7,204 |  |  |  | 25 |  |  |  | 7,229 |
Cash received by PAL under EAP program |  |  | 3,439 |  |  |  | — |  |  |  | 3,439 |
Earnings recognized by PAL for EAP program |  |  | 7,205 |  |  |  | — |  |  |  | 7,205 |
Distributions received |  |  | — |  |  |  | 500 |  |  |  | 500 |
As of the end of PAL’s fiscal December 2013 period, PAL’s amount of deferred revenues related to the EAP program was $0.
|  | For the Six Months Ended December 28, 2014 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 398,479 |  |  | $ | 16,315 |  |  | $ | 414,794 |
Gross profit |  |  | 23,032 |  |  |  | 1,662 |  |  |  | 24,694 |
Income from operations |  |  | 13,723 |  |  |  | 948 |  |  |  | 14,671 |
Net income |  |  | 19,003 |  |  |  | 1,024 |  |  |  | 20,027 |
Depreciation and amortization |  |  | 15,369 |  |  |  | 50 |  |  |  | 15,419 |
Cash received by PAL under EAP program |  |  | 8,454 |  |  |  | — |  |  |  | 8,454 |
Earnings recognized by PAL for EAP program |  |  | 8,755 |  |  |  | — |  |  |  | 8,755 |
Distributions received |  |  | — |  |  |  | — |  |  |  | — |
|  | For the Six Months Ended December 29, 2013 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 413,166 |  |  | $ | 17,911 |  |  | $ | 431,077 |
Gross profit |  |  | 36,755 |  |  |  | 2,125 |  |  |  | 38,880 |
Income from operations |  |  | 29,920 |  |  |  | 1,249 |  |  |  | 31,169 |
Net income |  |  | 31,416 |  |  |  | 1,329 |  |  |  | 32,745 |
Depreciation and amortization |  |  | 14,286 |  |  |  | 50 |  |  |  | 14,336 |
Cash received by PAL under EAP program |  |  | 7,493 |  |  |  | — |  |  |  | 7,493 |
Earnings recognized by PAL for EAP program |  |  | 16,284 |  |  |  | — |  |  |  | 16,284 |
Distributions received |  |  | 2,559 |  |  |  | 500 |  |  |  | 3,059 |

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32787-111569 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=35687916&loc=d3e32847-111569 + Details
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