XML 26 R15.htm IDEA: XBRL DOCUMENT
v3.20.2

Convertible Senior Notes | 6 Months Ended
--- | ---
Jun. 30, 2020
Debt Disclosure [Abstract] |
Convertible Senior Notes | Convertible Senior Notes In March 2019, we issued $700 million in aggregate principal amount of 0.125% convertible senior notes due in 2025 (2025 notes) and in April 2019, the initial purchasers fully exercised their option to purchase $100 million of additional 2025 notes for aggregate total principal amount of $800 million. In April 2018, we issued $345 million in aggregate principal amount of 0.25% convertible senior notes due in 2023 (2023 notes). The aggregate principal amount of the 2023 notes includes $45 million from the initial purchasers fully exercising their option to purchase additional notes. Collectively, the 2025 notes and 2023 notes are referred to as the “notes.” The notes were issued in private placements to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. Concurrently with the offering of the 2025 notes and 2023 notes, we used $97.2 million and $39.2 million, respectively, of the net proceeds to enter into privately negotiated capped call transactions. The total net proceeds from the notes are as follows (in thousands):
| 2025 Notes |  | 2023 Notes
Principal amount | $ | 800,000 |  |  | $ | 345,000 |
Less initial purchasers’ discount | (18,998) |  |  | (8,625) |
Less other issuance costs | (822) |  |  | (757) |
Net proceeds | $ | 780,180 |  |  | $ | 335,618 |
The notes are our senior, unsecured obligations and are governed by indenture agreements by and between us and Wells Fargo Bank, National Association, as Trustee (the indentures). The 2025 notes bear interest of 0.125% per year which is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2019. The 2025 notes will mature on March 15, 2025 (the 2025 notes maturity date), unless repurchased, redeemed or converted in accordance with their terms prior to such date. The 2023 notes bear interest of 0.25% per year which is payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The 2023 notes will mature on May 15, 2023 (the 2023 notes maturity date), unless repurchased, redeemed or converted in accordance with their terms prior to such date. Each $1,000 principal amount of the 2025 notes will initially be convertible into 19.3956 shares of our common stock. This is equivalent to an initial conversion price of approximately $51.56 per share, which is subject to adjustment in certain circumstances. Each $1,000 principal amount of the 2023 notes will initially be convertible into 37.1051 shares of our common stock. This is equivalent to an initial conversion price of approximately $26.95 per share, which is subject to adjustment in certain circumstances. Prior to the close of business on the business day immediately preceding December 15, 2024 for the 2025 notes and February 15, 2023 for the 2023 notes, the notes are convertible at the option of holders only upon satisfaction of the following circumstances: •during any calendar quarter commencing after the calendar quarter ending on June 30, 2019 for the 2025 notes and June 30, 2018 for the 2023 notes, 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 calendar quarter is greater than or equal to 130% of the respective conversion price for the notes on each applicable trading day; •during the five-business day period after any 10 consecutive trading day period (the measurement period) in which the trading price 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 second scheduled trading day immediately preceding the redemption date; or •upon the occurrence of certain specified corporate events described in the indentures. On or after December 15, 2024 for the 2025 notes and February 15, 2023 for the 2023 notes until the close of business on the second scheduled trading day immediately preceding the respective maturity dates, holders may convert their notes at any time, regardless of the foregoing circumstances. Upon conversion, the notes may be settled in shares of our common stock, cash or a combination of cash and shares of our common stock, at our election. The conditions allowing holders of the 2025 notes to convert were not met and therefore the 2025 notes are not convertible. The first circumstance allowing holders of the 2023 notes to convert was met during the three months ended June 30, 2020, March 31, 2020, December 31, 2019, June 30, 2019, and March 31, 2019. Therefore, the 2023 notes were and are convertible starting April 1, 2019 through September 30, 2019 and from January 1, 2020 through September 30, 2020. During the three and six months ended June 30, 2020, we received immaterial requests for conversion of the 2023 notes which we either settled in cash during the three months ended June 30, 2020 or expect to settle in cash during the three months ended September 30, 2020. The net carrying amount of the liability component of the notes is as follows (in thousands):
| June 30, 2020 |  |  |  | December 31, 2019 |  |
| 2025 Notes |  | 2023 Notes |  | 2025 Notes |  | 2023 Notes
Principal | $ | 800,000 |  |  | $ | 344,998 |  |  | $ | 800,000 |  |  | $ | 345,000 |
Unamortized debt discount | (167,016) |  |  | (36,029) |  |  | (184,698) |  |  | (42,280) |
Unamortized issuance costs | (11,476) |  |  | (4,284) |  |  | (12,691) |  |  | (5,028) |
Net carrying amount (liability) | $ | 621,508 |  |  | $ | 304,685 |  |  | $ | 602,611 |  |  | $ | 297,692 |
The net carrying amount of the equity component of the notes is as follows (in thousands):
| June 30, 2020 |  |  |  | December 31, 2019 |  |
| 2025 Notes |  | 2023 Notes |  | 2025 Notes |  | 2023 Notes
Debt discount for conversion option | $ | 212,000 |  |  | $ | 64,192 |  |  | $ | 212,000 |  |  | $ | 64,193 |
Issuance costs | (5,253) |  |  | (1,749) |  |  | (5,253) |  |  | (1,749) |
Net carrying amount (equity) | $ | 206,747 |  |  | $ | 62,443 |  |  | $ | 206,747 |  |  | $ | 62,444 |
As of June 30, 2020, the remaining lives of the 2025 notes and 2023 notes are approximately 4.7 years and 2.9 years, respectively. Based on the closing price of our common stock of $67.26 on June 30, 2020, the if-converted value of the 2025 notes was approximately $1,043.6 million which exceeds the principal amount of $800 million by approximately $243.6 million and the if-converted value of the 2023 notes was approximately $861.0 million which exceeds the principal amount of $345 million by approximately $516.0 million. The effective interest rates of the liability components for the 2025 notes and 2023 notes are 5.40% and 4.34%, respectively, and each is based on the interest rate of similar debt instruments, at the time of our offering, that do not have associated convertible features. The following tables set forth the total interest expense recognized related to the notes (in thousands):
| Three Months Ended June 30, |  |  |  |  |  |
| 2020 |  |  |  | 2019 |  |
| 2025 Notes |  | 2023 Notes |  | 2025 Notes |  | 2023 Notes
Contractual interest expense | $ | 249 |  |  | $ | 215 |  |  | $ | 251 |  |  | $ | 215 |
Amortization of debt discount | 8,842 |  |  | 3,126 |  |  | 8,914 |  |  | 3,125 |
Amortization of issuance costs | 607 |  |  | 371 |  |  | 613 |  |  | 368 |
Total interest expense | $ | 9,698 |  |  | $ | 3,712 |  |  | $ | 9,778 |  |  | $ | 3,708 |
| Six Months Ended June 30, |  |  |  |  |  |
| 2020 |  |  |  | 2019 |  |
| 2025 Notes |  | 2023 Notes |  | 2025 Notes |  | 2023 Notes
Contractual interest expense | $ | 498 |  |  | $ | 430 |  |  | $ | 265 |  |  | $ | 428 |
Amortization of debt discount | 17,683 |  |  | 6,251 |  |  | 9,424 |  |  | 6,216 |
Amortization of issuance costs | 1,215 |  |  | 743 |  |  | 648 |  |  | 737 |
Total interest expense | $ | 19,396 |  |  | $ | 7,424 |  |  | $ | 10,337 |  |  | $ | 7,381 |
Capped Call Transactions Concurrently with the offering of the 2025 notes and 2023 notes, we used $97.2 million and $39.2 million, respectively, of the net proceeds to enter into privately negotiated capped call transactions which are expected to generally reduce or offset potential dilution to holders of our common stock upon conversion of the notes and/or offset the potential cash payments we would be required to make in excess of the principal amount of any converted notes. The capped call transactions automatically exercise upon conversion of the notes and cover 15,516,480 and 12,801,185 shares of our common stock for the 2025 notes and 2023 notes, respectively, and are intended to effectively increase the overall conversion price from $51.56 to $79.32 per share for the 2025 notes and $26.95 to $40.68 per share for the 2023 notes. The effective increase in conversion price as a result of the capped call transactions serves to reduce potential dilution to holders of our common stock and/or offset the cash payments we are required to make in excess of the principal amount of any converted notes. As these transactions meet certain accounting criteria, they are recorded in stockholders’ equity as a reduction of additional paid-in capital on our condensed consolidated balance sheets and are not accounted for as derivatives. The fair value of the capped call instrument is not remeasured each reporting period. The cost of the capped call is not expected to be deductible for tax purposes.

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