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Leases | 12 Months Ended
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Jul. 03, 2022
Leases [Abstract] |
Leases | 4. Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). UNIFI adopted the new lease guidance utilizing the modified retrospective transition method, applied at the date of adoption, recording existing leases as of the effective date, July 1, 2019. Under this method, no adjustment to comparative prior periods is required and, accordingly, financial statement information and disclosures required under Topic 842 will not be provided for dates and periods prior to July 1, 2019. UNIFI made no adjustment to the July 1, 2019 opening retained earnings balance for fiscal 2020. UNIFI adopted the following practical expedients and elected the following accounting policies related to this standard update:
| • | carry forward of historical lease classifications and accounting treatment for existing land easements;
| • | not to reassess whether any expired or existing contracts are or contain leases;
| • | not to reassess initial direct costs for any existing leases;
| • | the use of hindsight;
| • | short-term lease accounting policy election allowing lessees to not recognize right-of-use assets and liabilities for leases with a term of 12 months or less and to recognize lease payments on a straight-line basis over the lease term and variable payments in the period the obligation is incurred; and
| • | the option not to separate lease and non-lease components for the transportation equipment asset class.
UNIFI routinely leases sales and administrative office space, warehousing and distribution centers, manufacturing space, transportation equipment, manufacturing equipment, and other information technology and office equipment from third parties. The lease terms range from 1 to 15 years with various options for renewal. There are no residual value guarantees, restrictions, covenants, or sub-leases related to these leases. Variable lease payments are determined as the amounts included in the lease payment that are based on the change in index or usage. UNIFI’s accounting for finance leases remained substantially unchanged. Disclosures related to the amount, timing and uncertainty of cash flows arising from leases are included below. The following table sets forth the balance sheet location and values of the Company’s lease assets and lease liabilities:
Classification |  | Balance Sheet Location |  | July 3, 2022 |  |  | June 27, 2021 |
Lease Assets |  |  |  |  |  |  |  |  |  |
Operating lease assets |  | Operating lease assets |  | $ | 8,829 |  |  | $ | 8,772 |
Finance lease assets |  | Property, plant & equipment, net |  |  | 7,017 |  |  |  | 16,037 |
Total lease assets |  |  |  | $ | 15,846 |  |  | $ | 24,809 |
Lease Liabilities |  |  |  |  |  |  |  |  |  |
Current operating lease liabilities |  | Current operating lease liabilities |  | $ | 2,190 |  |  | $ | 1,856 |
Current finance lease liabilities |  | Current portion of long-term debt |  |  | 1,726 |  |  |  | 3,545 |
Total current lease liabilities |  |  |  | $ | 3,916 |  |  | $ | 5,401 |
Non-current operating lease liabilities |  | Non-current operating lease liabilities |  | $ | 6,736 |  |  | $ | 7,032 |
Non-current finance lease liabilities |  | Long-term debt |  |  | 5,535 |  |  |  | 4,930 |
Total non-current lease liabilities |  |  |  | $ | 12,271 |  |  | $ | 11,962 |
Total lease liabilities |  |  |  | $ | 16,187 |  |  | $ | 17,363 |
The following table sets forth the components of UNIFI’s total lease cost for fiscal 2022 and 2021:
|  | For The Fiscal Year |  |  | For The Fiscal Year |
Lease Cost |  | July 3, 2022 |  |  | June 27, 2021 |
Operating lease cost |  | $ | 2,766 |  |  | $ | 2,465 |
Variable lease cost |  |  | 502 |  |  |  | 503 |
Finance lease cost: |  |  |  |  |  |  |  |
Amortization of lease assets |  |  | 1,981 |  |  |  | 1,998 |
Interest on lease liabilities |  |  | 258 |  |  |  | 365 |
Short-term lease cost |  |  | 967 |  |  |  | 1,007 |
Total lease cost |  | $ | 6,474 |  |  | $ | 6,338 |
As of July 3, 2022 and June 27, 2021, Unifi had not received any COVID-19 rent concessions. The following table presents supplemental information related to leases:
|  | For The Fiscal Year |  |  | For The Fiscal Year |
Other Information |  | July 3, 2022 |  |  | June 27, 2021 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |
Operating cash flows used by operating leases |  | $ | 2,766 |  |  | $ | 2,465 |
Financing cash flows used by finance leases |  | $ | 3,707 |  |  | $ | 3,646 |
Non-cash activities: |  |  |  |  |  |  |  |
Leased assets obtained in exchange for new operating lease liabilities |  | $ | 1,662 |  |  | $ | 2,606 |
Leased assets obtained in exchange for new finance lease liabilities |  | $ | 2,493 |  |  | $ | 740 |
UNIFI calculates its operating lease liabilities and finance lease liabilities entered into after the adoption of the new lease standard based upon UNIFI’s incremental borrowing rate (the “IBR”). When determining the IBR, we consider our centralized treasury function and our current credit profile. UNIFI makes adjustments to this rate for securitization, the length of the lease term (tenure), and leases denominated in foreign currencies. Generally, the IBR for each jurisdiction approximates the specific risk-free rate for the respective jurisdiction incremented for UNIFI’s corporate credit risk and adjusted for tenure. The following table sets forth UNIFI's weighted average remaining lease term in years and discount rate percentage used in the calculation of its outstanding lease liabilities:
Weighted Average Remaining Lease Term and Discount Rate |  | July 3, 2022 |  |  | June 27, 2021 |
Weighted average remaining lease term (years): |  |  |  |  |  |  |  |
Operating leases |  |  | 4.1 |  |  |  | 5.9 |
Finance leases |  |  | 4.2 |  |  |  | 3.8 |
Weighted average discount rate (percentage): |  |  |  |  |  |  |  |
Operating leases |  |  | 5.0 | % |  |  | 5.1 | %
Finance leases |  |  | 3.6 | % |  |  | 3.6 | %
Lease Maturity Analysis Future minimum finance lease payments and future minimum payments under non-cancelable operating leases with initial lease terms in excess of one year under Topic 842 as of July 3, 2022 by fiscal year were:
Maturity of Lease Liabilities |  | Finance Leases |  |  | Operating Leases |
Fiscal 2023 |  | $ | 2,032 |  |  | $ | 2,595 |
Fiscal 2024 |  |  | 2,032 |  |  |  | 2,004 |
Fiscal 2025 |  |  | 1,880 |  |  |  | 1,498 |
Fiscal 2026 |  |  | 1,385 |  |  |  | 1,201 |
Fiscal 2027 |  |  | 821 |  |  |  | 971 |
Fiscal years thereafter |  |  | 100 |  |  |  | 1,788 |
Total minimum lease payments |  | $ | 8,250 |  |  | $ | 10,057 |
Less estimated executory costs |  |  | (413 | ) |  |  | — |
Less imputed interest |  |  | (576 | ) |  |  | (1,131 | )
Present value of net minimum lease payments |  |  | 7,261 |  |  |  | 8,926 |
Less current portion of lease obligations |  |  | (1,726 | ) |  |  | (2,190 | )
Long-term portion of lease obligations |  | $ | 5,535 |  |  | $ | 6,736 |

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