Convertible Notes, Other Debts And Capital Leases (Tables)

9 Months Ended

Sep. 30, 2016

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The following table presents the components of the Notes as of September 30, 2016 and December 31, 2015 (in thousands, except for years and percentages):



	September 30, 2016			December 31, 2015
Liability:
Principal amount	$	128,250		$	128,250
Less: Debt discount, net of amortization	(23,458		)	(26,732		)
Less: Debt issuance costs, net of amortization	(2,828		)	(3,223		)
Carrying amount	$	101,964		$	98,295
Remaining amortization period (years)	4.2			4.9
Effective interest rate on liability component	9.94		%	9.94		%

Equity:
Value of conversion option	$	26,925		$	26,925
Less: Equity issuance costs	(863		)	(863		)
Carrying amount	$	26,062		$	26,062

Convertible Debt Interest

The following table presents interest expense recognized for the Notes (in thousands):



	Three months ended				Nine months ended
	September 30, 2016		October 2, 2015		September 30, 2016		October 2, 2015
Contractual interest expense	$	1,283	$	—	$	3,848	$	—
Amortization of debt discount	1,117		—		3,274		—
Amortization of debt issuance costs	135		—		395		—
Total interest expense recognized	$	2,535	$	—	$	7,517	$	—

Schedule of Other Debt and Capital Leases

In connection with the TVN acquisition, the Company assumed a variety of debt and credit facilities in France to satisfy the financing requirements of TVN operations. These arrangements are summarized in the table below (in thousands):



	September 30, 2016
Financing from French government agencies related to various government incentive programs ⁽¹⁾	$	19,153
Term loans ⁽²⁾	1,564
Secured borrowings ⁽³⁾	—
Obligations under capital leases	2,057
Total debt obligations	22,774
Less: current portion	(6,825		)
Long-term portion	$	15,949

Other than the 4.00% Notes, the Company did not have any other indebtedness as of December 31, 2015.

(1) As of September 30, 2016, the Company’s TVN French Subsidiary had an aggregate of $19.2 million of loans due to various financing programs of French government agencies, $15.6 million of which is related to loans backed by French R&D tax credit receivables. As of September 30, 2016, the TVN French Subsidiary had an aggregate of $25.1 million of R&D tax credit receivables from the French government from 2017 through 2020. (See Note 8, “Balance Sheet Components-Prepaid expenses and other current assets” for more information). The R&D tax loans have a fixed rate of 0.6%, plus EURIBOR 1 month + 1.3% and matures between 2017 through 2019. The remaining loans of $3.6 million at September 30, 2016 primarily relates to financial support from French government agencies for R&D innovation projects at minimal interest rates and these loans mature between 2020 through 2023.

(2) One of the term loans with a certain financial institution contains annual covenants that require the TVN French Subsidiary to maintain a minimum working capital balance and various other financial covenants and restrictions that limit the French Subsidiary’s ability to incur additional indebtedness. The annual covenant is based on French statutory year-end results and the French subsidiary was in compliance for 2015.

(3) The TVN French Subsidiary obtained advances under a credit line with BPI France against a pool of eligible receivables with recourse. The maximum advance under this credit line for receivables is €2 million (approximately $2.2 million as converted using the exchange rate at September 30, 2016), less applicable fees, and €200,000 (approximately $0.2 million as converted using the exchange rate at September 30, 2016) of cash is pledged for this program. This credit line was renewed in July 2016 for an additional year with no material change to the terms of the credit agreement. The TVN French Subsidiary also entered into an accounts receivable financing agreement with GE Capital Cofacredit, (“GE”) on September 27, 2013, which is subject to automatic renewal unless cancelled. GE advances up to 90% of qualified customer invoices and holds the remaining 10% as a guarantee fund with a minimum of €80,000 (approximately $0.1 million as converted using the exchange rate at September 30, 2016). In addition, another 10% of outstanding receivables is set aside in a holdback receivable and released upon payments received from the customers. These arrangements are treated as secured borrowings in accordance with FASB ASC 860, Transfers and Servicing.

Schedule of Maturities of Long-term Debt

The table below shows the future minimum repayments of debts and capital lease obligations as of September 30, 2016 (in thousands):



Years ending December 31,	Capital lease obligations		Other Debt obligations
2016 (remaining three months)	$	299	$	129
2017	1,130		5,691
2018	534		5,849
2019	68		6,743
2020	26		673
Thereafter	—		1,632
Total	$	2,057	$	20,717