XML 28 R17.htm IDEA: XBRL DOCUMENT
v3.8.0.1

LONG-TERM DEBT AND OTHER BORROWINGS | 3 Months Ended
--- | ---
Sep. 24, 2017
Debt Disclosure [Abstract] |
LONG-TERM DEBT AND OTHER BORROWINGS | LONG-TERM DEBT AND OTHER BORROWINGS As of September 24, 2017, and June 25, 2017, the Company’s outstanding debt consisted of the following:
| September 24, 2017 |  | June 25, 2017
| Amount (in thousands) |  | Effective Interest Rate |  | Amount (in thousands) |  | Effective Interest Rate
Fixed-rate 1.25% Convertible Notes Due May 15, 2018 ("2018 Notes") | $ | 238,367 |  | (1) | 5.27 | % |  | $ | 447,436 |  | (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 3.80% Senior Notes Due March 15, 2025 ("2025 Notes") | 500,000 |  |  | 3.87 | % |  | 500,000 |  |  | 3.87 | %
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes") | 538,468 |  | (1) | 4.28 | % |  | 631,074 |  | (2) | 4.28 | %
Total debt outstanding, at par | 2,576,835 |  |  |  |  | 2,878,510 |  |  |
Unamortized discount | (145,241 | ) |  |  |  | (178,589 | ) |  |
Fair value adjustment - interest rate contracts | (12,761 | ) |  |  |  | (10,102 | ) |  |
Unamortized bond issuance costs | (2,798 | ) |  |  |  | (3,161 | ) |  |
Total debt outstanding, at carrying value | $ | 2,416,035 |  |  |  |  | $ | 2,686,658 |  |  |
Reported as: |  |  |  |  |  |  |
Current portion of long-term debt | $ | 639,252 |  | (3) |  |  | $ | 907,827 |  | (3) |
Long-term debt | 1,776,783 |  |  |  |  | 1,778,831 |  |  |
Total debt outstanding, at carrying value | $ | 2,416,035 |  |  |  |  | $ | 2,686,658 |  |  |
____________________________ (1) As of September 24, 2017, these notes were convertible at the option of the bondholder, as a result of the condition described in (3) below. Upon closure of the conversion period, the 2041 Notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity. (2) As of June 25, 2017, these notes were convertible at the option of the bond holder, as a result of the condition described in (3) below. (3) 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 2041 Notes were classified in current liabilities and a portion of the equity component, associated with the convertible notes 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 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. The principal value of Convertible Note conversions in the three months ended September 24, 2017, was approximately $301.7 million. Selected additional information regarding the Convertible Notes outstanding as of September 24, 2017, and June 25, 2017, is as follows:
| September 24, 2017 |  | June 25, 2017
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 | $ | 92,388 |  |  | $ | 157,210 |  |  | $ | 89,604 |  |  | $ | 156,374 |
Carrying amount of temporary equity component, net of tax | $ | 5,816 |  |  | $ | 131,180 |  |  | $ | 15,186 |  |  | $ | 154,675 |
Remaining amortization period (years) | 0.6 |  |  | 23.6 |  |  | 0.8 |  |  | 23.8 |
Fair Value of Notes (Level 2) | $ | 697,829 |  |  | $ | 2,805,294 |  |  |  |  |
Conversion rate (shares of common stock per $1,000 principal amount of notes) | 16.6142 |  |  | 29.8160 |  |  |  |  |
Conversion price (per share of common stock) | $ | 60.19 |  |  | $ | 33.54 |  |  |  |  |
If-converted value in excess of par value | $ | 461,533 |  |  | $ | 2,298,926 |  |  |  |  |
Estimated share dilution using average quarterly stock price $159.71 per share | 2,468 |  |  | 12,683 |  |  |  |  |
Convertible Note Hedges and Warrants Concurrent with the issuance of the 2018 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. As of September 24, 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. During the period ended September 24, 2017 the note hedge was partially settled, resulting in the receipt of approximately 2,092,000 shares. The following table presents the details of the warrants and convertible note hedge arrangements as of September 24, 2017:
| 2018 Notes
(shares in thousands)
Warrants: |
Underlying shares | 7,476 |
Estimated share dilution using average quarterly stock price $159.71 per share | 4,074 |
Exercise price | $ | 72.69 |
Expiration date range | August 15 - October 24, 2018 |
Convertible Note Hedge: |
Number of shares available from counterparties | 3,960 |
Exercise price | $ | 60.19 |
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”, together with the 2020 Notes, the “Senior Notes”). The Company pays interest at an annual rate of 2.75% and 3.80%, on the 2020 Notes and 2025 Notes, respectively, 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 million aggregate principal amount of Senior Notes due June 2021 (the “2021 Notes”, together with the 2020 and 2025 Notes, the “Senior Notes”). The Company pays interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year. 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 September 24, 2017, is as follows:
| Remaining Amortization period |  | Fair Value of Notes (Level 2)
| (years) |  | (in thousands)
2020 Notes | 2.5 |  | $ | 507,915 |
2021 Notes | 3.7 |  | $ | 810,384 |
2025 Notes | 7.5 |  | $ | 518,625 |
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 months ended September 24, 2017, and September 25, 2016.
| Three Months Ended
September 24, 2017 |  | September 25, 2016
(in thousands)
Contractual interest coupon | $ | 17,956 |  |  | $ | 34,712 |
Amortization of interest discount | 4,104 |  |  | 5,914 |
Amortization of issuance costs | 485 |  |  | 918 |
Effect of interest rate contracts, net | (349 | ) |  | (1,058 | )
Total interest cost recognized | $ | 22,196 |  |  | $ | 40,486 |
Revolving Credit Facility On November 10, 2015, the Company 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. Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) 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 (2) 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 September 24, 2017, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants. On October 13, 2017, the Company entered into Amendment No. 2 to Amended and Restated Credit Agreement (the “2nd Amendment”), among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, which amends the Company’s Credit Agreement (as amended by the 2nd Amendment, the “Amended Credit Agreement”). Among other things, the Amended Credit Agreement provides for a $500 million increase to the Company’s revolving credit facility, from $750 million under the Credit Agreement to $1.25 billion under the Amended Credit Agreement. The Amended Credit Agreement also modifies the date of maturity of the revolving credit facility from November 10, 2020 to October 13, 2022. The Amended Credit Agreement provides for an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $600 million, for a potential total commitment of $1.85 billion. Other than as disclosed in this paragraph, the material terms of the Amended Credit Agreement are substantially the same as the Credit Agreement.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration