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Convertible Notes, Other Debts And Finance Lease | 6 Months Ended
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Jun. 28, 2019
Debt Disclosure [Abstract] |
Convertible Notes, Other Debts And Capital Leases | CONVERTIBLE NOTES, OTHER DEBTS AND FINANCE LEASES 4.00% Convertible Senior Notes In December 2015, the Company issued $128.25 million in aggregate principal amount of 4.00% Senior Convertible Notes due 2020 (the “offering” or “Notes”, as applicable) pursuant to an indenture (the “Indenture”), dated December 14, 2015, by and between the Company and U.S. Bank National Association, as trustee. The Notes bear interest at a rate of 4.00% per year, payable in cash on June 1 and December 1 of each year and the Notes will mature on December 1, 2020 unless earlier repurchased or converted. The Notes will be convertible into cash, shares of the Company’s common stock, par value $0.001 (“Common Stock”), or a combination thereof, at the Company’s election, at an initial conversion rate of 173.9978 shares of Common Stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $5.75 per share). The conversion rate, and thus the effective conversion price, may be adjusted under certain circumstances, including in connection with conversions made following certain fundamental changes and under other circumstances, in each case, as set forth in the Indenture. Prior to the close of business on the business day immediately preceding September 1, 2020, the Notes will be convertible only under the following circumstances: (1) during any fiscal quarter (and only during such fiscal quarter), 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 5 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. 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 Notes in the offering in privately negotiated transactions. In addition, the Company incurred approximately $4.1 million of debt issuance cost, resulting in net proceeds to the Company of approximately $74.2 million, which was used to fund the TVN acquisition. 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 June 28, 2019 and December 31, 2018 (in thousands, except for years and percentages):
| June 28, 2019 |  | December 31, 2018
Liability: |  |  |
Principal amount | $ | 128,250 |  |  | $ | 128,250 |
Less: Debt discount, net of amortization | (9,085 | ) |  | (11,996 | )
Less: Debt issuance costs, net of amortization | (1,095 | ) |  | (1,446 | )
Carrying amount | $ | 118,070 |  |  | $ | 114,808 |
Remaining amortization period (years) | 1.4 |  |  | 1.9 |
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 |  | Six months ended
| June 28, 2019 |  | June 29, 2018 |  | June 28, 2019 |  | June 29, 2018
Contractual interest expense | $ | 1,282 |  |  | $ | 1,282 |  |  | $ | 2,565 |  |  | $ | 2,565 |
Amortization of debt discount | 1,479 |  |  | 1,340 |  |  | 2,912 |  |  | 2,637 |
Amortization of debt issuance costs | 178 |  |  | 161 |  |  | 350 |  |  | 317 |
Total interest expense recognized | $ | 2,939 |  |  | $ | 2,783 |  |  | $ | 5,827 |  |  | $ | 5,519 |
Other Debts and Finance 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):
| June 28, 2019 |  | December 31, 2018
Financing from French government agencies related to various government incentive programs (1) | $ | 17,218 |  |  | $ | 18,783 |
Term loans | 759 |  |  | 914 |
Obligations under finance leases | 99 |  |  | 162 |
Total debt obligations | 18,076 |  |  | 19,859 |
Less: current portion | (1,379 | ) |  | (7,175 | )
Long-term portion | $ | 16,697 |  |  | $ | 12,684 |
(1) As of June 28, 2019 and December 31, 2018, loans backed by French R&D tax credit receivables were $15.1 million and $16.7 million, respectively. As of June 28, 2019, the TVN French Subsidiary had an aggregate of $21.8 million of R&D tax credit receivables from the French government from 2020 through 2023. See Note 8, “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 2020 through 2022. The remaining loans of $2.1 million at June 28, 2019, 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 finance lease obligations for TVN as of June 28, 2019 (in thousands):
Years ending December 31, | Finance lease obligations |  | Other Debt obligations
2019 (remaining six months) | $ | 77 |  |  | $ | 946 |
2020 | 22 |  |  | 6,563 |
2021 | — |  |  | 5,297 |
2022 | — |  |  | 4,791 |
2023 | — |  |  | 153 |
Thereafter | — |  |  | 227 |
Total | $ | 99 |  |  | $ | 17,977 |
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 June 28, 2019, the Company was in compliance with the covenants under the Loan Agreement. As of June 28, 2019, the Company has committed $2.1 million towards security for letters of credit issued under the Loan Agreement. There were no other borrowings under the Loan Agreement as of June 28, 2019.

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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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