Note 12 - Long-term Debt

12 Months Ended

Jun. 28, 2015

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 rates for borrowings as well as the applicable current portion of long-term debt:

			Weighted Average Interest Rate as of June 28, 2015 (1)		Principal Amounts as of
	Scheduled Maturity Date				June 28, 2015			June 29, 2014
ABL Revolver		March 2020		1.7%	$	5,000		$	26,000
ABL Term Loan		March 2020		2.2%		82,125			68,000
Term loan from unconsolidated affiliate		August 2016		3.0%		1,250			1,250
Capital lease obligations		(2)		(3)		15,735			4,238
Total debt						104,110			99,488
Current portion of long-term debt						(12,385	)		(7,215	)
Total long-term debt					$	91,725		$	92,273

(1) The weighted average interest rate as of June 28, 2015 for the ABL Term Loan includes the effects of the interest rate swap with a notional balance of $50,000.

(2) Scheduled maturity dates for capital lease obligations range from January 2017 to November 2027.

(3) Fixed interest rates for capital lease obligations range from 2.3% to 4.6%.

On March 26, 2015, the Company and its subsidiary, Unifi Manufacturing, Inc., entered into an Amended and Restated Credit Agreement (the “Amended Credit Agreement”) for a $200,000 senior secured credit facility (the “ABL Facility”) with a syndicate of lenders. The ABL Facility consists of a $100,000 revolving credit facility (the “ABL Revolver”) and an $84,375 term loan that can be reset up to a maximum amount of $100,000 if certain future conditions are met (the “ABL Term Loan”). The ABL Facility has a maturity date of March 26, 2020. The Company paid $750 to the lenders in connection with the Amended Credit Agreement.

The Amended Credit Agreement replaced a previous senior secured credit facility dated May 24, 2012 with a similar syndicate of lenders, which, after multiple amendments, would have matured on March 28, 2019 and consisted of a $100,000 revolving credit facility and a $90,000 term loan. As used herein, the terms “ABL Facility,” “ABL Revolver” and “ABL Term Loan” shall mean the senior secured credit facility, the revolving credit facility or the term loan, respectively, under the Amended Credit Agreement or the previous senior secured credit facility, as applicable.

ABL Facility

The ABL Facility is secured by a first-priority perfected security interest in substantially all owned property and assets (together with proceeds and products) 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 certain first tier controlled foreign corporations, as required by the lenders) 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 Amended 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. If excess availability under the ABL Revolver falls below the defined Trigger Level, 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. The Trigger Level as of June 28, 2015 was $22,766. In addition, the ABL Facility contains restrictions on certain payments and investments, including restrictions on the payment of dividends and share repurchases. 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.

ABL Facility borrowings bear interest at the London Interbank Offer Rate (“LIBOR”) plus an applicable margin of 1.50% to 2.00%, or the Base Rate plus an applicable margin of 0.50% to 1.00%, with interest currently being paid on a monthly basis. The applicable margin is based on (a) the excess availability under the ABL Revolver and (b) the consolidated leverage ratio, calculated by fiscal quarter. 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%. 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. There is also a monthly unused line fee under the ABL Revolver of 0.25%.

The ABL Term Loan is currently subject to quarterly amortizing payments of $2,250. Additionally, principal increases are available at the Company’s discretion, resetting the loan balance up to a maximum amount of $100,000, once per fiscal year upon satisfaction of certain conditions, beginning October 1, 2015.

As of June 28, 2015, the Company was in compliance with all financial covenants; the excess availability under the ABL Revolver was $75,933; the consolidated leverage ratio was 1.6 to 1.0; the fixed charge coverage ratio was 3.0 to 1.0; and the Company had $235 of standby letters of credit, none of which have been drawn upon.

First Amendment

On June 26, 2015, the Company entered into the First Amendment to Amended and Restated Credit Agreement dated March 26, 2015 (“First Amendment”). The First Amendment modified the composition of subsidiary guarantors in connection with an internal reorganization completed during the fourth quarter of fiscal year 2015. There was no impact to the consolidated financial statements as a result of the First Amendment.

Term Loan from Unconsolidated Affiliate

On August 30, 2012, a foreign subsidiary of the Company entered into an unsecured loan agreement under which it borrowed $1,250 from the Company’s unconsolidated affiliate, U.N.F. Industries Ltd. The loan does not amortize and bears interest at 3%, payable semi-annually. The entire principal balance is due August 30, 2016, the revised maturity date.

Capital Lease Obligations

During fiscal year 2015, the Company entered into six capital leases with an aggregate present value of $12,784. Fixed interest rates and maturity dates for these capital leases range from 3.1% to 3.8% and August 2019 to August 2020, respectively.

During fiscal year 2014, the Company entered into four capital leases with an aggregate present value of $3,353.

Scheduled Debt Maturities

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

	Scheduled Maturities on a Fiscal Year Basis
	2016		2017		2018		2019		2020		Thereafter
ABL Revolver	$	—	$	—	$	—	$	—	$	5,000	$	—
ABL Term Loan		9,000		9,000		9,000		9,000		46,125		—
Capital lease obligations		3,385		3,463		3,301		3,200		1,652		734
Term loan from unconsolidated affiliate		—		1,250		—		—		—		—
Total	$	12,385	$	13,713	$	12,301	$	12,200	$	52,777	$	734

Debt Financing Fees

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

	June 28, 2015			June 29, 2014
Balance at beginning of year	$	2,093		$	2,117
Additions		1,063			400
Amortization charged to interest expense		(505	)		(424	)
Loss on extinguishment of debt		(1,040	)		—
Balance at end of year	$	1,611		$	2,093

Interest Expense

Interest expense consists of the following:

	For the Fiscal Years Ended
	June 28, 2015			June 29, 2014			June 30, 2013
Interest on ABL Facility	$	3,290		$	3,292		$	3,673
Interest on a prior term loan		—			—			722
Other		273			192			107
Subtotal of interest on debt obligations		3,563			3,484			4,502
Reclassification adjustment for interest rate swap		231			554			322
Amortization of debt financing fees		505			424			632
Mark-to-market adjustment for interest rate swap		(83	)		39			(931	)
Interest capitalized to property, plant and equipment, net		(191	)		(172	)		(36	)
Subtotal of other components of interest expense		462			845			(13	)
Total interest expense	$	4,025		$	4,329		$	4,489

Loss on Extinguishment of Debt

Entering into the Amended Credit Agreement in fiscal year 2015 generated substantially different terms for the ABL Term Loan and resulted in the replacement of an existing lender. Accordingly, the Company recorded a loss on extinguishment of debt of $1,040 for the write-off of certain debt financing fees related to the previous credit agreement.

On January 8, 2013, the Company prepaid a $30,000 term loan with a maturity date of May 24, 2017, and recorded a loss on extinguishment of debt of $1,102 to reflect $671 for prepayment costs and $431 for the write-off of related debt financing fees.