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Debt | 12 Months Ended
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Jan. 31, 2021
Debt Disclosure [Abstract] |
Debt | Debt Convertible Senior Notes In September 2018, we issued $575.0 million in aggregate principal amount of the 0.5% Convertible Senior Notes due in 2023 (“2023 Notes”), which included the initial purchasers’ exercise in full of their option to purchase an additional $75.0 million aggregate principal amount of the 2023 Notes. The net proceeds from the issuance of the 2023 Notes were $560.8 million after deducting the initial purchasers’ discounts and transaction costs. In January 2021, we issued $690.0 million in aggregate principal amount of the 0% Convertible Senior Notes due in 2024 (“2024 Notes,” and together with the 2023 Notes, the “Notes”), which included the initial purchasers’ exercise in full of their option to purchase an additional $90.0 million aggregate principal amount of the 2024 Notes. The net proceeds from the issuance of the 2024 Notes were $677.3 million after deducting the initial purchasers’ discounts and transaction costs. The Notes are senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of our unsecured indebtedness then existing and future liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. Upon conversion of the Notes, holders will receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. The 2023 Notes are governed by an indenture dated September 18, 2018 (the “2018 Indenture”). The 2024 Notes are governed by an indenture dated January 15, 2021 (the “2021 Indenture,” and together with the 2018 Indenture, the “Indentures”). The Indentures are between us, as the issuer, and U.S. Bank National Association, as trustee. The Indentures do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness, or the issuance or repurchase of securities by us or any of our subsidiaries. The 2023 Notes mature on September 15, 2023, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date. Interest on the 2023 Notes is payable semi-annually in arrears on March 15 and September 15 of each year. The Notes are subject to additional interest in certain events of default. The 2024 Notes mature on January 15, 2024 unless earlier repurchased by us or earlier converted in accordance with their terms prior to the maturity date. Conversion terms The 2023 Notes have an initial conversion rate of 13.9860 shares of our common stock per $1,000 principal amount of the 2023 Notes, which is equal to an initial conversion price of approximately $71.50 per share of our common stock. The 2024 Notes have an initial conversion rate of 2.3796 shares of our common stock per $1,000 principal amount of the 2024 Notes, which is equal to an initial conversion price of approximately $420.24 per share of our common stock. The initial conversation rates are subject to adjustment in some events. Following certain corporate events that occur prior to the maturity date or, with respect to the 2023 Notes, following our issuance of a notice of redemption, we will increase the conversion rate for a holder who elects to convert its Notes in connection with such corporate event or during the related redemption period in certain circumstances. Additionally, upon the occurrence of a corporate event that constitutes a “fundamental change” as defined within the respective Indentures, holders of the Notes may require us to repurchase for cash all or a portion of their Notes at a purchase price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest if any. No such corporate events have occurred as of January 31, 2021. Holders of the 2023 Notes may convert all or any portion of their 2023 Notes at any time on or after June 15, 2023, until the close of business on September 13, 2023. Prior to the close of business on the business day immediately preceding June 15, 2023, holders of the 2023 Notes may convert all or any portion of their 2023 Notes, in integral multiples of $1,000 principal amount, only under the following circumstances (the “2023 Notes conversion conditions”): •During any fiscal quarter commencing after the fiscal quarter ending on January 31, 2019 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; •During the 5-business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price as defined in the 2018 Indenture per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; •If we call any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or •Upon the occurrence of specified corporate events described in the 2018 Indenture. In the second, third and fourth quarter of the year ended January 31, 2021, the last reported sale price of our common stock for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter was greater than 130% of the conversion price. The 2023 Notes therefore became convertible on August 1, 2020 and continue to be convertible through January 31, 2021. Holders of the 2024 Notes may convert all or any portion of their 2024 Notes at any time on or after October 15, 2023, until the close of business on September 15, 2024. Prior to the close of business on the business day immediately preceding October 15, 2023, holders of the 2024 Notes may convert all or any portion of their 2024 Notes, in integral multiples of $1,000 principal amount, only under the following circumstances (the “2024 Notes conversion conditions”): •During any fiscal quarter commencing after the fiscal quarter ending on April 30, 2021 (and only during such fiscal quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; •During the 5-business day period after any 10 consecutive trading day period (the “measurement period”) in which the trading price as defined in the 2021 Indenture per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or •Upon the occurrence of specified corporate events described in the 2021 Indenture. As of January 31, 2021, the 2024 Notes conversion conditions described above were not met and therefore the 2024 Notes are not yet convertible. Redemption terms We may redeem for cash or shares all or any portion of the 2023 Notes, at our option, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, beginning on or after September 20, 2021 if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day. We may not redeem the 2024 Notes prior to the maturity date. Repurchases of the 2023 Notes In connection with our issuance of the 2024 Notes, we used a portion of the proceeds to repurchase $460.0 million aggregate principal amount of the 2023 Notes in privately negotiated transactions for an aggregate consideration of $1.7 billion, consisting of $459.2 million in cash and 4.7 million shares of our common stock with a value of $1.2 billion, a non-cash financing activity. We recorded an extinguishment loss of $33.8 million as a result of the transaction. In our consolidated statement of cash flow, the cash paid to repurchase the 2023 Notes was bifurcated into two components: the portion of the repayment attributable to accreted interest related to debt discount is classified as cash outflows from operating activities, and the portion of the repayment attributable to the principal is classified as cash outflows from financing activities. In January 2021, certain holders of the 2023 Notes exercised their option to convert $23.9 million aggregate amount of the principal of the 2023 Notes to be settled in March 2021. As we are to settle the principal in cash, we reclassified $20.5 million of the carrying value to “Convertible senior notes—current.” Additionally, we reclassified $3.4 million, representing the difference between the aggregate principal and the carrying value, to mezzanine equity from permanent equity on our consolidated balance sheet as of January 31, 2021. Net Carrying Amounts of the Liability and Equity Components
| January 31,
(in thousands) | 2021 |  | 2020
2023 Notes (effective interest rate of 5.9%): |  |  |
Principal | $ | 575,000 |  |  | $ | 575,000 |
Less: extinguishment or conversion | (460,000) |  |  | — |
Unpaid principal | 115,000 |  |  | 575,000 |
Less: unamortized debt discount | (15,116) |  |  | (101,461) |
Less: unamortized transaction costs | (1,224) |  |  | (8,218) |
Net carrying value of current and noncurrent liability component | $ | 98,660 |  |  | $ | 465,321 |
Proceeds allocated to the conversion option (debt discount) | $ | 134,667 |  |  | $ | 134,667 |
Less: extinguishment or conversion | (31,933) |  |  | — |
Less: transaction costs | (3,336) |  |  | (3,336) |
Net carrying value of mezzanine and permanent equity component | $ | 99,398 |  |  | $ | 131,331 |
Excess of if-converted value over principal | $ | 259,578 |  |  |
2024 Notes (effective interest rate of 3.8%): |  |  |
Principal | $ | 690,000 |  |  |
Less: unamortized debt discount | (63,619) |  |  |
Less: unamortized transaction costs | (11,353) |  |  |
Net carrying value of noncurrent liability component | $ | 615,028 |  |  |
Proceeds allocated to the conversion option (debt discount) | $ | 64,453 |  |  |
Less: transaction costs | (1,185) |  |  |
Net carrying value of permanent equity component | $ | 63,268 |  |  |
Excess of if-converted value over principal | $ | — |  |  |
Interest expense recognized related to the Notes was as follows:
| Year Ended January 31,
(in thousands) | 2021 |  | 2020 |  | 2019
Contractual interest expense | $ | 2,773 |  |  | $ | 2,865 |  |  | $ | 1,071 |
Amortization of debt discount | 25,828 |  |  | 24,411 |  |  | 8,795 |
Amortization of transaction costs | 2,173 |  |  | 1,978 |  |  | 712 |
Total | $ | 30,774 |  |  | $ | 29,254 |  |  | $ | 10,578 |
Capped Calls To minimize the potential economic dilution to our common stock upon conversion of the Notes, we entered into privately-negotiated capped call transactions ("Capped Calls") with certain counterparties. The capped call transactions were as follows:
(in thousands, except per share amounts) | 2023 Notes |  | 2024 Notes
Aggregate cost of capped calls | $ | 67,563 |  |  | $ | 31,395 |
Initial strike price per share (1) | $ | 71.50 |  |  | $ | 420.24 |
Initial cap price per share (1) | $ | 110.00 |  |  | $ | 525.30 |
Shares of our common stock covered by the capped calls (1) | 8,042 |  |  | 1,642 |
(1) Subject to adjustments for certain events, such as merger events and tender offers, and anti-dilution adjustments Impact on Loss Per Share In periods when we have net income, the shares of our common stock subject to the Notes outstanding during the period is included in our diluted earnings per share under the if-converted method, as share settlement is presumed as of the fourth quarter of 2021. In prior periods, cash settlement was presumed and shares subject to the Notes would have been included under the treasury stock method. Capped Calls are excluded from the calculation of diluted earnings per share, as they would be antidilutive. However, upon conversion, there will be no economic dilution from the Notes unless the market price of our common stock exceeds the cap prices listed above in the Capped Calls section, as exercise of the Capped Calls offsets any dilution from the Notes from the conversion price up to the cap price. As of January 31, 2021, the market price of a share of our common stock exceeded the $110.00 cap price associated with the 2023 Notes but not the $525.30 cap price associated with the 2024 Notes; therefore, the 2023 Notes would have caused economic dilution if converted. Revolving Credit Facility In January 2021, we entered into a credit agreement with a syndicate of banks. The credit agreement extended a senior secured revolving credit facility to us in an aggregate principal amount of $500.0 million, which amount may be increased by an additional $250.0 million subject to the terms of the credit agreement. We may use the proceeds of future borrowings under the credit facility to finance working capital, capital expenditures and for other general corporate purposes, including permitted acquisitions. The facility matures in January 2026 and requires us to comply with customary affirmative and negative covenants. We were in compliance with all covenants as of January 31, 2021. As of January 31, 2021, there were no outstanding borrowings under the revolving credit facility. The facility is subject to customary fees for loan facilities of this type, including ongoing commitment fees at a rate between 0.25% and 0.30% per annum on the daily undrawn balance.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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