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Long-Term Debt and Short-Term Borrowings | 3 Months Ended
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Apr. 01, 2021
Long-Term Debt and Short-Term Borrowings |
Long-Term Debt and Short-Term Borrowings | 4. Long-Term Debt and Short-Term Borrowings Long-term debt is summarized as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | April 1,2021 |  | December 31, 2020
​ | ​ | (in thousands, except payment data)
Mortgage notes | ​ | $ | 24,482 | ​ | $ | 24,482
Senior notes | ​ |  | 100,000 | ​ |  | 100,000
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75% | ​ |  | 1,642 | ​ |  | 1,735
Convertible senior notes | ​ | ​ | 100,050 | ​ | ​ | 100,050
Payroll Protection Program loans | ​ | ​ | 3,424 | ​ | ​ | 3,424
Revolving credit agreement | ​ |  | 14,000 | ​ |  | —
Debt issuance costs | ​ |  | (4,467) | ​ |  | (3,684)
​ | ​ |  | 239,131 | ​ |  | 226,007
Less current maturities, net of issuance costs | ​ |  | 11,361 | ​ |  | 10,548
Less debt discount | ​ | ​ | — | ​ | ​ | 22,423
​ | ​ | $ | 227,770 | ​ | $ | 193,036
​ Credit Agreement At April 1, 2021, the Company had a revolving credit facility totaling $225,000,000 in place under an existing credit agreement that matures on January 9, 2025. There were borrowings of $14,000,000 outstanding on the revolving credit facility at April 1, 2021, bearing interest at LIBOR plus a margin, effectively 3.35% at April 1, 2021. The revolving credit facility requires an annual facility fee of 0.40% on the total commitment. Availability under the line at April 1, 2021, was $207,199,000, after taking into consideration outstanding letters of credit that reduce revolver availability. The credit agreement also provides for a Senior Term Loan A (the “Term Loan A”) that matures September 22, 2021. The $90,800,000 Term Loan A, net of amortized debt issuance costs of $436,000 and prepayments of $7,105,000 made in conjunction with certain asset dispositions, is included in short-term borrowings on the consolidated balance sheet as of April 1, 2021, and bears interest at 3.75%. In connection with the credit agreement: (i) the Company has pledged, subject to certain exceptions, security interests and liens in and on (a) substantially all of its respective personal property assets and (b) certain of its respective real property assets, in each case, to secure the credit agreement and related obligations; and (ii) certain of the Company’s subsidiaries have guaranteed the Company’s obligations under the credit agreement. The foregoing security interests, liens and guaranties will remain in effect until the Collateral Release Date (as defined in the credit agreement). The credit agreement contains customary events of default. If an event of default under the credit agreement occurs and is continuing, then, among other things, the lenders may declare any outstanding obligations under the credit agreement to be immediately due and payable and exercise rights and remedies against the pledged collateral. Convertible Senior Notes During fiscal 2020, the Company entered into a purchase agreement to issue and sell $100,050,000 aggregate principal amount of its 5.00% Convertible Senior Notes due 2025 (the “Convertible Notes.”) The Convertible Notes were issued pursuant to an indenture (the “Indenture”), dated September 22, 2020, between the Company and U.S. Bank National Association, as trustee. Prior to fiscal 2021, the Company separated the Convertible 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 par value of the Convertible Notes. The difference between the principal amount of the Convertible Notes and the liability component represented the debt discount, which was recorded as a direct deduction from the related debt liability in the consolidated balance sheet. On January 1, 2021, the Company early adopted ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU No. 2020-06 is designed to simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendments remove the separation models in ASC 470-20 for certain contracts. As a result, embedded conversion features would not be presented separately in equity, rather, the contract would be accounted for as a single liability measured at its amortized cost. Upon adoption, the Company recorded a one-time cumulative effect adjustment to the balance sheet on January 1, 2021 as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Balance at |  | ​ | ​ |  | ​ | ​
​ | ​ | December 31, | ​ | Cumulative | ​ | Balance at
​ |  | 2020 |  | adjustment |  | January 1, 2021
​ | ​ | (in thousands)
Long-term debt | ​ | $ | 193,036 | ​ | $ | 21,393 | ​ | $ | 214,429
Deferred income taxes | ​ |  | 33,429 | ​ |  | (5,584) | ​ |  | 27,845
Capital in excess of par | ​ |  | 153,529 | ​ |  | (16,511) | ​ |  | 137,018
Retained earnings | ​ |  | 331,897 | ​ |  | 702 | ​ |  | 332,599
​ Additionally, upon adoption of ASU No. 2020-06, the Company uses the if-converted method when calculating diluted earnings (loss) per share for convertible instruments. The Convertible Notes bear interest from September 22, 2020 at a rate of 5.00% per year. Interest will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2021. The Convertible Notes may bear additional interest under specified circumstances relating to the Company’s failure to comply with its reporting obligations under the Indenture or if the Convertible Notes are not freely tradeable as required by the Indenture. The Convertible Notes will mature on September 15, 2025, unless earlier repurchased or converted. Prior to March 15, 2025, the Convertible Notes will be convertible at the option of the holders only under the following circumstances: (i) during any fiscal quarter commencing after the fiscal quarter ending on December 31, 2020 (and only during such fiscal quarter), if the last reported sale price of the Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period immediately after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Common Stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2025, the Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, the Convertible Notes may be settled, at the Company’s election, in cash, shares of Common Stock or a combination thereof. The initial conversion rate is 90.8038 shares of Common Stock per $1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $11.01 per share of Common Stock), representing an initial conversion premium of approximately 22.5% to the $8.99 last reported sale price of the Common Stock on The New York Stock Exchange on September 17, 2020. If the Company undergoes certain fundamental changes, holders of Convertible Notes may require the Company to repurchase for cash all or part of their Convertible Notes for a purchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change occurs prior to the maturity date, the Company will, under certain circumstances, increase the conversion rate for holders who convert Convertible Notes in connection with such make-whole fundamental change. The Company may not redeem the Convertible Notes before maturity and no “sinking fund” is provided for the Convertible Notes. The Indenture includes covenants customary for securities similar to the Convertible Notes, sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company and certain of its subsidiaries after which the Convertible Notes become automatically due and payable. As of April 2, 2021, the first day of the Company’s second quarter, a conversion feature on the Convertible Notes had been met, and thus the Company’s Convertible Notes are now eligible for conversion. The Company has the ability to settle the conversion in Company stock. As such, the Convertible Notes will continue to be classified as long-term. Future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement period. No Convertible Notes have been converted to date and the Company does not expect any to be converted within the next 12 months. Derivatives The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. The Company entered into two interest rate swap agreements on March 1, 2018 covering $50,000,000 of floating rate debt. The first agreement has a notional amount of $25,000,000, expired March 1, 2021, and required the Company to pay interest at a defined rate of 2.559% while receiving interest at a defined variable rate of one-month LIBOR. The second agreement has a notional amount of $25,000,000, expires March 1, 2023, and requires the Company to pay interest at a defined rate of 2.687% while receiving interest at a defined variable rate of one-month LIBOR (0.125% at April 1, 2021). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company’s interest rate swap agreements are considered effective and qualify as cash flow hedges. The Company assesses, both at the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. As of April 1, 2021, the remaining interest rate swap was considered highly effective. The fair value of the interest rate swap on April 1, 2021 was a liability of $1,186,000, which is included in other long-term obligations in the consolidated balance sheet. The fair value of the interest rate swaps on December 31, 2020, was a liability of $1,470,000, of which $100,000 was included in other accrued liabilities and $1,370,000 was included in other long-term obligations in the consolidated balance sheet. The Company does not expect the interest rate swap to have a material effect on earnings within the next 12 months.

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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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