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BORROWINGS
 12 Months Ended
Jun. 30, 2022
BORROWINGS  
BORROWINGS

8.           BORROWINGS

Revolving Credit Facility

In December 2021, we entered into an amendment to the senior secured credit facility that increased the aggregate amount available to borrow from $535 million to $750 million. The amended facility matures in December 2026 and is comprised of a $600 million revolving credit facility and a $150 million delayed draw term loan. The term loan is available to us to draw through September 1, 2022. The revolving credit facility includes a $300 million sub-limit for letters of credit. Under certain circumstances and subject to certain conditions, we have the ability to increase the revolving credit facility by the greater of $250 million or such amount as would not cause our secured leverage ratio to exceed a specified level. Borrowings under the amended facility bore interest at LIBOR plus a margin of 1.0% as of June 30, 2022 (which margin can range from 1.0% to 1.75% based on our consolidated net leverage ratio as defined in the credit facility). The LIBOR index is expected to be phased out over time. The terms of our credit facility allow for replacement when that occurs. Letters of credit reduce the amount available to borrow under the credit facility by their face value amount. The unused portion of the facility bore a commitment fee of 0.10% as of June 30, 2022 (which fee can range from 0.10% to 0.25% based on our consolidated net leverage ratio as defined in the credit facility). Our borrowings under the credit agreement are guaranteed by certain of our U.S.-based subsidiaries and are secured by substantially all of our assets and substantially all the assets of certain of our subsidiaries. The credit facility contains various representations and warranties, affirmative, negative and financial covenants and events of default. As of June 30, 2022, there were $60.0 million of borrowings outstanding under the revolving credit facility, $78.5 million outstanding under the letters of credit sub-facility, and $50 million outstanding under the term loan. As of June 30, 2022, the amount available to borrow under the revolving credit facility was $461.5 million and the amount available to borrow under the term loan was $100 million. Loan amounts under the revolving credit facility may be borrowed, repaid and re-borrowed during the term. The principal amount of each loan is due and payable in full on the maturity date. We have the right to repay each loan in whole or in part from time to time without penalty. It is our practice to routinely borrow and repay several times per year under the revolving facility and therefore,

borrowings under the revolving credit facility are included in current liabilities. As of June 30, 2022, we were in compliance with all financial covenants under this credit facility.

1.25% Convertible Senior Notes Due 2022

In February 2017, we issued $287.5 million of the Notes in a private offering. The Notes are governed by an indenture dated February 22, 2017. The maturity for the payment of principal is September 1, 2022. The Notes bear interest at the rate of 1.25% and are payable in cash semiannually in arrears on each March 1 and September 1. The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of our unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of our secured indebtedness 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 our subsidiaries as well as any of our existing and future indebtedness that may be guaranteed by our subsidiaries to the extent of such guarantees (including the guarantees of certain of our subsidiaries under our existing credit facility).

The Notes are convertible at any time 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 our stock price at the time of the issuance. The conversion rate is subject to adjustment upon certain events. Upon conversion, the original indenture provided that the Notes may be settled, at our election, in cash or shares of our Common Stock or a combination of cash and shares of our Common Stock. We have irrevocably elected a combination settlement method to satisfy the conversion obligation, which provides for us to settle the principal amount of the Notes in cash and to settle the excess conversion value, if any, in shares of Common Stock and cash in lieu of fractional shares.

We may redeem the Notes if the last reported sale price of our 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 we undergo a fundamental change, as defined in the indenture for the Notes, subject to certain conditions, holders of the Notes may require us to repurchase all or part of the Notes for cash at a price 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. Since the last reported sales price of our Common Stock did not exceed 130% of the conversion price for at least 20 trading days within any applicable period of 30 consecutive trading days, the Notes are not yet convertible.

Pursuant to ASC 470-20, we originally 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 initial $45.1 million equity component represented 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 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 consolidated balance sheet and was being amortized as interest expense over the life of the Notes using the effective interest method. Total interest expense recognized for the year ended June 30, 2020 related to the Notes was $13.0 million, which consisted of $3.6 million of contractual interest expense for each year, $8.2 million of debt discount amortization, and $1.2 million of amortization of debt issuance costs. Total interest expense recognized for the year ended June 30, 2021 related to the Notes was $13.4 million, which consisted of $3.6 million of contractual interest expense, $8.6 million of debt discount amortization, and $1.2 million of amortization of debt issuance costs.

For the year ended June 30, 2022, the total interest expense on the Notes was $4.7 million, which consisted of $3.5 million of contractual interest expense and $1.2 million of amortization of debt issuance costs. As of July 1, 2021, the remaining unamortized debt discount of $10.5 million was eliminated upon the adoption of ASU 2020-06. The unamortized debt issuance cost of $1.4 million and $0.2 million as of June 30, 2021 and June 30, 2022, respectively, is amortized on a straight-line basis, which approximates the effective interest method, over the life of the Notes.

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible

instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments typically will be closer to the coupon interest rate. We early adopted the new guidance on July 1, 2021 using the modified retrospective approach and recorded a $19 million increase to retained earnings and a reduction of $27 million in Common Stock as if there had been no equity component. Additionally, we recorded an increase to the convertible notes balance by $10 million.

During fiscal 2022, we repurchased and cancelled approximately $45.2 million of principal value of the Notes. We recognized a loss on debt extinguishment of $0.1 million during the year ended June 30, 2022, representing the write-off of unamortized debt issuance costs related to the portion of the Notes repurchased.

Other Borrowings

Several of our 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 June 30, 2022, $60.0 million was outstanding under these letter-of-credit facilities. As of June 30, 2022, the total amount available under these credit facilities was $9.6 million.

Long-term debt consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

    

June 30, 

​

​

2021

​

2022

1.25% convertible notes due September 1, 2022:

​

​

​

​

​

​

Principal amount

​

$

287,500

​

$

242,302

Unamortized discount

​

​

(10,494)

​

​

—

Unamortized debt issuance costs

​

​

(1,372)

​

​

(196)

​

​

​

275,634

​

​

242,106

Term loan

​

​

—

​

​

50,000

Other long-term debt

​

 

1,633

​

 

1,137

​

​

 

277,267

​

 

293,243

Less current portion of long-term debt

​

 

(846)

​

 

(244,575)

Long-term portion of debt

​

$

276,421

​

$

48,668

​

Fiscal year principal payments of long-term debt as of June 30, 2022 are as follows (in thousands):

​

​

​

​

​

2023

    

$

244,771

2024

​

 

2,983

2025

​

 

2,560

2026

​

 

2,500

2027

​

 

40,625

Thereafter

​

​

—

Total

​

$

293,439

​