XML 34 R20.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Debt and Credit Facility | 9 Months Ended
--- | ---
Dec. 31, 2019
Debt Disclosure [Abstract] |
Debt and Credit Facility | Debt and Credit Facility Debt obligations included in the condensed consolidated balance sheets consisted of the following (in millions):
| Coupon Interest Rate |  | Effective Interest Rate |  | Fair Value of Liability Component at Issuance (1) |  | December 31, 2019 |  | March 31, 2019
Senior Secured Indebtedness |  |  |  |  |  |  |  |  |
Revolving Credit Facility |  |  |  |  |  |  | $ | 2,624.5 |  |  | $ | 3,266.5 |
Term Loan Facility |  |  |  |  |  |  | 1,723.5 |  |  | 1,911.5 |
2023 Notes, maturing June 1, 2023 ("2023 Notes") | 4.333% |  | 4.7% |  |  |  | 1,000.0 |  |  | 1,000.0 |
2021 Notes, maturing June 1, 2021 ("2021 Notes") | 3.922% |  | 4.5% |  |  |  | 1,000.0 |  |  | 1,000.0 |
Total Senior Secured Indebtedness |  |  |  |  |  |  | 6,348.0 |  |  | 7,178.0 |
Senior Subordinated Convertible Debt - Principal Outstanding |  |  |  |
2017 Senior Convertible Debt, maturing February 15, 2027 ("2017 Senior Convertible Debt") | 1.625% |  | 6.0% |  | $1,396.3 |  | 2,070.0 |  |  | 2,070.0 |
2015 Senior Convertible Debt, maturing February 15, 2025 ("2015 Senior Convertible Debt") | 1.625% |  | 5.9% |  | $1,160.1 |  | 1,725.0 |  |  | 1,725.0 |
Junior Subordinated Convertible Debt - Principal Outstanding |  |  |  |
2017 Junior Convertible Debt, maturing February 15, 2037 ("2017 Junior Convertible Debt") | 2.250% |  | 7.4% |  | $321.1 |  | 686.3 |  |  | 686.3 |
Total Convertible Debt |  |  |  |  |  |  | 4,481.3 |  |  | 4,481.3 |
Gross long-term debt including current maturities |  |  |  |  |  |  | 10,829.3 |  |  | 11,659.3 |
Less: Debt discount (2) |  |  |  |  |  |  | (1,177.9 | ) |  | (1,268.7 | )
Less: Debt issuance costs (3) |  |  |  |  |  |  | (70.9 | ) |  | (83.6 | )
Net long-term debt including current maturities |  |  |  |  |  |  | 9,580.5 |  |  | 10,307.0 |
Less: Current maturities (4) |  |  |  |  |  |  | (1,400.8 | ) |  | (1,360.8 | )
Net long-term debt |  |  |  |  |  |  | $ | 8,179.7 |  |  | $ | 8,946.2 |
(1) As each of the convertible debt instruments may be settled in cash upon conversion, for accounting purposes, they were bifurcated into a liability component and an equity component, which are both initially recorded at fair value. The amount allocated to the equity component is the difference between the principal value of the instrument and the fair value of the liability component at issuance. The resulting debt discount is being amortized to interest expense at the respective effective interest rate over the contractual term of the debt. (2) The unamortized discount consists of the following (in millions):
| December 31, |  | March 31,
| 2019 | 2019
2023 Notes | $ | (3.7 | ) |  | $ | (4.4 | )
2021 Notes | (2.6 | ) |  | (3.8 | )
2017 Senior Convertible Debt | (518.9 | ) |  | (561.9 | )
2015 Senior Convertible Debt | (312.8 | ) |  | (351.4 | )
2017 Junior Convertible Debt | (339.9 | ) |  | (347.2 | )
Total unamortized discount | $ | (1,177.9 | ) |  | $ | (1,268.7 | )
(3) Debt issuance costs consist of the following (in millions):
| December 31, |  | March 31,
| 2019 | 2019
Revolving Credit Facility | $ | (13.6 | ) |  | $ | (14.7 | )
Term Loan Facility | (15.3 | ) |  | (19.4 | )
2023 Notes | (8.3 | ) |  | (10.2 | )
2021 Notes | (5.8 | ) |  | (8.8 | )
2017 Senior Convertible Debt | (13.4 | ) |  | (14.5 | )
2015 Senior Convertible Debt | (11.4 | ) |  | (12.8 | )
2017 Junior Convertible Debt | (3.1 | ) |  | (3.2 | )
Total debt issuance costs | $ | (70.9 | ) |  | $ | (83.6 | )
(4) Current maturities consist of the liability component of the 2015 Senior Convertible Debt as the debentures were convertible as of December 31, 2019 and March 31, 2019. Expected maturities relating to the Company’s long-term debt as of December 31, 2019 are as follows (in millions):
Fiscal year ending March 31, |  | Expected Maturities
2020 |  | $ | — |
2021 |  | — |
2022 |  | 1,000.0 |
2023 |  | — |
2024 |  | 3,624.5 |
Thereafter |  | 6,204.8 |
Total |  | $ | 10,829.3 |
Ranking of Convertible Debt - The Senior Subordinated Convertible Debt and Junior Subordinated Convertible Debt (collectively, the Convertible Debt) are unsecured obligations which are subordinated in right of payment to the amounts outstanding under the Company's Credit Facility and Senior Secured Notes (as defined below). The Junior Subordinated Convertible Debt is expressly subordinated in right of payment to any existing and future senior debt of the Company (including the Credit Facility, the Senior Secured Notes, and the Senior Subordinated Convertible Debt) and is structurally subordinated in right of payment to the liabilities of the Company's subsidiaries. The Senior Subordinated Convertible Debt is subordinated to the Credit Facility and the Senior Secured Notes; ranks senior to the Company's indebtedness that is expressly subordinated in right of payment to it, including the Junior Subordinated Convertible Debt; ranks equal in right of payment to any of the Company's unsubordinated indebtedness that does not provide that it is senior to the Senior Subordinated Convertible Debt; ranks junior in right of payment to any of the Company's secured, unsubordinated indebtedness to the extent of the value of the assets securing such indebtedness; and is structurally subordinated to all indebtedness and other liabilities of the Company's subsidiaries. Summary of Conversion Features - Each series of Convertible Debt is convertible, subject to certain conditions, into cash, shares of the Company's common stock or a combination thereof, at the Company's election, at specified Conversion Rates (see table below), adjusted for certain events including the declaration of cash dividends. Except during the three-month period immediately preceding the maturity date of the applicable series of Convertible Debt, each series of Convertible Debt is convertible only upon the occurrence of (1) such time as the closing price of the Company's common stock exceeds the Conversion Price (see table below) by 130% for 20 days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter or (2) during the 5 business day period after any 10 consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day or (3) upon the occurrence of certain corporate events specified in the indenture of such series of Convertible Debt. In addition, for each series, if at the time of conversion the applicable price of the Company's common stock exceeds the applicable Conversion Price at such time, the applicable Conversion Rate will be increased by up to an additional maximum incremental shares rate, as determined pursuant to a formula specified in the indenture for the applicable series of Convertible Debt, and as adjusted for cash dividends paid since the issuance of such series of Convertible Debt. However, in no event will the applicable Conversion Rate exceed the applicable Maximum Conversion Rate specified in the indenture for the applicable series of Convertible Debt (see table below). The following table sets forth the applicable Conversion Rates adjusted for dividends declared since issuance of such series of Convertible Debt and the applicable Incremental Share Factors and Maximum Conversion Rates as adjusted for dividends paid since the applicable issuance date:
| Dividend adjusted rates as of December 31, 2019
| Conversion Rate |  | Approximate Conversion Price |  | Incremental Share Factor |  | Maximum Conversion Rate
2017 Senior Convertible Debt (1) | 10.4213 |  |  | $ | 95.96 |  |  | 5.2106 |  |  | 14.8503 |
2015 Senior Convertible Debt (1) | 16.2513 |  |  | $ | 61.53 |  |  | 8.1256 |  |  | 22.7517 |
2017 Junior Convertible Debt (1) | 10.6074 |  |  | $ | 94.27 |  |  | 5.3038 |  |  | 14.8503 |
(1) As of December 31, 2019, the 2017 Senior Convertible Debt and the 2017 Junior Convertible Debt were not convertible. As of December 31, 2019, the holders of the 2015 Senior Convertible Debt have the right to convert their debentures between January 1, 2020 and March 31, 2020 because the Company's common stock price has exceeded the Conversion Price by 130% for the specified period of time during the quarter ended December 31, 2019. If a holder of 2015 Senior Convertible Debt converted their debentures on October 1, 2019, the adjusted Conversion Rate would be increased to 18.9958 to include an additional maximum incremental share rate per the terms of the indenture. As of December 31, 2019, the 2017 Senior Convertible Debt, 2015 Senior Convertible Debt and 2017 Junior Convertible Debt had a value if converted above par of $283.5 million, $1.82 billion and $114.1 million, respectively. The Company may not redeem any series of Convertible Debt prior to the relevant maturity date and no sinking fund is provided for any series of Convertible Debt. Upon the occurrence of a fundamental change as defined in the applicable indenture of such series of Convertible Debt, holders of such series may require the Company to purchase all or a portion of their Convertible Debt for cash at a price equal to 100% of the principal amount plus any accrued and unpaid interest. Interest expense consists of the following (in millions):
| Three Months Ended December 31, |  | Nine Months Ended December 31,
| 2019 |  | 2018 |  | 2019 |  | 2018
Debt issuance amortization | $ | 3.3 |  |  | $ | 3.6 |  |  | $ | 9.9 |  |  | $ | 9.4 |
Debt discount amortization | 0.7 |  |  | 0.7 |  |  | 2.1 |  |  | 1.5 |
Interest expense | 64.1 |  |  | 84.2 |  |  | 217.7 |  |  | 210.1 |
Total interest expense on Senior Secured Indebtedness | 68.1 |  |  | 88.5 |  |  | 229.7 |  |  | 221.0 |
Debt issuance amortization | 1.0 |  |  | 0.9 |  |  | 2.9 |  |  | 2.7 |
Debt discount amortization | 30.0 |  |  | 28.3 |  |  | 88.8 |  |  | 83.7 |
Coupon interest expense | 19.3 |  |  | 19.3 |  |  | 57.9 |  |  | 57.8 |
Total interest expense on Convertible Debt | 50.3 |  |  | 48.5 |  |  | 149.6 |  |  | 144.2 |
Other interest expense | 1.3 |  |  | 0.6 |  |  | 2.6 |  |  | 1.5 |
Total interest expense | $ | 119.7 |  |  | $ | 137.6 |  |  | $ | 381.9 |  |  | $ | 366.7 |
The remaining period over which the unamortized debt discount will be recognized as non-cash interest expense is 7.1 years, 5.1 years, and 17.1 years for the 2017 Senior Convertible Debt, 2015 Senior Convertible Debt and 2017 Junior Convertible Debt, respectively. Senior Secured Notes In May 2018, the Company issued $1.00 billion aggregate principal amount of 3.922% Senior Secured Notes due 2021 (the “2021 Notes”) and $1.00 billion aggregate principal amount of 4.333% Senior Secured Notes due 2023 (the “2023 Notes”, and together with the 2021 Notes, the "Senior Secured Notes") to qualified institutional buyers in a Rule 144A offering. In connection with the issuance of these instruments, the Company incurred issuance costs of $24.4 million and recorded a debt discount of $10.5 million for fees deducted from the proceeds, which will both be amortized using the effective interest method over the term of the debt. The 2021 Notes mature on June 1, 2021 and the 2023 Notes mature on June 1, 2023. Interest on the 2021 Notes accrues at a rate of 3.922% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2018. Interest on the 2023 Notes accrues at a rate of 4.333% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2018. The Company may, at its option, redeem some or all of the 2021 Notes prior to June 1, 2021 at a price equal to the greater of (a) 100% of the principal amount of the 2021 Notes redeemed or (b) the sum of the present value of all remaining scheduled payments of principal and interest (discounted in accordance with the indenture for the 2021 Notes) that would have been due on the redeemed 2021 Notes, in each case, plus accrued and unpaid interest to, but excluding, the redemption date. The Company may, at its option, redeem some or all of the 2023 Notes, (i) if prior to May 1, 2023 (one month prior to the maturity date of the 2023 Notes), at a price equal to the greater of (a) 100% of the principal amount of the 2023 Notes redeemed or (b) the sum of the present value of all remaining scheduled payments of principal and interest (discounted in accordance with the indenture for the 2023 Notes) that would have been due on the redeemed 2023 Notes, in each case, plus accrued and unpaid interest to, but excluding, the redemption date, and (ii) if on or after May 1, 2023 (one month prior to maturity of the 2023 Notes), at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company experiences a specified change of control triggering event, the Company must offer to repurchase the Notes at a price equal to 101% of the principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. The Notes are guaranteed by certain of the Company's subsidiaries (each such guarantee, a “Note Guarantee”) that have also guaranteed the obligations under the Company's Credit Facility and under the Term Loan Facility (the Term Loan Facility together with the Credit Facility, the “Senior Credit Facilities”) that was entered into in connection with the financing of the Microsemi acquisition. The Notes and the Note Guarantees are secured, on a pari passu first lien basis with the Senior Credit Facilities, by substantially all of the tangible and intangible assets (other than certain excluded assets) of the Company and the guarantors that secure obligations under the Senior Credit Facilities, in each case subject to certain thresholds, exceptions and permitted liens, as set forth in the indenture for the Senior Secured Notes and the Security Agreement, dated May 29, 2018, by and among the Company, the subsidiary guarantors party thereto and the Collateral Agent (the "Security Agreement"). Credit Facility In September 2019, the Company amended the Company's Credit Agreement to, among other things, reduce the margin added to the interest rate on revolving loans under the Credit Agreement to 0.0% to 0.75% for base rate loans and 1.0% to 1.75% for the LIBOR rate loans, in each case determined based on the Company's senior leverage ratio. The amendment also allows the Company the option to refinance the term loans or revolving loans under the Credit Agreement up to a certain dollar limit and the option to factor receivables and certain related assets as further explained below. The amendment reduced the commitments for the Revolving Credit Facility thereunder to $3.57 billion from $3.60 billion at June 30, 2019. In connection with the amendment of the Credit Agreement, the Company incurred issuance costs of $1.75 million, which will be amortized using the effective interest method over the term of the debt. The Credit Agreement provides for a revolving loan facility in an aggregate principal amount of approximately $3.57 billion, with a $250.0 million foreign currency sublimit, a $50.0 million letter of credit sublimit and a $25.0 million swingline loan sublimit. The Credit Agreement consists of approximately $3.57 billion of revolving loan commitments that terminate on May 18, 2023 (the "2023 Maturity Date"). The $244.3 million of revolving loan commitments that would have terminated on February 4, 2020 were canceled in the fiscal year ended March 31, 2019. The Revolving Loans bear interest, at the Company’s option, at the base rate plus a spread of 0.00% to 0.75% or an adjusted LIBOR rate (based on one, two, three or six-month interest periods) plus a spread of 1.00% to 1.75%, in each case with such spread being determined based on the consolidated senior leverage ratio for the preceding four fiscal quarter period. The Credit Agreement permits the Company to engage in replacement financing in an aggregate principal amount not to exceed $2.0 billion incurred or issued to effect a refinancing or replacement of the initial Term Loans or payoff of other indebtedness and may have a maturity date that is at least three years after the date of incurrence or issuance of such replacement financing. The Credit Agreement allows the Company the sale, transfer or assignment of securitization assets in connection with qualified factoring transactions to the borrower or any subsidiary in an aggregate face amount that does not exceed an outstanding amount of $600 million at any time. The Credit Agreement permits the Company to add one or more incremental term loan facilities (in addition to the loans under the Term Loan Facility) and/or increase the commitments under the Revolving Credit Facility from time to time, subject, in each case, to the receipt of additional commitments from existing and/or new lenders and pro forma compliance with a consolidated senior leverage ratio set forth in the Credit Agreement. The Company's obligations under the Credit Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds set forth in the Credit Agreement. To secure the Company's obligations under the Credit Agreement and the subsidiary guarantors’ obligations under the guarantees, the Company and each of the subsidiary guarantors has granted a security interest in substantially all its assets subject to certain exceptions and limitations. In May 2018, the Company borrowed $3.0 billion aggregate principal amount of loans under the Term Loan Facility ("Term Loans"). In connection with such borrowings, the Company incurred issuance costs of $34.7 million which will be amortized using the effective interest method over the term of the debt. The Credit Agreement provides for quarterly amortization payments of the Term Loans on the last business day of each March, June, September and December, commencing with the last business day of the first full fiscal quarter to occur after the Microsemi acquisition effective date, equal to 0.25% of the aggregate original principal amount of the Term Loans. In addition, the Credit Agreement requires mandatory prepayments of the Term Loans from the incurrence of debt not otherwise permitted to be incurred under the Credit Agreement, certain asset sales and certain excess cash flow. Mandatory prepayments with excess cash flow (as defined in the Credit Agreement) are required to be made beginning with the Company’s fiscal year ending March 31, 2020 in an amount equal to 50%, 25% or 0% of the excess cash flow for such fiscal year, depending on the Company’s senior leverage ratio. The Company may prepay the Term Loans at any time without premium or penalty. Term Loans repaid or prepaid may not be reborrowed. The Company voluntarily prepaid $188.0 million of principal under the Term Loan Facility in the nine months ended December 31, 2019, which resulted in a loss on settlement of debt of approximately $1.9 million consisting of unamortized financing fees. During fiscal 2019, the Company voluntarily prepaid $1.09 billion of principal under the Term Loan Facility of which $500.0 million was from funds borrowed under its Revolving Credit Facility, and such transactions resulted in a loss on settlement of debt of approximately $11.5 million consisting of unamortized financing fees. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted LIBOR rate. Principal, together with all accrued and unpaid interest, is due and payable on the 2023 Maturity Date in the case of revolving loans under the Credit Agreement and May 29, 2025 in the case of the Term Loans. The Company pays a quarterly commitment fee on the available but unused portion of the Revolving Credit Facility which is calculated on the average daily available balance during the period. The Company may prepay the loans and terminate the commitments, in whole or in part, at any time without premium or penalty, subject to certain conditions including minimum amounts in the case of commitment reductions and reimbursement of certain costs in the case of prepayments of LIBOR loans. The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries' ability to, among other things, incur subsidiary indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into certain transactions with affiliates, pay dividends or make distributions, repurchase stock, enter into restrictive agreements and enter into sale and leaseback transactions, in each case subject to customary exceptions for a credit facility of this size and type. The Company is also required to maintain compliance with a senior leverage ratio, a total leverage ratio and an interest coverage ratio, all measured quarterly and calculated on a consolidated basis. At December 31, 2019, the Company was in compliance with these financial covenants. The financial covenants include limits on the Company's consolidated total leverage ratio and senior leverage ratio. The maximum Total Leverage Ratio (capitalized terms not otherwise defined in this Form 10-Q have the meaning of the defined terms in the applicable agreements), measured quarterly, cannot exceed (a) 6.75 to 1.00 for any such period ended on or after the Microsemi Acquisition Closing Date to (but excluding) the first anniversary of the Microsemi Acquisition Closing Date, (b) 6.25 to 1.00 for any such period ended on or after the first anniversary of the Microsemi Acquisition Closing Date to (but excluding) the second anniversary of the Microsemi Acquisition Closing Date to (but excluding) the second anniversary or the Microsemi Acquisition Closing Date and (c) 5.75 to 1.00 for any such period ended on or after the second anniversary of the Microsemi Acquisition Closing Date. The total leverage ratio is calculated as Consolidated Total Indebtedness, excluding the Junior Convertible Debt up to a $700 million maximum, to Consolidated EBIDTA for a period of four consecutive quarters. The Credit Agreement also requires that the Senior Leverage Ratio, measured quarterly, not exceed (a) 4.75 to 1.00 for any such period ended from (and including) the Microsemi Acquisition Closing Date to (but excluding) the first anniversary of the Microsemi Acquisition Closing Date, (b) 4.25 to 1.00 for any such period ended on or after the first anniversary of the Microsemi Acquisition Closing Date to (but excluding) the second anniversary of the Microsemi Acquisition Closing Date and (c) 3.75 to 1.00 for any such period ended on or after the second anniversary of the Microsemi Acquisition Closing Date. The senior leverage ratio is calculated as Consolidated Senior Indebtedness to Consolidated EBIDTA for four consecutive quarters. The Company is also required to comply with a Minimum Interest Coverage Ratio of at least 3.25 to 1.00 for any period ended on or after the Microsemi Acquisition Closing Date, measured quarterly. The Credit Agreement includes customary events of default that include, among other things, non-payment defaults, inaccuracy of representations and warranties, covenant defaults, cross default to material indebtedness, bankruptcy and insolvency defaults, material judgment defaults, ERISA defaults and a change of control default. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Revolving Credit Facility at a per annum rate equal to 2.00% above the applicable interest rate for any overdue principal and 2.00% above the rate applicable for base rate loans for any other overdue amounts.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_LongTermDebtTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration