23. Commitments and Contingencies

Collective Bargaining Agreements

While employees of UNIFI’s Brazilian operations are unionized, none of the labor force employed by UNIFI’s domestic or other foreign subsidiaries is currently covered by a collective bargaining agreement.

Environmental

On September 30, 2004, UNIFI completed its acquisition of polyester filament manufacturing assets located in Kinston, North Carolina from Invista S.a.r.l. (“INVISTA”). The land for the Kinston site was leased pursuant to a 99-year ground lease (the “Ground Lease”) with E.I. DuPont de Nemours (“DuPont”). Since 1993, DuPont has been investigating and cleaning up the Kinston site under the supervision of the U.S. Environmental Protection Agency and the North Carolina Department of Environmental Quality (“DEQ”) pursuant to the Resource Conservation and Recovery Act Corrective Action program. The program requires DuPont to identify all potential areas of environmental concern (“AOCs”), assess the extent of containment at the identified AOCs and remediate the AOCs to comply with applicable regulatory standards. Effective March 20, 2008, UNIFI entered into a lease termination agreement associated with conveyance of certain assets at the Kinston site to DuPont. This agreement terminated the Ground Lease and relieved UNIFI of any future responsibility for environmental remediation, other than participation with DuPont, if so called upon, with regard to UNIFI’s period of operation of the Kinston site, which was from 2004 to 2008. At this time, UNIFI has no basis to determine if or when it will have any responsibility or obligation with respect to the AOCs or the extent of any potential liability for the same.

UNIFI continues to own property acquired in the 2004 transaction with INVISTA that has contamination from DuPont’s operations and is monitored by DEQ. This site has been remediated by DuPont, and DuPont has received authority from DEQ to discontinue further remediation, other than natural attenuation. Prior to transfer of responsibility to UNIFI, DuPont has a duty to monitor and report the environmental status of the site to DEQ. UNIFI expects to assume that responsibility in fiscal 2018 and will be entitled to receive from DuPont seven years of monitoring and reporting costs, less certain adjustments. At that time, UNIFI will assume responsibility for any future remediation of the site. At this time, UNIFI has no basis to determine if or when it will have any obligation to perform further remediation or the potential cost thereof.

Leases

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.

Future minimum capital lease payments and future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) as of June 25, 2017 by fiscal year are:

	Capital leases			Operating leases
Fiscal 2018	$	7,943		$	2,088
Fiscal 2019		7,626			1,621
Fiscal 2020		5,916			1,340
Fiscal 2021		2,870			994
Fiscal 2022		2,565			328
Fiscal years thereafter		1,032			—
Total minimum lease payments	$	27,952		$	6,371
Less estimated executory costs		(782	)
Less interest		(2,002	)
Present value of net minimum capital lease payments		25,168
Less current portion of capital lease obligations		(7,060	)
Long-term portion of capital lease obligations	$	18,108

Rental expenses incurred under operating leases and included in operating income consist of the following:

	For the Fiscal Year Ended
	June 25, 2017		June 26, 2016		June 28, 2015
Rental expenses	$	4,357	$	4,867	$	4,214

Unconditional Obligations

UNIFI is a party to unconditional obligations for certain utility and other purchase or service commitments. These commitments are non-cancelable, have remaining terms in excess of one year and qualify as normal purchases.

On a fiscal year basis, the minimum payments expected to be made as part of such commitments are as follows:

	Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Thereafter
Unconditional purchase obligations	$	9,384	$	8,306	$	4,475	$	201	$	6	$	22
Unconditional service obligations		2,383		1,864		245		148		76		412
Total unconditional obligations	$	11,767	$	10,170	$	4,720	$	349	$	82	$	434

For fiscal 2017, 2016 and 2015, total costs incurred under these commitments consisted of the following:

	For the Fiscal Year Ended
	June 25, 2017		June 26, 2016		June 28, 2015
Costs for unconditional purchase obligations	$	26,984	$	26,790	$	28,971
Costs for unconditional service obligations		2,575		641		7,625
Total	$	29,559	$	27,431	$	36,596