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Debt and Other Obligations | 9 Months Ended
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Oct. 07, 2017
Debt Disclosure [Abstract] |
Debt and Other Obligations | 10. DEBT AND OTHER OBLIGATIONS Long-term debt and capital leases (net of issuance costs and debt discounts excluding line-of-credit arrangements) consisted of the following at October 7, 2017 and December 31, 2016, respectively (amounts in thousands):
|  | October 7, 2017 |  |  | December 31, 2016 |
Unsecured credit facility |  | $ | 6,500 |  |  | $ | 24,000 |
2026 notes |  |  | 394,847 |  |  |  | 394,406 |
2022 notes |  |  | 397,828 |  |  |  | 397,458 |
Accounts receivable securitization facility |  |  | 15,000 |  |  |  | 95,000 |
Capital lease obligations |  |  | 28,577 |  |  |  | 30,427 |
Other notes payable |  |  | 13,356 |  |  |  | 16,866 |
|  |  | 856,108 |  |  |  | 958,157 |
Current maturities of long-term debt and capital lease obligations |  |  | 12,469 |  |  |  | 11,490 |
Total long-term debt and capital lease obligations |  | $ | 843,639 |  |  | $ | 946,667 |
Bank overdrafts occur when checks have been issued but have not been presented to the bank for payment. Certain of our banks allow us to delay funding of issued checks until the checks are presented for payment. The delay in funding results in a temporary source of financing from the bank. The activity related to bank overdrafts is shown as a financing activity in our Condensed Consolidated Statements of Cash Flows. Bank overdrafts are included in other current accrued liabilities on our Condensed Consolidated Balance Sheets. As of October 7, 2017 and December 31, 2016, the bank overdraft balance was $9.3 million and $19.9 million, respectively. The company also had standby letters of credit (“LOCs”) outstanding of $8.7 million and $9.1 million at October 7, 2017 and December 31, 2016, respectively, which reduce the availability of funds under the credit facility (as defined below). The outstanding LOCs are for the benefit of certain insurance companies and lessors. None of the outstanding LOCs are recorded as a liability on the Condensed Consolidated Balance Sheets. 2026 Notes, Accounts Receivable Securitization Facility, 2022 Notes, and Credit Facility 2026 Notes. On September 28, 2016, the company issued $400.0 million of senior notes. The company pays semiannual interest on the 2026 notes on each April 1 and October 1 and the 2026 notes will mature on October 1, 2026. The notes bear interest at 3.500% per annum. The 2026 notes are subject to interest rate adjustments if either Moody’s or S&P downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the 2026 notes. On any date prior to July 1, 2026, the company may redeem some or all of the notes at a price equal to the greater of (1) 100% of the principal amount of the notes redeemed and (2) a “make-whole” amount plus, in each case, accrued and unpaid interest. The make-whole amount is equal to the sum of the present values of the remaining scheduled payments of principal and interest on the 2026 notes to be redeemed that would be due if such notes matured July 1, 2026 (exclusive of interest accrued to, but not including, the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate (as defined in the indenture governing the notes), plus 30 basis points, plus in each case accrued and unpaid interest. At any time on or after July 1, 2026, the company may redeem some or all of the 2026 notes at a price equal to 100% of the principal amount of the notes redeemed plus accrued and unpaid interest. If the company experiences a “change of control triggering event” (which involves a change of control of the company and the related rating of the notes below investment grade), it is required to offer to purchase the notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest thereon unless the company exercised its option to redeem the notes in whole. The 2026 notes are also subject to customary restrictive covenants for investment grade debt, including certain limitations on liens and sale and leaseback transactions. The face value of the 2026 notes is $400.0 million. There was a debt discount representing the difference between the net proceeds, after expenses, received upon issuance of debt and the amount repayable at its maturity. The company also paid issuance costs of $3.6 million (including underwriting fees and legal fees) on the 2026 notes. Debt issuance costs and the debt discount are being amortized to interest expense over the term of the 2026 notes. As of October 7, 2017, and December 31, 2016, respectively, the company was in compliance with all restrictive covenants under the indenture governing the 2026 notes. The table below presents the debt discount, underwriting fees and the legal and other fees for issuing the 2026 notes (amounts in thousands):
|  | Amount at Issuance |
Debt discount |  | $ | 2,108 |
Underwriting, legal, and other fees |  |  | 3,634 |
Total fees |  | $ | 5,742 |
Accounts Receivable Securitization Facility. On July 17, 2013, the company entered into an accounts receivable securitization facility (the “facility”). On August 7, 2014, the company entered into an amendment to the facility. The amendment (i) increased the revolving commitments under the facility to $200.0 million from $150.0 million, (ii) extended the term one year to July 17, 2016, and (iii) made certain other conforming changes. On December 17, 2014, the company executed a second amendment to the facility to add a bank to the lending group. The original commitment amount was split between the original lender and the new lender in the proportion of 62.5% for the original lender and 37.5% for the new lender. This modification, which was accounted for as an extinguishment of the debt, resulted in a charge of $0.1 million, or 37.5%, of the unamortized financing costs. On August 20, 2015, the company executed a third amendment to the facility to extend the term to August 11, 2017 and to add a leverage pricing grid. This amendment was accounted for as a modification. On September 30, 2016, the company executed a fourth amendment to the facility to extend the term to September 28, 2018. This amendment was accounted for as a modification. On September 28, 2017, the company executed a fifth amendment to the facility to extend the term to September 28, 2019. This amendment was accounted for as a modification and $0.1 million was paid for financing costs. Under the facility, a wholly-owned, bankruptcy-remote subsidiary purchases, on an ongoing basis, substantially all trade receivables. As borrowings are made under the facility, the subsidiary pledges the receivables as collateral. In the event of liquidation of the subsidiary, its creditors would be entitled to satisfy their claims from the subsidiary’s pledged receivables prior to distributions of collections to the company. We include the subsidiary in our Condensed Consolidated Financial Statements. The facility contains certain customary representations and warranties, affirmative and negative covenants, and events of default. There was $15.0 million and $95.0 million outstanding under the facility as of October 7, 2017 and December 31, 2016, respectively. As of October 7, 2017 and December 31, 2016, respectively, the company was in compliance with all restrictive covenants under the facility. The company currently has $185.0 million available under its facility for working capital and general corporate purposes. Amounts available for withdrawal under the facility are determined as the lesser of the total commitments and a formula derived amount based on qualifying trade receivables. Optional principal repayments may be made at any time without premium or penalty. Interest is due two days after our reporting periods end in arrears on the outstanding borrowings and is computed as the cost of funds rate plus an applicable margin of 85 basis points. An unused fee of 30 basis points is applicable on the unused commitment at each reporting period. Financing costs paid at inception of the facility and at the time amendments are executed are being amortized over the life of the facility. The balance of unamortized financing costs was $0.2 million on October 7, 2017 and December 31, 2016 and are recorded in other assets on the Condensed Consolidated Balance Sheets. 2022 Notes. On April 3, 2012, the company issued $400.0 million of senior notes. The company pays semiannual interest on the 2022 notes on each April 1 and October 1 and the 2022 notes will mature on April 1, 2022. The 2022 notes bear interest at 4.375% per annum. On any date prior to January 1, 2022, the company may redeem some or all of the 2022 notes at a price equal to the greater of (1) 100% of the principal amount of the notes redeemed and (2) a “make-whole” amount plus, in each case, accrued and unpaid interest. The make-whole amount is equal to the sum of the present values of the remaining scheduled payments of principal thereof (not including any interest accrued thereon to, but not including, the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the treasury rate (as defined in the indenture governing the notes), plus 35 basis points, plus in each case, unpaid interest accrued thereon to, but not including, the date of redemption. At any time on or after January 1, 2022, the company may redeem some or all of the 2022 notes at a price equal to 100% of the principal amount of the 2022 notes redeemed plus accrued and unpaid interest. If the company experiences a “change of control triggering event” (which involves a change of control of the company and the related rating of the notes below investment grade), it is required to offer to purchase the 2022 notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest thereon unless the company exercised its option to redeem the 2022 notes in whole. The 2022 notes are also subject to customary restrictive covenants for investment grade debt, including certain limitations on liens and sale and leaseback transactions. The face value of the 2022 notes is $400.0 million and the debt discount on the 2022 notes at issuance was $1.0 million. The company paid issuance costs (including underwriting fees and legal fees) on the 2022 notes of $3.9 million. The issuance costs and the debt discount are being amortized to interest expense over the term of the 2022 notes. As of October 7, 2017 and December 31, 2016, the company was in compliance with all restrictive covenants under the indenture governing the 2022 notes. Credit Facility. On April 19, 2016, the company amended its senior unsecured credit facility (the “credit facility”), which was accounted for as a modification of the debt, that addressed changes in law affecting the terms of the existing agreement. In addition, the amendment increases the highest applicable margin applicable to base rate loans to 0.75% and the Eurodollar rate loans to 1.75%, in each case, based on the leverage ratio of the company. It also increases the highest applicable facility fee to 0.50%, due quarterly on all commitments under the credit facility. Previously, on April 21, 2015, the company amended the credit facility to extend the term to April 21, 2020, reduce the applicable margin on base rate and Eurodollar loans and reduce the facility fees, described below. The April 21, 2015 amendment was accounted for as a modification of the debt. The credit facility is a five-year, $500.0 million senior unsecured revolving loan facility. The credit facility contains a provision that permits us to request up to $200.0 million in additional revolving commitments, for a total of up to $700.0 million, subject to the satisfaction of certain conditions. Proceeds from the credit facility may be used for working capital and general corporate purposes, including capital expenditures, acquisition financing, refinancing of indebtedness, dividends and share repurchases. The credit facility includes certain customary restrictions, which, among other things, require maintenance of financial covenants and limit encumbrance of assets and creation of indebtedness. Restrictive financial covenants include such ratios as a minimum interest coverage ratio (4.50 times computed interest expense) and a maximum leverage ratio (3.75 times computed earnings). As of October 7, 2017 and December 31, 2016, respectively, the company was in compliance with all restrictive covenants under the credit facility. Interest is due either monthly or quarterly in arrears on any outstanding borrowings at a customary Eurodollar rate or the base rate plus applicable margin, respectively. The underlying rate is defined as rates offered in the interbank Eurodollar market, or the higher of the prime lending rate or the federal funds rate plus 0.50%, with a floor rate defined by the one-month interbank Eurodollar market rate plus 1.00%. The applicable margin ranges from 0.0% to 0.75% for base rate loans and from 0.70% to 1.75% for Eurodollar loans. In addition, a facility fee ranging from 0.05% to 0.50% is due quarterly on all commitments under the credit facility. Both the interest margin and the facility fee are based on the company’s leverage ratio. Financing costs paid at inception of the credit facility and at the time amendments are executed are being amortized over the life of the credit facility. The balance of unamortized financing costs was $0.9 million and $1.1 million on October 7, 2017 and December 31, 2016, respectively, and are recorded in other assets on the Condensed Consolidated Balance Sheets. Amounts outstanding under the credit facility vary daily. Changes in the gross borrowings and repayments can be caused by cash flow activity from operations, capital expenditures, acquisitions, dividends, share repurchases, and tax payments, as well as derivative transactions, which are part of the company’s overall risk management strategy as discussed in Note 9, Derivative Financial Instruments. The table below presents the borrowings and repayments under the credit facility during the forty weeks ended October 7, 2017.
|  | Amount (thousands) |
Balance at December 31, 2016 |  | $ | 24,000 |
Borrowings |  |  | 421,200 |
Payments |  |  | (438,700 | )
Balance at October 7, 2017 |  | $ | 6,500 |
The table below presents the net amount available under the credit facility as of October 7, 2017:
|  | Amount (thousands) |
Gross amount available |  | $ | 500,000 |
Outstanding |  |  | (6,500 | )
Letters of credit |  |  | (8,698 | )
Available for withdrawal |  | $ | 484,802 |
The table below presents the highest and lowest outstanding balance under the credit facility during the forty weeks ended October 7, 2017:
|  | Amount (thousands) |
High balance |  | $ | 47,500 |
Low balance |  | $ | — |
The company paid off two term loans during the third quarter of fiscal 2016 at issuance of the 2026 notes. A total of $1.9 million was recognized as an extinguishment of debt cost at payoff. The loss on extinguishment was recorded as interest expense. Aggregate maturities of debt outstanding, including capital leases and the associated interest, as of October 7, 2017, are as follows (excluding unamortized debt discount and issuance costs) (amounts in thousands):
Remainder of 2017 |  | $ | 2,676 |
2018 |  |  | 12,095 |
2019 |  |  | 25,623 |
2020 |  |  | 11,844 |
2021 |  |  | 3,598 |
2022 and thereafter |  |  | 807,991 |
Total |  | $ | 863,827 |
Debt discount and issuance costs are being amortized straight-line (which approximates the effective method) over the term of the underlying debt outstanding. The table below reconciles the debt issuance costs and debt discounts to the net carrying value of each of our debt obligations (excluding line-of-credit arrangements) at October 7, 2017 (amounts in thousands):
|  |  |  |  |  | Debt issuance costs |  |  |  |  |
|  | Face Value |  |  | and debt discount |  |  | Net carrying value |
2026 notes |  | $ | 400,000 |  |  | $ | 5,153 |  |  | $ | 394,847 |
2022 notes |  |  | 400,000 |  |  |  | 2,172 |  |  |  | 397,828 |
Other notes payable |  |  | 13,750 |  |  |  | 394 |  |  |  | 13,356 |
Total |  | $ | 813,750 |  |  | $ | 7,719 |  |  | $ | 806,031 |
The table below reconciles the debt issuance costs and debt discounts to the net carrying value of each of our debt obligations (excluding line-of-credit arrangements) at December 31, 2016 (amounts in thousands):
|  |  |  |  |  | Debt issuance costs |  |  |  |  |
|  | Face Value |  |  | and debt discount |  |  | Net carrying value |
2026 notes |  | $ | 400,000 |  |  | $ | 5,594 |  |  | $ | 394,406 |
2022 notes |  |  | 400,000 |  |  |  | 2,542 |  |  |  | 397,458 |
Other notes payable |  |  | 17,500 |  |  |  | 634 |  |  |  | 16,866 |
Total |  | $ | 817,500 |  |  | $ | 8,770 |  |  | $ | 808,730 |
The company also leases certain property and equipment under various operating and capital lease arrangements. During the forty weeks ended October 7, 2017, the company terminated certain operating lease contracts prior to the maturity date, which resulted in net termination costs. The net termination costs consisted of $1.2 million of lease termination gain recognized in the selling, distribution and administrative line item and $1.8 million of lease termination costs recognized in the depreciation and amortization line item of our Condensed Consolidated Statements of Operations.

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- Definition The entire disclosure for debt and capital lease obligations can be reported. 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. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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