Long-Term Debt

On March 10, 2015, we entered into a secured credit agreement (the "Credit Agreement") with Jefferies Finance, LLC and certain other lenders for purposes of funding, in part, our acquisition of Silicon Image. The Credit Agreement provided for a $350 million term loan (the "Term Loan") maturing on March 10, 2021 (the "Term Loan Maturity Date"). We received $346.5 million net of an original issue discount of $3.5 million and we paid debt issuance costs of $8.3 million. The Term Loan bears variable interest equal to the 6-month LIBOR as of December 31, 2016, subject to a 1.00% floor, plus a spread of 4.25%. The current effective interest rate on the Term Loan is 6.20%.

The Term Loan is payable through a combination of (i) quarterly installments of approximately $0.9 million, which began on July 4, 2015, (ii) annual excess cash flow payments as defined in the Credit Agreement, which are due 95 days after the last day of our fiscal year, and (iii) any payments due upon certain issuances of additional indebtedness and certain asset dispositions, with any remaining outstanding principal amount due and payable on the Term Loan Maturity Date. The percentage of excess cash flow we are required to pay ranges from 0% to 75%, depending on our leverage and other factors as defined in the Credit Agreement. Currently, the Credit Agreement would require a 75% excess cash flow payment. In the second quarter of fiscal 2016, we made a required additional principal payment of $1.7 million due to the sale of Qterics.

Due to the combination of payments described above, our calculation of the current portion of long-term debt depends on activity that has occurred subsequent to December 31, 2016. Since our Earnings Release on February 15, 2017, we have entered into a patent monetization transaction that has triggered a $17.9 million increase to current portion of long-term debt presented in the Consolidated Balance Sheets. Over the next twelve months, we expect to be required to make principal payments of approximately $32.5 million, in addition to required quarterly payments.

While the Credit Agreement does not contain financial covenants, it does contain informational covenants and certain restrictive covenants, including limitations on liens, mergers and consolidations, sales of assets, payment of dividends, and indebtedness. We were in compliance with all such covenants at December 31, 2016.

The original issue discount and the debt issuance costs have been accounted for as a reduction to the carrying value of the Term Loan on our Consolidated Balance Sheets and are being amortized to interest expense in our Consolidated Statements of Operations over the contractual term, using the effective interest method.

The fair value of the Term Loan approximates the carrying value, which is reflected in our Consolidated Balance Sheets as follows:



(in thousands)	December 31, 2016			January 2, 2016
Principal amount	$	342,221		$	347,375
Unamortized original issue discount and debt issuance costs	(7,599		)	(8,948		)
Less: Current portion of long-term debt	(33,767		)	(7,557		)
Long-term debt	$	300,855		$	330,870

Interest expense related to the Term Loan was included in Interest expense on the Consolidated Statements of Operations as follows:



			Year Ended
(in thousands)	December 31, 2016		January 2, 2016		January 3, 2015
Contractual interest	$	18,518	$	15,225	$	—
Amortization of debt issuance costs and discount	1,350		2,835		—
Total Interest expense related to the Term Loan	$	19,868	$	18,060	$	—

As of December 31, 2016, minimum expected future principal payments on the Term Loan were as follows:



Fiscal year	(in thousands)

2017	$	35,996
2018	20,813
2019	52,583
2020	89,113
2021	143,716
	$	342,221