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Debt | 3 Months Ended
--- | ---
Sep. 30, 2018
Debt Disclosure [Abstract] |
Debt |
Note 9. | Debt
The components of debt for the periods indicated were as follows ($000):
| September 30, |  |  | June 30, |
| 2018 |  |  | 2018 |
0.25% convertible senior notes | $ | 345,000 |  |  | $ | 345,000 |
Convertible senior notes unamortized discount attributable to cash conversion option and debt issuance costs including initial purchaser discount |  | (53,300 | ) |  |  | (56,409 | )
Term loan, interest at LIBOR, as defined, plus 1.75% |  | 60,000 |  |  |  | 65,000 |
Line of credit, interest at LIBOR, as defined, plus 1.75% |  | 180,000 |  |  |  | 80,000 |
Credit facility unamortized debt issuance costs |  | (1,035 | ) |  |  | (1,126 | )
Yen denominated line of credit, interest at LIBOR, as defined, plus 1.75% |  | 2,645 |  |  |  | 2,714 |
Note payable assumed in IPI acquisition |  | 3,834 |  |  |  | 3,834 |
Total debt |  | 537,144 |  |  |  | 439,013 |
Current portion of long-term debt |  | (20,000 | ) |  |  | (20,000 | )
Long-term debt, less current portion | $ | 517,144 |  |  | $ | 419,013 |
0.25% Convertible Senior Notes On August 24, 2017, the Company entered into a purchase agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the several initial purchasers named therein (collectively, the “Initial Purchasers”), to issue and sell $300 million aggregate principal amount of our 0.25% convertible senior notes due 2022 (the "Notes") in a private placement to qualified institutional buyers within the meaning of Rule 144A under the Securities Act of 1933, as amended. In addition, we granted the Initial Purchasers a 30-day option to purchase up to an additional $45 million aggregate principal amount of the Notes (the “Over-Allotment Option”). As a result of our cash conversion option, the Company separately accounted for the value of the embedded conversion option as a debt discount. The value of the embedded conversion option was determined based on the estimated fair value of the debt without the conversion feature, which was determined using an expected present value technique (income approach) to estimate the fair value of similar nonconvertible debt; the debt discount is being amortized as additional non-cash interest expense over the term of the Notes using the effective interest method. The equity component, which amounts to $56.4 million, net of issuance costs of $1.7 million, is not remeasured as long as it continues to meet the conditions for equity classification. The initial conversion rate is 21.25 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $47.06 per share of common stock. Throughout the term of the Notes, the conversion rate may be adjusted upon the occurrence of certain events. The if-converted value of the Notes amounted to $346.8 million as of September 30, 2018 and $318.5 million as of June 30, 2018 (based on the Company’s closing stock price on the last trading day of the fiscal periods then ended). As of September 30, 2018, the Notes are not yet convertible based upon the Notes’ conversion features. Holders of the Notes will not receive any cash payment representing accrued and unpaid interest upon conversion of a note. Accrued but unpaid interest will be deemed to be paid in full upon conversion rather than cancelled, extinguished or forfeited. The following table sets forth total interest expense recognized related to the Notes for the three months ended September 30, 2018 and 2017:
|  |  | Three Months Ended |
September 30, |  |  | 2018 |  |  | 2017 |
0.25% contractual coupon |  | $ |  | 220 |  |  |  | 78 |
Amortization of debt discount and debt issuance costs including initial purchaser discount |  |  |  | 3,110 |  |  |  | 1,107 |
Interest expense |  | $ |  | 3,330 |  |  |  | 1,185 |
The effective interest rate on the liability component for both periods presented was 4.5%. The unamortized discount amounted to $46.6 million as of September 30, 2018 and is being amortized over 4 years. Amended Credit Facility On July 28, 2016, the Company amended and restated its existing credit agreement. The Third Amended and Restated Credit Agreement (the “Amended Credit Facility”) provides for a revolving credit facility of $325 million, as well as a $100 million term loan. The term loan is being repaid in consecutive quarterly principal payments on the first business day of each January, April, July and October, with the first payment having commenced on October 1, 2016, as follows: (i) twenty consecutive quarterly installments of $5 million and (ii) a final installment of all remaining principal due and payable on the maturity date of July 27, 2021. Amounts borrowed under the revolving credit facility are due and payable on the maturity date. The Amended Credit Facility is unsecured, but is guaranteed by each existing and subsequently acquired or organized wholly-owned domestic subsidiary of the Company. The Company has the option to request an increase to the size of the revolving credit facility in an aggregate additional amount not to exceed $100 million. The Amended Credit Facility has a five-year term through July 27, 2021 and has an interest rate of either a Base Rate Option or a Euro-Rate Option, plus an Applicable Margin, as defined in the agreement governing the Amended Credit Facility. If the Base Rate option is selected for a borrowing, the Applicable Margin is 0.00% to 1.25% and if the Euro-Rate Option is selected for a borrowing, the Applicable Margin is 1.00% to 2.25%. The Applicable Margin is based on the ratio of the Company’s consolidated indebtedness to consolidated EBITDA. Additionally, the Credit Facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of September 30, 2018, the Company was in compliance with all financial covenants under its Amended Credit Facility. Yen Loan The Company’s Yen denominated line of credit is a 500 million Yen (approximately $4.4 million) facility. The Yen line of credit matures in August 2020. The interest rate is equal to LIBOR, as defined in the loan agreement, plus 0.625% to 1.75%. At September 30, 2018 and June 30, 2018, the Company had 300 million Yen borrowed. Additionally, the facility is subject to certain covenants, including those relating to minimum interest coverage and maximum leverage ratios. As of September 30, 2018, the Company was in compliance with all financial covenants under its Yen facility. Note Payable In conjunction with the acquisition of IPI, the Company assumed a non-interest bearing note payable owed to a major customer of IPI. The agreement if not terminated early by either party is payable in full in January 2020. Aggregate Availability The Company had aggregate availability of $146.3 million and $246.4 million under its lines of credit as of September 30, 2018 and June 30, 2018, respectively. The amounts available under the Company’s lines of credit are reduced by outstanding letters of credit. The total outstanding letters of credit supported by these credit facilities were $0.4 million as of September 30, 2018 and June 30, 2018. Weighted Average Interest Rate The weighted average interest rate of total borrowings was 1.5% and 1.8% for the three months ended September 30, 2018 and 2017, respectively. Remaining Annual Principal Payments Remaining annual principal payments under the Company’s existing credit obligations from September 30, 2018 were as follows:
|  |  |  |  |  |  |  |  |  | U.S. |  |  |  |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  |  |  | Dollar |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Term |  |  | Yen Line |  |  | Line of |  |  | Note |  |  | Convertible |  |  |  |  |
Period |  | Loan |  |  | of Credit |  |  | Credit |  |  | Payable |  |  | Notes |  |  | Total |
Year 1 |  | $ | 20,000 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 20,000 |
Year 2 |  |  | 20,000 |  |  |  | 2,645 |  |  |  | - |  |  |  | 3,834 |  |  |  | - |  |  |  | 26,479 |
Year 3 |  |  | 20,000 |  |  |  | - |  |  |  | 180,000 |  |  |  | - |  |  |  | - |  |  |  | 200,000 |
Year 4 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 345,000 |  |  |  | 345,000 |
Total |  | $ | 60,000 |  |  | $ | 2,645 |  |  | $ | 180,000 |  |  | $ | 3,834 |  |  | $ | 345,000 |  |  | $ | 591,479 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + 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
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