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Convertible Notes, Other Debts And Capital Leases | 6 Months Ended
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Jun. 30, 2017
Debt Disclosure [Abstract] |
Convertible Notes, Other Debts And Capital Leases | CONVERTIBLE NOTES, OTHER DEBTS AND CAPITAL LEASES 4.00% Convertible Senior Notes In December 2015, the Company issued $128.25 million aggregate principal amount of 4.0% unsecured convertible senior notes due December 1, 2020 (the “offering” or “Notes”, as applicable) through a private placement with a financial institution. The Notes do not contain any financial covenants and the Company can settle the Notes in cash, shares of common stock, or any combination thereof. The Notes can be converted under certain circumstances described below, based on an initial conversion rate of 173.9978 shares of common stock per $1,000 principal amount of Notes (which represents an initial conversion price of approximately $5.75 per share). Interest on the Notes is payable semiannually in arrears on June 1 and December 1 of each year. Concurrent with the closing of the offering, the Company used $49.9 million of the net proceeds to repurchase 11.1 million shares of the Company’s common stock from purchasers of the offering in privately negotiated transactions. In addition, the Company incurred approximately $4.1 million in debt issuance costs resulting in net proceeds to the Company of approximately $74.2 million, which was used to fund the TVN acquisition. Prior to September 1, 2020, holders of the Notes may convert the Notes at their option only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on April 1, 2016, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price of the Notes on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “ measurement period ”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. Commencing on September 1, 2020 until the close of business on the second scheduled trading day immediately preceding the maturity date, the Notes will be convertible in multiples of $1,000 principal amount regardless of the foregoing circumstances. If a fundamental change occurs, holders of the Notes may require the Company to purchase all or any portion of their Notes for cash at a repurchase 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. In addition, if specific corporate events occur prior to the maturity date, the conversion rate may be increased for a holder who elects to convert the Notes in connection with such a corporate event. In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the initial proceeds of the Notes as a whole. The difference between the initial proceeds of the Notes and the liability component (the “debt discount”) of $26.9 million is amortized to interest expense using the effective interest method over the term of the Notes. The equity component of the Notes is included in additional paid-in capital in the Condensed Consolidated Balance Sheets and is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the transaction costs related to the issuance of the Notes, the Company allocated the total amount of $4.1 million to the liability and equity components using the same proportions as the proceeds from the Notes. Transaction costs attributable to the liability component were $3.2 million and were recorded as a direct deduction from the carrying amount of the debt liability in long-term liability in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in the Condensed Consolidated Statements of Operations using the effective interest method over the term of the Notes. Transaction costs attributable to the equity component were $0.9 million and were netted with the equity component of the Notes in additional paid-in capital in the Condensed Consolidated Balance Sheets. The following table presents the components of the Notes as of June 30, 2017 and December 31, 2016 (in thousands, except for years and percentages):
| June 30, 2017 |  | December 31, 2016
Liability: |  |  |
Principal amount | $ | 128,250 |  |  | $ | 128,250 |
Less: Debt discount, net of amortization | (19,914 | ) |  | (22,302 | )
Less: Debt issuance costs, net of amortization | (2,401 | ) |  | (2,689 | )
Carrying amount | $ | 105,935 |  |  | $ | 103,259 |
Remaining amortization period (years) | 3.4 |  |  | 3.9 |
Effective interest rate on liability component | 9.94 | % |  | 9.94 | %
Equity: |  |  |
Value of conversion option | $ | 26,925 |  |  | $ | 26,925 |
Less: Equity issuance costs | (863 | ) |  | (863 | )
Carrying amount | $ | 26,062 |  |  | $ | 26,062 |
The following table presents interest expense recognized for the Notes (in thousands):
| Three months ended |  | Six months ended
| June 30, 2017 |  | July 1, 2016 |  | June 30, 2017 |  | July 1, 2016
Contractual interest expense | $ | 1,282 |  |  | $ | 1,282 |  |  | $ | 2,565 |  |  | $ | 2,565 |
Amortization of debt discount | 1,214 |  |  | 1,098 |  |  | 2,388 |  |  | 2,157 |
Amortization of debt issuance costs | 146 |  |  | 132 |  |  | 288 |  |  | 260 |
Total interest expense recognized | $ | 2,642 |  |  | $ | 2,512 |  |  | $ | 5,241 |  |  | $ | 4,982 |
Other Debts and Capital Leases In connection with the TVN acquisition, the Company assumed a variety of debt and credit facilities in France to satisfy the financing requirements of TVN operations. These arrangements are summarized in the table below (in thousands):
| June 30, 2017 |  | December 31, 2016
Financing from French government agencies related to various government incentive programs (1) | $ | 13,597 |  |  | $ | 17,930 |
Term loans (2) | 1,369 |  |  | 1,400 |
Obligations under capital leases | 1,456 |  |  | 1,860 |
Total debt obligations | 16,422 |  |  | 21,190 |
Less: current portion | (7,130 | ) |  | (7,275 | )
Long-term portion | $ | 9,292 |  |  | $ | 13,915 |
(1) As of June 30, 2017, the Company’s TVN French Subsidiary had an aggregate of $13.6 million of loans due to various financing programs of French government agencies, $10.8 million of which are related to loans backed by R&D tax credit receivables. As of June 30, 2017, the TVN French Subsidiary had an aggregate of $24.3 million of R&D tax credit receivables from the French government from 2018 through 2021. (See Note 8, “Balance Sheet Components-Prepaid expenses and other current assets,” for more information). These tax loans have a fixed rate of 0.6%, plus EURIBOR 1 month + 1.3% and mature between 2018 through 2019. The remaining loans of $2.8 million at June 30, 2017 primarily relate to financial support from French government agencies for R&D innovation projects at minimal interest rates and these loans mature between 2020 through 2023. (2) One of the term loans with a certain financial institution contains annual covenants that require the TVN French Subsidiary to maintain a minimum working capital balance and various other financial covenants and restrictions that limit the French Subsidiary’s ability to incur additional indebtedness. The annual covenant is based on French statutory year-end results and the TVN French Subsidiary failed the 2016 covenant test primarily due to the Company’s plan to integrate TVN’s operations into other subsidiaries for tax planning and logistics purposes. In early 2017, the Company informed the financial institution of the 2016 covenant test results and was told by the financial institution to continue with the original payment schedule. The Company reported the entire loan balance with this financial institution under “Other debts and capital lease obligations, current” in the Condensed Consolidated Balance Sheets. The loan balance was approximately $0.4 million at both June 30, 2017 and December 31, 2016. (3) The TVN French Subsidiary obtained advances under a credit line with BPI France against a pool of eligible receivables with recourse. There was no balance outstanding to BPI France as of June 30, 2017. This credit line expired in July 2017. Future minimum repayments The table below shows the future minimum repayments of debts and capital lease obligations for TVN as of June 30, 2017 (in thousands):
Years ending December 31, | Capital lease obligations |  | Other Debt obligations
2017 (remaining six months) | $ | 492 |  |  | $ | 673 |
2018 | 868 |  |  | 5,873 |
2019 | 69 |  |  | 6,782 |
2020 | 27 |  |  | 601 |
2021 | — |  |  | 489 |
Thereafter | — |  |  | 548 |
Total | $ | 1,456 |  |  | $ | 14,966 |

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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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