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 |