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LONG-TERM DEBT AND OTHER BORROWINGS | 9 Months Ended
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Mar. 26, 2017
Debt Disclosure [Abstract] |
LONG-TERM DEBT AND OTHER BORROWINGS | LONG-TERM DEBT AND OTHER BORROWINGS As of March 26, 2017 and June 26, 2016, the Company's outstanding debt consisted of the following:
| March 26, 2017 |  | June 26, 2016
| Amount (in thousands) |  | Effective Interest Rate |  | Amount (in thousands) |  | Effective Interest Rate
Fixed-rate 1.25% Convertible Notes Due May 15, 2018 ("2018 Notes") | $ | 449,768 |  | (1) | 5.27 | % |  | $ | 449,954 |  | (2) | 5.27 | %
Fixed-rate 2.75% Senior Notes Due March 15, 2020 ("2020 Notes") | 500,000 |  |  | 2.88 | % |  | 500,000 |  |  | 2.88 | %
Fixed-rate 2.80% Senior Notes Due June 15, 2021 ("2021 Notes") | 800,000 |  |  | 2.95 | % |  | 800,000 |  |  | 2.95 | %
Fixed-rate 3.45% Senior Notes Due June 15, 2023 ("2023 Notes") | — |  |  | — |  |  | 600,000 |  |  | 3.60 | %
Fixed-rate 3.80% Senior Notes Due March 15, 2025 ("2025 Notes") | 500,000 |  |  | 3.87 | % |  | 500,000 |  |  | 3.87 | %
Fixed-rate 3.90% Senior Notes Due June 15, 2026 ("2026 Notes") | — |  |  | — |  |  | 1,000,000 |  |  | 4.01 | %
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes") | 631,090 |  | (1) | 4.28 | % |  | 699,895 |  | (2) | 4.28 | %
Total debt outstanding, at par | 2,880,858 |  |  |  |  | 4,549,849 |  |  |
Unamortized discount | (184,315 | ) |  |  |  | (232,727 | ) |  |
Fair value adjustment - interest rate contracts | (17,141 | ) |  |  |  | 8,552 |  |  |
Unamortized bond issuance costs | (3,523 | ) |  |  |  | (7,213 | ) | (3) |
Total debt outstanding, at carrying value | $ | 2,675,879 |  |  |  |  | $ | 4,318,461 |  |  |
Reported as: |  |  |  |  |  |  |
Current portion of long-term debt | $ | 904,693 |  | (4) |  |  | $ | 940,537 |  | (4) |
Long-term debt | 1,771,186 |  |  |  |  | 3,377,924 |  |  |
Total debt outstanding, at carrying value | $ | 2,675,879 |  |  |  |  | $ | 4,318,461 |  |  |
____________________________ (1) As of March 26, 2017, these notes were convertible at the option of the bondholder, as a result of the condition described in (4) below. Upon closure of the conversion period, Notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity. (2) As of June 26, 2016, these notes were convertible at the option of the bond holder, as a result of the condition described in (4) below. (3) The Company adopted ASU 2015-3, regarding the simplification of the presentation of bond issuance costs, which requires that bond issuance costs related to a recognized liability be presented on the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The Company applied the accounting standard update on a retrospective basis by reclassifying the presentation of bond issuance costs totaling $1.76 million which was originally included in prepaid assets and other current assets against current portion of convertible notes and capital leases, and $5.45 million which was originally included in other assets against senior notes, convertible notes, and capital leases, less current portion on the Condensed Consolidated Balance Sheets for June 26, 2016. There is no impact to the Company's Condensed Consolidated Statements of Operation, Stockholders' Equity, or Cash Flows for the fiscal year ended June 26, 2016. (4) As of the report date the market value of the Company's Common Stock was greater than 130% of the convertible notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end. As a result, the convertible notes were classified in current liabilities and a portion of the equity component, representing the unamortized discount, was classified in temporary equity on the Company's Consolidated Balance Sheets. Convertible Senior Notes In May 2011, the Company issued and sold $450 million in aggregate principal amount of 1.25% Convertible Senior Notes due May 2018 (the “2018 Notes”) at par. The Company pays cash interest at an annual rate of 1.25%, on the 2018 Notes, on a semi-annual basis on May 15 and November 15 of each year. In June 2012, with the acquisition of Novellus Systems, Inc. (“Novellus”), the Company assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 2041 (the “2041 Notes,” and collectively with the 2018 Notes, the “Convertible Notes”). The Company pays cash interest at an annual rate of 2.625%, on a semi-annual basis on May 15 and November 15 of each year on the 2041 Notes. The 2041 Notes also have a contingent interest payment provision that may require the Company to pay additional interest, up to 0.60% per year, based on certain thresholds, beginning with the semi-annual interest payment on May 15, 2021, and upon the occurrence of certain events, as outlined in the indenture governing the 2041 Notes. The Company separately accounts for the liability and equity components of the Convertible Notes. The initial debt components of the Convertible Notes were valued based on the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without the conversion feature, which equals the effective interest rate on the liability component disclosed in the table below, respectively. The equity component was initially valued equal to the principle value of the notes, less the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without a conversion feature, which equated to the initial debt discount. Under certain circumstances, the Convertible Notes may be converted into shares of the Company’s Common Stock. The number of shares each debenture is convertible into is based on conversion rates, disclosed in the table below. Conversions in the three and nine months ended March 26, 2017 were approximately $68.8 million and $69.0 million principal value of Convertible Notes, respectively. Selected additional information regarding the Convertible Notes outstanding as of March 26, 2017 and June 26, 2016, the Convertible Notes consisted of the following:
| March 26, 2017 |  | June 26, 2016
2018 Notes |  | 2041 Notes |  | 2018 Notes |  | 2041 Notes
(in thousands, except years, percentages, conversion rate, and conversion price)
Carrying amount of permanent equity component, net of tax | $ | 85,380 |  |  | $ | 155,445 |  |  | $ | 72,992 |  |  | $ | 152,397 |
Carrying amount of temporary equity component, net of tax | $ | 19,501 |  |  | $ | 155,608 |  |  | $ | 31,894 |  |  | $ | 175,658 |
Remaining amortization period (years) | 1.1 |  |  | 24.1 |  |  | 1.9 |  |  | 24.9 |
Fair Value of Notes (Level 2) | $ | 953,193 |  |  | $ | 2,374,886 |  |  |  |  |
Conversion rate (shares of common stock per $1,000 principal amount of notes) | 16.5232 |  |  | 29.6528 |  |  |  |  |
Conversion price (per share of common stock) | $ | 60.52 |  |  | $ | 33.72 |  |  |  |  |
If-converted value in excess of par value | $ | 497,538 |  |  | $ | 1,754,331 |  |  |  |  |
Estimated share dilution using average quarterly stock price $116.02 per share | 3,555 |  |  | 13,274 |  |  |  |  |
Convertible Note Hedges and Warrants Concurrent with the issuance of the 2018 Notes and $450 million of notes that matured in May of 2016 (the "2016 Notes"), the Company purchased a convertible note hedge and sold warrants. The warrants settlement is contractually defined as net share settlement. The exercise price is adjusted for certain corporate events, including dividends on the Company’s Common Stock. During the nine months ended March 26, 2017, warrants associated with the 2016 Notes were exercised resulting in the issuance of approximately 2.0 million shares of the Company's Common Stock. As of March 26, 2017, the warrants associated with the 2018 Notes had not been exercised and remained outstanding. In conjunction with the convertible note hedge, counterparties agreed to sell to the Company shares of Common Stock equal to the number of shares issuable upon conversion of the 2018 Notes in full. The convertible note hedge transactions will be settled in net shares and will terminate upon the earlier of the maturity date or the first day none of the respective notes remain outstanding due to conversion or otherwise. Settlement of the convertible note hedge in net shares, based on the number of shares issued upon conversion of the 2018 Notes, on the expiration date would result in the Company receiving net shares equivalent to the number of shares issuable by the Company upon conversion of the 2018 Notes. The exercise price is adjusted for certain corporate events, including dividends on the Company’s Common Stock. The following table presents the details of the warrants and convertible note hedge arrangements as of March 26, 2017:
|  | 2018 Notes
| (shares in thousands)
Warrants: |  |
Underlying shares |  | 7,435 |
Estimated share dilution using average quarterly stock price $116.02 per share |  | 2,750 |
Exercise price |  | $ | 73.09 |
Expiration date range |  | August 15 - October 23, 2018 |
Convertible Note Hedge: |  |
Number of shares available from counterparties |  | 7,432 |
Exercise price |  | $ | 60.52 |
Senior Notes On March 12, 2015, the Company completed a public offering of $500 million aggregate principal amount of the Company’s Senior Notes due March, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of the Company’s Senior Notes due March, 2025 (the “2025 Notes” and, together with the 2020 Notes, the “Senior Notes”). The Company pays interest at an annual rate of 2.75% and 3.80%, respectively, on the 2020 Notes and 2025 Notes, on a semi-annual basis on March 15 and September 15 of each year. During the year ended June 26, 2016, the Company entered into a series of interest rate contracts hedging the fair value of a portion of the 2025 Notes par value, whereby the Company receives a fixed rate and pays a variable rate based on a certain benchmark interest rate. Refer to Note 7 for additional information regarding these interest rate contracts. The Company may redeem the Senior Notes at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect of the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes and before December 15, 2024 for the 2025 Notes. The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020 for the 2020 Notes and on or after December 24, 2024 for the 2025 Notes. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the Senior Notes, plus accrued and unpaid interest. On June 7, 2016, The Company completed a public offering of $800.0 million aggregate principal amount of Senior Notes due June 2021 (the "2021 Notes"), $600.0 million aggregate principal amount of Senior Notes due June 2023 (the "2023 Notes") and $1,000.0 million aggregate principal amount of Senior Notes due June 2026 (the "2026 Notes" together with the 2020, 2021, 2023, and 2025 Notes, the “Senior Notes”). The Company will pay interest at an annual rate of 2.80%, 3.45% and 3.90%, respectively, on the 2021 Notes, 2023 Notes and 2026 Notes, on a semi-annual basis on June 15 and December 15 of each year, beginning December 15, 2016. As a result of the October 5, 2016 termination of the Agreement and Plan of Merger and Reorganization with KLA-Tencor (see Note 15 for additional information), the 2023 Notes and the 2026 Notes were redeemed on October 13, 2016 under the Special Mandatory Redemption terms of the indenture governing these Notes. The Company was required to redeem all of the 2023 Notes and the 2026 Notes then outstanding, at a special mandatory redemption price equal to 101% of the aggregate principal amount of such notes, plus accrued and unpaid interest of approximately $21.0 million from the date of initial issuance. In addition, in conjunction with the Special Mandatory Redemption of the 2023 Notes and the 2026 Notes in the three months ended December 25, 2016, the Company recognized approximately $2.5 million of loan issuance costs to other expense, net. The 2021 Notes are not subject to Special Mandatory Redemption. The Company may redeem the 2021 Notes at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the 2021 Notes and accrued and unpaid interest before May 15, 2021. The Company may redeem the 2021 Notes at par, plus accrued and unpaid interest at any time on or after May 15, 2021. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the 2021 Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest. Selected additional information regarding the Senior Notes outstanding as of March 26, 2017 is as follows:
| Remaining Amortization period |  | Fair Value of Notes (Level 2)
| (years) |  | (in thousands)
2020 Notes | 3.0 |  | $ | 505,820 |
2021 Notes | 4.2 |  | $ | 802,560 |
2025 Notes | 8.0 |  | $ | 503,910 |
Interest Cost The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Convertible Notes, the Senior Notes, the term loan agreement and the revolving credit facility during the three and nine months ended March 26, 2017 and March 27, 2016.
| Three Months Ended |  | Nine Months Ended
March 26, 2017 |  | March 27, 2016 |  | March 26, 2017 |  | March 27, 2016
|  |  |  | (in thousands)
Contractual interest coupon | $ | 19,443 |  |  | $ | 14,749 |  |  | $ | 76,777 |  |  | $ | 44,269 |
Amortization of interest discount | 5,654 |  |  | 8,979 |  |  | 17,241 |  |  | 27,359 |
Amortization of issuance costs | 482 |  |  | 13,124 |  |  | 1,931 |  |  | 28,224 |
Effect of interest rate contracts, net | (672 | ) |  | 96 |  |  | (4,296 | ) |  | 285 |
Total interest cost recognized | $ | 24,907 |  |  | $ | 36,948 |  |  | $ | 91,653 |  |  | $ | 100,137 |
Term Loan Agreement On May 13, 2016, we entered into an Amended and Restated Term Loan Agreement (the “Amended and Restated Term Loan Agreement”), which amends and restates the Term Loan Agreement we entered into on November 10, 2015 with a syndicate of lenders. The Amended and Restated Term Loan Agreement provides for a commitment of $1,530.0 million senior unsecured term loan facility composed of two tranches (the "Commitments"); (i) a $1,005.0 million tranche of 3-year senior unsecured loans; and (ii) a $525.0 million tranche of 5-year senior unsecured loans. The Commitments automatically terminated on October 5, 2016, upon termination of the Agreement and Plan of Merger and Reorganization with KLA-Tencor Corporation (see Note 15 for additional detail). In conjunction with the termination of the Commitments the Company released approximately $3.7 million of loan issuance costs to loss on extinguishment of debt, a component of other expense, net in the three months ended December 25, 2016. Revolving Credit Facility On November 10, 2015, we entered into an Amendment and Restatement Agreement (as amended on April 26, 2016 by Amendment No. 1 to the Amended and Restated Credit Agreement, and as further amended, restated, supplemented or otherwise modified from time to time, the “Amended and Restated Credit Agreement”), which amends and restates the Company's prior unsecured Credit Agreement, dated March 12, 2014 (as amended by Amendment No. 1, dated March 5, 2015). The Amended and Restated Credit Agreement provides for an increase to our revolving unsecured credit facility, from $300.0 million to $750.0 million with a syndicate of lenders. It includes an expansion option, subject to certain requirements, for us to request an increase in the facility of up to an additional $250.0 million, for a potential total commitment of $1.0 billion. Proceeds from the credit facility can be used for general corporate purposes. The facility matures on November 10, 2020. Termination of the Agreement and Plan of Merger and Reorganization with KLA-Tencor Corporation has no effect to the Amended and Restated Credit Agreement. Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (i) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) one-month LIBOR plus 1.0%, plus a spread of 0.0% to 0.5%, or (ii) LIBOR multiplied by the statutory rate, plus a spread of 0.9% to 1.5% in each case as the applicable spread is determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Principal and any accrued and unpaid interest is due and payable upon maturity. Additionally, the Company will pay the lenders a quarterly commitment fee that varies based on the Company’s credit rating. The Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants and events of default that are substantially similar to those in the Amended and Restated Term Loan Agreement. As of March 26, 2017, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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