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 April 1, 2019 and December 31, 2018: Interest Rate as of April 1, 2019 Principal Outstanding as of April 1, 2019 Interest Rate as of December 31, 2018 Principal Outstanding as of December 31, 2018 (In thousands) Term Loan due September 2024 4.99% $ 805,879 5.00% $ 835,879 Senior Notes due October 2025 5.63% 375,000 5.63% 375,000 Convertible Senior Notes due December 2020 1.75% 249,975 1.75% 249,985 U.S. ABL Revolving Loan due May 2020 3.99% 40,000 4.00% 40,000 Asia ABL Revolving Loan due May 2020 3.89% 30,000 3.90% 30,000 1,500,854 1,530,864 Less: Long-term debt unamortized discount (19,603 ) (22,167 ) Long-term debt unamortized debt issuance costs (15,241 ) (16,272 ) 1,466,010 1,492,425 Less: current maturities — (30,000 ) Long-term debt, less current maturities $ 1,466,010 $ 1,462,425 Term Loan Facility On April 18, 2018, the Company closed its $600,000 commitment of incremental loans concurrent with the completion of its acquisition of Anaren. At issuance, these incremental loans increased the Company’s existing balance of its Term Loan Facility due 2024 from $348,250 to $948,250. The Term Loan Facility had an outstanding balance of $805,879 as of April 1, 2019 and is included in long-term debt. The Term Loan Facility was issued at a weighted average discount of 99.7% and bears interest, at the Company’s option, at a floating rate of LIBOR, plus an applicable interest margin of 2.50%, or an alternate base rate, (defined as the greater of the JP Morgan prime, the New York Fed bank rate plus 0.5% or LIBOR plus 1.0%), subject to a 1.0% floor plus an applicable margin of 1.5%. At April 1, 2019, the Based on certain parameters defined in the Term Loan Facility, including a First Lien Leverage Ratio, the Company may be required to make an additional principal payment on an annual basis beginning after fiscal year 2018, if the Company’s First Lien Leverage Ratio is greater than 2.0. For 2019, the Company is not required to make an additional principal payment as its First Lien Leverage Ratio is less than 2.0. Any remaining outstanding balance under the Term Loan Facility is due at the maturity date of September 28, 2024. Borrowings under the Term Loan Facility are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments and dispositions, and share payments. Senior Notes The $375,000 of Senior Notes, which is included in long-term debt, bears interest at a rate of 5.63% per annum. Interest is payable semiannually in arrears on April 1 and October 1 of each year beginning April 1, 2018. The Senior Notes will mature on October 1, 2025. Borrowings under the Senior Notes are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and share payments. Convertible Senior Notes due 2020 The Company maintains 1.75% Convertible Senior Notes in the amount of $249,975 due December 15, 2020. 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 unsecured obligations and would 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. As of April 1, 2019 and December 31, 2018, the following summarizes the equity components of the Convertible Senior Notes included in additional paid-in capital: As of April 1, 2019 As of December 31, 2018 Embedded conversion option — Convertible Senior Notes Embedded conversion option — Convertible Senior Notes Issuance Costs Total Embedded conversion option — Convertible Senior Notes Embedded conversion option — Convertible Senior Notes Issuance Costs Total (in thousands) Convertible Senior Notes due 2020 $ 60,213 $ (1,916 ) $ 58,297 $ 60,216 $ (1,916 ) $ 58,300 The components of interest expense resulting from the Convertible Senior Notes for the quarters ended April 1, 2019 and April 2, 2018 were as follows: Quarter Ended April 1, April 2, 2019 2018 (In thousands) Contractual coupon interest $ 1,094 $ 1,094 Amortization of debt discount $ 2,379 $ 2,230 Amortization of debt issuance costs $ 238 $ 224 Asset-Based Lending Agreements The Company maintains a $200,000 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 U.S. ABL consists of three tranches comprised of a revolving credit facility for up to $200,000, a letter of credit facility for up to $50,000, and swingline loans for 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 April 1, 2019, the interest rate on the outstanding borrowings under the U.S. ABL was 3.99%. 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 certain inventories as well as by a second position against a significant amount of the domestic assets of the Company and a pledge of 65% of the voting stock of the Company’s first tier foreign subsidiaries and are structurally senior to the Company’s Senior Notes and Convertible Senior Notes. See Senior Notes and Convertible Senior Notes above. As of April 1, 2019, $40,000 of the U.S. ABL was outstanding and classified as long-term debt, which is consistent with its maturity date. The Asia ABL consists of two tranches comprised of a revolving credit facility for up to $150,000 and a letter of credit facility for 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. As of April 1, 2019, the interest rate on the outstanding borrowings under the Asia ABL was 3.89%. 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 Senior Notes and Convertible Senior Notes. See Senior Notes and Convertible Senior Notes above. As of April 1, 2019, $30,000 of the Asia ABL was outstanding and classified as long-term debt, which is consistent with its maturity date. 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 of April 1, 2019, letters of credit in the amount of $13,383 were outstanding under the U.S. ABL and $19,445 were outstanding under the Asia ABL with various expiration dates through September 2019. Available borrowing capacity under the U.S. ABL and the Asia ABL was $146,617 and $100,555, respectively, which considers letters of credit outstanding as of April 1, 2019. 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. The Company incurred total commitment fees related to unused borrowing availability of $240 and $241 for the quarters ended April 1, 2019 and April 2, 2018, respectively. Under the occurrence of certain events, the ABL Revolving Loans are subject to various financial and operational covenants, including maintaining minimum fixed charge coverage ratios. 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 $31,286 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 June 2019. As of April 1, 2019, the Chinese Revolver had not been drawn upon. Debt Issuance and Debt Discount As of April 1, 2019 As of April 1, 2019 As of December 31, 2018 Debt Issuance Costs Debt Discount Effective Interest Rate Debt Issuance Costs Debt Discount Effective Interest Rate (in thousands) Term Loan due September 2024 $ 7,620 $ 2,305 4.66% $ 8,229 $ 2,489 4.66% Senior Notes due October 2025 5,887 — 5.92% 6,071 — 5.92% Convertible Senior Notes 1,734 17,298 6.48% 1,972 19,678 6.48% $ 15,241 $ 19,603 $ 16,272 $ 22,167 The above debt discount and debt issuance costs are recorded as a reduction of the debt and are amortized into interest expense using an effective interest rate over the duration of the debt. Remaining unamortized debt issuance costs for the ABL Revolving Loans of $1,170 and $1,420 as of April 1, 2019 At April 1, 2019, the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 3.5 years. |