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. 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, automotive, 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, automotive, 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. However, an intersegment technologies expense charged from the Polyester 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 June 27, 2021 Polyester Asia Brazil Nylon All Other Total Net sales $ 316,235 $ 184,837 $ 95,976 $ 65,869 $ 4,675 $ 667,592 Cost of sales 282,791 159,444 64,281 63,502 4,080 574,098 Gross profit 33,444 25,393 31,695 2,367 595 93,494 Segment depreciation expense 18,637 — 1,315 1,769 648 22,369 Segment Profit $ 52,081 $ 25,393 $ 33,010 $ 4,136 $ 1,243 $ 115,863 For the Fiscal Year Ended June 28, 2020 Polyester Asia Brazil Nylon All Other Total Net sales $ 309,184 $ 153,032 $ 73,339 $ 67,381 $ 3,573 $ 606,509 Cost of sales 297,096 136,349 62,144 68,359 3,521 567,469 Gross profit (loss) 12,088 16,683 11,195 (978 ) 52 39,040 Segment depreciation expense 16,904 — 1,385 1,917 453 20,659 Segment Profit $ 28,992 $ 16,683 $ 12,580 $ 939 $ 505 $ 59,699 For the Fiscal Year Ended June 30, 2019 Polyester Asia Brazil Nylon All Other Total Net sales $ 370,770 $ 132,866 $ 102,877 $ 98,127 $ 4,164 $ 708,804 Cost of sales 346,951 117,166 84,298 90,231 3,850 642,496 Gross profit 23,819 15,700 18,579 7,896 314 66,308 Segment depreciation expense 16,068 — 1,537 2,083 229 19,917 Segment Profit $ 39,887 $ 15,700 $ 20,116 $ 9,979 $ 543 $ 86,225 The reconciliations of segment gross profit to consolidated income (loss) before income taxes are as follows: For the Fiscal Year Ended June 27, 2021 June 28, 2020 June 30, 2019 Polyester $ 33,444 $ 12,088 $ 23,819 Asia 25,393 16,683 15,700 Brazil 31,695 11,195 18,579 Nylon 2,367 (978 ) 7,896 All Other 595 52 314 Segment gross profit 93,494 39,040 66,308 SG&A expenses 51,334 43,814 52,690 (Benefit) provision for bad debts (1,316 ) 1,739 308 Other operating expense, net 4,865 2,308 2,350 Operating income (loss) 38,611 (8,821 ) 10,960 Interest income (603 ) (722 ) (628 ) Interest expense 3,323 4,779 5,414 Equity in (earnings) loss of unconsolidated affiliates (739 ) 477 (3,968 ) Recovery of non-income taxes (9,717 ) — — Gain on sale of investment in unconsolidated affiliate — (2,284 ) — Impairment of investment in unconsolidated affiliate — 45,194 — Loss on extinguishment of debt — — 131 Income (loss) before income taxes $ 46,347 $ (56,265 ) $ 10,011 The reconciliations of segment depreciation and amortization expense to consolidated depreciation and amortization expense are as follows: For the Fiscal Year Ended June 27, 2021 June 28, 2020 June 30, 2019 Polyester $ 18,637 $ 16,904 $ 16,068 Asia — — — Brazil 1,315 1,385 1,537 Nylon 1,769 1,917 2,083 All Other 648 453 229 Segment depreciation expense 22,369 20,659 19,917 Other depreciation and amortization expense 3,159 2,994 3,086 Depreciation and amortization expense $ 25,528 $ 23,653 $ 23,003 The reconciliations of segment capital expenditures to consolidated capital expenditures are as follows: For the Fiscal Year Ended June 27, 2021 June 28, 2020 June 30, 2019 Polyester $ 15,325 $ 13,714 $ 17,291 Asia 666 60 32 Brazil 3,461 2,332 2,574 Nylon 728 249 624 Segment capital expenditures 20,180 16,355 20,521 Other capital expenditures 998 2,154 4,350 Capital expenditures $ 21,178 $ 18,509 $ 24,871 The reconciliations of segment total assets to consolidated total assets are as follows: June 27, 2021 June 28, 2020 Polyester $ 285,939 $ 263,496 Asia 41,121 41,452 Brazil 85,950 49,967 Nylon 68,034 42,020 Segment total assets 481,044 396,935 Other current assets 48,972 48,600 Other PP&E 21,175 23,676 Other operating lease assets 1,116 1,503 Other non-current assets 902 1,277 Investments in unconsolidated affiliates 2,159 2,171 Total assets $ 555,368 $ 474,162 Geographic Data For the Fiscal Year Ended Net Sales June 27, 2021 June 28, 2020 June 30, 2019 U.S. $ 341,897 $ 342,350 $ 426,725 China 171,261 148,923 125,667 Brazil 95,976 73,339 102,877 Remaining Foreign Countries 58,458 41,897 53,535 Total $ 667,592 $ 606,509 $ 708,804 Export sales from UNIFI’s U.S. operations to external customers $ 59,055 $ 64,305 $ 84,707 The net sales amounts are based on the operating locations from where the items were produced or distributed. Long-Lived Assets June 27, 2021 June 28, 2020 June 30, 2019 U.S. $ 191,733 $ 195,874 $ 305,483 Brazil 21,733 10,805 13,218 China 1,919 779 78 Remaining Foreign Countries 9,708 9,859 5,169 Total $ 225,093 $ 217,317 $ 323,948 Long-lived assets are comprised of PP&E, net; operating lease assets; intangible assets, net; investments in unconsolidated affiliates; and other non-current assets. Total Assets June 27, 2021 June 28, 2020 June 30, 2019 U.S. $ 362,502 $ 352,869 $ 457,571 Brazil 85,950 49,967 67,490 China 63,239 39,238 30,982 Remaining Foreign Countries 43,677 32,088 36,108 Total $ 555,368 $ 474,162 $ 592,151 |