Debt and Credit Facility

2017 Convertible Notes

During the first quarter of fiscal year 2018, the Company received conversion requests from the remaining holders of the 2017 Convertible Notes. Upon settlement, the holders received a cash payment equal to the par value of the 2017 Convertible Notes of $457.9 million, as well as 9.0 million shares of the Company's common stock. In conjunction with the settlement, the Company exercised its call options on its shares of common stock that it purchased to hedge against the dilution from the conversion of the 2017 Convertible Notes, and received 9.0 million shares from the hedge counterparties. As of the end of the first quarter of fiscal year 2018, the 2017 Convertible Notes were no longer outstanding.

The carrying values of the liabilities and equity components of the 2017 Convertible Notes are reflected in the Company's condensed consolidated balance sheets as follows:



(In thousands)	July 1, 2017		April 1, 2017
Liability component:
Principal amount of the 2017 Convertible Notes	$	—	$	457,918
Unamortized discount of liability component	—		(1,977		)
Hedge accounting adjustment – sale of interest rate swap	—		571
Unamortized debt issuance costs associated with 2017 Convertible Notes	—		(184		)
Net carrying value of the 2017 Convertible Notes	$	—	$	456,328

Equity component (including temporary equity) – net carrying value	$	—	$	50,688

Prior to the conversion, interest expense related to the 2017 Convertible Notes was included in interest and other income (expense), net on the consolidated statements of income, and was recognized as follows:



	Three Months Ended
(In thousands)	July 1, 2017		July 2, 2016
Contractual coupon interest	$	2,300	$	3,938
Amortization of debt issuance costs	184		362
Amortization of debt discount, net	1,406		2,763
Total interest expense related to the 2017 Convertible Notes	$	3,890	$	7,063

To reduce the hedging costs of purchasing the call options on its common stock as described above, the Company, under separate transactions, sold warrants to independent counterparties, which give the counterparties the right to purchase up to 21.1 million shares of the Company's common stock at $40.38 per share. These warrants expire on a gradual basis over a specified period starting on September 13, 2017 through November 7, 2017.

2019 and 2021 Notes

On March 12, 2014, the Company issued the 2019 Notes and 2021 Notes at a discounted price of 99.477% and 99.281% of par, respectively. Interest on the 2019 Notes and 2021 Notes is payable semi-annually on March 15 and September 15.

The Company received net proceeds of $990.1 million from issuance of the 2019 Notes and 2021 Notes, after the debt discount and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the terms of the 2019 Notes and 2021 Notes. As of July 1, 2017, the remaining term of the 2019 Notes and 2021 Notes are 1.7 years and 3.7 years respectively.

The following table summarizes the carrying value of the 2019 Notes and 2021 Notes as of July 1, 2017 and April 1, 2017:




(In thousands)	July 1, 2017			April 1, 2017
Principal amount of the 2019 Notes	$	500,000		$	500,000
Unamortized discount of the 2019 Notes	(904		)	(1,037		)
Unamortized debt issuance costs associated with 2019 Notes	(569		)	(654		)
Principal amount of the 2021 Notes	500,000			500,000
Unamortized discount of the 2021 Notes	(1,979		)	(2,107		)
Unamortized debt issuance costs associated with 2021 Notes	(895		)	(955		)
Total carrying value	$	995,653		$	995,247

Interest expense related to the 2019 Notes and 2021 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:



	Three Months Ended
(In thousands)	July 1, 2017		July 2, 2016
Contractual coupon interest	$	6,406	$	6,406
Amortization of debt issuance costs	146		146
Amortization of debt discount, net	260		253
Total interest expense related to the 2019 Notes and 2021 Notes	$	6,812	$	6,805

2024 Notes

On May 30, 2017, the Company issued the 2024 Notes at a discounted price of 99.887% of par. Interest on the 2024 Notes is payable semi-annually on June 1 and December 1.

The Company received $745.2 million from the issuance of the 2024 Notes, after the debt discount and deduction of debt issuance costs. The debt discounts and issuance costs are amortized to interest expense over the term of the 2024 Notes. As of July 1, 2017, the remaining term of the 2024 Notes is approximately 6.9 years.

In relation to the issuance of the 2024 Notes, the Company entered into interest rate swap contracts with certain independent financial institutions, whereby the Company pays on a semi-annual basis, a variable interest rate equal to the three-month London Interbank Offered Rate (LIBOR) plus 91.43 bps, and receives on a semi-annual basis, interest income at a fixed interest rate of 2.950%. For the three months ended July 1, 2017, the Company earned a net interest amount of $643 thousand from the interest rate swap contracts, which was included in interest and other income (expense), net on the condensed consolidated statements of income as a reduction to interest expense. As of July 1, 2017, the fair value of the interest rate swap contracts was $3.5 million, which was recorded in other long-term liabilities.

The following table summarizes the carrying value of the 2024 Notes as of July 1, 2017 and April 1, 2017:



(In thousands)	July 1, 2017			April 1, 2017
Principal amount of the 2024 Notes	$	750,000		$	—
Unamortized discount of the 2024 Notes	(838		)	—
Unamortized debt issuance costs associated with 2024 Notes	(3,911		)	—
Carrying Value of the 2024 Notes	$	745,251		$	—
Fair value hedge adjustment — interest rate swap contracts	(3,494		)	—
Net carrying value of the 2024 Notes	$	741,757		$	—

Interest expense related to the 2024 Notes was included in interest and other income (expense), net on the condensed consolidated statements of income as follows:



	Three Months Ended
(In thousands)	July 1, 2017		July 2, 2016
Contractual coupon interest	$	1,322	$	—
Amortization of debt issuance costs	47		—
Amortization of debt discount, net	10		—
Total interest expense related to the 2024 Notes	$	1,379	$	—

Revolving Credit Facility

On December 7, 2016, the Company entered into a $400.0 million senior unsecured revolving credit facility that, upon certain conditions, may be extended by an additional $150.0 million, with a syndicate of banks (expiring in December 2021). Borrowings under the credit facility will bear interest at a benchmark rate plus an applicable margin based upon the Company’s credit rating. In connection with the credit facility, the Company is required to maintain certain financial and nonfinancial covenants. As of July 1, 2017, the Company had made no borrowings under this credit facility and was not in violation of any of the covenants.