XML 49 R19.htm IDEA: XBRL DOCUMENT
v3.19.3

Subsequent Events | 9 Months Ended
--- | ---
Sep. 29, 2019
Subsequent Events [Abstract] |
Subsequent Events | Subsequent Events Agreements with Verisure S.à.r.l. On November 4, 2019, Arlo Technologies, Inc. (the “Company”) and Verisure S.à.r.l. (“Verisure”) concurrently entered into an Asset Purchase Agreement (the “Purchase Agreement”) and Supply Agreement (the “Supply Agreement” and together with the Purchase Agreement, the “Verisure Agreements”). The Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the Purchase Agreement, the Company will transfer, sell and assign to Verisure certain assets (the “Assets”) related to the Company’s commercial operations in Europe (the “Business”) to Verisure for $50.0 million in cash plus inventory to be transferred to Verisure as of the closing of the transactions contemplated by the Purchase Agreement and subject to a net working capital adjustment. As part of the transactions contemplated by the Purchase Agreement, Verisure will offer positions to approximately 25 Company employees who support the Business, and will also assume certain liabilities related to the Business. The closing of the transactions contemplated by the Purchase Agreement (the “Closing”) is subject to certain customary closing conditions, including, among other conditions, regulatory approvals, the accuracy of the representations and warranties made by each of the Company and Verisure, the compliance by the parties with their respective obligations under the Purchase Agreement and that there shall have been no material adverse effect with respect to the Business. The Closing, which is expected to occur by the first quarter of 2020, may not be completed if any of the closing conditions are not satisfied or waived. The Purchase Agreement contains customary representations and warranties regarding Verisure, the Business and the Assets, covenants regarding the Assets and the Business that apply between signing and Closing, indemnification provisions, termination rights and other customary provisions. The Company has agreed not to engage in any business that competes with the Business for a period of three years after Closing. The Supply Agreement provides that, upon the terms and subject to the conditions set forth in the Supply Agreement, Verisure will become the exclusive distributor of Company products in Europe for all channels, and will non-exclusively distribute Company products in connection with Verisure’s security business (the “Verisure Security Business”). During the five-year period commencing January 1, 2020, Verisure has an aggregate minimum purchase commitment of $500.0 million, which includes yearly annual commitments. Verisure will pay the Company an upfront payment of $20.0 million on the date of the Closing of the Purchase Agreement and $40.0 million on the one year anniversary as prepayments. The Supply Agreement also provides that the Company will provide certain development services to Verisure, including developing certain custom products specified by Verisure, in exchange for an aggregate of $10.0 million, payable in installments provided that the Company has met certain development milestones. The Supply Agreement will have an initial term of five years, but may be automatically renewed for additional five-year terms if neither party provides written notice of re-negotiation at least 12 months prior to the expiration. If a party provides written notice of its intent to renegotiate, the parties will negotiate any revised terms in good faith, and if the parties fail to reach an agreement on new terms by six months prior to the expiration, Verisure will have the right to terminate the Supply Agreement or elect to renew the Supply Agreement for a five-year term with its current terms (excluding any prepayment or minimum volume provisions) and if Verisure takes no action, the Supply Agreement will automatically renew for an additional five years. Verisure may terminate the Supply Agreement if the Company (i) experiences a change of control without Verisure’s consent, (ii) assigns the Supply Agreement to a third party without Verisure’s consent, (iii) materially breaches the Supply Agreement and does not cure such breach within 45 days’ notice or (iv) ceases to operate in the ordinary course or undergoes an insolvency event. If the Purchase Agreement terminates prior to Closing, the Supply Agreement will be suspended and the parties will enter into a seven-week negotiation period to determine whether the Supply Agreement will continue and on what terms. The Company may terminate the Supply Agreement (a) if Verisure materially breaches the Supply Agreement and does not cure such breach within 45 days’ notice or (b) if Verisure ceases to operate in the ordinary course or undergoes an insolvency event. Credit Agreement On November 5, 2019, the Company entered into a Business Financing Agreement (the “Credit Agreement”) with Western Alliance Bank, an Arizona corporation, as lender (the “Lender”). The Credit Agreement provides for a two-year revolving credit facility (the “Credit Facility”) that matures on November 5, 2021 and that may, by its terms, be extended by mutual written agreement between the Company and the Lender. Borrowings under the Credit Facility are limited to the lesser of (x) $40.0 million, and (y) an amount equal to the borrowing base. The borrowing base will be 60% of the Company’s eligible receivables and eligible accounts receivable, less such reserves as the Lender may deem proper and necessary from time to time. The Lender is not required to make any advance under the Credit Facility during the period beginning on January 1st and continuing through June 30th, except for advances made against eligible receivables first invoiced between July 1 and December 31, 2019. The Credit Agreement also includes sublimits for the issuance by the Lender of letters of credit, credit card indebtedness and foreign exchange forward contract. Repayment of the borrowings under the Credit Facility are due upon collection of the eligible receivables. The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. The obligations of the Company under the Credit Agreement are secured by substantially all of the Company’s domestic personal property, excluding intellectual property assets and more than 65% of the shares of voting capital stock of any of the Company’s foreign subsidiaries. Borrowings under the Credit Agreement generally bear interest at floating rates based upon the prime rate plus two and one-quarter percentage points (2.25%), plus an additional five percentage points (5.0%) during any period that an event of default has occurred and is continuing. Among other fees, the Company is required to pay an annual facility fee equal to 0.25% of the limit under the Credit Facility due upon entry into the Credit Agreement and on each anniversary thereof. The Credit Agreement contains customary events of default and other restrictions, including a financial covenant that requires the Company to maintain certain amount of domestic cash, and certain restrictions on the Company’s ability to incur additional indebtedness, consolidate or merge, enter into acquisitions, pay any dividend or distribution on the Company’s capital stock, redeem, retire or purchase shares of the Company’s capital stock, make investments or pledge or transfer assets, in each case subject to limited exceptions. If an event of default under the Credit Agreement occurs, then the Lender may cease making advances under the Credit Agreement and declare any outstanding obligations under the Credit Agreement to be immediately due and payable. In addition, if the Company files a bankruptcy petition, a bankruptcy petition is filed against the Company and is not dismissed or stayed within forty-five days, or the Company makes a general assignment for the benefit of creditors, then any outstanding obligations under the Credit Agreement will automatically and without notice or demand become immediately due and payable. Restructuring Plan On November 7, 2019, the Company announced a restructuring plan that includes, but is not limited to, reducing outside services, headcount, marketing and capital expenditures to manage the Company's operating expenses. The Company expects to incur restructuring charges of $1.0 million to $2.0 million which are primarily associated with headcount-related charges under the restructuring plan.

X
- References No definition available. + Details
Name: | us-gaap_SubsequentEventsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
Name: | us-gaap_SubsequentEventsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration