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Business Segment Information
 3 Months Ended
Sep. 26, 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 has four reportable segments.

 

•

The operations within the Polyester Segment exhibit similar long-term economic characteristics and primarily sell into an economic trading zone covered by the USMCA, NAFTA and CAFTA (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, 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, industrial and other end-use markets principally in Asia.  The Asia Segment includes sales offices 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 September 26, 2021

 

 

 

Polyester

 

 

Asia

 

 

Brazil

 

 

Nylon

 

 

All Other

 

 

Total

 

Net sales

 

$

89,467

 

 

$

51,428

 

 

$

33,738

 

 

$

20,159

 

 

$

1,200

 

 

$

195,992

 

Cost of sales

 

 

81,173

 

 

 

44,457

 

 

 

23,798

 

 

 

19,433

 

 

 

1,034

 

 

 

169,895

 

Gross profit

 

 

8,294

 

 

 

6,971

 

 

 

9,940

 

 

 

726

 

 

 

166

 

 

 

26,097

 

Segment depreciation expense

 

 

4,482

 

 

 

—

 

 

 

383

 

 

 

435

 

 

 

158

 

 

 

5,458

 

Segment Profit

 

$

12,776

 

 

$

6,971

 

 

$

10,323

 

 

$

1,161

 

 

$

324

 

 

$

31,555

 

 

 

 

For the Three Months Ended September 27, 2020

 

 

 

Polyester

 

 

Asia

 

 

Brazil

 

 

Nylon

 

 

All Other

 

 

Total

 

Net sales

 

$

69,076

 

 

$

37,723

 

 

$

22,606

 

 

$

11,029

 

 

$

1,071

 

 

$

141,505

 

Cost of sales

 

 

64,444

 

 

 

33,145

 

 

 

17,993

 

 

 

10,364

 

 

 

998

 

 

 

126,944

 

Gross profit

 

 

4,632

 

 

 

4,578

 

 

 

4,613

 

 

 

665

 

 

 

73

 

 

 

14,561

 

Segment depreciation expense

 

 

4,403

 

 

 

—

 

 

 

430

 

 

 

442

 

 

 

164

 

 

 

5,439

 

Segment Profit

 

$

9,035

 

 

$

4,578

 

 

$

5,043

 

 

$

1,107

 

 

$

237

 

 

$

20,000

 

 

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

 

 

 

For the Three Months Ended

 

 

 

September 26, 2021

 

 

September 27, 2020

 

Polyester

 

$

8,294

 

 

$

4,632

 

Asia

 

 

6,971

 

 

 

4,578

 

Brazil

 

 

9,940

 

 

 

4,613

 

Nylon

 

 

726

 

 

 

665

 

All Other

 

 

166

 

 

 

73

 

Segment gross profit

 

 

26,097

 

 

 

14,561

 

Selling, general and administrative expenses

 

 

12,670

 

 

 

11,364

 

Provision (benefit) for bad debts

 

 

(80

)

 

 

(887

)

Other operating expense, net

 

 

256

 

 

 

1,178

 

Operating income

 

 

13,251

 

 

 

2,906

 

Interest income

 

 

(258

)

 

 

(125

)

Interest expense

 

 

696

 

 

 

871

 

Equity in earnings of unconsolidated affiliates

 

 

(280

)

 

 

(93

)

Income before income taxes

 

$

13,093

 

 

$

2,253

 

 

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

 

 

 

September 26, 2021

 

 

June 27, 2021

 

Polyester

 

$

299,708

 

 

$

285,939

 

Asia

 

 

72,417

 

 

 

41,121

 

Brazil

 

 

84,881

 

 

 

85,950

 

Nylon

 

 

43,355

 

 

 

68,034

 

Segment total assets

 

 

500,361

 

 

 

481,044

 

Other current assets

 

 

23,692

 

 

 

48,972

 

Other PP&E

 

 

20,253

 

 

 

21,175

 

Other operating lease assets

 

 

1,023

 

 

 

1,116

 

Other non-current assets

 

 

3,376

 

 

 

3,061

 

Total assets

 

$

548,705

 

 

$

555,368