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Debt
 3 Months Ended
Oct. 02, 2021
Debt Disclosure [Abstract]  
Debt
Note 9. Debt
Convertible Notes
2026 Notes
In December 2019, we issued $1,050.0 million in aggregate principal amount of 0.50% Convertible Notes due in 2026 (“the 2026 Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2026 Notes are governed by an indenture between the Company and U.S. Bank National Association (the “2026 Indenture”). We used approximately $196.0 million of the net proceeds of the offering to repay in full all amounts outstanding under our term loan credit facility, and a portion of the net proceeds of the offering to purchase approximately $200.0 million of our common stock concurrently with the pricing of the offering in privately negotiated transactions. The 2026 Notes are unsecured and do not contain any financial covenants, restrictions on dividends, incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by us.
The 2026 Notes bear interest at a rate of 0.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2020. The 2026 Notes will mature on December 15, 2026, unless earlier redeemed, repurchased by us, or converted pursuant to their terms.
The initial conversion rate is 10.0711 shares of common stock per $1,000 principal amount of the 2026 Notes (which is equivalent to an initial conversion price of approximately $99.29 per share). The conversion rate is subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a make-whole fundamental change or our issuance of a notice of redemption, we will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert the 2026 Notes in connection with such make-whole fundamental change or notice of redemption.
Prior to the close of business on the business day immediately preceding September 15, 2026, holders of the 2026 Notes may convert their 2026 Notes only under certain circumstances discussed in detail in our Annual Report on Form 10-K for the year ended July 3, 2021.
2024 Notes
In March 2017, we issued $450 million of 0.25% Convertible Notes due in 2024 (the “2024 Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The 2024 Notes are governed by an indenture between the Company, as the issuer, and U.S. Bank National Association, as trustee (the “2024 Indenture”). The 2024 Notes are unsecured and do not contain any financial covenants, restrictions on dividends, incurrence of senior debt or other indebtedness, or the issuance or repurchase of securities by us.
The 2024 Notes bear interest at a rate of 0.25% per year. Interest on the 2024 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2017. The 2024 Notes will mature on March 15, 2024, unless earlier repurchased by us or converted pursuant to their terms.
The initial conversion rate of the 2024 Notes is 16.4965 shares of common stock per $1,000 principal amount of 2024 Notes, which is equivalent to an initial conversion price of approximately $60.62 per share, a 132.5% premium to the fair market value at the date of issuance. Prior to the close of business on the business day immediately preceding December 15, 2023, each holder of the 2024 Notes may convert their 2024 Notes only under certain circumstances discussed in detail in our Annual Report on Form 10-K for the year ended July 3, 2021.
During the three months ended October 2, 2021, we received conversion requests for less than $0.1 million principal amount of the 2024 Notes, which were settled in cash in the first quarter of fiscal 2022.
2024 and 2026 Notes
Our convertible notes consisted of the following components as of the periods presented (in millions):
Liability component:October 2, 2021July 3, 2021
2024 Notes (1)
2026 Notes (2)
2024 Notes2026 Notes
Principal$450.0 $1,050.0 $450.0 $1,050.0 
Unamortized debt discount and issuance costs(54.2)(250.0)(59.3)(260.2)
Net carrying amount of the liability component$395.8 $800.0 $390.7 $789.8 
(1) Since the closing price of our stock exceeded $78.80 (or 130% of the conversion price of $60.62) for 20 of the last 30 trading days of the first quarter of fiscal 2022, the 2024 Notes have become convertible at the option of the holders. Therefore, the debt component of our 2024 Notes as of October 2, 2021 has been classified as current liabilities in our condensed consolidated balance sheet.
(2) If the closing price of our stock exceeds $129.08 (or 130% of the conversion price of $99.29) for 20 of the last 30 trading days of any future quarter, our 2026 Notes would also become convertible at the option of the holders and the debt component would be reclassified to current liabilities in our condensed consolidated balance sheet.
The following table sets forth interest expense information related to the convertible notes for the periods presented (in millions):
Three Months Ended
October 2, 2021September 26, 2020
Contractual interest expense$1.6 $1.6 
Amortization of the debt discount and debt issuance costs15.3 14.4 
Total interest expense
$16.9 $16.0 
The future interest and principal payments related to our convertible notes are as follows as of October 2, 2021 (in millions):
Fiscal Years2024 Notes2026 NotesTotal
Remainder of 2022$0.5 $5.3 $5.8 
20231.1 5.3 6.4 
2024451.1 5.3 456.4 
2025— 5.3 5.3 
2026— 5.3 5.3 
Thereafter— 1,052.4 1,052.4 
Total convertible notes payments
$452.7 $1,078.9 $1,531.6 
The principal balances of our Notes are reflected in the payment periods in the table above based on their respective contractual maturities.