FINANCING ARRANGEMENTS

12 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

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

Revolving Credit Facility

		June 30,
	Maturity Date	2021	2020	2021		2020
	(Fiscal year)	(Interest rate %)		(Dollars in thousands)
Revolving credit facility	2023	5.00%	5.50%	$	186,911	$	177,500

At June 30, 2021, cash and cash equivalents totaled $19.2 million. As of June 30, 2021, the Company had $186.9 million of outstanding borrowings under a $294.4 million revolving credit facility. The credit facility decreased $0.6 million from $295.0 million as of June 30, 2020, in accordance with the bulk sale provisions in the agreement, due to the sale of secured inventory related to our transition to third party vendors. At June 30, 2021, the Company had outstanding standby letters of credit under the revolving credit facility of $18.7 million, primarily related to the Company's self-insurance program. The unused available credit under the facility was $88.8 million at June 30, 2021. The Company's liquidity per the agreement includes the unused available balance under the credit facility, unrestricted cash and cash equivalents and the shortfall in the gap in expected proceeds from the sale of salon assets of $20.9 million as of June 30, 2021. Total liquidity per the agreement was $128.9 million as of June 30, 2021.

In May of 2020, the Company amended its revolving credit facility that expires in March 2023. Under the new terms of the amendment, the Company is required to maintain a minimum liquidity of $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. The Company was in compliance with all covenants and other requirements of the financing arrangements as of June 30, 2021 and believes it will continue to be in compliance for at least one year from the filing date.

Sale and Leaseback Transactions

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

	Maturity Date	Interest Rate	June 30, 2021		June 30, 2020
	(Fiscal year)		(Dollars in thousands)
Financial liability - Salt Lake City Distribution Center	2034	N/A	$	—	$	16,773
Financial liability - Chattanooga Distribution Center	2034	N/A	—		11,208
Long-term financing liabilities			$	—	$	27,981

In fiscal year 2019, the Company sold its Salt Lake City and Chattanooga Distribution Centers to an unrelated party. At the time of the sale, the transactions were considered failed sale and leaseback transactions, as the Company had planned to lease the property for more than 75% of its economic life. The sale proceeds received from the buyer-lessor were recognized as a financial liability, which was reduced based on the rental payments made under the lease that were allocated between principal and interest. In the third quarter of fiscal year 2021, as a result of the decision to exit the Company's wholesale product sales business, the Company informed the landlord of its intention to exit the leased spaces. Because the Company no longer plans to lease the distribution centers for the majority of the assets' useful lives, these transactions are subsequently considered sale and leaseback transactions. As a result, the Company derecognized the financial liability of $28.5 million and the carrying value of the related assets of $13.5 million and recognized a gain of $15.0 million for the difference between the liability and asset. The gain on distribution centers was recorded to Interest income and other, net in the Consolidated Statement of Operations. As the leases for the two distribution centers meet the sale and leaseback criteria, the Company recognized a right of use asset and lease liability on the Consolidated Balance Sheet (See Note 6 to the Consolidated Financial Statements).