Note 4 - Borrowings and Credit Agreements

12 Months Ended

Dec. 29, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

4. Borrowings and Credit Agreements

The following table is a summary of our borrowings as of

December 29, 2018

and

December 30, 2017:

	Fiscal year-end
(in thousands)	2018  (1)			2017
Bank Term Loan under Credit Agreement	$	349,125		$	-
Bank Term Loans-Kita		4,576			5,855
Bank Term Loan-Xcerra		1,839			-
Lines of Credit		3,115			3,108
Total debt		358,655			8,963
Less: financing fees and discount		(8,551	)		-
Less: current portion		(6,676	)		(4,388	)
Total long-term debt	$	343,428		$	4,575

( 1 ) Excludes capital lease obligations, which are included in long-term and short-term debt in our consolidated balance sheet, as they were not material at December 29, 2018.

The debt principal payments, excluding capital lease obligations, for the next

five

years and thereafter are as follows:

(in thousands)
2019	$	7,791
2020		4,195
2021		4,082
2022		4,082
2023		4,082
Thereafter		334,423
Total	$	358,655

Credit Agreement

On

October 1, 2018,

we entered into a Credit Agreement providing for a

$350.0

million Credit Facility and borrowed the full amount. Loans under the Credit Facility amortize in equal quarterly installments equal to

0.25%

of the original principal amount, with the balance payable at maturity. All outstanding principal and interest in respect of the Credit Facility must be repaid on or before

October 1, 2025.

The loans under the Term Loan Facility bear interest, at Cohu’s option, at a floating annual rate equal to LIBOR plus a margin of

3.00%.

At

December 29, 2018,

the outstanding loan balance, net of discount and deferred financing costs, was

$340.6

million and

$2.4

million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. As of

December 29, 2018,

the fair value of the debt was

$336.9

 million. The measurement of the fair value of debt is based on the average of the bid and ask trading quotes as of

December 29, 2018

and is considered a Level

2

fair value measurement. See Note

2,

“Business Acquisitions” for additional information on the Credit Facility.

Kita Term Loans

As a result of our acquisition of Kita, we assumed term loans from a series of Japanese financial institutions primarily related to the expansion of Kita’s facility in Osaka, Japan. The loans are collateralized by the facility and land, carry interest rates ranging from

0.05%

to

0.45%,

and expire at various dates through

2034.

At

December 29, 2018,

the outstanding loan balance was

$4.6

million and

$0.9

million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. The fair value of the debt approximates the carrying value at

December 29, 2018.

The term loans are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Xcerra Term Loan

As a result of our acquisition of Xcerra, we assumed a term loan related to the purchase of Xcerra’s facility in Rosenheim, Germany. The loan is payable over

10

years at an annual interest rate of

2.35%.

Principal plus accrued interest is due quarterly over the duration of the term loan. At

December 29, 2018,

the outstanding loan balance was

$1.8

million and

$0.3

million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. The fair value of the debt approximates the carrying value at

December 29, 2018.

The term loan is denominated in Euros and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Lines of Credit

As a result of our acquisition of Kita, we assumed a series of revolving credit facilities with various financial institutions in Japan. The credit facilities renew monthly and provide Kita with access to working capital totaling up to

$6.2

 million. At

December 29, 2018,

total borrowings outstanding under the revolving lines of credit were

$3.1

 million. As these credit facility agreements renew monthly, they have been included in short-term borrowings in our consolidated balance sheet.

The revolving lines of credit are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Our wholly owned Ismeca subsidiary has

one

available line of credit which provides it with borrowings of up to a total of

2.0

 million Swiss Francs. At

December 29, 2018,

and

December 30, 2017,

no

amounts were outstanding under this line of credit.