XML 92 R20.htm IDEA: XBRL DOCUMENT
v3.19.3

LONG-TERM DEBT AND OTHER BORROWINGS | 3 Months Ended
--- | ---
Sep. 29, 2019
Debt Disclosure [Abstract] |
LONG-TERM DEBT AND OTHER BORROWINGS | LONG-TERM DEBT AND OTHER BORROWINGS As of September 29, 2019, and June 30, 2019, the Company’s outstanding debt consisted of the following:
| September 29, 2019 |  | June 30, 2019 |
| Amount (in thousands) |  | Effective Interest Rate |  | Amount (in thousands) |  | Effective Interest Rate |
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 3.75% Senior Notes Due March 15, 2026 ("2026 Notes") | 750,000 |  |  | 3.86 | % |  | 750,000 |  |  | 3.86 | % |
Fixed-rate 4.00% Senior Notes Due March 15, 2029 ("2029 Notes") | 1,000,000 |  |  | 4.09 | % |  | 1,000,000 |  |  | 4.09 | % |
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes") | 184,294 |  | (1) | 4.28 | % |  | 212,349 |  | (1) | 4.28 | % |
Fixed-rate 4.875% Senior Notes Due March 15, 2049 ("2049 Notes") | 750,000 |  |  | 4.93 | % |  | 750,000 |  |  | 4.93 | % |
Total debt outstanding, at par | 4,484,294 |  |  |  |  | 4,512,349 |  |  |  |
Unamortized discount | (65,446 | ) |  |  |  | (73,191 | ) |  |  |
Fair value adjustment - interest rate contracts | 3,778 |  | (2) |  |  | (3,612 | ) |  |  |
Unamortized bond issuance costs | (5,317 | ) |  |  |  | (5,535 | ) |  |  |
Total debt outstanding, at carrying value | $ | 4,417,309 |  |  |  |  | $ | 4,430,011 |  |  |  |
Reported as: |  |  |  |  |  |  |  |
Current portion of long-term debt, and commercial paper | $ | 641,353 |  |  |  |  | $ | 662,308 |  |  |  |
Long-term debt | 3,775,956 |  |  |  |  | 3,767,703 |  |  |  |
Total debt outstanding, at carrying value | $ | 4,417,309 |  |  |  |  | $ | 4,430,011 |  |  |  |
____________________________ (1) As of the report date, these notes were convertible at the option of the bondholder. This is a result of the following condition being met: 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. Upon closure of the conversion period, the notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity. (2) This amount includes a cumulative fair market gain of $3.0 million for discontinued hedging relationships, net of an immaterial amount of amortization for the three months ended, September 29, 2019. Convertible Senior Notes In June 2012, with the acquisition of Novellus Systems, Inc., the Company assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 15, 2041 (the “2041 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. 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 2041 Notes. The initial debt components of the 2041 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 principal 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. The 2041 Notes may be redeemed on or after May 21, 2021 at a price equal to outstanding principal plus accrued and unpaid interest if the last reported sales price of common shares has been equal to or more than 150% of the then applicable conversion price for at least 20 trading days during the 30 consecutive trading days prior to the redemption notice date. Under certain circumstances, the 2041 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 the 2041 Note conversions in the three months ended September 29, 2019, was approximately $28.1 million. During the quarter ended September 29, 2019 and in the subsequent period through October 25, 2019, the Company received notice of conversion for an additional $7.3 million principal value of 2041 Notes, which will settle in the quarter ending December 29, 2019. Selected additional information regarding the 2041 Notes outstanding as of September 29, 2019, and June 30, 2019, is as follows:
| September 29, 2019 |  | June 30, 2019
| 2041 Notes |  | 2041 Notes
| (in thousands, except years, percentages, conversion rate, and conversion price)
Carrying amount of permanent equity component, net of tax | $ | 160,979 |  |  | $ | 160,604 |
Carrying amount of temporary equity component, net of tax | $ | 42,553 |  |  | $ | 49,439 |
Remaining amortization period (years) | 21.6 |  |  | 21.9 |
Fair Value of Notes (Level 2) | $ | 1,303,285 |  |  |
Conversion rate (shares of common stock per $1,000 principal amount of notes) | 30.9197 |  |  |
Conversion price (per share of common stock) | $ | 32.34 |  |  |
If-converted value in excess of par value | $ | 886,078 |  |  |
Estimated share dilution using average quarterly stock price $209.64 per share | 4,819 |  |  |
Senior Notes On March 4, 2019, the company completed a public offering of $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2026 (the “2026 Notes”), $1.0 billion aggregate principal amount of the Company’s Senior Notes due March 15, 2029 (the “2029 Notes”), and $750 million aggregate principal amount of the Company’s Senior Notes due March 15, 2049 (the “2049 Notes”). The Company pays interest at an annual rate of 3.75%, 4.00%, and 4.875%, on the 2026, 2029, and 2049 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year. On March 12, 2015, the Company completed a public offering of $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of the Company’s Senior Notes due March 15, 2025 (the “2025 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 8 - Financial Instruments for additional information regarding these interest rate contracts. 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”). 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 2020, 2021, 2025, 2026, 2029 and 2049 Notes (collectively 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 to the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes, before May 15, 2021 for the 2021 Notes, before December 15, 2024 for the 2025 Notes, before January 15, 2026 for the 2026 Notes, before December 15, 2028 for the 2029 Notes, and before September 15, 2048 for the 2049 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, on or after May 15, 2021 for the 2021 Notes, on or after December 24, 2024 for the 2025 Notes, on or after January 15, 2026 for the 2026 Notes, on or after December 15, 2028 for the 2029 Notes, and on or after September 15, 2048 for the 2049 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 respective note, plus accrued and unpaid interest. Selected additional information regarding the Senior Notes outstanding as of September 29, 2019, is as follows:
| Remaining Amortization period |  | Fair Value of Notes (Level 2)
| (years) |  | (in thousands)
2020 Notes | 0.5 |  | $ | 501,065 |
2021 Notes | 1.7 |  | $ | 809,032 |
2025 Notes | 5.5 |  | $ | 535,600 |
2026 Notes | 6.5 |  | $ | 800,220 |
2029 Notes | 9.5 |  | $ | 1,102,670 |
2049 Notes | 29.5 |  | $ | 915,225 |
Commercial Paper Program On November 13, 2017, the Company established a commercial paper program (“the CP Program”) under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $1.25 billion. The net proceeds from the commercial paper program will be used for general corporate purposes, including repurchases of the Company’s Common Stock from time to time under the Company’s stock repurchase program. Amounts available under the CP Program may be re-borrowed. The CP Program is backstopped by the Company’s Revolving Credit Arrangement. As of September 29, 2019 and June 30, 2019, the Company had no outstanding borrowings under the CP Program. Revolving Credit Facility On March 12, 2014, the Company established an unsecured Credit Agreement. This agreement was amended on November 10, 2015 (the “Amended and Restated Credit Agreement”), October 13, 2017 (the “2nd Amendment”), and February 25, 2019 (the “3rd Amendment”). Under the Amended and Restated Credit Agreement (as amended by the 2nd and 3rd Amendment), the Company has a revolving credit facility of $1.25 billion with a syndicate of lenders with an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $600.0 million, for a potential total commitment of $1.85 billion. The facility matures on October 13, 2022. 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 1.50%, 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 Amended and Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants and events of default. As of September 29, 2019, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants. 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 Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the three months ended September 29, 2019 and September 23, 2018.
| Three Months Ended
| September 29, 2019 |  | September 23, 2018
| (in thousands)
Contractual interest coupon | $ | 41,122 |  |  | $ | 17,427 |
Amortization of interest discount | 1,235 |  |  | 900 |
Amortization of issuance costs | 414 |  |  | 329 |
Effect of interest rate contracts, net | 675 |  |  | 753 |
Total interest cost recognized | $ | 43,446 |  |  | $ | 19,409 |

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration