Note 3 - Borrowings and Credit Agreements

9 Months Ended

Sep. 28, 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

September 28, 2019

and

December 29, 2018 (

in thousands)

:

	September 28,			December 29,
	2019			2018 (1)
Bank Term Loan under Credit Agreement	$	346,500		$	349,125
Bank Term Loans-Kita		4,042			4,576
Bank Term Loan-Xcerra		1,524			1,839
Bank Term Loan-Rasco		3,720			-
Lines of Credit		3,241			3,115
Total debt		359,027			358,655
Less: financing fees and discount		(7,725	)		(8,551	)
Less: current portion		(6,382	)		(6,676	)
Total long-term debt	$	344,920		$	343,428

( 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.

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

September 28, 2019,

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

$338.8

 million and

$2.4

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

September 28, 2019,

the fair value of the debt was

$332.2

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

September 28, 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

0.44%,

and expire at various dates through

2034.

At

September 28, 2019,

the outstanding loan balance was

$4.0

 million and

$0.5

 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

September 28, 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

September 28, 2019,

the outstanding loan balance was

$1.5

 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

September 28, 2019.

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

Rasco Term Loan

On

July 26, 2019,

our wholly owned subsidiary Rasco GmbH entered into a term loan agreement with a financial institution in Germany that provided

€3.4

million (Euro) that is being used to finance the expansion of our facility in Kolbermoor, Germany. The facility expansion project will allow us to combine the operations of multiple subsidiaries in

one

location as part of our strategic restructuring program. The loan is secured by the land and the existing building on the site. The loan is payable over

10

years at an annual interest rate of

0.8%.

Principal repayments will be made over

8

years starting at the end of

2021.

Only interest will be due each quarter starting in

September 2019

and principal plus accrued interest will be due each quarter starting at the end of

December, 2021.

At

September 28, 2019,

the outstanding loan balance was

$3.7

 million with

none

of the outstanding balance being presented as current installments of long-term debt in our consolidated balance sheets based on contractual due dates. The term loan is denominated in Euros and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates. The fair value of the debt approximates the carrying value at

September 28, 2019.

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

$8.9

 million. At

September 28, 2019,

total borrowings outstanding under the revolving lines of credit were

$3.3

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

September 28, 2019

and

December 29, 2018

no

amounts were outstanding under this line of credit.