Debt

3 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

12. Debt

At December 31, 2022 and September 30, 2022, we had the following long-term debt obligations:

(in thousands)	December 31, 2022			September 30, 2022
4.000% Senior notes due 2028	$	500,000		$	500,000
3.625% Senior notes due 2025		500,000			500,000
Credit facility revolver(1)		359,000			359,000
Total debt		1,359,000			1,359,000
Unamortized debt issuance costs for the senior notes(2)		(7,829	)		(8,372	)
Total debt, net of issuance costs	$	1,351,171		$	1,350,628

(1) Unamortized debt issuance costs related to the credit facility were $3.2 million and $2.7 million as of December 31, 2022 and September 30, 2022, respectively, and are included in Other assets on the Consolidated Balance Sheets.

(2) Unamortized debt issuance costs are included in Long-term debt on the Consolidated Balance Sheets.

Senior Unsecured Notes

In February 2020, we issued $500 million in aggregate principal amount of 4.0% senior, unsecured long-term debt at par value, due in 2028 (the 2028 notes) and $500 million in aggregate principal amount of 3.625% senior, unsecured long-term debt at par value, due in 2025 (the 2025 notes).

As of December 31, 2022, the total estimated fair value of the 2028 and 2025 notes was approximately $455.2 million and $476.9 million, respectively, based on quoted prices for the notes on that date.

We were in compliance with all the covenants for all of our senior notes as of December 31, 2022. Any failure to comply with such covenants could constitute a default that could cause all amounts outstanding to become due and payable immediately.

Terms of the 2028 and 2025 Notes

Interest on the 2028 and 2025 notes is payable semi-annually on February 15 and August 15. The debt indenture for the 2028 and 2025 notes includes covenants that limit our ability to, among other things, incur additional debt, grant liens on our properties or capital stock, enter into sale and leaseback transactions or asset sales, and make capital distributions.

We may, on one or more occasions, redeem the 2028 and 2025 notes in whole or in part at specified redemption prices. In certain circumstances constituting a change of control, we will be required to make an offer to repurchase the notes at a purchase price equal to 101% of the aggregate principal amount of the notes, plus accrued and unpaid interest. Our ability to repurchase the notes upon such event may be limited by law, by the indenture associated with the notes, by our then-available financial resources or by the terms of other agreements to which we may be party at such time. If we fail to repurchase the notes as required by the indenture, it would constitute an event of default under the indenture which, in turn, may also constitute an event of default under other obligations.

Credit Agreement

We were party to the Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, from February 2020 through January 3, 2023 (the "Prior Credit Facility"). We used the Prior Credit Facility for general corporate purposes, including acquisitions of businesses, share repurchases and working capital requirements.

On January 3, 2023, subsequent to the end of Q1’23, we terminated the Prior Credit Facility and repaid all amounts outstanding and entered into a new credit agreement for the purpose of funding the payment of the closing purchase price of ServiceMax. Refer to Note 15. Subsequent Events for additional discussion regarding the new credit agreement and acquisition of ServiceMax.

The Prior Credit Facility, in effect as of December 31, 2022, consisted of a $1 billion revolving credit facility, which could have been increased by up to an additional $500 million in the aggregate if the existing or additional lenders were willing to make such increased commitments. The revolving loan commitment did not require amortization of principal and could have been repaid in whole or in part prior to the scheduled maturity date at our option without penalty or premium. As of December 31, 2022, the fair value of our credit facility approximated its book value.

Loans under the Prior Credit Facility bore interest at variable rates which reset every 30 to 180 days depending on the rate and period selected by PTC as described below. As of December 31, 2022, the annual rate for borrowings outstanding was 5.7%.

Under the Prior Credit Facility PTC and its subsidiaries were required to maintain the following financial ratios:

•Total leverage ratio, defined as consolidated funded indebtedness to consolidated trailing four quarters EBITDA, not to exceed 4.50 to 1.00 as of the last day of any fiscal quarter;

•Senior secured leverage ratio, defined as senior consolidated total indebtedness (which excludes unsecured indebtedness) to the consolidated trailing four quarters EBITDA, not to exceed 3.00 to 1.00 as of the last day of any fiscal quarter; and

•Interest coverage ratio, defined as the ratio of consolidated trailing four quarters EBITDA to consolidated trailing four quarters of cash basis interest expense, of not less than 3.00 to 1.00 as of the last day of any fiscal quarter.

As of December 31, 2022, our total leverage ratio was 1.79 to 1.00, our senior secured leverage ratio was 0.49 to 1.00 and our interest coverage ratio was 14.05 to 1.00 and we were in compliance with all financial and operating covenants of the Prior Credit Facility.

In the first quarters of 2023 and 2022, we paid $4.8 million and $2.4 million of interest on our debt, respectively. The average interest rate on borrowings outstanding during the first quarters of 2023 and 2022 was approximately 4.2% and 3.2%, respectively.