FINANCING

Long-term debt consists of the following:



(in thousands)	2017			2016
Long-term debt
Tranche B term loan, 1.00% amortizing per year, maturing July 5, 2023	$	455,400		$	460,000
Tangible equity units, 8.75% coupon, maturing July 1, 2019 ¹	16,443			24,985
Capital lease obligations	2,466			—
Total long-term debt	$	474,309		$	484,985
Less: Unamortized underwriting discounts, commissions and other expenses	(12,491		)	(16,843		)
Less: Current maturities of tranche B term loan debt ^{2, 3}	(33,600		)	(4,600		)
Less: Current maturities of TEU debt ²	(9,152		)	(8,541		)
Less: Current maturities of capital lease obligations ²	(522		)	—
Total long-term debt, less current maturities, net	$	418,544		$	455,001


¹	See Note 9 for more information on our TEUs issued in the third quarter of fiscal year 2016.


²	In addition to the current maturities above, current maturities of long-term debt, net on the Consolidated Balance Sheets includes the current portion of unamortized underwriting discounts, commissions and other expenses of $4,179 and $3,291 as of September 30, 2017 and October 1, 2016, respectively.


³	As of September 30, 2017, current maturities of tranche B term loan consists of the 1% annual payment and calculated required annual Excess Cash Flow payment as defined below, as well as planned prepayments. As of October 1, 2016, current maturities of tranche B term loan consists of the 1% annual payment.

Tranche B Term Loan and Revolving Credit Facility

In the fourth quarter of fiscal year 2016, we entered into a credit agreement with U.S. Bank National Association and HSBC Bank USA, National Association as Co-documentation Agents, Wells Fargo Bank, National Association as Syndication Agent, JPMorgan Chase Bank, N.A. as Administrative Agent and JP Morgan Chase Bank, N.A. and Wells Fargo Securities, LLC as Joint Bookrunners and Joint Lead Arrangers (the Credit Agreement). The Credit Agreement provides for senior secured credit facilities consisting of a $120,000 revolving credit facility (the Revolving Credit Facility) which expires on July 5, 2021, and a $460,000 tranche B term loan facility (the Term Facility) which expires on July 5, 2023. The proceeds of the Revolving Credit Facility can be drawn upon to refinance existing indebtedness and for working capital and other general corporate purposes up to a maximum of $120,000. The proceeds of the Term Facility were used for financing the acquisition of PCB. The Term Facility amortizes in equal quarterly installments equal to 1% of the original principal amount.

In the fourth quarter of fiscal year 2017, we completed a repricing of the tranche B term loan through an amendment to the Credit Agreement (Second Credit Agreement Amendment) to reduce the Applicable Rate (as defined in the Credit Agreement) by 100 basis points for both the Term Facility and Revolving Credit Facility and to make certain reductions to the Revolving Credit Facility commitment fee rates. During the fourth quarter of 2017, in connection with the execution of the Second Credit Agreement Amendment, we paid debt financing costs of $1,770, of which $1,147 was expensed in interest expense, net in the Consolidated Income Statements and $623 was capitalized in current maturities of long-term debt, net; long-term debt, less current maturities, net; and prepaid expenses and other current assets in the Consolidated Balance Sheets. We also recognized non-cash charges of $503 in interest expense, net in the Consolidated Income Statements for the loss on debt extinguishment resulting from the write-off of existing unamortized debt financing costs.

The primary categories of borrowing include Alternate Base Rate (ABR) Borrowings (ABR Term Loans and ABR Revolving Loans), Swingline Loans and Eurocurrency Borrowing (each as defined in the Credit Agreement). ABR Borrowings and Swingline Loans made in U.S. dollars under the Credit Agreement bear interest at a rate per annum equal to the ABR plus the Applicable Rate. The ABR is defined as the greater of (a) the Prime Rate (as defined in the Credit Agreement) in effect on such day, (b) the New York Federal Reserve Bank Rate (NYFRB Rate) (as defined in the Credit Agreement) in effect on such day plus ½ of 1.00%, or (c) the Adjusted LIBOR (as defined in the Credit Agreement) for a one-month interest period in dollars on such day plus 1.00%. The ABR for ABR Term Loans shall not be less than 1.75% per annum. The Applicable Rate for any ABR Revolving Loans is based upon the leverage ratio applicable on such date. As of September 30, 2017, the Applicable Rate was 2.25% per annum for ABR Term Loans.

Eurocurrency Borrowings made under the Credit Agreement bear interest at a rate per annum equal to the Adjusted LIBOR Rate plus the Applicable Rate. The Adjusted LIBOR Rate is defined as an interest rate per annum equal to (a) the LIBOR Rate for such interest period multiplied by (b) the Statutory Reserve Rate (as defined in the Credit Agreement). The Applicable Rate for any Eurocurrency Revolving Loans is based upon the leverage ratio applicable on such date. The Adjusted LIBOR Rate for Eurocurrency Term Loans shall not be less than 0.75% per annum. Based on our leverage ratio as of September 30, 2017, the Applicable Rate for Eurocurrency Revolving Loans was 4.00%. As of September 30, 2017, the Applicable Rate for Eurocurrency Term Loans was 3.25% per annum, plus the applicable Adjusted LIBOR rate of 1.24%. The weighted average interest rate on the Term Facility during fiscal year 2017 was 4.96%.

As of September 30, 2017, there were no borrowings against the Revolving Credit Facility, and we had outstanding letters of credit drawn from the credit facility totaling $37,811, leaving approximately $82,189 of unused borrowing capacity. Commitment fees are payable on the unused portion of the Revolving Credit Facility at rates between 0.25% and 0.40% based on our leverage ratio. For the fiscal years ended September 30, 2017 and October 1, 2016, commitment fees incurred totaled $405 and $271, respectively.

The Credit Agreement governing the Term Facility requires us to prepay outstanding term loans, subject to certain exceptions, depending on the leverage ratio with (a) up to 50% of the Company's annual Excess Cash Flow (as defined in the Credit Agreement) and (b) 100% of the net cash proceeds of (i) certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions; and (ii) any incurrence or issuance of certain debt, other than debt permitted under the Credit Agreement. We may voluntarily prepay outstanding loans under the Term Facility at any time without premium or penalty. All obligations under the Term Facility are unconditionally guaranteed by certain of the Company's existing wholly owned domestic subsidiaries, and are secured, subject to certain exceptions, by substantially all of the Company's assets and the assets of the Company's subsidiary guarantors.

Under the Credit Agreement, we are subject to customary affirmative and negative covenants, including, among others, restrictions on our ability to incur debt, create liens, dispose of assets, make investments, loans, advances, guarantees and acquisitions, enter into transactions with affiliates, and enter into any restrictive agreements and customary events of default (including payment defaults, covenant defaults, change of control defaults and bankruptcy defaults). The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to adjusted consolidated earnings before income, taxes, depreciation and amortization (Adjusted EBITDA), as defined in the Credit Agreement, as well as the ratio of Adjusted EBITDA to consolidated interest expense. These covenants restrict our ability to purchase outstanding shares of common stock. As of September 30, 2017 and October 1, 2016, we were in compliance with these financial covenants.

See Note 3 for additional information on the fair value of the tranche B term loan and the TEU debt.

Interest Rate Swaps

On October 20, 2016, in order to mitigate our exposure to interest rate increases on our variable rate debt, we entered into a variable to fixed amortizing interest rate swap. See Note 4 for additional information on derivative financial instruments.

The interest rate swap will be reduced to the following notional amounts over the next five years:



(in thousands)	Notional Amount
October 3, 2017	$	255,000
October 3, 2018	225,000
October 3, 2019	180,000
October 3, 2020	125,000
April 3, 2021	—

Future Maturities of Long-term Debt

Future maturities of long-term debt, excluding unamortized original issue discounts and deferred financing costs, for the next five fiscal years and thereafter are as follows:



Fiscal Year	Future Maturities ⁴ (in thousands)
2018	$	32,658
2019	12,432
2020	5,161
2021	5,179
2022	4,863
Thereafter	414,016

⁴

Includes the 1% annual payment on the tranche B term loan, calculated required annual Excess Cash Flow prepayment on the tranche B term loan for fiscal year 2017 results due in the first quarter of fiscal year 2018, current maturities of TEU debt and current maturities of capital lease obligations. For fiscal year 2019 and thereafter, excludes any Excess Cash Flow prepayments which may be required under the provisions of the Credit Agreement for the tranche B term loan based on fiscal year 2018 and subsequent fiscal year results because the amount of future prepayments, if any, is not reasonably estimable as of September 30, 2017. Capital lease obligations expire on various dates through fiscal year 2022.

Letters of Credit and Guarantees

As of September 30, 2017, we had outstanding letters of credit and guarantees totaling $47,086 and $22,800, respectively, primarily to bond advance payments and performance guarantees related to customer contracts in Test.