Convertible Senior Notes and Related Transactions (Tables)

3 Months Ended

May 04, 2024

The Notes consist of the following (in thousands):


	May 4, 2024		Feb 3, 2024
2024 Notes
Principal	$	—	$	48,078
Unamortized debt issuance costs	—		(30)
Net carrying amount	$	—	$	48,048
Fair value, net1	$	—	$	49,182
Initial 2028 Notes
Principal	$	275,000	$	275,000
Unamortized debt discount and issuance costs2,3	(7,598)		(8,034)
Net carrying amount	$	267,402	$	266,966
Fair value, net1	$	353,793	$	295,550
Additional 2028 Notes
Principal	$	76,947	$	64,826
Unamortized debt discount and issuance costs3	(13,913)		(11,465)
Embedded derivative4	30,230		16,390
Net carrying amount	$	93,264	$	69,751
Fair value, net1	$	117,436	$	60,099

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Notes:

1The fair value of the Notes is determined based on inputs that are observable in the market and have been classified as Level 2 in the fair value hierarchy.

2The unamortized debt discount related to the Initial 2028 Notes is due to the result of the modification accounting for a portion of the exchanged notes. This discount represents both an increase in the fair value of the embedded conversion feature, which is calculated as the difference between the fair value of the embedded conversion feature immediately before and after the exchange, and cash paid to modified noteholders. The change in conversion feature value reduces the carrying amount of the convertible debt instrument with a corresponding increase in additional paid-in capital. The additional cash paid to modified noteholders increased the debt discount. This debt discount is being amortized to interest expense over five years.

3For the three months ended May 4, 2024, the weighted average effective interest rate including amortization of debt discount and issuance costs was 4.5% and 9.3% for the Initial 2028 Notes and Additional 2028 Notes, respectively. For the three months ended April 29, 2023, the weighted average effective interest rate including amortization of debt discount and issuance costs was 4.5% for the Initial 2028 Notes.

4The fair value of the embedded derivative is measured using significant unobservable inputs and are classified as Level 3 in the fair value hierarchy.

Schedule of Interest Expense on Convertible Notes

Interest expense for the Notes for the three months ended May 4, 2024 and April 29, 2023 consists of the following (in thousands):


	Three Months Ended
	May 4, 2024		Apr 29, 2023
2024 Notes
Coupon interest	$	334	$	1,096
Amortization of debt discount and issuance costs	28		161
Total	$	362	$	1,257
Initial 2028 Notes
Coupon interest	$	2,578	$	401
Amortization of debt discount and issuance costs	436		63
Total	$	3,014	$	464
Additional 2028 Notes
Coupon interest	$	646	$	—
Amortization of debt discount and issuance costs	662		—
Total	$	1,308	$	—