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Convertible Notes, Other Debts And Capital Leases | 9 Months Ended
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Sep. 28, 2018
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 in 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 acquisition of our France subsidiary, TVN. 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 accordance with the accounting guidance on embedded conversion features, the conversion feature associated with the Notes was valued at $26.1 million and bifurcated from the host debt instrument and recorded in stockholders’ equity. The resulting debt discount on the Notes is being amortized to interest expense at the effective interest rate over the contractual term of the Notes. The following table presents the components of the Notes as of September 28, 2018 and December 31, 2017 (in thousands, except for years and percentages):
| September 28, 2018 |  | December 31, 2017
Liability: |  |  |
Principal amount | $ | 128,250 |  |  | $ | 128,250 |
Less: Debt discount, net of amortization | (13,404 | ) |  | (17,404 | )
Less: Debt issuance costs, net of amortization | (1,616 | ) |  | (2,098 | )
Carrying amount | $ | 113,230 |  |  | $ | 108,748 |
Remaining amortization period (years) | 2.2 |  |  | 2.9 |
Effective interest rate on liability component | 9.94 | % |  | 9.94 | %
Carrying amount of equity component | $ | 26,062 |  |  | $ | 26,062 |
The following table presents interest expense recognized for the Notes (in thousands):
| Three months ended | Nine months ended
| September 28, 2018 |  | September 29, 2017 | September 28, 2018 |  | September 29, 2017
Contractual interest expense | $ | 1,283 |  |  | $ | 1,283 |  | $ | 3,848 |  |  | $ | 3,848 |
Amortization of debt discount | 1,364 |  |  | 1,235 |  | 4,001 |  |  | 3,623 |
Amortization of debt issuance costs | 164 |  |  | 149 |  | 481 |  |  | 437 |
Total interest expense recognized | $ | 2,811 |  |  | $ | 2,667 |  | $ | 8,330 |  |  | $ | 7,908 |
Other Debts and Capital Leases The Company has 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):
| September 28, 2018 |  | December 31, 2017
Financing from French government agencies related to various government incentive programs (1) | $ | 19,443 |  |  | $ | 20,565 |
Term loans | 1,018 |  |  | 1,282 |
Obligations under capital leases | 371 |  |  | 1,099 |
Total debt obligations | 20,832 |  |  | 22,946 |
Less: current portion | (7,677 | ) |  | (7,610 | )
Long-term portion | $ | 13,155 |  |  | $ | 15,336 |
(1) As of September 28, 2018 and December 31, 2017, loans backed by French R&D tax credit receivables were $17.0 million and $17.7 million, respectively. As of September 28, 2018, the TVN French Subsidiary had an aggregate of $25.6 million of R&D tax credit receivables from the French government from 2018 through 2022. See Note 6, “Balance Sheet Components” for additional information. These tax loans have a fixed rate of 0.6%, plus EURIBOR 1 month + 1.3% and mature between 2019 through 2021. The remaining loans of $2.4 million at September 28, 2018, primarily relate to financial support from French government agencies for R&D innovation projects at minimal interest rates, and these loans mature between 2019 through 2025. Future minimum repayments The table below presents the future minimum repayments of debts and capital lease obligations for TVN as of September 28, 2018 (in thousands):
Years ending December 31, | Capital lease obligations |  | Other Debt obligations
2018 (remaining three months) | $ | 205 |  |  | $ | 659 |
2019 | 93 |  |  | 6,934 |
2020 | 50 |  |  | 6,741 |
2021 | 23 |  |  | 5,441 |
2022 | — |  |  | 461 |
Thereafter | — |  |  | 225 |
Total | $ | 371 |  |  | $ | 20,461 |
Line of Credit On September 27, 2017, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (the “Bank”). The Loan Agreement provides for a secured revolving credit facility in an aggregate principal amount of up to $15.0 million. Under the terms of the Loan Agreement, the principal amount of loans, plus the face amount of any outstanding letters of credit, at any time cannot exceed up to 85% of the Company’s eligible receivables. Under the terms of the Loan Agreement, the Company may also request letters of credit from the Bank. The proceeds of any loans under the Loan Agreement will be used for working capital and general corporate purposes. Loans under the Loan Agreement will bear interest, at the Company’s option, and subject to certain conditions, at an annual rate of either a prime rate or a LIBOR rate plus an applicable margin of 2.25%. There will be no applicable margin for prime rate advances when the Company is in compliance with the liquidity requirement of at least $20.0 million in the aggregate of consolidated cash plus availability under the Loan Agreement (the “Liquidity Requirement”) and a 0.25% margin for prime rate advances when the Company is not in compliance with the Liquidity Requirement. The Company may not request LIBOR advances when it is not in compliance with the Liquidity Requirement. Interest on each advance is due and payable monthly and the principal balance is due at maturity. The Company’s obligations under the revolving credit facility are secured by a security interest on substantially all of its assets, excluding intellectual property. The Loan Agreement contains customary affirmative and negative covenants. The Company must comply with financial covenants requiring it to maintain (i) a short-term asset to short-term liabilities ratio of at least 1.10 to 1.00 and (ii) a minimum adjusted EBITDA, in the amounts and for the periods as set forth in the Loan Agreement. The Company must also maintain a minimum liquidity amount, comprised of unrestricted cash held at accounts with the Bank plus proceeds available to be drawn under the Loan Agreement, equal to at least $10.0 million at all times. As of September 28, 2018, the Company was in compliance with the covenants under the Loan Agreement. As of September 28, 2018, the Company committed $2.7 million towards security for letters of credit issued under the Loan Agreement. There were no other borrowings under the Loan Agreement as of September 28, 2018.

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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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