Note 3 - Borrowings and Credit Agreements

3 Months Ended

Mar. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

3. Borrowings and Credit Agreements

The following table is a summary of our borrowings as of

March 30, 2019

and

December 29, 2018 (

in thousands)

:

		March 30,			December 29,
		2019			2018
Bank Term Loan under Credit Agreement	$	348,250		$	349,125
Bank Term Loans-Kita		4,354			4,576
Bank Term Loan-Xcerra		1,729			1,839
Lines of Credit		3,161			3,115
Total debt		357,494			358,655
Less: financing fees and discount		(8,280	)		(8,551	)
Less: current portion		(6,582	)		(6,676	)
Total long-term debt	$	342,632		$	343,428

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 of

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

March 30, 2019,

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

$340.0

 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

March 30, 2019,

the fair value of the debt was

$337.8

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

March 30, 2019

and is considered a Level

2

fair value measurement. See Note

2,

“Business Acquisitions, Goodwill and Purchased Intangible Assets” 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

March 30, 2019,

the outstanding loan balance was

$4.3

 million and

$0.7

 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

March 30, 2019.

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 ending in

March 2024.

At

March 30, 2019,

the outstanding loan balance was

$1.7

 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

March 30, 2019.

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

$6.3

 million. At

March 30, 2019,

total borrowings outstanding under the revolving lines of credit were

$3.2

 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

March 30, 2019,

and

December 29, 2018.,

no

amounts were outstanding under this line of credit.