Subsequent Events

Restricted Stock Unit Grants

In November 2015, we granted the restricted stock units shown in the table below to employees, including some of our executive officers. The performance-based RSUs are granted to the executive officers only and are eligible to vest based upon our total shareholder return relative to a peer group target (the “TSR units”), measured annually over a three-year period that commenced on October 1, 2015. To the extent earned, these TSR units will vest in three substantially equal installments on the later of November 15, 2016, November 15, 2017 and November 15, 2018, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved for each performance period. RSUs not earned for a period may be earned in the third period. The number of TSR units that will vest will be based on the level of achievement up to a maximum of 570 thousand, with no vesting if the annual threshold requirement is not achieved, or the employee is no longer with the Company at the end of the relevant performance period.

The time-based RSUs were issued to both employees and our executive officers. In addition, executive officers have opportunity to earn up to one or, for our CEO, two times the number of time-based RSUs (up to a maximum of 302 thousand shares) if certain performance conditions are met. The time-based RSUs will vest in three substantially equal annual installments on November 15, 2016, 2017 and 2018. The performance-based RSUs will vest in three substantially equal installments on the later of November 15, 2016, November 15, 2017 and November 15, 2018, or the date the Compensation Committee determines the extent to which the applicable performance criteria have been achieved.



	TSR units		Performance-Based RSUs		Time-Based RSUs
	(in thousands)
Maximum number of RSUs eligible to vest	570		302		839
Intrinsic value on grant date based on the maximum number of RSUs eligible to vest	$	13,382	$	10,928	$	30,326

Performance-Based Stock Modification

In November 2015, the Compensation of Committee of our Board of Directors modified certain performance-based RSUs previously granted under our long-term incentive programs due to the impact of changes in our business model and foreign currency on our financial results. As a result, we expect to record approximately of $10 million of stock-based compensation expense in the first quarter of 2016 for RSUs that were not expected to vest under the original grant terms.

Credit Facility

Subsequent to year end, we borrowed $50 million under our credit facility in anticipation of our acquisition of Vuforia described below.

On November 4, 2015, we entered into a credit agreement with a syndicate of sixteen banks. This credit facility amended and restated our credit facility described in Note H in its entirety. We expect to use the credit facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements. The credit facility consists of $1 billion revolving loan commitment which may be increased by an additional $500 million (in the form of revolving loans or term loans, or a combination thereof) if the existing or additional lenders are willing to make such increased commitments. We borrowed $475 million under the credit agreement to repay an existing term loan under our previous credit facility described in Note H. The revolving loan commitment does not require amortization of principal and may be repaid in whole or in part prior to the scheduled maturity date at PTC's option without penalty or premium. The credit facility matures on September 15, 2019, when all remaining amounts outstanding will be due and payable in full. PTC and certain eligible foreign subsidiaries are eligible borrowers under this credit facility. Under the restated credit facility, we must maintain


•	a total leverage ratio, defined as consolidated total indebtedness to the consolidated trailing four quarters EBITDA, not to exceed


◦	prior to a Covenant Modification Trigger Event (incurring unsecured indebtedness of not less than $200 million in aggregate) (x) 3.50 to 1.00 as of the last day of any fiscal quarter ending on or prior to July 2, 2016, and (y) 3.25 to 1.00 as of the last day of any fiscal quarter ending on or after September 30, 2016


◦	on and after a Covenant Modification Trigger Event, 4.00 to 1.00 as of the last day of any fiscal quarter.


•	a senior secured leverage ratio, defined as consolidated total indebtedness to consolidated trailing four quarters EBITDA, not to exceed 3.00 to 1.00 as of the last day of any fiscal quarter ending after a Covenant Modification Trigger Event, and


•	a fixed charge coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA less consolidated capital expenditures to consolidated fixed charges, of not less than 3.50 to 1.00 as of the last day of any fiscal quarter.

The obligations under the credit facility are guaranteed by PTC and certain of its material domestic subsidiaries. In addition, PTC and certain of its material domestic subsidiaries' owned property (including equity interests) is subject to first priority perfected liens in favor of the lenders of this credit facility. 100% of the voting equity interests of certain of PTC’s domestic subsidiaries and 65% of its material first-tier foreign subsidiaries are pledged as collateral for the obligations under the credit facility.

Other terms of the credit facility including interest rates, commitment fees, and restrictions are substantially the same as the previous credit facility.

Acquisition

On November 3, 2015, pursuant to an Asset Purchase Agreement, PTC acquired Vuforia business from Qualcomm Connected Experiences, Inc., a subsidiary of Qualcomm Incorporated, for approximately $65 million in cash.

We acquired Vuforia and its augmented reality technology platform to enrich PTC’s technology portfolio. At the time of the acquisition, Vuforia had approximately 80 employees and historical annualized revenues were not material. We have not yet completed our acquisition accounting.

Restructuring

On October 23, 2015, we committed to a plan to restructure our workforce and consolidate select facilities in order to reduce our cost structure and to realign our investments with our highest growth opportunities. The restructuring is expected to result in a charge of approximately $40 million to $50 million, which is primarily attributable to termination benefits, substantially all of which will be recorded in our first fiscal quarter ending January 2, 2016. The restructuring will result in cash expenditures of approximately $40 million to $50 million, which we expect will primarily be paid over the first three quarters of fiscal 2016. We expect that the effect of the expense reductions, offset by certain planned cost increases and investments in our business, will result in a decrease in costs and expenses of approximately $17 million in 2016, as compared to 2015.