Long-term Debt



	September 30, 2017			December 31, 2016
	(In millions)
Term loan, bearing interest at variable rates (rate of 3.24% as of September 30, 2017), maturing in June 2021	$	375.0		$	390.0
Unamortized deferred financing costs	(1.8		)	(2.0		)
Total senior debt	373.2			388.0
Senior convertible notes, bearing interest at 2.25% per annum, interest payments due in June and December, maturing in December 2023	300.0			300.0
Unamortized discount and deferred financing costs	(54.6		)	(60.0		)
Total convertible senior notes	245.4			240.0
Convertible subordinated debentures, bearing interest at 4.0625% per annum, interest payments due in June and December, maturing in December 2039	—			35.6
Total convertible subordinated notes	—			35.6
Total debt, net of unamortized discount and deferred financing costs	618.6			663.6
Less: Amounts due within one year	(22.4		)	(55.6		)
Total long-term debt, net of unamortized discount and deferred financing costs	$	596.2		$	608.0

Senior Credit Facility

On June 17, 2016, the Company entered into a new $750.0 million senior secured senior credit facility (the "Senior Credit Facility"). The Senior Credit Facility matures on June 17, 2021 and consists of (i) a $350.0 million revolving line of credit (the "Revolver") and (ii) a $400.0 million term loan (the "Term Loan"). Under the Revolver, up to an aggregate of $100.0 million is available for the issuance of letters of credit and up to an aggregate of $10.0 million is available for swingline loans. The Senior Credit Facility amends and replaces the prior $300.0 million credit facility which was set to mature in May 2019.

On the closing date, the Company borrowed $100.0 million of loans under the Revolver and used the proceeds to repay in full the $90.0 million of outstanding term loans under the prior credit facility, fees incurred for the Senior Credit Facility, and for general corporate purposes. As of September 30, 2017, the Company had $375.0 million outstanding under the Term Loan, zero borrowings under the Revolver, and had issued $39.1 million letters of credit.

The Term Loan and loans under the Revolver bear interest at LIBOR (or the base rate) plus an applicable margin ranging from 175 to 250 basis points based on the Company's leverage ratio (the "Consolidated Net Leverage Ratio") at the end of the most recent fiscal quarter. In addition to interest, the Company must also pay certain fees including (i) letter of credit fees ranging from 175 to 250 basis points per annum on the amount of issued but undrawn letters of credit and (ii) commitment fees ranging from 30 to 45 basis points per annum on the unused portion of the Revolver.

The Term Loan amortizes at a rate of 5.0% per annum of the original drawn amount starting on September 30, 2016, increasing to 7.5% per annum on September 30, 2018, and increasing to 10.0% per annum from September 30, 2020 to be paid in equal quarterly installments with any remaining amounts, along with outstanding borrowings under the Revolver, due on the maturity date. Outstanding borrowings under the Revolver and the Term Loan may be voluntarily repaid at any time, in whole or in part, without premium or penalty.

Subject to certain restrictions, all the obligations under the Senior Credit Facility are guaranteed by the Company and the existing and future material domestic subsidiaries, other than Easton (the "Guarantors"). As collateral security for the amount outstanding under the Senior Credit Facility and the guarantees thereof, the Company and the Guarantors (collectively, the "Loan Parties") have granted to the administrative agent for the benefit of the lenders: (i) certain equity interests of the Loan Parties; (ii) first priority liens on substantially all of the tangible and intangible personal property of the Loan Parties; and (iii) first priority liens on certain real properties located in Los Angeles, California, Culpepper, Virginia and Redmond, Washington (but excluding all other owned real properties).

The Senior Credit Facility contains covenants requiring the Company to (i) maintain an interest coverage ratio (the "Consolidated Interest Coverage Ratio") of not less than 3.00 to 1.00 and (ii) maintain a Consolidated Net Leverage Ratio not to exceed (a) 4.00 to 1.00 for period ended September 30, 2017; (b) 3.75 to 1.00 for periods ending from December 31, 2017 through September 30, 2018; and (c) 3.50 to 1.00 for periods ending from December 31, 2018 thereafter, provided that the maximum leverage ratio for all periods shall be increased by 0.50 to 1.00 for two quarters after consummation of a qualified acquisition.

The Company may generally make certain investments, redeem debt subordinated to the Senior Credit Facility and make certain restricted payments (such as stock repurchases) if the Company's Consolidated Net Leverage Ratio does not exceed 3.25 to 1.00 pro forma for such transaction. The Company is otherwise subject to customary covenants including limitations on asset sales, incurrence of additional debt, and limitations on certain investments and restricted payments.



Financial Covenant	Actual Ratios as of September 30, 2017	Required Ratios
Consolidated Interest Coverage Ratio, as defined under the Senior Credit Facility	10.97 to 1.00	Not less than: 3.00 to 1.00
Consolidated Net Leverage Ratio, as defined under the Senior Credit Facility	2.47 to 1.00	Not greater than: 4.00 to 1.00

The Company was in compliance with its financial and non-financial covenants as of September 30, 2017.

2.25% Convertible Senior Notes

On December 14, 2016, the Company issued $300.0 million aggregate principal amount of 2¼% Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.

The Company separately accounted for the liability and equity components of the 2¼% Notes. The initial liability component of the 2¼% Notes was valued based on the present value of the future cash flows using an estimated borrowing rate at the date of the issuance for similar debt instruments without the conversion feature, which equals the effective interest rate of 5.8% on the liability component. The equity component, or debt discount, was initially valued equal to the principal value of the 2¼% Notes, less the liability component. The debt discount is being amortized as a non-cash charge to interest expense over the period from the issuance date through December 15, 2023.

The debt issuance costs of $5.8 million incurred in connection with the issuance of the 2¼% Notes were capitalized and bifurcated into deferred financing costs of $4.7 million and equity issuance costs of $1.1 million. The deferred financing costs are being amortized to interest expense from the issuance date through December 15, 2023.

The 2¼% Notes consisted of the following (in millions, except years, percentages, conversion rate, and conversion price):



	September 30, 2017			December 31, 2016
Carrying value, long-term	$	245.4		$	240.0
Unamortized discount and deferred financing costs	54.6			60.0
Principal amount	$	300.0		$	300.0
Carrying amount of equity component, net of equity issuance costs	$	54.5		$	54.5
Remaining amortization period (years)	6.3			7.0
Effective interest rate	5.8		%	5.8		%
Conversion rate (shares of common stock per $1,000 principal amount)	38.4615			38.4615
Conversion price (per share of common stock)	$	26.00		$	26.00

Based on the Company's closing stock price of $35.01 on September 30, 2017, the if-converted value of the 2¼% Notes exceeded the aggregate principal amount of the 2¼% Notes by $104.0 million.

The following table presents the interest expense components for the 2¼% Notes for the first nine months of fiscal 2017 (in millions):



Interest expense-contractual interest	$	5.1
Interest expense-amortization of debt discount	5.0
Interest expense-amortization of deferred financing costs	0.4
	$	10.5

4.0625% Convertible Subordinated Debentures

As of September 30, 2017, the Company fully redeemed the outstanding principal amount of its 4¹/₁₆% Debentures. In December 2016, the Company notified holders of its 4¹/₁₆% Debentures that the Company would redeem, on February 3, 2017, all of their 4¹/₁₆% Debentures at a purchase price equal to 100% of the principal amount of the 4¹/₁₆% Debentures to be redeemed, plus any accrued and unpaid interest. In January 2017, $35.6 million of the 4¹/₁₆% Debentures (the entire amount outstanding as of December 31, 2016) were converted to 3.9 million shares of common stock.