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Borrowings | 9 Months Ended
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Mar. 31, 2017
Borrowings |
Borrowings | 6. Borrowings Revolving Credit Facility In December 2016, the Company entered into an amendment to its revolving credit facility, which, among other things, increased the aggregate committed amount available to the Company from $450 million to $525 million and extended the maturity date to December 2021. The credit facility includes a $300 million sub-limit for letters of credit. Under certain circumstances, the Company has the ability to increase the facility by the greater of $250 million or such amount as would not cause the Company’s secured leverage ratio to exceed a specified level. Borrowings under this facility bear interest at LIBOR plus a margin of 1.5% as of March 31, 2017, but this margin can range from 1.25% to 2.0% based on the Company’s consolidated net leverage ratio as defined in the credit facility. Letters of credit reduce the amount available to borrow by their face value. The unused portion of the facility bears a commitment fee of 0.20% as of March 31, 2017, but this fee can range from 0.20% to 0.30% based on the Company’s consolidated net leverage ratio as defined in the credit facility. The Company’s borrowings under the credit agreement are guaranteed by certain of the Company’s U.S.-based subsidiaries and are secured by substantially all of the assets of the Company and certain subsidiaries. The agreement contains various representations and warranties, affirmative, negative and financial covenants and conditions of default customary for financing agreements of this type. As of March 31, 2017, there was $93.0 million of borrowings outstanding under the revolving credit facility and $20.7 million outstanding under the letters-of-credit sub-facility. Available borrowing under the credit facility as of March 31, 2017 was $411 million. Under the terms of the Company’s revolving credit facility, loans may be borrowed, repaid and re-borrowed during the term. Although the principal amount of all revolving loans are due and payable in full on the maturity date, the Company has the right to repay the revolving loans in whole or in part from time to time without penalty. It is the Company’s practice to routinely borrow and repay several times per year under this revolving facility as part of the Company’s overall treasury function. Therefore, borrowings under the credit facility are classified in current liabilities. As of March 31, 2017, the Company is in compliance with all covenants under this credit facility. 1.25% Convertible Senior Notes Due 2022 In February 2017, the Company issued $287.5 million of 1.25% convertible senior notes due 2022 (the “Notes”) in a private offering. The Notes are governed by an indenture dated February 22, 2017. The Notes will mature on September 1, 2022, unless earlier converted, redeemed or repurchased. Interest at the rate of 1.25% per year is payable in cash semi-annually in arrears on each March 1 and September 1, commencing on September 1, 2017. The Notes are senior unsecured obligations and rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated and effectively junior in right of payment to any of the Company’s secured indebtedness (including the Company’s credit facility), to the extent of the value of the assets securing such indebtedness and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries, as well as any of the existing and future indebtedness of the Company that may be guaranteed by the Company’s subsidiaries to the extent of such guarantee (including the guarantees of certain of the Company’s subsidiaries under the Company’s existing revolving credit facility). The proceeds from the issuance of the Notes, after deducting offering expenses and underwriting discounts of $7.7 million, were used as follows: (i) $35 million to repurchase 451,600 shares of the Company’s stock from the purchasers of the Notes in privately negotiated transactions concurrently with the Notes offering; and (ii) approximately $245 million to repay a portion of the amount outstanding under the Company’s revolving credit facility. The Notes are convertible prior to March 1, 2022 only upon specified events and during specified periods and are thereafter convertible at any time, in each case at an initial conversion rate of 9.3056 per $1,000 principal amount of the Notes, which is equal to an initial conversion price of approximately $107.46 per share or a 38.5% premium to the Company’s stock price at the time of the issuance. The conversion rate is subject to adjustment upon certain events. Upon conversion, the Notes may be settled, at the Company’s election, in shares of the Company’s common stock, cash or a combination of cash and shares of common stock. The Company has initially elected a combination settlement method to satisfy the conversion obligation, which allows it to settle the principal amount of the Notes in cash and to settle the excess conversion value, if any, in shares, as well as cash in lieu of fractional shares. The Company may not redeem the Notes prior to March 6, 2020. Thereafter, the Company may redeem the Notes if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any period of 30 consecutive trading days. If the Company undergoes a fundamental change, as defined in the indenture for the Notes, subject to certain conditions holders of the Notes may require the Company to repurchase all or part of the Notes for cash at a price generally equal to 100% of the principal amount of the Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The occurrence of a fundamental change will also result in the Notes becoming immediately convertible. Pursuant to ASC 470-20, the Company allocated the $287.5 million gross proceeds of the Notes between liability and equity components. The initial $242.4 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day the Notes were issued. The $45.1 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the Notes. Issuance costs of $7.7 million were allocated between the debt ($6.5 million) and equity ($1.2 million) components with the portion allocated to the debt presented as an offset against long term debt in the condensed consolidated balance sheet and being amortized as interest expense over the life of the Notes using the effective interest method. The total interest expense recognized for the three and nine months ended March 31, 2017 was $1.2 million, which consists of $0.4 million of contractual interest expense, $0.7 million of debt discount amortization and $0.1 million of amortization of debt issuance costs. As of March 31, 2017, the unamortized debt discount was $44.4 million and is being amortized over the remaining contractual term to maturity of the Notes using an effective interest rate of 4.50%. The unamortized debt issuance cost of $6.4 million as of March 31, 2017 is amortized on a straight-line basis over the life of the Notes. Based upon the Company’s March 31, 2017 stock price of $72.99 per share, the “if-converted” value of the Notes did not exceed the principal amount. Other Borrowings Several of the Company’s foreign subsidiaries maintain bank lines-of-credit, denominated in local currencies and U.S. dollars, primarily for the issuance of letters-of-credit. As of March 31, 2017, $48.0 million was outstanding under these letter-of-credit facilities. As of March 31, 2017, the total amount available under these credit facilities was $10.3 million. In September 2012, the Company entered into a term loan agreement for $11.1 million to fund the acquisition of land and a building in the state of Washington. The loan, which bears interest at LIBOR plus 1.25%, is payable on a monthly basis over seven years. Concurrent with entering into the floating rate loan, the Company entered into an interest rate swap agreement that effectively locks the interest rate of the loan to 2.2% per annum for the term of the loan. Long-term debt consisted of the following (in thousands):
|  | June 30, 2016 |  | March 31, 2017 |
1.25% convertible notes due 2022: |  |  |  |  |
Principal amount |  | $ | — |  | $ | 287,500 |
Unamortized discount |  | — |  | (44,373 | )
Unamortized debt issuance costs |  | — |  | (6,367 | )
1.25% convertible notes due 2022, net of unamortized discount and debt issuance costs |  | — |  | 236,760 |
Term loans |  | 6,847 |  | 4,096 |
Other long-term debt |  | 1,966 |  | 1,572 |
|  | 8,813 |  | 242,428 |
Less current portion of long-term debt |  | (2,759 | ) | (2,410 | )
Long-term portion of debt |  | $ | 6,054 |  | $ | 240,018 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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