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Investments in Unconsolidated Affiliates and Variable Interest Entities | 6 Months Ended
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Dec. 24, 2017
Equity Method Investments And Joint Ventures [Abstract] |
Investments in Unconsolidated Affiliates and Variable Interest Entities | 16. Investments in Unconsolidated Affiliates and Variable Interest Entities UNIFI currently maintains investments in three entities classified as unconsolidated affiliates: PAL; U.N.F. Industries, Ltd. (“UNF”); and UNF America LLC (“UNFA”). As of December 24, 2017, UNIFI’s investment in PAL was $110,321 and UNIFI’s combined investments in UNF and UNFA were $3,302, each of which is reflected within investments in unconsolidated affiliates in the accompanying condensed consolidated balance sheets. Parkdale America, LLC PAL is a limited liability company treated as a partnership for income tax reporting purposes. UNIFI accounts for its investment in PAL using the equity method of accounting. 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 valued using quoted prices classified within Level 1 of the fair value hierarchy. As of December 2017, PAL had no futures contracts designated as cash flow hedges. The reconciliation between UNIFI’s share of the underlying equity of PAL and its investment is as follows:
Underlying equity as of December 24, 2017 |  | $ | 128,412 |
Initial excess capital contributions |  |  | 53,363 |
Impairment charge recorded by UNIFI in fiscal 2007 |  |  | (74,106 | )
Anti-trust lawsuit against PAL in which UNIFI did not participate |  |  | 2,652 |
Investment as of December 24, 2017 |  | $ | 110,321 |
U.N.F. Industries, Ltd. Raw material and production services for UNF are provided by Nilit Ltd. 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 Nilit America Inc. 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, UNIFI entered into a supply agreement with UNF and UNFA whereby UNIFI 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 24, 2017, UNIFI’s open purchase orders related to this agreement were $3,158. UNIFI’s raw material purchases under this supply agreement consist of the following:
|  | For the Six Months Ended |
|  | December 24, 2017 |  |  | December 25, 2016 |
UNF |  | $ | 1,141 |  |  | $ | 1,250 |
UNFA |  |  | 10,406 |  |  |  | 9,579 |
Total |  | $ | 11,547 |  |  | $ | 10,829 |
As of December 24, 2017 and June 25, 2017, UNIFI had combined accounts payable due to UNF and UNFA of $1,483 and $2,301, respectively. UNIFI has determined that UNF and UNFA are variable interest entities (“VIEs”) and UNIFI is the primary beneficiary of these entities, based on the terms of the supply agreement discussed above. As a result, these entities should be consolidated with UNIFI’s financial results. As UNIFI purchases substantially all of the output from the two entities, the two entities’ balance sheets constitute 3% or less of UNIFI’s current assets, total assets and total liabilities and because such balances are not expected to comprise a larger portion in the future, UNIFI has not included the accounts of UNF and UNFA in its consolidated financial statements. The financial results of UNF and UNFA are included in UNIFI’s consolidated financial statements with a one-month lag, using the equity method of accounting and with intercompany profits eliminated in accordance with UNIFI’s accounting policy. Other than the supply agreement discussed above, UNIFI does not provide any other commitments or guarantees related to either UNF or UNFA. Condensed balance sheet and income statement information for UNIFI’s unconsolidated affiliates (including reciprocal balances) is presented in the tables below. PAL is defined as significant and its information is separately disclosed. PAL does not meet the criteria for segment reporting.
|  | As of December 24, 2017 |
|  | PAL |  |  | Other |  |  | Total |
Current assets |  | $ | 265,491 |  |  | $ | 8,797 |  |  | $ | 274,288 |
Noncurrent assets |  |  | 171,256 |  |  |  | 971 |  |  |  | 172,227 |
Current liabilities |  |  | 56,134 |  |  |  | 3,262 |  |  |  | 59,396 |
Noncurrent liabilities |  |  | 2,933 |  |  |  | — |  |  |  | 2,933 |
Shareholders’ equity and capital accounts |  |  | 377,680 |  |  |  | 6,506 |  |  |  | 384,186 |
UNIFI’s portion of undistributed earnings |  |  | 41,432 |  |  |  | 1,411 |  |  |  | 42,843 |
|  | As of June 25, 2017 |
|  | PAL |  |  | Other |  |  | Total |
Current assets |  | $ | 247,820 |  |  | $ | 10,340 |  |  | $ | 258,160 |
Noncurrent assets |  |  | 183,418 |  |  |  | 1,039 |  |  |  | 184,457 |
Current liabilities |  |  | 54,389 |  |  |  | 3,588 |  |  |  | 57,977 |
Noncurrent liabilities |  |  | 3,263 |  |  |  | — |  |  |  | 3,263 |
Shareholders’ equity and capital accounts |  |  | 373,586 |  |  |  | 7,791 |  |  |  | 381,377 |
|  | For the Three Months Ended December 24, 2017 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 176,577 |  |  | $ | 6,756 |  |  | $ | 183,333 |
Gross profit |  |  | 2,379 |  |  |  | 1,628 |  |  |  | 4,007 |
(Loss) income from operations |  |  | (1,922 | ) |  |  | 1,185 |  |  |  | (737 | )
Net (loss) income |  |  | (1,398 | ) |  |  | 1,198 |  |  |  | (200 | )
Depreciation and amortization |  |  | 10,885 |  |  |  | 47 |  |  |  | 10,932 |
Cash received by PAL under cotton rebate program |  |  | 4,701 |  |  |  | — |  |  |  | 4,701 |
Earnings recognized by PAL for cotton rebate program |  |  | 3,191 |  |  |  | — |  |  |  | 3,191 |
Distributions received |  |  | — |  |  |  | 1,500 |  |  |  | 1,500 |
|  | For the Three Months Ended December 25, 2016 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 153,074 |  |  | $ | 5,056 |  |  | $ | 158,130 |
Gross profit |  |  | 1,765 |  |  |  | 983 |  |  |  | 2,748 |
(Loss) income from operations |  |  | (2,849 | ) |  |  | 509 |  |  |  | (2,340 | )
Net (loss) income |  |  | (2,238 | ) |  |  | 513 |  |  |  | (1,725 | )
Depreciation and amortization |  |  | 11,708 |  |  |  | 45 |  |  |  | 11,753 |
Cash received by PAL under cotton rebate program |  |  | 3,635 |  |  |  | — |  |  |  | 3,635 |
Earnings recognized by PAL for cotton rebate program |  |  | 2,907 |  |  |  | — |  |  |  | 2,907 |
Distributions received |  |  | — |  |  |  | 750 |  |  |  | 750 |
|  | For the Six Months Ended December 24, 2017 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 379,368 |  |  | $ | 12,449 |  |  | $ | 391,817 |
Gross profit |  |  | 16,089 |  |  |  | 2,582 |  |  |  | 18,671 |
Income from operations |  |  | 8,034 |  |  |  | 1,694 |  |  |  | 9,728 |
Net income |  |  | 6,948 |  |  |  | 1,716 |  |  |  | 8,664 |
Depreciation and amortization |  |  | 20,485 |  |  |  | 94 |  |  |  | 20,579 |
Cash received by PAL under cotton rebate program |  |  | 6,942 |  |  |  | — |  |  |  | 6,942 |
Earnings recognized by PAL for cotton rebate program |  |  | 6,446 |  |  |  | — |  |  |  | 6,446 |
Distributions received |  |  | 7,178 |  |  |  | 1,500 |  |  |  | 8,678 |
|  | For the Six Months Ended December 25, 2016 |
|  | PAL |  |  | Other |  |  | Total |
Net sales |  | $ | 358,974 |  |  | $ | 11,058 |  |  | $ | 370,032 |
Gross profit |  |  | 7,261 |  |  |  | 2,528 |  |  |  | 9,789 |
(Loss) income from operations |  |  | (1,988 | ) |  |  | 1,594 |  |  |  | (394 | )
Net (loss) income |  |  | (1,364 | ) |  |  | 1,610 |  |  |  | 246 |
Depreciation and amortization |  |  | 23,184 |  |  |  | 84 |  |  |  | 23,268 |
Cash received by PAL under cotton rebate program |  |  | 7,762 |  |  |  | — |  |  |  | 7,762 |
Earnings recognized by PAL for cotton rebate program |  |  | 6,796 |  |  |  | — |  |  |  | 6,796 |
Distributions received |  |  | — |  |  |  | 1,500 |  |  |  | 1,500 |

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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 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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