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Debt | 9 Months Ended
--- | ---
Mar. 28, 2025
Debt Disclosure [Abstract] |
Debt | Debt Debt consisted of the following:
| March 28, 2025 |  | June 28, 2024
| (in millions)
4.75% senior unsecured notes due 2026 | $ | 2,300 |  |  | $ | 2,300 |
Variable interest rate Term Loan A-2 maturing 2027 | — |  |  | 2,588 |
Variable interest rate Term Loan A-3 maturing 2027 | 2,480 |  |  | — |
3.00% convertible notes due 2028 | 1,600 |  |  | 1,600 |
2.85% senior notes due 2029 | 500 |  |  | 500 |
3.10% senior notes due 2032 | 500 |  |  | 500 |
Total debt | 7,380 |  |  | 7,488 |
Issuance costs | (47) |  |  | (54) |
Subtotal | 7,333 |  |  | 7,434 |
Less: current portion of long-term debt | (2,426) |  |  | (1,750) |
Long-term debt | $ | 4,907 |  |  | $ | 5,684 |
On February 20, 2025, the Company entered into a fourth amendment to the loan agreement governing the Company’s revolving credit facility maturing in January 2027 (the “2027 Revolving Credit Facility”) and term loan facility, dated as of January 7, 2022 (as amended, the “Loan Agreement”) that, among other changes, (a) permitted the Separation, (b) provided for the automatic release, in connection with the Separation, of guarantees and liens on collateral provided by Sandisk (as defined below) and Sandisk Technologies, Inc. under the Loan Agreement, (c) provided for the issuance of a new $2.51 billion Term Loan A-3 maturing in January 2027 (the “Term Loan A-3”) in a noncash exchange to replace the Company’s previously existing Term Loan A-2 (the “Term Loan A-2” and, together with the Term Loan A-3, the “Term Loan Facility”), (d) facilitates a potential future debt for equity exchange with respect to the Term Loan A-3 in connection with the Sandisk retained interest, and (e) in connection with the Separation, reduced the aggregate commitments under the 2027 Revolving Credit Facility from $2.25 billion to $1.25 billion. During the three and nine months ended March 28, 2025, the Company made scheduled repayments of $32 million and $107 million, respectively, under the Term Loan Facility. The Term Loan A-3 bears interest, at the Company’s option, at a per annum rate equal to either (x) the Adjusted Term SOFR (as defined in the Loan Agreement) plus an applicable margin varying from 1.125% to 2.000% or (y) a base rate plus an applicable margin varying from 0.125% to 1.000%, in each case depending on the corporate family ratings of the Company from at least two of the Credit Rating Agencies (as defined in the Loan Agreement), with an initial interest rate of Adjusted Term SOFR plus 1.500%. The all-in interest rate for Term Loan A-3 as of March 28, 2025 was 5.927%. During the nine months ended March 28, 2025, the Company drew and repaid $150 million principal amount under the 2027 Revolving Credit Facility. As of March 28, 2025, the Company had no outstanding standby letters of credit and the available capacity under the 2027 Revolving Credit Facility was $1.25 billion as of that date. The Loan Agreement requires the Company to comply with a financial leverage ratio covenant. As of March 28, 2025, the Company was in compliance with the financial covenant. As of March 28, 2025, the Company had outstanding $1.60 billion aggregate principal amount of convertible senior notes pursuant to an indenture dated as of November 3, 2023 (the “Indenture”), which bear interest at an annual rate of 3.00% and mature on November 15, 2028, unless earlier repurchased, redeemed or converted (the “2028 Convertible Notes”). The 2028 Convertible Notes are convertible at the option of any holder beginning August 15, 2028, at a conversion price of approximately $37.89 per share of common stock (which conversion price has been adjusted from its original conversion price of approximately $52.20 in accordance with the Indenture as a result of the Separation). Prior to August 15, 2028, if the trading price of the Company’s common stock remains above 130% of the conversion price for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading-day period prior to the end of a quarter, holders of the 2028 Convertible Notes would have the right to convert the 2028 Convertible Notes during the next succeeding calendar quarter. The 2028 Convertible Notes are also convertible prior to August 15, 2028, upon the occurrence of certain corporate events. Upon any conversion of the 2028 Convertible Notes, the Company will pay cash for the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination thereof, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the notes being converted. During the calendar quarter ended June 30, 2024, the sale price conditional conversion feature of the 2028 Convertible Notes was triggered. As a result, the holder of the 2028 Convertible Notes had the right to convert the 2028 Convertible Notes during the next succeeding calendar quarter through September 30, 2024. Consequently, the Company classified the 2028 Convertible Notes in the Current portion of long-term debt in the Condensed Consolidated Financial Statements as of June 28, 2024. The sale price conditional conversion feature was not triggered during the calendar quarter ended March 31, 2025 and accordingly, the holders of the 2028 Convertible Notes do not have the right to convert the notes during the succeeding calendar quarter ending June 30, 2025. As a result, the 2028 Convertible Notes were classified as Long-term debt in the Condensed Consolidated Financial Statements as of March 28, 2025. The Company will continue to evaluate the conversion feature quarterly to determine if the 2028 Convertible Notes become convertible in future periods. In connection with the issuance of the 2028 Convertible Notes, the Company also entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”). The Capped Calls each have a strike price of approximately $37.89 per share, which has been adjusted from its original conversion price of approximately $52.20 per share according to the terms of the agreements and corresponds to the current conversion price of the 2028 Convertible Notes. The Capped Calls are subject to the same adjustments applicable to the conversion price of the convertible notes, which the Company expects will result in adjusted cap prices of approximately $51.00 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 11 million shares of the Company’s common stock. The Capped Calls are generally intended to reduce or offset the potential dilution to the Company’s common stock upon any conversion of the 2028 Convertible Notes with such reduction or offset, as the case may be, subject to a cap based on the cap price. However, if the market price per share of the Company’s common stock, as measured under the terms of the Capped Calls, exceeds the cap prices of the Capped Calls, there would not be an offset for the excess. The Capped Calls are separate transactions and not part of the terms of the 2028 Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in shareholders’ equity and are not accounted for as derivatives. Subsequent to March 28, 2025, the Company redeemed, at its election, $1.80 billion aggregate principal amount of its 4.75% senior unsecured notes due 2026 (the “2026 Notes”) at par plus accrued interest. Following such redemption, $500 million aggregate principal amount of the 2026 Notes remained outstanding.

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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/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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