Long-term Debt | 9 Months Ended |
Sep. 30, 2013 |
Debt Disclosure [Abstract] | ' |
Long-term Debt | ' |
Long-term Debt |
|
1% Senior Convertible Notes due August 15, 2018 |
|
In August 2013, the Company issued $258.8 million aggregate principal amount of 1.00% Senior Convertible Notes due August 15, 2018 ("2018 Notes"). The 2018 Notes bear interest at a rate of 1.00% per year, payable semiannually in arrears, on February 15 and August 15 of each year, beginning on February 15, 2014. The conversion price for the 2018 Notes is equivalent to an initial effective conversion price of approximately $35.00 per share of common stock. Proceeds, net of original issuance discounts and debt issuance costs, of $252.3 million were received from the 2018 Notes. The net proceeds were used to pay down $208.0 million of the First Lien Term Loan and $43.0 million of the Revolving Credit Facility. |
|
The Company may not redeem the 2018 Notes prior to August 20, 2016. On or after August 20, 2016, we may redeem for cash any or all of the 2018 Notes, at our option, if the last reported sale price of our common stock exceeds 130% of the applicable conversion price on each applicable trading day as defined by the indenture. The redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date. Subsequent to December 31, 2013, holders of the 2018 Notes may also convert their notes at any time prior to May 15, 2018 if the sale price of our common stock exceeds 130% of the applicable conversion price on each applicable trading day as defined by the indenture. In addition, holders may also convert their notes any time prior to May 15, 2018 if during the five business days after any five consecutive trading day period in which the trading price was less than 98% of the product of the last reported sale price of our common stock and the conversion rate if the Company calls the notes for redemption; or upon the occurrence of specified corporate events. |
|
Prior to August 20, 2016, the 2018 Notes are redeemable or convertible upon certain fundamental changes, as defined in the indenture, which may require us to purchase the 2018 Notes in whole or in part for cash at a price equal to 100% of the principal amount of the 2018 Notes to be purchased, plus any accrued and unpaid interest to, but not including, the purchase date. In addition, following certain types of fundamental changes, also described in the indenture, or a notice of redemption, the conversion rate increases for a holder who elects to convert its notes in connection with such change or notice of redemption. |
|
The 2018 Notes are senior unsecured obligations and will be effectively junior to any of our existing and future secured indebtedness, including our borrowings under our First Lien Credit Agreement (discussed below). |
|
The Company determined that the embedded conversion option in the 2018 Notes is not required to be separately accounted for as a derivative under Accounting Standards Codification ("ASC") 815, Derivatives and Hedging. The 2018 Notes are within the scope of ASC 470, Topic 20, Debt with Conversion and Other Options, which requires the Company to separate a liability component and an equity component from the proceeds received. The carrying amount of the liability component of $204.4 million was calculated by measuring the fair value of a similar debt instrument that does not have an associated equity component. The fair value of the liability component was subtracted from the initial proceeds and the remaining amount of$47.8 million was recorded as the equity component. The excess of the principal amount of the liability component over its carrying amount will be amortized to interest expense over the expected life using the effective interest method. |
|
Upon conversion or maturity of the 2018 Notes, the Company may settle the notes with either cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The Company has adopted a current policy to settle the $258.8 million of principal amount in cash and any excess conversion value in shares of our common stock. Because the principal amount of the 2018 Notes will be settled in cash upon conversion, only the conversion spread relating to the 2018 Notes may be included in our calculation of diluted net income per common share. When the market price of our stock exceeds the conversion price, as applicable, we will include, in the diluted net income per common share calculation, the effect of the additional shares that may be issued upon conversion using the treasury stock method. As such, the 2018 Notes have no impact on diluted net income per common share until the price of our common stock exceeds the conversion price (approximately $35.00 per common share) of the 2018 Notes. |
|
As of September 30, 2013, the carrying value of the debt and equity component was $205.6 million and $47.8 million, respectively. The unamortized debt discount of $53.2 million will be amortized over the remaining life of the 2018 Notes. |
|
First Lien Credit Agreement |
|
On October 27, 2011, the Company entered into credit facilities, pursuant to (i) a First Lien Credit Agreement, dated as of October 27, 2011, by and among the Company, J. P. Morgan Securities LLC and Deutsche Bank Securities Inc., as Co-Syndication Agents; Goldman Sachs Lending Partners LLC and SunTrust Bank, as Co-Documentation Agents; and JPMorgan Chase Bank, N.A., as Administrative Agent, and the lenders from time to time party thereto ("the First Lien Credit Agreement") and (ii) a Second Lien Credit Agreement, dated as of October 27, 2011 (the “Second Lien Credit Agreement”). The First Lien Credit Agreement originally provided for (i) a six-year first lien term loan (the “First Lien Term Loan”) and (ii) a five-year first lien revolving credit facility (the “Revolving Credit Facility”). The Second Lien Credit Agreement originally provided for a seven-year second lien term loan (the “Second Lien Term Loan”). |
|
The Company is required to maintain certain financial ratios under the First Lien Credit Agreement and the Second Lien Credit Agreement. In addition, there are customary covenants that limit the incurrence of debt, the payment of dividends, the disposition of assets, and making of certain payments. Substantially all of the Company’s tangible and intangible assets are pledged as collateral under the credit agreements. |
|
On March 6, 2013, the Company repriced its First Lien Term Loan and increased the outstanding balance to $660.0 million. In addition, the Company increased the maximum amount of available borrowings under the Revolving Credit Facility to $70 million. After giving effect to the repricing, the First Lien Term Loan had an interest rate of LIBOR plus 3.50%, with a 1.0% LIBOR floor, and the revolving credit facility's interest rate is now 3.25% plus LIBOR. The proceeds received from the additional First Lien Term Loan were used to extinguish the Second Lien Term Loan's outstanding balance of $32.0 million. |
|
The repricing of the First Lien Term Loan and the payoff of the Second Lien Term Loan were both accounted for as debt extinguishments in accordance with ASC 470, Debt. In addition, the partial pay down of $208 million on the First Lien Term Loan, using proceeds from the August 2013 convertible debt issuance, was also accounted for as a debt extinguishment. As a result of the extinguishments, the Company recorded a $20.7 million loss from debt extinguishment from accelerating unamortized deferred financing fees and loan origination discounts during the nine months ended September 30, 2013 related to both instruments. Included in the loss is $7.2 million of prepayment penalties that were paid during the first quarter of 2013 related to the extinguishment of the Second Lien Term Loan and repricing of the First Lien Term Loan. |
|
After considering the two debt transactions discussed above, the net reduction in the Company's outstanding long-term debt from principal payments totaled $53.3 million during the nine months ended September 30, 2013. |
|
Outstanding long-term debt and the interest rates in effect at September 30, 2013 and December 31, 2012 consist of the following (in thousands): |
|
| | | | | | | |
| September 30, | | December 31, |
2013 | 2012 |
Revolving Credit Facility maturing 2016, 3.43% at September 30, 2013, based on LIBOR plus 3.25%. | $ | — | | | $ | 41,000 | |
|
First Lien Term Loan due 2017, 4.50%, based on 1.00% LIBOR floor plus 3.50%, less unamortized discount of $869 at September 30, 2013, effective rate of 4.70% | 387,981 | | | 621,784 | |
|
Second Lien Term Loan, extinguished on March 6, 2013 | — | | | 30,011 | |
|
Senior Convertible Notes, maturing 2018, 1.00%, less unamortized discount of $53,167 at September 30, 2013, effective rate of 5.83% | 205,583 | | | — | |
|
Capital Lease Obligations | — | | | 26 | |
|
Total Outstanding Debt | 593,564 | | | 692,821 | |
|
Less: Current Portion of Long-Term Debt | (6,600 | ) | | (4,681 | ) |
Long-Term Portion | $ | 586,964 | | | $ | 688,140 | |
|
|
Debt discount and issuance costs |
|
The Company recorded $1.6 million and $3.1 million of interest expense from amortizing debt issuance costs and discount costs during the three months ended September 30, 2013 and 2012, respectively. During the nine months ended September 30, 2013 and 2012, $2.6 million and $9.4 million, respectively, was recorded. |
|
The First Lien Term Loan has repayment terms that are based on the excess cash flow generated by the Company as defined by the agreement. Excess cash flow payments are required to be made during the quarter following the calendar year ended. The Company has forecasted the excess cash flows expected to be generated during the year ended December 31, 2013 and reflected the estimate as current maturities, net of prepayments made through September 30, 2013. Subsequent to that, the minimum principal payments, excluding the excess cash flow payments, are presented due to the significant estimates required in determining such amounts. As of September 30, 2013, the Company has satisfied the excess cash flow payment requirements with the principal payments that have been made during the year. Total estimated principal payments due for the next five years are as follows: |
| | | | |
| | | | | | | |
Year 1 | $ | 6,600 | | | | | |
| | | |
Year 2 | 6,600 | | | | | |
| | | |
Year 3 | 6,600 | | | | | |
| | | |
Year 4 | 6,600 | | | | | |
| | | |
Year 5 | 621,200 | | | | | |
| | | |
Total principal payments | $ | 647,600 | | | | | |
| | | |
| | | | | | | | |