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Long-term Debt and Letters of Credit
6 Months Ended
Jun. 28, 2021
Debt Disclosure [Abstract]  
Long-term Debt and Letters of Credit

(8) Long-term Debt and Letters of Credit

The following table summarizes the long-term debt of the Company as of June 28, 2021 and December 28, 2020:

 

 

Interest Rate as of

June 28, 2021

 

 

Principal

Outstanding

as of

June 28, 2021

 

 

Interest Rate as of

December 28, 2020

 

 

Principal

Outstanding

as of

December 28, 2020

 

 

 

(In thousands)

 

Senior Notes due March 2029

 

 

4.00

 

%

$

500,000

 

 

 

 

%

$

 

Term Loan due September 2024

 

 

2.60

 

 

 

405,879

 

 

 

2.65

 

 

 

405,879

 

Senior Notes due October 2025

 

 

 

 

 

 

 

 

5.63

 

 

 

375,000

 

U.S. ABL Revolving Loan due June 2024

 

 

 

 

 

 

 

 

1.40

 

 

 

40,000

 

Asia ABL Revolving Loan due June 2024

 

 

1.50

 

 

 

30,000

 

 

 

1.55

 

 

 

30,000

 

 

 

 

 

 

 

 

935,879

 

 

 

 

 

 

 

850,879

 

Less: Long-term debt unamortized discount

 

 

 

 

 

 

(712

)

 

 

 

 

 

 

(814

)

Long-term debt unamortized debt

issuance costs

 

 

 

 

 

 

(8,644

)

 

 

 

 

 

 

(7,212

)

 

 

 

 

 

 

 

926,523

 

 

 

 

 

 

 

842,853

 

Less: current maturities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

 

 

 

$

926,523

 

 

 

 

 

 

$

842,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pursuant to the Term Loan Credit Agreement, the Company may reinvest the cash proceeds received from the sale of the Mobility business unit for a period of twelve months commencing September 3, 2020. If the proceeds are not reinvested during that time, the Company is required to use the proceeds to prepay the Term Loan. The Company used a portion of the cash proceeds to

repay $400,000 of the Term Loan during the year ended December 28, 2020 and used the remaining cash proceeds for reinvestment pursuant to the Term Loan Credit Agreement. Permitted investments, as defined in the Term Loan Credit Agreement, include extensions of trade credit in the ordinary course of business, investments in cash and cash equivalents, permitted acquisitions, investments in assets useful in the business of the Company and its restricted subsidiaries, investments in joint ventures and unrestricted subsidiaries among others.

 

Senior Notes due 2029

On March 10, 2021, the Company issued $500,000 of Senior Notes due 2029, which are included in long-term debt and bear interest at a rate of 4.0% per annum. Interest is payable semiannually in arrears on March 1 and September 1 of each year beginning September 1, 2021. The Senior Notes due 2029 will mature on March 1, 2029.

The Company used a portion of the net proceeds from the issuance of the Senior Notes due 2029 during the quarter ended March 29, 2021 to: (i) fund the early retirement of $375,000 Senior Notes due 2025, (ii) fund the repayment of $40,000 outstanding under the U.S. Asset-Based Lending Credit Agreement (U.S. ABL) Revolving credit facility (but not terminate the commitments thereunder), and (iii) pay related premiums, fees and expenses. The Company intends to use the remaining net proceeds for general corporate purposes.

Asset-Based Lending Agreements

As of June 28, 2021, letters of credit in the amount of $12,201 were outstanding under the U.S. ABL and $3,475 were outstanding under the Asia Asset-Based Lending Credit Agreement (Asia ABL) with various expiration dates through July 2021. Available borrowing capacity under the U.S. ABL and the Asia ABL was $137,799 and $116,525, respectively, which considers letters of credit outstanding as of June 28, 2021.

 

Debt Covenants

Borrowings under the Term Loan and Senior Notes due 2029 are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and share payments.

Under the occurrence of certain events, the U.S. ABL and Asia ABL (collectively, the ABL Revolving Loans), are subject to various financial covenants, including leverage and fixed charge coverage ratios.

Debt Issuance and Debt Discount

As of June 28, 2021 and December 28, 2020, remaining unamortized debt discount and debt issuance costs for the Senior Notes due 2029, Term Loan Facility and Senior Notes due 2025 are as follows:

 

 

 

As of June 28, 2021

 

 

As of December 28, 2020

 

 

Debt

Issuance Costs

 

 

Debt

Discount

 

 

Effective

Interest Rate

 

 

Debt

Issuance Costs

 

 

Debt

Discount

 

 

Effective

Interest Rate

 

 

 

 

(In thousands, except interest rates)

Senior Notes due March 2029

 

$

6,289

 

 

$

 

 

 

4.19

 

%

$

 

 

$

 

 

 

 

%

Term Loan due September 2024

 

 

2,355

 

 

 

712

 

 

 

4.66

 

 

 

2,695

 

 

 

814

 

 

 

4.66

 

 

Senior Notes due October 2025

 

 

 

 

 

 

 

 

 

4,517

 

 

 

 

 

5.92

 

 

 

 

$

8,644

 

 

$

712

 

 

 

 

 

 

$

7,212

 

 

$

814

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The above debt discount and debt issuance costs are recorded as a reduction of the debt and are amortized into interest expense using an effective interest rate over the duration of the debt.

Remaining unamortized debt issuance costs for the ABL Revolving Loans of $1,637 and $1,919 as of June 28, 2021 and December 28, 2020, respectively, are included in other non-current assets and are amortized to interest expense over the duration of the ABL Revolving Loans using the straight-line method of amortization.

As of June 28, 2021, the remaining weighted average amortization period for all unamortized debt discount and debt issuance costs was 5.7 years.

Loss on Extinguishment of Debt

During the two quarters ended June 28, 2021, the Company recognized losses of $15,217 associated with the premium paid on extinguishment of debt and the write-off of the remaining unamortized debt issuance costs as a result of the repayment of the remaining outstanding balance of the Senior Notes due 2025.