DEBT | DEBT Long-term debt is comprised of the following (in thousands): September 28, December 29, Senior secured term loan A $ 314,063 $ 335,157 Senior secured term loan B 658,286 873,286 9.125% senior notes due 2023 — 360,000 Revolving line of credit — 74,000 Unamortized discount on term loan B and debt issuance costs (18,155 ) (33,278 ) Total debt 954,194 1,609,165 Current portion of long-term debt (37,500 ) (30,469 ) Total long-term debt $ 916,694 $ 1,578,696 Senior Secured Credit Facilities The Company has senior secured credit facilities (the “Senior Secured Credit Facilities”) consisting of (i) a $200 million revolving credit facility (the “Revolving Credit Facility”), (ii) a $314 million term loan A facility (the “TLA Facility”), and (iii) a $658 million term loan B facility (the “TLB Facility”). The TLA Facility and TLB Facility are collectively referred to as the “Term Loan Facilities.” The TLB Facility was issued at a 1% discount. On June 8, 2018, the Company amended the Senior Secured Credit Facilities to permit the sale of the AS&O Product Line. As required by the amended terms of the Company’s Senior Secured Credit Facilities, the Company paid down indebtedness as a result of the disposition of the AS&O Product Line. On July 10, 2018, the Company completed the redemption in full of its 9.125% senior notes due on November 1, 2023 (the “Senior Notes”) at a redemption price of 100% of the principal amount of the Senior Notes plus the applicable “make-whole” premium of $31.3 million and accrued and unpaid interest through the redemption date. Upon completion of the redemption of the Senior Notes, the indenture governing the Senior Notes was satisfied and discharged. The Company utilized the remaining net proceeds to pay down an additional $188 million in debt outstanding under the Senior Secured Credit Facilities, consisting of $114 million on the TLB Facility and $74 million on the Revolving Credit Facility. Revolving Credit Facility The Revolving Credit Facility matures on October 27, 2020 . The Revolving Credit Facility also includes a $15 million sublimit for swingline loans and a $25 million sublimit for standby letters of credit. The Company is required to pay a commitment fee on the unused portion of the Revolving Credit Facility, which will range between 0.175% and 0.25% , depending on the Company’s Total Net Leverage Ratio (as defined in the Senior Secured Credit Facilities agreement). Interest rates on the Revolving Credit Facility, as well as the TLA Facility, are at the Company’s option, either at: (i) the prime rate plus the applicable margin, which will range between 0.75% and 2.25% , based on the Company’s Total Net Leverage Ratio, or (ii) the applicable LIBOR rate plus the applicable margin, which will range between 1.75% and 3.25% , based on the Company’s Total Net Leverage Ratio. As of September 28, 2018 , the Company had no outstanding borrowings on the Revolving Credit Facility and an available borrowing capacity of $191.3 million after giving effect to $8.7 million of outstanding standby letters of credit. Subject to certain conditions, commitments under the Revolving Credit Facility may be increased through an incremental revolving facility so long as, on a pro forma basis, the Company’s first lien net leverage ratio does not exceed 4.25 :1.00. Due to being variable rate and short-term in nature, the carrying amount of the Revolving Credit Facility approximates fair value. (5.) DEBT (Continued) Term Loan Facilities The TLA Facility and TLB Facility mature on October 27, 2021 and October 27, 2022 , respectively. As a result of the upgrade to the Company’s corporate family credit rating from Moody’s Investors Services, Inc. from B3 to B2 during the third quarter of 2018, the interest rate margin for the TLB Facility was stepped down by 25 basis points. Interest rates on the TLB Facility are, at the Company’s option, either at: (i) the prime rate plus 2.00% or (ii) the applicable LIBOR rate plus 3.00% , with LIBOR subject to a 1.00% floor. As of September 28, 2018 , the interest rates on the TLA Facility and TLB Facility were 4.74% and 5.14% , respectively. Subject to certain conditions, one or more incremental term loan facilities may be added to the Term Loan Facilities so long as, on a pro forma basis, the Company’s first lien net leverage ratio does not exceed 4.25 :1.00. As of September 28, 2018 , the estimated fair value of the TLB Facility was approximately $664 million , based on quoted market prices for the debt, recent sales prices for the debt and consideration of comparable debt instruments with similar interest rates and trading frequency, among other factors, and is classified as Level 2 measurements within the fair value hierarchy. The par amount of the TLA Facility approximated its fair value as of September 28, 2018 based upon the debt being variable rate in nature. Covenants The Revolving Credit Facility and TLA Facility contain covenants requiring (A) a maximum Total Net Leverage Ratio of 5.75 :1.00, subject to periodic step downs in beginning in the fourth quarter of 2018 and (B) a minimum interest coverage ratio of adjusted EBITDA (as defined in the Senior Secured Credit Facilities) to interest expense of not less than 2.75 :1.00 subject to a step up beginning in the first quarter of 2019. As of September 28, 2018 , the Company was in compliance with these financial covenants. The TLB Facility does not contain any financial maintenance covenants. The Senior Secured Credit Facilities also contain negative covenants that restrict the Company’s ability to (i) incur additional indebtedness; (ii) create certain liens; (iii) consolidate or merge; (iv) sell assets, including capital stock of the Company’s subsidiaries; (v) engage in transactions with the Company’s affiliates; (vi) create restrictions on the payment of dividends or other amounts from the Company’s restricted subsidiaries; (vii) pay dividends on capital stock or redeem, repurchase or retire capital stock; (viii) pay, prepay, repurchase or retire certain subordinated indebtedness; (ix) make investments, loans, advances and acquisitions; (x) make certain amendments or modifications to the organizational documents of the Company or its subsidiaries or the documentation governing other senior indebtedness of the Company; and (xi) change the Company’s type of business. These negative covenants are subject to a number of limitations and exceptions that are described in the Senior Secured Credit Facilities agreement. As of September 28, 2018 , the Company was in compliance with all negative covenants under the Senior Secured Credit Facilities. The Senior Secured Credit Facilities provide for customary events of default. Upon the occurrence and during the continuance of an event of default, the outstanding advances and all other obligations under the Senior Secured Credit Facilities become immediately due and payable. 9.125% Senior Notes due 2023 On October 27, 2015, the Company completed a private offering of $360 million aggregate principal amount of 9.125% senior notes due on November 1, 2023 . On July 10, 2018, the Company completed the redemption in full of the Senior Notes at a redemption price of 100% of the principal amount of the Senior Notes plus the applicable “make-whole” premium of $31.3 million and accrued and unpaid interest through the redemption date. The “make-whole” premium is included in Interest Expense in the accompanying Condensed Consolidated Statements of Operations. Upon completion of the redemption of the Senior Notes, the indenture governing the Senior Notes was satisfied and discharged. Contractual maturities under the Senior Secured Credit Facilities for the remainder of 2018 and the next four years and thereafter, excluding any discounts or premiums, as of September 28, 2018 are as follows (in thousands): 2018 2019 2020 2021 2022 Future minimum principal payments $ 9,375 $ 37,500 $ 37,500 $ 229,688 $ 658,286 (5.) DEBT (Continued) Debt Issuance Costs and Discounts The change in deferred debt issuance costs related to the Revolving Credit Facility is as follows (in thousands): December 29, 2017 $ 2,808 Amortization during the period (743 ) September 28, 2018 $ 2,065 The change in unamortized discount and debt issuance costs related to the Term Loan Facilities and Senior Notes is as follows (in thousands): Debt Issuance Costs Unamortized Discount on TLB Facility Total December 29, 2017 $ 26,889 $ 6,389 $ 33,278 Write-off of debt issuance costs and unamortized discount (1) (9,373 ) (1,448 ) (10,821 ) Amortization during the period (3,497 ) (805 ) (4,302 ) September 28, 2018 $ 14,019 $ 4,136 $ 18,155 __________ (1) The Company redeemed its Senior Notes and prepaid portions of its TLB Facility during 2018 and 2017. The Company recognized losses from extinguishment of debt during the three and nine months ended September 28, 2018 of $9.3 million and $10.8 million , respectively. The Company recognized losses from extinguishment of debt during the three and nine months ended September 29, 2017 of $0.8 million and $3.3 million , respectively. The loss from extinguishment of debt represents the unamortized debt issuance costs related to the Senior Notes and the portion of the unamortized discount and debt issuance costs related to the portion of the TLB Facility that was prepaid and is included in Interest Expense in the accompanying Condensed Consolidated Statements of Operations. Interest Rate Swap During 2016, the Company entered into a three -year $200 million interest rate swap to hedge against potential changes in cash flows on the outstanding variable rate debt, which is indexed to the one-month LIBOR rate. The variable rate received on the interest rate swap and the variable rate paid on the outstanding debt will have the same rate of interest, excluding the credit spread, and will reset and pay interest on the same date. The swap is being accounted for as a cash flow hedge. Information regarding the Company’s outstanding interest rate swap designated as a cash flow hedge as of September 28, 2018 is as follows (dollars in thousands): Notional Amount Start Date End Date Pay Fixed Rate Receive Current Floating Rate Fair Value Balance Sheet Location $ 200,000 Jun-17 Jun-20 1.1325 % 2.2300 % $ 5,690 Other Long-Term Assets The estimated fair value of the interest rate swap agreement represents the amount the Company would receive (pay) to terminate the contract. No portion of the change in fair value of the Company’s interest rate swap during the quarters ended September 28, 2018 and September 29, 2017 was considered ineffective. The amounts recorded to Interest Expense during the nine months ended September 28, 2018 and September 29, 2017 related to the Company’s interest rate swap were reductions of $1.1 million and $0.4 million , respectively. The estimated Accumulated Other Comprehensive Income related to the Company’s interest rate swaps that is expected to be reclassified into earnings within the next twelve months is a $2.9 million gain. |