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Debt | 9 Months Ended
--- | ---
Sep. 30, 2018
Debt |
Debt | 8.Debt Long-term debt, net consists of the following (in thousands):
|  |  |  | September 30, |  |  | December 31,
|  |  |  | 2018 |  |  | 2017
Outstanding debt |  |  | $ | 578,600 |  | $ | 470,000
Unamortized debt issuance costs |  |  |  | (2,845) |  |  | (3,435)
Current portion of long-term debt |  |  |  | (20,000) |  |  | (20,000)
Total long-term debt, less current portion, net |  |  | $ | 555,755 |  | $ | 446,565
On August 30, 2017, the Company entered into a credit agreement (the “Credit Agreement”) which provided for an unsecured revolving credit facility in an aggregate principal amount of $600.0 million (the “Revolving Facility”) and an unsecured term loan facility in an aggregate principal amount of $400.0 million (the “Term Loan Facility”) and together with the Revolving Facility, the “Facilities”. The Facilities mature on August 30, 2022. The loans under the Facilities, after giving effect to the Amendment described below, accrue interest at a per annum rate equal to, at the Company’s election, either a LIBOR rate plus a margin ranging from 125 to 250 basis points or a base rate (generally determined by a prime rate, federal funds rate or a LIBOR rate plus 1.00%) plus a margin ranging from 25 to 150 basis points. In each case, the actual margin is determined according to a ratio of the Company’s total indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the then most recently ended four-quarter period (the “Leverage Ratio”). Quarterly amortization payments are required to be made on the Term Loan Facility in the amount of $5.0 million which began in the fourth quarter of 2017. Loans outstanding under the Credit Agreement may be prepaid at any time without premium or penalty, subject to customary breakage costs in the case of borrowings for which a LIBOR rate election is in effect. Up to $35.0 million of the Revolving Facility may be advanced in certain agreed foreign currencies, including Euros, Pounds Sterling, Canadian Dollars, Japanese Yen, and Mexican Pesos. The Credit Agreement contains customary affirmative and negative covenants, including financial covenants requiring the maintenance of the Leverage Ratio and a specified fixed charge coverage ratio. On October 9, 2018, we entered into an amendment to the Credit Agreement (the “Amendment”), which amendments and modifications to the Credit Agreement are effective through the remainder of the term of the Facilities and include, without limitation, the following:
| · |  | reduction of the maximum amount available under the Revolving Facility to $400.0 million; there was no change in available Term Loan Facility borrowings;
| · |  | amendment to the definition of EBITDA to exclude certain costs recorded as Special charges (up to certain pre-defined limits) as detailed in Note 9 “Commitments and Contingencies”;
| · |  | modification of the financial covenants in the Credit Agreement by increasing the permitted Leverage Ratio to 5.25 to 1.0 beginning in the third quarter of 2018, decreasing over time to 4.00 to 1.0 by 2022; and decreasing the permitted specified fixed charge coverage ratio to 2.00 to 1.0 beginning in the third quarter of 2018 and increasing over time to 2.50 to 1.0 in 2021 and thereafter. We were in compliance with these financial covenants at September 30, 2018;
| · |  | modifications to the negative covenant restricting the ability to make dividends and distributions to provide if the Leverage Ratio is above 3.75 to 1.0, the Company (x) cannot repurchase any of its shares of common stock and (y) cannot increase the cash dividend above the lesser of $0.225 per share per quarter or $35 million per fiscal year;
| · |  | increase in the interest rate payable on outstanding loans for the Facilities based on the Leverage Ratio as follows:
| o |  | removal of interest rate pricing tiers if the Leverage Ratio of the Company is less than 1.50 to 1.00;
| o |  | if the Leverage Ratio of the Company is greater than 3.50 to 1.00 but less than 4.50 to 1.00, the Company will pay an additional 0.25% per annum interest rate margin on the outstanding loans under the Facilities and an additional 0.05% per annum commitment fee on the unused portion of the Revolving Facility;
| o |  | if the Leverage Ratio of the Company is greater than 4.50 to 1.00, the Company will pay an additional 0.50% per annum interest rate margin on the outstanding loans under the Facilities and an additional 0.10% per annum commitment fee on the unused portion of the Revolving Facility; and
| · |  | requirement that the Company and certain direct and indirect domestic subsidiaries of the Company grant a security interest in substantially all of the capital stock and equity interests of their respective domestic and first tier material foreign subsidiaries to secure the obligations owing under the Facilities.
Under the Credit Agreement, we have the option to increase the Revolving Facility or the Term Loan Facility in an aggregate amount of up to $300.0 million, subject to the Leverage Ratio of the Company not exceeding 4.00 to 1.00. Our outstanding debt of $578.6 million at September 30, 2018 under the Facilities was composed of $380.0 million outstanding under the Term Loan Facility and $198.6 million outstanding under the Revolving Facility. Including outstanding letters of credit, the Company’s remaining availability under the Facilities at September 30, 2018 was approximately $166.4 million. As of September 30, 2018, the Company had approximately $2.8 million in unamortized debt issuance costs, which are being amortized into interest expense over the term of the Facilities. Upon execution of the Amendment, subsequent to September 30, 2018, we wrote off approximately $560,000 of these unamortized debt issuance costs in accordance with applicable accounting guidance. The Company also incurred additional amendment fees of approximately $1.9 million, which will be amortized into interest expense over the remaining term of the Facilities. We attempt to minimize interest risk exposure by fixing our rate through the utilization of interest rate swaps, which are derivative financial instruments. Our swaps are entered into with financial institutions that participate in the Facilities. By using a derivative instrument to hedge exposures to changes in interest rates, we expose ourselves to credit risk. Credit risk is due to the possible failure of the counterparty to perform under the terms of the derivative contract. We use interest rate swaps to hedge against the effects of potential interest rate increases on borrowings under our Facilities. As of September 30, 2018, we have the following interest rate swap agreements:
Effective Dates |  | Floating Rate Debt |  | Fixed Rates |
April 30, 2018 through April 30, 2023 |  | $ | 55 | million |  | 2.33 | %
April 30, 2018 through April 30, 2023 |  | $ | 35 | million |  | 2.36 | %
April 30, 2018 through April 30, 2023 |  | $ | 35 | million |  | 2.34 | %
January 30, 2018 through August 30, 2022 |  | $ | 100 | million |  | 1.99 | %
January 30, 2018 through August 30, 2022 |  | $ | 75 | million |  | 1.99 | %
January 30, 2018 through August 30, 2022 |  | $ | 75 | million |  | 2.00 | %
January 30, 2018 through August 30, 2022 |  | $ | 25 | million |  | 1.99 | %
The gain or loss on the swaps is recognized in other comprehensive (loss) income and reclassified into earnings as adjustments to interest expense in the same period or periods during which the swaps affect earnings. Gains or losses on the swaps representing hedge components excluded from the assessment of effectiveness are recognized in current earnings. The following table provides information on the location and amounts of our swaps in the accompanying condensed consolidated financial statements (in thousands):
|  | Interest Rate Swap Derivatives
|  | Fair Value |  | Fair Value
|  | September 30, |  | December 31,
Balance Sheet Location |  | 2018 |  | 2017
Other current and long-term assets |  | $ | 12,163 |  | $ | 651
There were no derivatives that were not designated as hedging instruments. The effect of derivative instruments on the accompanying condensed consolidated financial statements is as follows (in thousands):
|  |  |  | Location of Gain |  | Amount of Gain |  |
Derivatives - |  | Amount of Gain or |  | or (Loss) |  | or (Loss) |  | Total Interest Expense
Cash Flow |  | (Loss) Recognized |  | Reclassified from |  | Reclassified from |  | on Consolidated
Hedging |  | in AOCI/AOCL |  | AOCI/AOCL into |  | AOCI/AOCL into |  | Statements of
Relationships |  | on Derivative |  | Income |  | Income |  | Income
Interest rate swaps for the three months ended: |  |  |  |  |  |
September 30, 2018 |  | $ | 1,483 |  |  | Interest expense |  | $ | (19) |  | $ | (6,190)
September 24, 2017 |  | $ | 404 |  |  | Interest expense |  | $ | (54) |  | $ | (2,702)
Interest rate swaps for the nine months ended: |  |  |  |  |  |  |  |  |
September 30, 2018 |  | $ | 8,863 |  |  | Interest expense |  | $ | (216) |  | $ | (17,321)
September 24, 2017 |  | $ | (1,061) |  |  | Interest expense |  | $ | (378) |  | $ | (6,542)
The weighted average interest rates on our debt, including the impact of the interest rate swap agreements, were 3.9% and 3.7% for the three and nine months ended September 30, 2018, compared to 2.7% and 2.4% for the three and nine months ended September 24, 2017. Interest paid, including payments made or received under the swaps, was $6.0 million and $2.0 million for the three months ended September 30, 2018 and September 24, 2017, respectively, and $16.6 million and $5.9 million for the nine months ended September 30, 2018 and September 24, 2017, respectively. As of September 30, 2018, the portion of the aggregate $12.2 million interest rate swap asset that would be reclassified into earnings during the next twelve months as interest income approximates $3.0 million.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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