Note 12 - Long-Term Debt

6 Months Ended

Dec. 29, 2013

Disclosure Text Block [Abstract]

Long-term Debt [Text Block]

12. Long-Term Debt

Debt Obligations
The following table presents the total balances outstanding for the Company’s debt obligations, their scheduled maturity dates and the weighted average interest rate for borrowings (including the effects of an interest rate swap) as well as the applicable current portion of long-term debt: 

	Scheduled	Weighted Average Interest Rate as of	Principal Amounts as of
	Maturity Date	December 29, 2013	December 29, 2013			June 30, 2013
ABL Revolver	May 2018	3.1%	$	50,400		$	52,500
ABL Term Loan	May 2018	3.1%		50,000			42,800
Term loan from unconsolidated affiliate	August 2014	3.0%		1,250			1,250
Capital lease obligation	November 2027	4.6%		1,174			1,203
Total debt				102,824			97,753
Current portion of long-term debt				(1,316	)		(65	)
Total long-term debt			$	101,508		$	97,688

ABL Facility

On May 24, 2012, the Company entered into a credit agreement (the “Credit Agreement”) to establish a $150,000 senior secured credit facility (“ABL Facility”) with Wells Fargo Bank, N.A. and Bank of America, N.A. The ABL Facility consists of a $100,000 revolving credit facility (“ABL Revolver”) and a $50,000 term loan (“ABL Term Loan”). In addition, the Company entered into a $30,000 term loan (“Term B Loan”) which was repaid on January 8, 2013. The Company entered into a First Amendment to Credit Agreement on December 27, 2012, a Second Amendment to Credit Agreement on June 25, 2013 and, as discussed below, a Third Amendment to Credit Agreement on January 16, 2014 (the “Third Amendment”). The ABL Facility, as amended, has a maturity date of May 24, 2018.  

The ABL Facility is secured by a first-priority security interest in substantially all property and assets of Unifi, Inc., Unifi Manufacturing, Inc. and certain subsidiary guarantors (the “Loan Parties”). It is also secured by a first-priority security interest in all (or 65% in the case of first tier controlled foreign corporations) of the stock of (or other ownership interests in) each of the Loan Parties (other than the Company) and certain subsidiaries of the Loan Parties, together with all proceeds and products thereof. The ABL Facility is further secured by a first-priority lien on the Company’s limited liability company membership interest in Parkdale America, LLC (“PAL”).

The Credit Agreement includes representations and warranties made by the Loan Parties, affirmative and negative covenants and events of default that are usual and customary for financings of this type. Should excess availability under the ABL Revolver fall below the greater of $10,000 or 20% of the maximum revolver amount, a financial covenant requiring the Loan Parties to maintain a fixed charge coverage ratio on a monthly basis of at least 1.05 to 1.0 becomes effective. In addition, the ABL Facility contains restrictions on certain payments and investments, including restrictions on the payment of dividends and share repurchases, unless excess availability is greater than $20,000 for the thirty day period prior to the making of such a distribution (as calculated on a pro forma basis as if the payment and any revolving loans made in connection therewith were made on the first day of such period).

The Company’s ability to borrow under the ABL Revolver is limited to a borrowing base equal to specified percentages of eligible accounts receivable and inventory and is subject to certain conditions and limitations. ABL Revolver borrowings bear interest at the London Interbank Offer Rate (“LIBOR”) plus an applicable margin of 1.75% to 2.25%, or the Base Rate plus an applicable margin of 0.75% to 1.25%, with interest currently being paid on a monthly basis. The applicable margin is based on the average quarterly excess availability under the ABL Revolver. The Base Rate means the greater of (i) the prime lending rate as publicly announced from time to time by Wells Fargo, (ii) the Federal Funds Rate plus 0.5%, and (iii) LIBOR plus 1.0%. There is also a monthly unused line fee under the ABL Revolver of 0.25% to 0.375% of the unused line amount.

The ABL Term Loan bears interest at LIBOR plus an applicable margin of 2.25%, or the Base Rate plus an applicable margin of 1.25%, with interest currently being paid on a monthly basis. ABL Term Loan principal payments (if any) are based on the amount that the outstanding balance of the ABL Term Loan exceeds a calculation of eligible machinery and equipment and eligible real property collateral specific to the ABL Term Loan. Subject to certain provisions, the ABL Term Loan may be prepaid at par, in whole or in part, at any time before the maturity date, at the Company’s discretion.

Under the terms of the ABL Facility, the Company is required to hedge at least $50,000 of variable interest rate exposure so long as the outstanding principal of all indebtedness having variable rates of interest exceeds $75,000.

As of December 29, 2013, the Company was in compliance with all financial covenants, the excess availability under the ABL Revolver was $28,083, the fixed charge coverage ratio was 5.52 to 1.0 and the Company had $525 of standby letters of credit, none of which have been drawn upon.

Subsequent Event

The Third Amendment, which was entered into on January 16, 2014, among other things: (i) revised the definition of permitted indebtedness to allow the Company to enter into permitted sales and leaseback transactions of equipment in an aggregate amount not to exceed $4,000 per fiscal year; (ii) revised the definition of permitted dispositions to increase the amount of certain asset sales or dispositions from $500 to $4,000 per fiscal year; and (iii) revised the mandatory prepayment provision to increase the amount of net proceeds received from certain permitted dispositions that would be required to prepay the outstanding ABL Facility debt from $500 to $4,000 per fiscal year. No amendment fee was required.

Term Loan from Unconsolidated Affiliate

On August 30, 2012, a foreign subsidiary of the Company entered into an unsecured loan agreement for $1,250 with its unconsolidated affiliate U.N.F. Industries Ltd. The loan bears interest at 3% with interest payable semi-annually. The loan does not amortize and has a maturity date of August 30, 2014, at which time the entire principal balance is due.

Capital Lease Obligation

On November 19, 2012, the Company entered into a capital lease with Salem Leasing Corporation for certain transportation equipment. The original amount due under the fifteen year term of the lease is $1,234 and payments are made monthly. The implicit annual interest rate under the lease is approximately 4.6%.

Scheduled Debt Maturities

The following table presents the scheduled maturities of the Company’s outstanding debt obligations for the remainder of fiscal year 2014 and the fiscal years thereafter:

	Scheduled Maturities on a Fiscal Year Basis
	2014		2015		2016		2017		2018		Thereafter
ABL Revolver	$	—	$	—	$	—	$	—	$	50,400	$	—
ABL Term Loan		—		—		—		—		50,000		—
Term loan from unconsolidated affiliate		—		1,250		—		—		—		—
Capital lease obligation		30		63		66		69		72		874
Total debt	$	30	$	1,313	$	66	$	69	$	100,472	$	874

Debt financing fees are classified within other non-current assets and consist of the following:

	December 29, 2013
Balance at beginning of year	$	2,117
Amounts paid related to debt modification		3
Amortization charged to interest expense		(212	)
Balance at end of period	$	1,908

Interest Expense

Interest expense consists of the following:

	For the Three Months Ended						For the Six Months Ended
	December 29, 2013			December 23, 2012			December 29, 2013			December 23, 2012
Interest on ABL Facility	$	812		$	839		$	1,665		$	1,740
Interest on Term B Loan		—			317			—			679
Amortization of debt financing fees		105			163			212			329
Marked to market adjustment for interest rate swap		(148	)		(73	)		(8	)		(73	)
Reclassification adjustment for interest rate swap		145			92			300			92
Interest capitalized to property, plant and equipment, net		(41	)		—			(83	)		—
Other		30			23			69			38
Total interest expense	$	903		$	1,361		$	2,155		$	2,805

Loss on Extinguishment of Debt

The components of loss on extinguishment of debt consist of the following:

	For the Three Months Ended				For the Six Months Ended
	December 29, 2013		December 23, 2012		December 29, 2013		December 23, 2012
Prepayment call premium and other costs for Term B Loan	$	—	$	66	$	—	$	201
Non-cash charges due to write-off of debt financing fees		—		48		—		155
Loss on extinguishment of debt	$	—	$	114	$	—	$	356