Long-term Debt and Letters of Credit | (8) Long-term Debt and Letters of Credit The following table summarizes the long-term debt of the Company as of January 2, 2017 and December 28, 2015: Average Effective January 2, Average Effective December 28, (In thousands) Term loan due May 2021 5.25 % $ 700,000 — — Term loan due May 2021 — — 6.00 % $ 947,625 U.S. ABL revolving loan due May 2020 2.27 % 80,000 2.17 % 80,000 Asia ABL revolving loan due May 2020 2.17 % 30,000 — — Convertible Senior Notes due December 2020 1.75 % 250,000 1.75 % 250,000 Capital lease 6.43 % 1,798 — — 1,061,798 1,277,625 Less: Long-term debt unamortized discount (37,392 ) (75,668 ) Long-term debt unamortized debt issuance costs (4,724 ) (31,171 ) 1,019,682 1,170,786 Less: current maturities (110,652 ) (157,375 ) Long-term debt, less current maturities $ 909,030 $ 1,013,411 The fiscal calendar maturities of long-term debt through 2021 and thereafter are as follows: (In thousands) 2017 $ 110,652 2018 358 2019 381 2020 250,407 2021 700,000 $ 1,061,798 Term and Revolving Loans On May 31, 2015, in conjunction with the acquisition of Viasystems, the Company entered into a $950,000 Term Loan Credit Agreement (Term Loan). Additionally, the Company entered into a $150,000 U.S. Asset-Based Lending Credit Agreement(U.S. ABL) and a $150,000 Asia Asset-Based Lending Credit Agreement (Asia ABL) (collectively the ABL Revolving Loans). The Company drew $80,000 of the U.S. ABL at the closing of the acquisition of Viasystems. On September 27, 2016, the Company issued new $775,000 Term B Loans (Term Loan B) at an interest rate of LIBOR, with a 1.0% LIBOR floor, plus 4.25%, a reduction of 75 basis points from its previous Term Loans, and repaid in full the remaining outstanding balance of the May 31, 2015 Term Loan. This transaction was accounted for as an extinguishment of debt and accordingly, the Company recognized a loss of $47,767 primarily associated with the write off of the remaining unamortized debt discount and issuance costs. Additionally, on September 27, 2016, the Company amended its U.S. ABL credit facility to increase the amount available to $200,000, reduce the applicable margin by 25 basis points for both Eurodollar loans and ABR loans, and reduce the Letters of Credit Facilities to $50,000. On December 22, 2016, the Company amended its Asia ABL credit facility to reduce the interest margin by 35 basis points. The Term Loan B bears interest at a floating rate of LIBOR, with a 1.0% LIBOR floor, plus an applicable interest margin of 4.25%, or JP Morgan Chase Bank’s prime rate, with a 2% floor, plus a margin of 3.25%, at the Company’s option. At January 2, 2017, the weighted average interest rate on the outstanding borrowings under the Term Loan was 5.25%. There is no provision, other than an event of default, for the interest margin to increase. The Term Loan B will mature on May 31, 2021. The Term Loan B is secured by a significant amount of the assets of the Company and a pledge of 65% of voting stock of the Company’s first tier foreign subsidiaries and is structurally senior to the Company’s convertible senior notes. See Convertible Senior Notes below. The amended U.S. ABL consists of three tranches comprised of a revolving credit facility of up to $200,000, a letter of credit facility of up to $50,000, and swingline loans of up to $30,000, provided that at no time may amounts outstanding under the tranches exceed in aggregate $200,000 or the applicable borrowing base, which is a percentage of the principal amount of Eligible Accounts, as defined in the U.S. ABL agreement. Borrowings under the U.S. ABL bear interest at either a floating rate of LIBOR plus a margin of 150 basis points or JP Morgan Chase Bank’s prime rate plus a margin of 50 basis points, at the Company’s option. At January 2, 2017, the weighted average interest rate on the outstanding borrowings under the U.S. ABL was 2.27%. The applicable margin can vary based on the remaining availability of the facility, from 125 to 175 basis points for LIBOR-based loans and from 25 to 75 basis points for JP Morgan Chase Bank’s prime rate-based loans. Other than availability and an event of default, there are no other provisions for the interest margin to increase. The U.S. ABL will mature on May 31, 2020. Loans made under the U.S. ABL are secured first by all of the Company’s domestic cash, receivables and inventories as well as by a second position against a significant amount of the assets of the Company and a pledge of 65% of voting stock of the Company’s first tier foreign subsidiaries and are structurally senior to the Company’s convertible senior notes. See Convertible Senior Notes below. At January 2, 2017, $80,000 of the U.S. ABL was outstanding. The Company and its domestic subsidiaries have fully and unconditionally guaranteed the full and timely payment of all Term Loan B and U.S. ABL related obligations. The Asia ABL consists of two tranches comprised of a revolving credit facility of up to $150,000 and a letter of credit facility of up to $100,000, provided that at no time may amounts outstanding under both tranches exceed in aggregate $150,000 or the applicable borrowing base, which is a percentage of the principal amount of Eligible Accounts, as defined in the Asia ABL agreement. Borrowings under the Asia ABL bear interest at a floating rate of LIBOR plus 140 basis points. At January 2, 2017, the weighted average interest rate on the outstanding borrowings under the Asia ABL was 2.17%. There is no provision, other than an event of default, for the interest margin to increase. The Asia ABL will mature on May 22, 2020. Loans made under the Asia ABL are secured by a portion of the Company’s Asia Pacific cash and receivables and are structurally senior to the Company’s domestic obligations, including the convertible senior notes. See Convertible Senior Notes below. The Company’s Asia Pacific subsidiary and certain of its subsidiaries have fully and unconditionally guaranteed the full and timely payment of all Asia ABL related obligations. At January 2, 2017, $30,000 of the Asia ABL was outstanding. During the year ended January 2, 2017, the Company made net debt principal payments totaling $217,625 representing normal principal payments as well as additional prepayments of principal. The Company is not required to make quarterly scheduled payments of the outstanding Term Loan B balance due to mandatory payments and optional loan prepayments applied to date. Based on certain parameters defined in the Term Loan B agreement, including a secured leverage ratio, the Company may be required to make an additional principal payment on an annual basis. Any remaining outstanding balances under the Term Loan B are due at the maturity date of May 31, 2021. Borrowings under the Term Loan B are subject to financial and operating covenants including maintaining a maximum total leverage ratio. Under the occurrence of certain events, the U.S. ABL and the Asia ABL are subject to financial and operational covenants, including maintaining minimum fixed charge coverage ratios. At January 2, 2017, the Company was in compliance with the covenants under the Term Loan B, the U.S. ABL and the Asia ABL. As of January 2, 2017, remaining unamortized debt issuance costs of $977 related to the Term Loan B. As of December 28, 2015, remaining unamortized debt discount of $30,242 and debt issuance costs of $26,619 related to the Term Loan. There was no unamortized debt discount for the Term Loan B at January 2, 2017. These debt discount and debt issuance costs are recorded as a reduction of the Term Loan B and the Term Loan at January 2, 2017 and December 28, 2015, respectively, and are amortized over the duration of the Term Loan B and Term Loan into interest expense using an effective interest rate of 5.29% and 7.50%, respectively. Additionally, remaining unamortized debt issuance costs related to the ABL Revolving Loans were $3,423 and $4,303 as of January 2, 2017 and December 28, 2015, respectively. These debt issuance costs are included in other non-current At January 2, 2017, the remaining amortization period for the unamortized debt issuance costs for both the Term Loan B and the ABL Revolving Loans was 3.6 years. The Company is required to pay a commitment fee of 0.25% to 0.375% per annum on any unused portion of the U.S. ABL or Asia ABL based on utilization levels. Additionally, the Company also paid commitment fees of 0.5% per annum on the unused portion of the $90,000 senior secured revolving loan associated with the terminated 2012 credit agreement for the years ended December 28, 2015 and December 29, 2014. The Company incurred total commitment fees related to unused borrowing availability of $709, $763, and $600 for the years ended January 2, 2017, December 28, 2015, and December 29, 2014, respectively. As of January 2, 2017, the outstanding amount of the Term Loan B was $700,000, which is included as long-term debt. Additionally, $80,000 of the U.S. ABL and $30,000 of the Asia ABL were outstanding as of January 2, 2017, which were classified as short-term debt. Available borrowing capacity under the U.S. ABL and Asia ABL was $113,003 and $111,663, which includes letters of credit outstanding of $6,997 and $8,337 mentioned below, respectively, at January 2, 2017. Letters of Credit The Company has up to $50,000 and $100,000 Letters of Credit Facilities under the U.S. ABL and the Asia ABL, respectively, as mentioned above. As of January 2, 2017, letters of credit in the amount of $6,997 were outstanding under the U.S. ABL and $8,337 were outstanding under the Asia ABL with various expiration dates through December 2017. At December 28, 2015, certain letters of credit were securitized by cash collateral. As such the Company had recorded such cash as restricted cash on the consolidated balance sheet as of December 28, 2015. As of January 2, 2017, none of the letters of credit were securitized by cash collateral. Convertible Senior Notes Convertible Senior Notes due 2020 The Company issued 1.75% convertible senior notes due December 15, 2020, in a public offering for an aggregate principal amount of $250,000 in 2014. The convertible senior notes bear interest at a rate of 1.75% per annum. Interest is payable semiannually in arrears on June 15 and December 15 of each year. The convertible senior notes are senior unsecured obligations and rank equally to the Company’s future unsecured senior indebtedness and are senior in right of payment to any of the Company’s future subordinated indebtedness. Conversion: On or after March 15, 2020 until the close of business on the third scheduled trading day preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, for each $1 principal amount of notes, the Company will pay shares of our common stock, cash or a combination of cash and shares of our common stock at its election, if applicable, based on a daily conversion value calculated on a proportionate basis for each day of the 80 trading day observation period. All conversions occurring on the same date or on or after March 15, 2020 shall be settled using the same settlement method. Additionally, in the event of a fundamental change as defined in the indenture governing the notes, or other conversion rate adjustments such as share splits or combinations, other distributions of shares, cash or other assets to stockholders, including self-tender transactions (Other Conversion Rate Adjustments), the conversion rate may be modified to adjust the number of shares per $1 principal amount of the notes. As of January 2, 2017, none of the criteria for a fundamental change or a conversion rate adjustment had been met. The maximum number of shares issuable upon conversion, including the effect of a fundamental change and subject to Other Conversion Rate Adjustments, would be 32,425. Note Repurchase: Convertible Note Hedge and Warrant Transaction: Convertible Senior Notes due 2015 The Company issued 3.25% convertible senior notes due on May 15, 2015, in a public offering for an aggregate principal amount of $175,000. In May 2015, the outstanding principal of $32,395 plus accrued interest was paid in full. As of January 2, 2017 and December 28, 2015, the following summarizes the equity components of the convertible senior notes included in additional paid-in As of January 2, 2017 and December 28, 2015 Embedded Embedded Total (in thousands) Convertible senior notes due 2020 $ 60,227 $ (1,916 ) $ 58,311 The components of interest expense resulting from the convertible senior notes for the years ended January 2, 2017, December 28, 2015 and December 29, 2014 were as follows: For the Year Ended January 2, December 28, December 29, (In thousands) Contractual coupon interest Convertible Senior Notes due 2020 $ 4,375 $ 4,375 $ 4,367 Convertible Senior Notes due 2015 — 395 1,053 $ 4,375 $ 4,770 $ 5,420 Amortization of debt discount Convertible Senior Notes due 2020 $ 8,034 $ 7,532 $ 7,102 Convertible Senior Notes due 2015 — 554 1,395 $ 8,034 $ 8,086 $ 8,497 Amortization of debt issuance costs Convertible Senior Notes due 2020 $ 805 $ 755 $ 712 Convertible Senior Notes due 2015 — 56 141 $ 805 $ 811 $ 853 As of January 2, 2017 and December 28, 2015, remaining unamortized debt discount of $37,392 and $45,426, respectively, and debt issuance costs of $3,747 and $4,552, respectively, related to the convertible senior notes. These debt discount and debt issuance costs are recorded as a reduction of the convertible senior notes and are being amortized to interest expense over the term of the convertible senior notes using the effective interest rate method. At January 2, 2017, the remaining weighted average amortization period for the unamortized senior convertible note discount and debt issuance costs was 4 years. For the years ended January 2, 2017, December 28, 2015 and December 29, 2014, the amortization of the convertible senior notes due 2020 debt discount and debt issuance costs was based on an effective interest rate of 6.48%. For the years ended December 28, 2015 and December 29, 2014, the amortization of the convertible senior notes due 2015 debt discount and debt issuance costs was based on an effective interest rate of 8.37%. Loss on Extinguishment of Debt During the year ended January 2, 2017 and as mentioned previously, the Company repaid the remaining outstanding balances of its Term Loan. As a result, the Company recognized losses of $47,767 primarily associated with the write off of the remaining unamortized debt discount and debt issuance costs. During the year ended December 28, 2015, the Company paid in full the remaining outstanding amount of $225,700 under an existing 2012 credit agreement. As a result, the Company recognized losses of approximately $802 resulting from the write off of the remaining unamortized debt issuance costs associated with the terminated 2012 credit agreement. During the year ended December 29, 2014, the Company repurchased $6,541 of its convertible senior notes due 2015 at approximately 103.4% of their principal amounts. The repurchases were accounted for as extinguishments of debt and, accordingly, the Company recognized losses of approximately $506 primarily associated with the premium paid to repurchase the convertible senior notes and the recognition of related unamortized debt discount and issuance costs. Other Credit Facility Additionally, the Company is party to a revolving loan credit facility (Chinese Revolver) with a lender in China. Under this arrangement, the lender has made available to the Company approximately $30,200 in unsecured borrowing with all terms of the borrowing to be negotiated at the time the Chinese Revolver is drawn upon. There are no commitment fees on the unused portion of the Chinese Revolver, and this arrangement expires in January 2018. As of January 2, 2017, the Chinese Revolver had not been drawn upon. |