FINANCING ARRANGEMENTS:

9 Months Ended

Mar. 31, 2020

FINANCING ARRANGEMENTS:

The Company’s long-term debt consists of the following:

Revolving Credit Facility


	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Revolving credit facility	2023	3.90%	$	273,000	$	90,000

At March 31, 2020, cash, cash equivalents and marketable securities totaled $241.0 million. As of March 31, 2020, the Company has $273.0 million of outstanding borrowings under a $295.0 million revolving credit facility. At March 31, 2020, the Company has outstanding standby letters of credit under the revolving credit facility of $21.5 million, primarily related to the Company's self-insurance program. The unused available credit under the facility was $0.5 million as of March 31, 2020. The Company increased its outstanding borrowings from December 31, 2019 to March 31, 2020 by making a draw on the credit facility of $183.0 million in March of 2020. The $183.0 million draw was done to increase the Company's cash position and preserve financial flexibility as the Company experienced significant business interruption due to the COVID-19 pandemic. As of March 31, 2020, the Company had cash, cash equivalents and restricted cash of $255.8 million and current liabilities of $232.1 million.

In May of 2020, the Company amended its $295.0 million revolving credit facility that expires in March 2023. The amendment to the revolving credit facility provides relief for the maximum consolidated net leverage ratio covenant and the minimum fixed charge coverage ratio covenant. Without such amendment, the Company would have been in violation of the covenants as of March 31, 2020 which could have resulted in default. Under the new terms of the amendment, the Company is required to maintain a minimum liquidity of not less than $75.0 million, and provides the Company's lenders security in the Company's assets, adds additional guarantors and grants a first priority lien and security interest to the lenders in substantially all of the Company’s and the guarantors’ existing and future property. The amendment also increases the applicable interest rate margins and facility fees applicable to the loans and inserts a 1.25% LIBOR floor. The applicable margin for loans bearing interest at LIBOR ranges from 3.75%-4.25%, the applicable margin for loans bearing interest at the base rate ranges from 2.75%-3.25% and the facility fee ranges from 0.5%-0.75%, each depending on average utilization of the revolving line of credit. This amendment gives the Company flexibility throughout the uncertainty generated by the business disruption caused by the COVID-19 pandemic, as well as the Company's navigation through its strategic transformation. As of the filing date, the Company is in compliance with its amended debt covenants.

The Company was not in compliance with its previous debt covenants as of March 31, 2020, which could have resulted in a default. This coupled with the closure of most of our salons for a period of time are conditions and events that could have created substantial doubt about our ability to continue as a going concern. We amended our debt agreement, which removed and amended certain covenants and requirements and also remedied the non-compliance item, in addition to taking other actions that have alleviated the substantial doubt about our ability to continue as a going concern.

Sale and Leaseback Transaction

The Company’s long-term financing liabilities consists of the following:


	Maturity Date	Interest Rate	March 31, 2020		June 30, 2019
	(Fiscal Year)		(Dollars in thousands)
Financial liability - Salt Lake City Distribution Center	2034	3.30%	$	16,914	$	17,354
Financial liability - Chattanooga Distribution Center	2034	3.70%	11,319		11,556
Long- term financing liability			$	28,233	$	28,910

In fiscal year 2019, the Company sold its Salt Lake City and Chattanooga Distribution Centers to an unrelated party. The Company is leasing the properties back for 15 years with the option to renew. As the Company plans to lease the property for more than 75% of its economic life, the sales proceeds received from the buyer-lessor are recognized as a financial liability. This financial liability is reduced based on the rental payments made under the lease that are allocated between principal and interest. As of March 31, 2020, the current portion of the Company’s lease liability was $0.9 million which was recorded in accrued expenses on the unaudited Condensed Consolidated Balance Sheet. The weighted average remaining lease term was 13.9 years and the weighted-average discount rate was 3.46% for financing leases as of March 31, 2020.

As of March 31, 2020, future lease payments due are as follows:


Fiscal year	Salt Lake City Distribution Center		Chattanooga Distribution Center
	(Dollars in thousands)
Remainder of 2020	$	287	$	201
2021	1,157		817
2022	1,171		829
2023	1,186		842
2024	1,200		854
Thereafter	11,899		9,282
Total	$	16,900	$	12,825

The financing liability does not include interest. Future lease payments above are due per the lease agreement and include embedded interest. Therefore, the total payments do not equal the financing liability. Total interest expense for the financing lease was $0.3 and $0.8 million for the three and nine months ended March 31, 2020.