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Long-term Debt and Letters of Credit | 12 Months Ended
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Dec. 28, 2020
Debt Disclosure [Abstract] |
Long-term Debt and Letters of Credit |
(7) | Long-term Debt and Letters of Credit
The following table summarizes the long-term debt of the Company as of December 28, 2020 and December 30, 2019:
|  | Interest Rate as of December 28, 2020 |  |  | Principal Outstanding as of December 28, 2020 |  |  | Interest Rate as of December 30, 2019 |  |  | Principal Outstanding as of December 30, 2019 |
|  | (In thousands) |
Term Loan due September 2024 |  |  | 2.65 |  | % | $ | 405,879 |  |  |  | 4.28 |  | % | $ | 805,879 |
Senior Notes due October 2025 |  |  | 5.63 |  |  |  | 375,000 |  |  |  | 5.63 |  |  |  | 375,000 |
U.S. ABL Revolving Loan due June 2024 |  |  | 1.40 |  |  |  | 40,000 |  |  |  | 3.03 |  |  |  | 40,000 |
Asia ABL Revolving Loan due June 2024 |  |  | 1.55 |  |  |  | 30,000 |  |  |  | 3.18 |  |  |  | 30,000 |
Convertible Senior Notes due December 2020 |  |  | — |  |  |  | — |  |  |  | 1.75 |  |  |  | 249,975 |
|  |  |  |  |  |  | 850,879 |  |  |  |  |  |  |  | 1,500,854 |
Less: Long-term debt unamortized discount |  |  |  |  |  |  | (814 | ) |  |  |  |  |  |  | (11,943 | )
Long-term debt unamortized debt issuance costs |  |  |  |  |  |  | (7,212 | ) |  |  |  |  |  |  | (12,974 | )
|  |  |  |  |  |  | 842,853 |  |  |  |  |  |  |  | 1,475,937 |
Less: current maturities |  |  |  |  |  |  | — |  |  |  |  |  |  |  | (249,975 | )
Long-term debt, less current maturities |  |  |  |  |  | $ | 842,853 |  |  |  |  |  |  | $ | 1,225,962 |
The fiscal calendar maturities of long-term debt through 2025 and thereafter are as follows:
|  | (In thousands) |
2021 |  | $ | — |
2022 |  |  | — |
2023 |  |  | — |
2024 |  |  | 475,879 |
2025 |  |  | 375,000 |
Thereafter |  |  | — |
|  | $ | 850,879 |
As of December 28, 2020, the Company was in compliance with the financial covenants under the Term Loan Facility, Senior Notes and ABL Revolving Loans. 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 $405,879 as of December 28, 2020 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 2.5%, or an alternate base rate (as d efined in the Term Loan Credit Agreement) plus an applicable margin of 1.5%. As of December 28, 20 20, the interest rate on the outstanding borrowings under the Term Loan Facility was 2.65%. There is no provision, other than an event of default, for the interest margin to increase. The Term Loan Facility will mature on September 28, 2024. The Term Loan Facility is secured by a significant amount of the domestic 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 Senior Notes and Convertible Senior Notes. See Senior Notes and Convertible Senior Notes below. The Company has twelve months to reinvest the cash proceeds received from the sale of the Mobility business unit. If the proceeds are not reinvested, the Company is required to use the proceeds to prepay the Term Loan. The Company used a portion of the cash proceeds to repay $400,000 of the Term Loan during the year ended December 28, 2020 and plans to use the remaining cash proceeds for reinvestment. Permitted investments, as defined in the Term Loan Credit Agreement, include extensions of trade credit in the ordinary course of business, investments in cash and cash equivalents, permitted acquisitions, investments in assets useful in the business of the Company and its restricted subsidiaries, investments in joint ventures and unrestricted subsidiaries among others. 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 2020, the Company is not required to make an additional principal payment as its First Lien Leverage Ratio was 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, dispositions, and share payments. Senior Notes The $375,000 of Senior Notes issued, which is included in long-term debt, bear 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 Convertible Senior Notes bore interest at a rate of 1.75% per annum. Interest was payable semiannually in arrears on June 15 and December 15 of each year. The Convertible Senior Notes were unsecured obligations that ranked equally to the Company’s future unsecured senior indebtedness and were senior in right of payment to any of the Company’s future subordinated indebtedness. Offering expenses were amortized to interest expense over the term of the Convertible Senior Notes. The Convertible Senior Notes matured and were repaid in cash in the amount of $249,975 on December 15, 2020. Convertible Note Hedge and Warrant Transaction: In connection with the issuance of the Convertible Senior Notes due 2020, the Company entered into a convertible note hedge and warrant transaction (Call Spread Transaction), with respect to the Company’s common stock. The convertible note hedge consisted of the Company’s option to purchase up to 25,939 common stock shares at a price of $9.64 per share. The hedge could only be executed upon the conversion of the above mentioned Convertible Senior Notes due 2020 and it expired unexercised on December 15, 2020. Additionally, the Company sold equity-classified warrants to purchase 25,940 shares of its common stock at a price of $14.26 per share. Although the Convertible Senior Notes are no longer outstanding, these warrants remain outstanding and expire ratably from March 2021 through January 2022. The Call Spread Transaction had no effect on the terms of the Convertible Senior Notes due 2020. The components of interest expense resulting from the Convertible Senior Notes for the years ended December 28, 2020, December 30, 2019 and December 31, 2018 were as follows:
|  | For the Year Ended |
|  | December 28, |  |  | December 30, |  |  | December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (In thousands) |
Contractual coupon interest |  | $ | 4,180 |  |  | $ | 4,374 |  |  | $ | 4,375 |
Amortization of debt discount |  | $ | 9,926 |  |  | $ | 9,751 |  |  | $ | 9,142 |
Amortization of debt issuance costs |  | $ | 995 |  |  | $ | 977 |  |  | $ | 916 |
Asset-Based Lending Agreements During June 2019, the Company amended its U.S. Asset-Based Lending Credit Agreement (U.S. ABL) and its Asia Asset-Based Lending Credit Agreement (Asia ABL) (collectively the ABL Revolving Loans). The U.S. ABL credit facility was amended to extend its maturity to June 2024 and decrease the size of the revolving credit facility to $150,000. The Asia ABL credit facility was amended to extend the maturity to June 2024. The U.S. 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 $50,000, provided that at no time may amounts outstanding under the 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 U.S. ABL agreement. Borrowings under the U.S. ABL bear interest at either a floating rate of LIBOR plus a margin of 125 basis points or an alternate base rate (defined as the greater of the prime rate, 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 25 basis points, at the Company’s option. As of December 28, 2020, the interest rate on the outstanding borrowings under the U.S. ABL was 1.40%. The applicable margin can vary based on the remaining availability of the facility, from 125 to 150 basis points for LIBOR-based loans and from 25 to 50 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 June 3, 2024. 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 December 28, 2020, $40,000 under 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 December 28, 2020, the interest rate on the outstanding borrowings under the Asia ABL was 1.55%. There is no provision, other than an event of default, for the interest margin to increase. The Asia ABL will mature on June 4, 2024. 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 December 28, 2020, $30,000 under the Asia ABL was outstanding and classified as long-term debt, which is consistent with its maturity date. As of December 28, 2020, letters of credit in the amount of $11,329 were outstanding under the U.S. ABL and $13,042 were outstanding under the Asia ABL with various expiration dates through May 2021. Available borrowing capacity under the U.S. ABL and the Asia ABL was $98,671 and $106,958, respectively, which considers letters of credit outstanding as of December 28, 2020. The Company is required to pay a commitment fee of 0.25% per annum on any unused portion of the U.S. ABL and 0.28% per annum on any unused portion of the Asia ABL. The Company incurred total commitment fees related to unused borrowing availability of $541, $703 and $992 for the years ended December 28, 2020, December 30, 2019 and December 31, 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. Debt Issuance and Debt Discount As of December 28, 2020 and December 30, 2019, remaining unamortized debt discount and debt issuance costs for the Term Loan Facility, Senior Notes, and Convertible Senior Notes are as follows:
|  | As of December 28, 2020 |  |  | As of December 30, 2019
|  | Debt Issuance Costs |  |  | Debt Discount |  |  | Effective Interest Rate |  |  | Debt Issuance Costs |  |  | Debt Discount |  |  | Effective Interest Rate |  |
|  | (In thousands, except interest rates)
Term Loan due September 2024 |  | $ | 2,695 |  |  | $ | 814 |  |  |  | 4.66 |  | % | $ | 6,663 |  |  | $ | 2,016 |  |  |  | 4.66 |  | %
Senior Notes due October 2025 |  |  | 4,517 |  |  | — |  |  |  | 5.92 |  |  |  | 5,316 |  |  | — |  |  |  | 5.92 |  |
Convertible Senior Notes due December 2020 |  | — |  |  | — |  |  | — |  |  |  | 995 |  |  |  | 9,927 |  |  |  | 6.48 |  |
|  | $ | 7,212 |  |  | $ | 814 |  |  |  |  |  |  | $ | 12,974 |  |  | $ | 11,943 |  |  |  |  |  |
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 $1,919 and $2,511 as of December 28, 2020 and December 30, 2019, respectively, are included in other non-current assets and are amortized to interest expense over the duration of the ABL Revolving Loans using the straight line method of amortization. As of December 28, 2020, the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 4.1 years.

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