The accompanying notes are an integral part
of these condensed consolidated financial statements.
The accompanying notes are an integral part
of these consolidated financial statements.
The accompanying notes are an integral part
of these condensed consolidated financial statements.
UNAUDITED CONDENSED NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
1.
|
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
|
Internap Corporation (“we,” “us” “our”
“INAP” or “the Company”) provides high-performance Internet infrastructure services across North America,
Europe and the Asia-Pacific region.
We have prepared the accompanying unaudited condensed consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries.
We have eliminated all intercompany transactions and balances in the accompanying financial statements.
We have condensed or omitted certain information and note disclosures
normally included in annual financial statements prepared in accordance with GAAP. In the opinion of management, the accompanying
financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary
for a fair statement of our financial position as of March 31, 2017 and our operating results and cash flows for the interim periods
presented. The balance sheet at December 31, 2016 was derived from our audited financial statements, but does not include all disclosures
required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial
statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities
and Exchange Commission (“SEC”).
The preparation of financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the
three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for any future periods.
|
2.
|
CHANGE IN ORGANIZATIONAL STRUCTURE
|
During the three months ended March 31, 2017, we changed our
organizational structure in an effort to create more effective and efficient operations and to improve customer and product focus.
In that regard, we revised the information that our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”),
regularly reviews for purposes of allocating resources and assessing performance. As a result, we report our financial performance
based on our new segments, described in note 10 “Operating Segments.” We have reclassified prior period amounts to
conform to the current presentation.
The prior year reclassifications, which did not affect total
revenues,
total direct costs of sales and services, operating loss or net loss,
are
summarized as follows (in thousands):
|
|
Three Months Ended March 31, 2016
|
|
|
|
As Previously
Reported
|
|
|
Reclassification
|
|
|
As Reported
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Data center and network services
|
|
$
|
50,872
|
|
|
$
|
(50,872
|
)
|
|
$
|
—
|
|
Cloud and hosting services
|
|
|
25,052
|
|
|
|
(25,052
|
)
|
|
|
—
|
|
INAP COLO
|
|
|
—
|
|
|
|
55,881
|
|
|
|
55,881
|
|
INAP CLOUD
|
|
|
—
|
|
|
|
20,043
|
|
|
|
20,043
|
|
Direct costs of sales and services, exclusive of depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
Data center and network services
|
|
|
24,373
|
|
|
|
(24,373
|
)
|
|
|
—
|
|
Cloud and hosting services
|
|
|
6,704
|
|
|
|
(6,704
|
)
|
|
|
—
|
|
INAP COLO
|
|
|
—
|
|
|
|
26,333
|
|
|
|
26,333
|
|
INAP CLOUD
|
|
|
—
|
|
|
|
4,744
|
|
|
|
4,744
|
|
3. FAIR VALUE MEASUREMENTS
We account for certain assets and liabilities at fair value.
The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable
in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that
is significant to the fair value measurement in its entirety. These levels are:
|
•
|
Level 1: Quoted prices in active markets for identical assets or liabilities;
|
|
•
|
Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities; and
|
|
•
|
Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets or liabilities.
|
Assets and liabilities measured at fair value on a recurring
basis are summarized as follows (in thousands):
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
March 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts (note 8)
|
|
$
|
—
|
|
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
77
|
|
Asset retirement obligations
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,861
|
|
|
|
2,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts (note 8)
|
|
|
—
|
|
|
|
195
|
|
|
|
—
|
|
|
|
195
|
|
Asset retirement obligations
(1)
|
|
|
—
|
|
|
|
—
|
|
|
|
2,810
|
|
|
|
2,810
|
|
|
(1)
|
We calculate the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury
bill rate adjusted for our credit non-performance. The balance is included in “Other long-term liabilities,” in the
accompanying consolidated balance sheets.
|
The following table provides a summary of changes in our Level
3 asset retirement obligations for the three months ended March 31, 2017 (in thousands):
Balance, January 1, 2017
|
|
$
|
2,810
|
|
Accretion
|
|
|
51
|
|
Balance, March 31, 2017
|
|
$
|
2,861
|
|
The fair values of our other Level 3 debt liabilities, estimated
using a discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements, are as
follows (in thousands):
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
Carrying
|
|
|
Fair
|
|
|
|
Amount
|
|
|
Value
|
|
|
Amount
|
|
|
Value
|
|
Term loan
|
|
$
|
251,003
|
|
|
$
|
251,317
|
|
|
$
|
291,000
|
|
|
$
|
267,700
|
|
Revolving credit facility
|
|
|
35,500
|
|
|
|
35,544
|
|
|
|
35,500
|
|
|
|
32,600
|
|
During the three months
ended March 31, 2017, we changed our operating segments, as discussed in note 10 “Operating Segments,” and, subsequently,
our reporting units. We now have six reporting units: IP services, IP products, data center services, managed hosting, cloud and
Ubersmith. We allocated goodwill to our new reporting units using a relative fair value approach. In addition, we completed an
assessment of any potential goodwill impairment for all reporting units immediately prior to and after the reallocation and determined
that no impairment existed.
During the three months ended March
31, 2017, we re-allocated goodwill as follows (in thousands):
|
|
December 31,
2016
|
|
|
Re-allocations
|
|
|
March 31,
2017
|
|
Operating segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Data center and network services
|
|
$
|
—
|
|
|
$
|
|
|
|
$
|
—
|
|
Cloud and hosting services
|
|
|
50,209
|
|
|
|
(50,209
|
)
|
|
|
—
|
|
INAP COLO
|
|
|
—
|
|
|
|
6,003
|
|
|
|
6,003
|
|
INAP CLOUD
|
|
|
—
|
|
|
|
44,206
|
|
|
|
44,206
|
|
Total
|
|
$
|
50,209
|
|
|
$
|
—
|
|
|
$
|
50,209
|
|
Third Amendment
During the three months ended March 31, 2017, we entered into
an amendment to our credit agreement (the “Third Amendment”), which, among other things, amended the credit agreement
(i) to make each of the interest coverage ratio and leverage ratio covenants less restrictive and (ii) to decrease the maximum
level of permitted capital expenditures. We paid a one-time aggregate fee of $2.6 million to the lenders for the Third Amendment,
which we recorded as a debt discount of $2.2 million related to the term loan and prepaid debt issuance costs of $0.4 million related
to the revolving credit facility. In addition, we paid $0.3 million in third-party fees, which we recorded as expense of $0.3 million
related to the term loan and as prepaid debt issuance costs of less than $0.1 million related to the revolving credit facility.
The Third Amendment was effective on February 28, 2017,
upon the closing of the equity sale, which is described in note 6 below. The effectiveness of the covenant amendments was
conditioned on the Company completing one or more equity offerings on or before June 30, 2017 for gross cash proceeds of not
less than $40 million, and net cash proceeds of not less than $37 million and the application of the net cash proceeds to the
repayment of indebtedness under the Credit Agreement. The Company paid a fee of approximately $0.9 million to the lenders on
January 26, 2017 and paid an additional fee of $1.6 million on February 28, 2017. Absent the Third Amendment we may not have
been able to comply with our covenants in the Credit Agreement.
Securities Purchase Agreement
On February 22,
2017, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain purchasers
(the “Purchasers”), pursuant to which the Company issued to the Purchasers an aggregate of 23,802,850 shares of the
Company’s common stock at a price of US$1.81 per share, for the aggregate purchase price of US$43.1 million, which closed
on February 27, 2017. The Securities Purchase Agreement contains customary representations, warranties, and covenants. Conditions
for the Securities Purchase Agreement include: (i) the Company to use the funds of the sale of such common stock to repay indebtedness
under the Credit Agreement, (ii) a 90-day “lock-up” period whereby the Company is restricted from certain sales of
equity securities and (iii) the Company to pay certain transaction expenses of the Purchasers up to $100,000. The Company used
$39.2 million of the proceeds to pay down our debt.
Registration Rights Agreement
On February 22, 2017, the Company entered
into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, which provides the
Purchasers under the Securities Purchase Agreement the ability to request registration of such securities.
Under the Registration Rights Agreement,
the Company will use its best efforts to promptly, but in no event later than 15 days following the filing of the Company’s
Annual Report on 10-K, file a registration statement on Form S-3 or such other form under the Securities Act of 1933 then available
to the Company providing for the resale by the Purchasers of the registrable securities beneficially owned by such Purchasers.
The Company must use its reasonable best efforts to cause the registration statement to be declared effective by the SEC as promptly
as practicable following such filing, but in no event later than May 23, 2017. The registration statement was filed in March 2017
and declared effective during April 2017.
|
7.
|
EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES
|
The following table displays the transactions and balances for
exit activities and restructuring charges during the three months ended March 31, 2017 and 2016 (in thousands). Our real estate
obligations are substantially related to our INAP COLO segment. Severance is spread across both reportable segments.
|
|
Balance
December
31, 2016
|
|
|
Initial
Charges
|
|
|
Plan
Adjustments
|
|
|
Cash
Payments
|
|
|
Balance
March
31, 2017
|
|
Activity for 2016 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
1,911
|
|
|
$
|
—
|
|
|
$
|
566
|
|
|
$
|
(993
|
)
|
|
$
|
1,484
|
|
Real estate obligations
|
|
|
933
|
|
|
|
—
|
|
|
|
378
|
|
|
|
(187
|
)
|
|
|
1,124
|
|
Activity for 2015 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate obligation
|
|
|
111
|
|
|
|
—
|
|
|
|
(4
|
)
|
|
|
(7
|
)
|
|
|
100
|
|
Service contracts
|
|
|
565
|
|
|
|
—
|
|
|
|
5
|
|
|
|
(49
|
)
|
|
|
521
|
|
Activity for 2014 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate obligation
|
|
|
1,183
|
|
|
|
—
|
|
|
|
34
|
|
|
|
(150
|
)
|
|
|
1,067
|
|
|
|
$
|
4,703
|
|
|
$
|
—
|
|
|
$
|
979
|
|
|
$
|
(1,386
|
)
|
|
$
|
4,296
|
|
|
|
Balance
December
31, 2015
|
|
|
Initial
Charges
|
|
|
Plan
Adjustments
|
|
|
Cash
Payments
|
|
|
Balance
March
31, 2016
|
|
Activity for 2016 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate obligations
|
|
|
—
|
|
|
|
105
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
96
|
|
Service contracts
|
|
|
—
|
|
|
|
42
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42
|
|
Activity for 2015 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate obligation
|
|
|
164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(33
|
)
|
|
|
131
|
|
Service contracts
|
|
|
843
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(139
|
)
|
|
|
704
|
|
Activity for 2014 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate obligations
|
|
|
1,701
|
|
|
|
—
|
|
|
|
18
|
|
|
|
(144
|
)
|
|
|
1,575
|
|
Activity for 2007 restructuring charge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate obligation
|
|
|
1,170
|
|
|
|
—
|
|
|
|
181
|
|
|
|
(478
|
)
|
|
|
873
|
|
|
|
$
|
3,878
|
|
|
$
|
147
|
|
|
$
|
199
|
|
|
$
|
(803
|
)
|
|
$
|
3,421
|
|
Foreign Currency Contracts
We have foreign currency contracts to mitigate the risk of a
portion of our Canadian compensation expense. These contracts will hedge foreign exchange variations between the United States
and Canadian dollar and commit us to purchase a total of $12.0 million Canadian dollars at an exchange rate of 1.2855 through June
2017. As of March 31, 2017, and December 31, 2016, the fair value of our foreign currency contracts was less than $0.1 million
and $0.2 million, respectively, included in “Other current liabilities” in the accompanying consolidated balance sheets.
During the three months ended March 31, 2017 and 2016, the activity
of the foreign currency contracts was as follows (in thousands):
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Unrealized gain, net of less than $0.1 million and $0.1 million income tax, respectively, included in “Accumulated items of other comprehensive loss” in the accompanying consolidated balance sheets
|
|
$
|
85
|
|
|
$
|
638
|
|
Realized loss on effective portion, included as compensation expense in “Direct costs of customer support” and “Sales, general and administrative” in the accompanying consolidated statements of operations and comprehensive loss
|
|
|
(80
|
)
|
|
|
(179
|
)
|
|
9.
|
COMMITMENTS, CONTINGENCIES AND LITIGATION
|
We are subject to legal proceedings, claims and litigation arising
in the ordinary course of business. Although the outcome of these matters is currently not determinable, we do not expect that
the ultimate costs to resolve these matters will have a material adverse impact on our financial condition, results of operations
or cash flows.
The Company has two reportable segments: INAP COLO and INAP
CLOUD. These segments are comprised of strategic businesses that are defined by the service offerings they provide. Each segment
is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate
General Manager who reports directly to the Company’s CODM.
The CODM evaluates segment performance using business unit contribution
which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing,
exclusive of depreciation and amortization.
We report our financial performance based on our two reportable
segments, INAP COLO and INAP CLOUD, as follows:
INAP COLO
Our Colocation segment consists of colocation, network services
and managed hosting.
Colocation
Colocation involves providing physical space within data centers
and associated services such as power, interconnection, environmental controls, monitoring and security while allowing our customers
to deploy and manage their servers, storage and other equipment in our secure data centers.
Network Services
Network services includes our patented Performance IP™
service, content delivery network services, IP routing hardware and software platform and Managed Internet Route Optimizer™
Controller. By intelligently routing traffic with redundant, high-speed connections over multiple, major Internet backbones, our
network services provides high-performance and highly-reliable delivery of content, applications and communications to end users
globally.
Managed Hosting
Managed Hosting consists of leasing dedicated servers as well
as, storage and network equipment along with other associated hardware to our customers. We configure and administer the
hardware and operating system, provide technical support, patch management, monitoring and updates. We offer managed hosting
around the globe, including North America, Europe and the Asia-Pacific region.
INAP CLOUD
Cloud services involve providing compute and storage services
via an integrated platform that includes servers, storage and network. We built our next generation cloud platform with our high-density
colocation, Performance IP service and OpenStack, a leading open source technology for cloud services.
In conjunction with our change in segments
we changed the measure for determining the results of our segments to business unit contribution which includes the direct costs
of sales and services, customer support and sales and marketing, exclusive of depreciation and amortization.
The following table provides segment
results, with prior period amounts restated to conform to the current presentation (in thousands):
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Revenues:
|
|
|
|
|
|
|
INAP COLO
|
|
$
|
53,339
|
|
|
$
|
55,881
|
|
INAP CLOUD
|
|
|
18,794
|
|
|
|
20,043
|
|
Total revenues
|
|
|
72,133
|
|
|
|
75,924
|
|
|
|
|
|
|
|
|
|
|
Direct costs of sales and services, customer support and sales and marketing, exclusive of depreciation and amortization:
|
|
|
|
|
|
|
|
|
INAP COLO
|
|
|
33,650
|
|
|
|
36,812
|
|
INAP CLOUD
|
|
|
9,464
|
|
|
|
10,957
|
|
Total direct costs of sales and services, customer support and sales and marketing
|
|
|
43,114
|
|
|
|
47,769
|
|
|
|
|
|
|
|
|
|
|
Business unit contribution:
|
|
|
|
|
|
|
|
|
INAP COLO
|
|
|
19,689
|
|
|
|
19,069
|
|
INAP CLOUD
|
|
|
9,330
|
|
|
|
9,086
|
|
Total business unit contribution
|
|
|
29,019
|
|
|
|
28,155
|
|
|
|
|
|
|
|
|
|
|
Exit activities, restructuring and impairments
|
|
|
1,023
|
|
|
|
201
|
|
Other operating expenses, including depreciation and amortization
|
|
|
27,504
|
|
|
|
30,155
|
|
Income (loss) from operations
|
|
|
492
|
|
|
|
(2,201
|
)
|
Non-operating expenses
|
|
|
8,234
|
|
|
|
7,341
|
|
Loss before income taxes and equity in (earnings) of equity-method investment
|
|
$
|
(7,742
|
)
|
|
$
|
(9,542
|
)
|
We compute basic net loss per share by dividing net loss attributable
to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all
outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented.
Basic and diluted net loss per share is calculated as follows
(in thousands, except per share amounts):
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Net loss attributable to common stock
|
|
$
|
(8,230
|
)
|
|
$
|
(9,644
|
)
|
Weighted average shares outstanding, basic and diluted
|
|
|
64,351
|
|
|
|
51,774
|
|
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.13
|
)
|
|
$
|
(0.19
|
)
|
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans
|
|
|
5,539
|
|
|
|
7,598
|
|
|
12.
|
RECENT ACCOUNTING PRONOUNCEMENTS
|
Adoption of New Accounting Standards
In January 2017, the FASB issued ASU No. 2017-04, "Intangibles
- Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment" ("ASU 2017-04"), which simplifies
the subsequent measurement of goodwill by eliminating “Step 2” from the goodwill impairment test. The guidance is effective
for public companies’ annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We adopted
ASU 2017-04 in the first quarter of 2017 and it did not impact our consolidated financial statements.
In
October 2016, the FASB issued ASU No. 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
,
which allows the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when
the transfer occurs.
Historically, recognition of the income tax consequence was not recognized until the asset was sold
to an outside party. This guidance should be applied on a modified retrospective basis through a cumulative-effect adjustment directly
to retained earnings as of the beginning of the period of adoption. There are no new disclosure requirements. The guidance is effective
for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted, and the
Company adopted the provisions of ASU 2016-16 as of January 1, 2017. In connection with the adoption of the standard, the Company
recorded a $2.2 million deferred tax asset and corresponding $1.9 million valuation allowance with the net difference going to
retained earnings.
In
March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting" ("ASU 2016-09"), which includes multiple amendments intended to simplify aspects
of share-based payment accounting, and was effective for us at January 1, 2017. We have elected to account for forfeitures as they
occur, rather than estimate expected forfeitures.
In connection with the adoption of the standard, the Company recorded
a $10.8 million deferred tax asset and a corresponding $10.8 million valuation allowance.
Accounting Pronouncements Issued But Not Yet Effective
In August 2016, the FASB issued ASU No. 2016-15, which
amends Accounting Standards Codification 230, to clarify guidance on the classification of certain cash receipts and payments
in the statement of cash flows. The FASB issued ASU 2016-15 with the intent of reducing diversity in practice with respect to eight
types of cash flows. This guidance is effective for fiscal years beginning after December 15, 2017, with early adoption permitted.
We are currently evaluating the impact that adoption will have on the presentation of our consolidated statements of cash flow.
In May 2014, the FASB issued ASU 2014-09, which provides a single
model for revenue arising from contracts with customers and supersedes current revenue recognition guidance. The guidance is effective
for periods beginning January 1, 2018. The guidance permits the application of its requirements retrospectively to all prior periods
presented or in the year of adoption through a cumulative adjustment. We are currently evaluating the impact that adoption will
have on our consolidated financial statements and related disclosures. As we have not completed our evaluation, we cannot make
a determination of the impact and have not yet selected a transition method or determined the impact of the standard on our ongoing
financial reporting.
In February 2016, the FASB issued ASU No. 2016-02, "Leases
(Topic 842)" ("ASU 2016-02"), which requires all leases in excess of 12 months to be recognized on the balance
sheet as lease assets and lease liabilities. For operating leases, a lessee is required to recognize a right-of-use asset and lease
liability, initially measured at the present value of the lease payment; recognize a single lease cost over the lease term generally
on a straight-line basis; and classify all cash payments within operating activities on the cash flow statement. The guidance is
effective for annual and interim periods beginning after December 15, 2018. Earlier adoption is permitted. We are currently evaluating
the impact that adoption will have on our consolidated financial statements and related disclosures.
On April 6, 2017, the Company entered
into a Credit Agreement (the “Credit Agreement”) by and among the Company, the Guarantors party thereto, the Lenders
party thereto, Jefferies Finance LLC, as Administrative Agent and Collateral Agent, Jefferies Finance LLC and PNC Capital Markets
LLC, as Joint Lead Arrangers, PNC Bank, National Association, as Syndication Agent and as Issuing Bank, and Jefferies Finance LLC,
as Documentation Agent, Sole Book Manager and as Swingline Lender.
The Credit Agreement provides for a
$300 million term loan facility and a $25 million revolving credit facility (which includes a $15 million letter of credit facility).
In addition, the Company may request incremental term loans and/or incremental revolving loan commitments in an aggregate amount
not to exceed $50 million.
The proceeds of the term loan facility
were used on April 6, 2017 to refinance the Company’s existing credit facility and to pay costs and expenses associated with
the Credit Agreement.