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Long-Term Debt | 12 Months Ended
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Jul. 03, 2022
Debt Disclosure [Abstract] |
Long-Term Debt | 12. Long-Term Debt Debt Obligations The following table presents the total balances outstanding for UNIFI’s debt obligations, their scheduled maturity dates and the weighted average interest rates for borrowings as well as the applicable current portion of long-term debt:
|  |  |  | Weighted Average |  |  |  |  |  |  |  |
|  | Scheduled |  | Interest Rate as of |  | Principal Amounts as of |
|  | Maturity Date |  | July 3, 2022 |  | July 3, 2022 |  |  | June 27, 2021 |
ABL Revolver |  | December 2023 |  | 3.2% |  |  | $ | 41,300 |  |  | $ | — |
ABL Term Loan |  | December 2023 |  | 3.2% |  |  |  | 65,000 |  |  |  | 77,500 |
Finance lease obligations |  | (1) |  | 3.6% |  |  |  | 7,261 |  |  |  | 8,475 |
Construction financing |  | (2) |  | 1.9% |  |  |  | 729 |  |  |  | 882 |
Total debt |  |  |  |  |  |  |  | 114,290 |  |  |  | 86,857 |
Current ABL Term Loan |  |  |  |  |  |  |  | (10,000 | ) |  |  | (12,500 | )
Current portion of finance lease obligations |  |  |  |  |  |  |  | (1,726 | ) |  |  | (3,545 | )
Unamortized debt issuance costs |  |  |  |  |  |  |  | (255 | ) |  |  | (476 | )
Total long-term debt |  |  |  |  |  |  | $ | 102,309 |  |  | $ | 70,336 |
(1) | Scheduled maturity dates for finance lease obligations range from March 2025 to November 2027.
(2) | Refer to the discussion below under the subheading “Construction Financing” for further information.
ABL Facility On December 18, 2018, Unifi, Inc. and certain of its subsidiaries entered into a Third Amendment to Amended and Restated Credit Agreement and Second Amendment to Amended and Restated Guaranty and Security Agreement (the “2018 Amendment”). The 2018 Amendment amended the Amended and Restated Credit Agreement, dated as of March 26, 2015, by and among Unifi, Inc. and a syndicate of lenders, as previously amended (together with all previous and subsequent amendments, the “Credit Agreement”). The Credit Agreement provides for a $200,000 senior secured credit facility (the “ABL Facility”), including a $100,000 revolving credit facility (the “ABL Revolver”) and a term loan that can be reset up to a maximum amount of $100,000, once per fiscal year, if certain conditions are met (the “ABL Term Loan”). The ABL Facility has a maturity date of December 18, 2023. The 2018 Amendment made the following changes to the Credit Agreement, among others: (i) extended the maturity date from March 26, 2020 to December 18, 2023 and (ii) decreased the Applicable Margin (as defined in the Credit Agreement) pricing structure for Base Rate Loans (as defined in the Credit Agreement) and LIBOR Rate Loans (as defined in the Credit Agreement) by 25 basis points. In connection and concurrent with the sale of UNIFI’s 34% interest in PAL on April 29, 2020, UNIFI entered into the Fourth Amendment to Amended and Restated Credit Agreement (“Fourth Amendment”). The Fourth Amendment, among other things, revised the: (i) definition of permitted dispositions within the Credit Agreement to include the sale by Unifi Manufacturing, Inc. of its equity interest in PAL so long as the aggregate net cash proceeds received equaled or exceeded $60,000 and such sale occurred on or before May 15, 2020; (ii) terms of the Credit Agreement to allow the net cash proceeds from the sale of PAL to be applied to the outstanding principal amount of the ABL Revolver until paid in full with the remaining net cash proceeds retained by UNIFI, so long as certain conditions were met; and (iii) terms of the Credit Agreement to allow the lenders to make changes to the benchmark interest rate without further amendment should LIBOR temporarily or permanently cease to exist and a transition to a new benchmark interest rate such as the Secured Overnight Financing Rate (“SOFR”) be required for future ABL Facility borrowings. The Fourth Amendment generated no change in cash flows for the Credit Agreement and, accordingly, followed debt modification accounting. On February 5, 2021, UNIFI entered into the Fifth Amendment to Amended and Restated Agreement (“Fifth Amendment”). The Fifth Amendment primarily allowed for share repurchases of up to $5,000 to be completed from available domestic cash, through June 30, 2021. No such share repurchases were made. The ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with all proceeds and products) of Unifi, Inc., Unifi Manufacturing, Inc., and a certain subsidiary guarantor (collectively, the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of UNIFI’s first-tier controlled foreign subsidiary, as required by the lenders) of the stock of (or other ownership interests in) each of the Loan Parties (other than Unifi, Inc.) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof. If excess availability under the ABL Revolver falls below the Trigger Level (as defined in the Credit Agreement), a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a quarterly basis of at least 1.05 to 1.00 becomes effective. The Trigger Level as of July 3, 2022 was $20,625. In addition, the ABL Facility contains restrictions on particular payments and investments, including certain restrictions on the payment of dividends and share repurchases. Subject to specific provisions, the ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at UNIFI’s discretion. ABL Facility borrowings bear interest at LIBOR plus an applicable margin of 1.25% to 1.75%, or the Base Rate (as defined below) plus an applicable margin of 0.25% to 0.75%, with interest currently being paid on a monthly basis. The applicable margin is based on (i) the excess availability under the ABL Revolver and (ii) the consolidated leverage ratio, calculated as of the end of each fiscal quarter. The Base Rate means the greater of (i) the prime lending rate as publicly announced from time to time by Wells Fargo Bank, National Association, (ii) the Federal Funds Rate (as defined in the Credit Agreement) plus 0.5%, and (iii) LIBOR plus 1.0%. UNIFI’s ability to borrow under the ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventories and is subject to certain conditions and limitations. There is also a monthly unused line fee under the ABL Revolver of 0.25%. In 2017, UNIFI entered into three interest rate swaps with Wells Fargo Bank, N.A., with notional amounts of $20,000 (“Swap A”), $30,000 (“Swap B”) and $25,000 (“Swap C”), respectively. The combined designated hedges fixed LIBOR at approximately 1.9% for $75,000 of variable rate borrowings through May 24, 2022. Such swaps terminated in May 2022 and there were no material fair value or hedging impacts. As of July 3, 2022: UNIFI had $0 of standby letters of credit; excess availability under the ABL Revolver was $51,409; and the fixed charge coverage ratio was (0.24) to 1.00. Finance Lease Obligations During fiscal 2022, UNIFI entered into finance lease obligations totaling $2,493 for eAFK Evo texturing machines. The maturity dates of these obligations occur during fiscal 2027 with interest rates between 3.0% and 4.4%. During fiscal 2021, UNIFI entered into finance lease obligations totaling $740 for certain transportation equipment. The maturity date of these obligations is June 2025 with an interest rate of 3.8%. During fiscal 2020, UNIFI entered into finance lease obligations totaling $6,301 for certain transportation equipment. The maturity date of these obligations range from March 2025 to November 2026 with interest rates ranging from 3.1% to 3.5%. Construction Financing In May 2021, UNIFI entered into an agreement with a third party lender that provides for construction-period financing for certain texturing machinery included in our capital allocation plans. UNIFI records project costs to construction in progress and the corresponding liability to construction financing (within long-term debt). The agreement provides for monthly, interest-only payments during the construction period, at a rate of SOFR plus 1.25%, and contains terms customary for a financing of this type. Each borrowing under the agreement provides for 60 monthly payments, which will commence upon the completion of the construction period with an interest rate of approximately 4.4%. In connection with this construction financing arrangement, UNIFI has borrowed a total of $3,222 and transitioned $2,493 of completed asset costs to finance lease obligations as of July 3, 2022. Scheduled Debt Maturities The following table presents the scheduled maturities of UNIFI’s outstanding debt obligations for the following five fiscal years and thereafter.
|  | Fiscal 2023 |  |  | Fiscal 2024 |  |  | Fiscal 2025 |  |  | Fiscal 2026 |  |  | Fiscal 2027 |  |  | Thereafter |
ABL Revolver |  | $ | — |  |  | $ | 41,300 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
ABL Term Loan |  |  | 10,000 |  |  |  | 55,000 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Finance lease obligations |  |  | 1,726 |  |  |  | 1,787 |  |  |  | 1,699 |  |  |  | 1,255 |  |  |  | 732 |  |  |  | 62 |
Total (1) |  | $ | 11,726 |  |  | $ | 98,087 |  |  | $ | 1,699 |  |  | $ | 1,255 |  |  | $ | 732 |  |  | $ | 62 |
| (1) | Total reported excludes $729 for construction financing, described above.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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