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Convertible Notes, Other Debts And Finance Lease | 3 Months Ended
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Mar. 27, 2020
Debt Disclosure [Abstract] |
Convertible Notes, Other Debts And Capital Leases | CONVERTIBLE NOTES, OTHER DEBTS AND FINANCE LEASES 2.00% Convertible Senior Notes due 2024 In September 2019, the Company issued $115.5 million of the 2024 Notes pursuant to an indenture (the “2024 Notes Indenture”), dated September 13, 2019, by and between the Company and U.S. Bank National Association, as trustee. The 2024 Notes bear interest at a rate of 2.00% per year, payable semiannually on March 1 and September 1 of each year. The 2024 Notes will mature on September 1, 2024, unless earlier repurchased by the Company, redeemed by the Company or converted pursuant to their terms. The 2024 Notes are 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 115.5001 shares of Common Stock per $1,000 principal amount of 2024 Notes (which is equivalent to an initial conversion price of approximately $8.66 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 or a notice of redemption and under other circumstances, in each case, as set forth in the 2024 Notes Indenture. The 2024 Notes will be convertible at certain times and upon the occurrence of certain events in the future, in each case, specified in the 2024 Notes Indenture. Further, on or after June 1, 2024, until the close of business on the scheduled trading day immediately preceding the maturity date, holders of the 2024 Notes may convert all or a portion of their 2024 Notes regardless of these conditions. In accordance with the accounting guidance on embedded conversion features, the conversion feature associated with the 2024 Notes was valued at $24.9 million and bifurcated from the host debt instrument and recorded in “Additional paid-in capital”. The resulting debt discount on the 2024 Notes is being amortized to interest expense at the effective interest rate over the contractual term of the 2024 Notes. The following table presents the components of the 2024 Notes as of March 27, 2020 and December 31, 2019 (in thousands, except for years and percentages):
| March 27, 2020 |  | December 31, 2019
Liability: |  |  |
Principal amount | $ | 115,500 |  |  | $ | 115,500 |
Less: Debt discount, net of amortization | (22,594 | ) |  | (23,652 | )
Less: Debt issuance costs, net of amortization | (3,074 | ) |  | (3,219 | )
Carrying amount | $ | 89,832 |  |  | $ | 88,629 |
Remaining amortization period (years) | 4.4 |  |  | 4.7 |
Effective interest rate on liability component | 7.95 | % |  | 7.95 | %
4.00% Convertible Senior Notes due 2020 In December 2015, the Company issued $128.25 million in aggregate principal amount of the 2020 Notes pursuant to an indenture (the “2020 Notes Indenture”), dated December 14, 2015, by and between the Company and U.S. Bank National Association, as trustee. The 2020 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 2020 Notes will mature on December 1, 2020 unless earlier repurchased by the Company, redeemed by the Company or converted pursuant to their terms. In September 2019, the Company used approximately $109.6 million of the net proceeds from the issuance of the 2024 Notes to repurchase $82.5 million aggregate principal of the 2020 Notes in privately negotiated transactions. The repurchase of the 2020 Notes was accounted for as a debt extinguishment, and the consideration transferred was allocated between the equity and liability components by determining the fair value of the conversion option immediately prior to the debt extinguishment and allocating that portion of the repurchase price to additional paid-in capital for $27.1 million, with the residual repurchase price allocated to the liability component, respectively. The partial repurchase of the 2020 Notes resulted in the recognition of a $5.7 million loss on debt extinguishment for the year ended December 31, 2019. The 2020 Notes are convertible into cash, shares of the 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 2020 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 2020 Notes Indenture. The 2020 Notes will be convertible at certain times and upon the occurrence of certain events in the future, in each case, specified in the 2020 Notes Indenture. Further, on or after September 1, 2020, until the close of business on the scheduled trading day immediately preceding the maturity date, holders of the 2020 Notes may convert all or a portion of their 2020 Notes regardless of these conditions. In accordance with the accounting guidance on embedded conversion features, the conversion feature associated with the 2020 Notes was initially valued at $26.1 million and bifurcated from the host debt instrument and recorded in “Additional paid-in capital”. The resulting debt discount on the 2020 Notes is being amortized to interest expense at the effective interest rate over the contractual terms of the 2020 Notes. The following table presents the components of the 2020 Notes as of March 27, 2020 and December 31, 2019 (in thousands, except for years and percentages):
| March 27, 2020 |  | December 31, 2019
Liability: |  |  |
Principal amount | $ | 45,785 |  |  | $ | 45,785 |
Less: Debt discount, net of amortization | (1,586 | ) |  | (2,151 | )
Less: Debt issuance costs, net of amortization | (191 | ) |  | (259 | )
Carrying amount | $ | 44,008 |  |  | $ | 43,375 |
Remaining amortization period (years) | 0.7 |  |  | 0.9 |
Effective interest rate on liability component | 9.94 | % |  | 9.94 | %
The 2020 Notes became convertible as of December 31, 2019, as the last reported sale price of the Common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter was greater than or equal to 130% of the conversion price of the 2020 Notes on each applicable trading day. As a result of the 2020 Notes becoming currently convertible for cash up to the principal amount of $45.8 million, the Company reclassified the unamortized debt discount for the 2020 Notes in the amount of $1.8 million from “Additional paid-in-capital” to convertible debt in the mezzanine equity section in the Condensed Consolidated Balance Sheet as of March 27, 2020. The following table presents interest expense recognized for the 2020 Notes and the 2024 Notes (in thousands):
| Three months ended
| March 27, 2020 |  | March 29, 2019
Contractual interest expense | $ | 1,035 |  |  | $ | 1,283 |
Amortization of debt discount | 1,623 |  |  | 1,433 |
Amortization of debt issuance costs | 212 |  |  | 172 |
Total interest expense recognized | $ | 2,870 |  |  | $ | 2,888 |
Other Debts and Finance Leases The Company has a variety of debt and credit facilities in France to satisfy the financing requirements of the operations of its French subsidiary. These arrangements are summarized in the table below (in thousands):
| March 27, 2020 |  | December 31, 2019
Financing from French government agencies related to various government incentive programs (1) | $ | 16,160 |  |  | $ | 16,566 |
Term loans | 174 |  |  | 587 |
Obligations under finance leases | 57 |  |  | 71 |
Total debt obligations | 16,391 |  |  | 17,224 |
Less: current portion | (6,343 | ) |  | (6,713 | )
Long-term portion | $ | 10,048 |  |  | $ | 10,511 |
(1) As of March 27, 2020 and December 31, 2019, loans backed by French R&D tax credit receivables were $14.7 million and $15.1 million, respectively. As of March 27, 2020, the French Subsidiary had an aggregate of $23.5 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 $1.5 million at March 27, 2020, 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 2025. Future minimum repayments The table below presents the future minimum repayments of debts and finance lease obligations in France as of March 27, 2020 (in thousands):
Years ending December 31, | Finance lease obligations |  | Other Debt obligations
2020 (remaining nine months) | $ | 35 |  |  | $ | 6,212 |
2021 | 22 |  |  | 5,007 |
2022 | — |  |  | 4,750 |
2023 | — |  |  | 147 |
Thereafter | — |  |  | 218 |
Total | $ | 57 |  |  | $ | 16,334 |
Line of Credit On December 19, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as lender. The Credit Agreement provides for a secured revolving loan facility in an aggregate principal amount of up to $25.0 million, based on a borrowing base of eligible accounts receivable and inventory, with a maturity date of October 31, 2020. The Company may use availability under the revolving loan facility for the issuance of letters of credit. The proceeds of the revolving loans may be used for general corporate purposes. The revolving loans bear interest, at the Company’s election, at a floating rate per annum equal to either (1) 1.25% plus the greater of (i) 1 month LIBOR on any day plus 2.50% and (ii) the prime rate as reported in the Wall Street Journal from time to time or (2) 2.25% plus LIBOR for an interest period of one, two or three months. Interest on the revolving loans is payable monthly in arrears, in the case of prime rate loans, and at the end of the applicable interest period, in the case of LIBOR loans. The Credit Agreement contains customary affirmative and negative covenants, including covenants limiting the ability of the Company, among other things, incur debt, grant liens, undergo certain fundamental changes, make investments, make certain restricted payments, dispose of assets, enter into transactions with affiliates, and enter into burdensome agreements, in each case, subject to limitations and exceptions set forth in the Credit Agreement. The Company is also required to maintain compliance with an adjusted quick ratio, a minimum EBITDA covenant (tested quarterly) and a minimum liquidity covenant, in each case, determined in accordance with the terms of the Credit Agreement. As of March 27, 2020, the Company was in compliance with the covenants under the Credit Agreement. As of March 27, 2020, there was $0.3 million of outstanding letters of credit issued under the Credit Agreement. There were no revolving borrowings under the Credit Agreement as of March 27, 2020. As of March 27, 2020, the Company has security for letters of credit which are unsecured in the amount of $2.2 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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