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Note 17 - Investments in Unconsolidated Affiliates and Variable Interest Entities | 6 Months Ended
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Dec. 27, 2015
Notes to Financial Statements |
Equity Method Investments and Joint Ventures Disclosure [Text Block] | 17. Investments in Unconsolidated Affiliates and Variable Interest Entities The Company currently maintains investments in three entities classified as unconsolidated affiliates: Parkdale America, LLC (“PAL”); U.N.F. Industries Ltd. (“UNF”); and UNF America LLC (“UNFA”). As of December 27, 2015, the Company’s investment in PAL was $110,059 and the Company’s combined investments in UNF and UNFA were $3,651, reflected within investments in unconsolidated affiliates in the consolidated balance sheets. Parkdale America, LLC PAL is a limited liability company treated as a partnership for income tax reporting purposes. The Company has a 34% ownership interest in PAL, which is accounted for using the equity method of accounting. PAL is a producer of cotton and synthetic yarns for sale to the textile industry and apparel market, both foreign and domestic. 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. 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 2015, PAL had no futures contracts designated as cash flow hedges. As PAL’s fiscal year end is the Saturday nearest to December 31 and its results are considered significant (in accordance with Regulation S-X Rule 3-09), 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 2014 Annual Report on Form 10-K for the fiscal year ended June 29, 2014 on April 2, 2015 to provide PAL’s audited financial statements for PAL’s fiscal year ended January 3, 2015. The Company expects to file an amendment to the 2015 Form 10-K on or before April 1, 2016 to provide PAL’s audited financial statements for PAL’s fiscal year ended January 2, 2016. On February 27, 2015, PAL purchased two manufacturing facilities, plus inventory, for approximately $13,000 cash, and entered into a yarn supply agreement with the seller. 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 bargain purchase gain of approximately $9,381 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 asset valuations. The reconciliation between the Company’s share of the underlying equity of PAL and its investment is as follows:
Underlying equity as of December 27, 2015 |  | $ | 128,364 |
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 |
Cotton rebate program adjustments |  |  | (214 | )
Investment as of December 27, 2015 |  | $ | 110,059 |
U.N.F. Industries Ltd. Raw material and production services for UNF are provided by the Company’s 50% joint venture partner 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 Raw material and production services for UNFA are provided by the Company’s 50% joint venture partner under separate supply and services agreements. UNFA’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 UNFA, the Company entered into a supply agreement with UNF and UNFA whereby the Company agreed to purchase all of its first quality nylon POY requirements for texturing (subject to certain exceptions) from either UNF or UNFA. The agreement has no stated minimum purchase quantities and pricing is negotiated every six months, based on market rates. As of December 27, 2015, the Company’s open purchase orders related to this agreement were $3,192. The Company’s raw material purchases under this supply agreement consist of the following:
|  | For the Six Months Ended |
|  | Dec ember 2 7, 201 5 |  |  | Dec ember 2 8 , 2014 |
UNF |  | $ | 1,356 |  |  | $ | 1,817 |
UNFA |  |  | 13,441 |  |  |  | 14,274 |
Total |  | $ | 14,797 |  |  | $ | 16,091 |
As of December 27, 2015 and June 28, 2015, the Company had combined accounts payable due to UNF and UNFA of $2,565 and $4,038, respectively. 17 Unifi, Inc. Notes to Condensed Consolidated Financial Statements (Continued) The Company has determined that UNF and UNFA 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 (when excluding reciprocal balances), and because such balances are not expected to comprise a larger portion in the future, the Company has not included the accounts of UNF and UNFA in its consolidated financial statements. The financial results of UNF and UNFA 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 UNFA. Condensed balance sheet and income statement information for the Company’s unconsolidated affiliates (including reciprocal balances) is presented in the following tables. As PAL is defined as significant, its information is separately disclosed.
|  | As of December 27, 2015 |
|  | PAL |  |  | Other |  |  | Total |
Current assets |  | $ | 218,948 |  |  | $ | 10,070 |  |  | $ | 229,018 |
Noncurrent assets |  |  | 211,053 |  |  |  | 1,110 |  |  |  | 212,163 |
Current liabilities |  |  | 43,751 |  |  |  | 3,937 |  |  |  | 47,688 |
Noncurrent liabilities |  |  | 8,708 |  |  |  | — |  |  |  | 8,708 |
Shareholders’ equity and capital accounts |  |  | 377,542 |  |  |  | 7,243 |  |  |  | 384,785 |
The Company’s portion of undistributed earnings |  |  | 40,741 |  |  |  | 1,335 |  |  |  | 42,076 |
|  | As of June 28, 2015 |
|  | PAL |  |  | Other |  |  | Total |
Current assets |  | $ | 250,699 |  |  | $ | 9,273 |  |  | $ | 259,972 |
Noncurrent assets |  |  | 216,708 |  |  |  | 3,676 |  |  |  | 220,384 |
Current liabilities |  |  | 61,243 |  |  |  | 4,985 |  |  |  | 66,228 |
Noncurrent liabilities |  |  | 28,935 |  |  |  | — |  |  |  | 28,935 |
Shareholders’ equity and capital accounts |  |  | 377,229 |  |  |  | 7,964 |  |  |  | 385,193 |
|  | For the Three Months Ended December 27, 2015 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 183,426 |  |  | $ | 7,264 |  |  | $ | 190,690 |
Gross profit |  |  | 2,917 |  |  |  | 1,852 |  |  |  | 4,769 |
(Loss) income from operations |  |  | (1,437 | ) |  |  | 1,389 |  |  |  | (48 | )
Net (loss) income |  |  | (1,170 | ) |  |  | 1,420 |  |  |  | 250 |
Depreciation and amortization |  |  | 11,169 |  |  |  | 37 |  |  |  | 11,206 |
Cash received by PAL under cotton rebate program |  |  | 5,676 |  |  |  | — |  |  |  | 5,676 |
Earnings recognized by PAL for cotton rebate program |  |  | 3,574 |  |  |  | — |  |  |  | 3,574 |
Distributions received |  |  | — |  |  |  | 1,000 |  |  |  | 1,000 |
As of the end of PAL’s fiscal December 2015 period, PAL’s amount of deferred revenues related to the cotton rebate program was $0.
|  | 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 cotton rebate program |  |  | 4,153 |  |  |  | — |  |  |  | 4,153 |
Earnings recognized by PAL for cotton rebate 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 cotton rebate program was $0. 18 Unifi, Inc. Notes to Condensed Consolidated Financial Statements (Continued)
|  | For the Six Months Ended December 27, 2015 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 407,491 |  |  | $ | 16,613 |  |  | $ | 424,104 |
Gross profit |  |  | 10,304 |  |  |  | 4,182 |  |  |  | 14,486 |
Income from operations |  |  | 2,124 |  |  |  | 3,238 |  |  |  | 5,362 |
Net income |  |  | 4,559 |  |  |  | 3,278 |  |  |  | 7,837 |
Depreciation and amortization |  |  | 20,863 |  |  |  | 74 |  |  |  | 20,937 |
Cash received by PAL under cotton rebate program |  |  | 8,860 |  |  |  | — |  |  |  | 8,860 |
Earnings recognized by PAL for cotton rebate program |  |  | 7,928 |  |  |  | — |  |  |  | 7,928 |
Distributions received |  |  | 947 |  |  |  | 2,000 |  |  |  | 2,947 |
|  | 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 cotton rebate program |  |  | 8,454 |  |  |  | — |  |  |  | 8,454 |
Earnings recognized by PAL for cotton rebate program |  |  | 8,755 |  |  |  | — |  |  |  | 8,755 |
Distributions received |  |  | — |  |  |  | — |  |  |  | — |

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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 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: 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=49116238&loc=d3e32847-111569 Reference 3: 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 4: 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=49116238&loc=d3e32787-111569 + Details
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