

	September 23, 2018							June 24, 2018
	Amount (in thousands)				Effective Interest Rate			Amount (in thousands)				Effective Interest Rate
Fixed-rate 2.75% Senior Notes Due March 15, 2020 ("2020 Notes")	$	500,000			2.88	%		$	500,000			2.88	%
Fixed-rate 2.80% Senior Notes Due June 15, 2021 ("2021 Notes")	800,000				2.95	%		800,000				2.95	%
Fixed-rate 3.80% Senior Notes Due March 15, 2025 ("2025 Notes")	500,000				3.87	%		500,000				3.87	%
Fixed-rate 2.625% Convertible Notes Due May 15, 2041 ("2041 Notes")	247,510			⁽¹⁾	4.28	%		326,953			⁽¹⁾	4.28	%
Commercial paper	360,000				2.30	%	⁽²⁾	360,000				2.33	%	⁽²⁾
Total debt outstanding, at par	2,407,510							2,486,953
Unamortized discount	(65,388		)					(85,196		)
Fair value adjustment - interest rate contracts	(33,475		)					(31,189		)
Unamortized bond issuance costs	(1,688		)					(1,820		)
Total debt outstanding, at carrying value	$	2,306,959						$	2,368,748
Reported as:
Current portion of long-term debt, and commercial paper	$	548,400		⁽¹⁾				$	608,532		⁽¹⁾
Long-term debt	1,758,559							1,760,216
Total debt outstanding, at carrying value	$	2,306,959						$	2,368,748

⁽¹⁾ As of the report date, these notes were convertible at the option of the bondholder. This is a result of the following condition being met: the market value of the Company’s Common Stock was greater than 130% of the convertible notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end. As a result, the 2041 Notes were classified in current liabilities and a portion of the equity component, associated with the convertible notes representing the unamortized discount, was classified in temporary equity on the Company’s Consolidated Balance Sheets. Upon closure of the conversion period, the notes not converted will be reclassified back into noncurrent liabilities and the temporary equity will be reclassified into permanent equity.

In June 2012, with the acquisition of Novellus Systems, Inc. (“Novellus”), the Company assumed $700 million in aggregate principal amount of 2.625% Convertible Senior Notes due May 2041 (the “2041 Notes,”). The Company pays cash interest at an annual rate of 2.625%, on a semi-annual basis on May 15 and November 15 of each year. The 2041 Notes also have a contingent interest payment provision that may require the Company to pay additional interest, up to 0.60% per year, based on certain thresholds, beginning with the semi-annual interest payment on May 15, 2021, and upon the occurrence of certain events, as outlined in the indenture governing the 2041 Notes.

The Company separately accounts for the liability and equity components of the 2041 Notes. The initial debt components of the 2041 Notes were valued based on the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without the conversion feature, which equals the effective interest rate on the liability component disclosed in the table below, respectively. The equity component was initially valued equal to the principle value of the notes, less the present value of the future cash flows using the Company’s borrowing rate at the date of the issuance or assumption for similar debt instruments without a conversion feature, which equated to the initial debt discount.

The 2041 Notes may be redeemed on or after May 21, 2021 at a price equal to outstanding principal plus accrued and unpaid interest if the last reported sales price of common shares has been equal to or more than 150% of the then applicable conversion price for at least 20 trading days during the 30 consecutive trading days prior to the redemption notice date.

Under certain circumstances, the 2041 Notes may be converted into shares of the Company’s Common Stock. The number of shares each debenture is convertible into is based on conversion rates, disclosed in the table below. The principal value of the 2041 Note conversions in the three months ended September 23, 2018, was approximately $79.4 million. During the quarter ended September 23, 2018, and in the subsequent period through October 19, 2018, the Company received notice of conversion of an additional $6.0 million principal value of 2041 Notes. Selected additional information regarding the 2041 Notes outstanding as of September 23, 2018, and June 24, 2018, is as follows:



	September 23, 2018		June 24, 2018
	2041 Notes		2041 Notes
	(in thousands, except years, percentages, conversion rate, and conversion price)
Carrying amount of permanent equity component, net of tax	$	159,523	$	159,120
Carrying amount of temporary equity component, net of tax	$	58,812	$	78,192
Remaining amortization period (years)	22.6		22.9
Fair Value of Notes (Level 2)	$	1,161,772
Conversion rate (shares of common stock per $1,000 principal amount of notes)	30.3454
Conversion price (per share of common stock)	$	32.95
If-converted value in excess of par value	$	921,771
Estimated share dilution using average quarterly stock price $172.39 per share	6,075

The Company has warrants outstanding in connection with its 2018 convertible notes that matured in May 2018. The warrants settlement is contractually defined as net share settlement. The exercise price is adjusted for certain corporate events, including dividends on the Company’s Common Stock. During the three months ended September 23, 2018, 4.1 million warrants associated with the 2018 Notes were exercised, resulting in the issuance of approximately 2.3 million shares of the Company's Common Stock.



	2018 Notes
	(shares in thousands)
Warrants:
Underlying shares	3,500
Estimated share dilution using average quarterly stock price $172.39 per share	2,055
Exercise price	$71.42
Remaining expiration date range	September 24 - October 24, 2018

On March 12, 2015, the Company completed a public offering of $500 million aggregate principal amount of the Company’s Senior Notes due March, 2020 (the “2020 Notes”) and $500 million aggregate principal amount of the Company’s Senior Notes due March, 2025 (the “2025 Notes”, together with the 2020 Notes, the “Senior Notes”). The Company pays interest at an annual rate of 2.75% and 3.80%, on the 2020 Notes and 2025 Notes, respectively, on a semi-annual basis on March 15 and September 15 of each year. During the year ended June 26, 2016, the Company entered into a series of interest rate contracts hedging the fair value of a portion of the 2025 Notes par value, whereby the Company receives a fixed rate and pays a variable

The Company may redeem the Senior Notes at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect of the Senior Notes and accrued and unpaid interest before February 15, 2020, for the 2020 Notes and before December 15, 2024, for the 2025 Notes. The Company may redeem the Senior Notes at par, plus accrued and unpaid interest at any time on or after February 15, 2020, for the 2020 Notes and on or after December 24, 2024, for the 2025 Notes. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the Senior Notes at a price equal to 101% of the principal amount of the Senior Notes, plus accrued and unpaid interest.

On June 7, 2016, the Company completed a public offering of $800 million aggregate principal amount of Senior Notes due June 2021 (the “2021 Notes”, together with the 2020 and 2025 Notes, the “Senior Notes”). The Company pays interest at an annual rate of 2.80% on the 2021 Notes on a semi-annual basis on June 15 and December 15 of each year.

The Company may redeem the 2021 Notes at a redemption price equal to 100% of the principal amount of such series (“par”), plus a “make whole” premium as described in the indenture in respect to the 2021 Notes and accrued and unpaid interest before May 15, 2021. The Company may redeem the 2021 Notes at par, plus accrued and unpaid interest at any time on or after May 15, 2021. In addition, upon the occurrence of certain events, as described in the indenture, the Company will be required to make an offer to repurchase the 2021 Notes at a price equal to 101% of the principal amount of the respective note, plus accrued and unpaid interest.

On November 13, 2017, the Company established a commercial paper program (“the CP Program”) under which the Company may issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate principal amount of $1.25 billion. The net proceeds from the commercial paper program will be used for general corporate purposes, including repurchases of the Company’s Common Stock from time to time and under the Company’s stock repurchase program. As of September 23, 2018, borrowings under the CP Program totaled $360.0 million, with a weighted-average interest rate of 2.30% and maturities of 90 days or less. Amounts available under the CP Program may be re-borrowed.

On October 13, 2017, the Company entered into Amendment No. 2 to Amended and Restated Credit Agreement (the “2nd Amendment”), which amends the Company’s prior unsecured Credit Agreement (as amended by the 2nd Amendment, the “Amended Credit Agreement”). Among other things, the Amended Credit Agreement provides for a $500 million increase to the Company’s revolving credit facility, from $750 million to $1.25 billion with a syndicate of lenders. The Amended Credit Agreement provides for an expansion option that will allow the Company, subject to certain requirements, to request an increase in the facility of up to an additional $600 million, for a potential total commitment of $1.85 billion. The facility matures on October 13, 2022.

Interest on amounts borrowed under the credit facility is, at the Company’s option, based on (1) a base rate, defined as the greatest of (a) prime rate, (b) Federal Funds rate plus 0.5%, or (c) one-month LIBOR plus 1.0%, plus a spread of 0.0% to 0.5%, or (2) LIBOR multiplied by the statutory rate, plus a spread of 0.9% to 1.5% in each case as the applicable spread is determined based on the rating of the Company’s non-credit enhanced, senior unsecured long-term debt. Principal and any accrued and unpaid interest is due and payable upon maturity. Additionally, the Company will pay the lenders a quarterly commitment fee that varies based on the Company’s credit rating. The Amended and Restated Credit Agreement contains affirmative covenants, negative covenants, financial covenants and events of default. As of September 23, 2018, the Company had no borrowings outstanding under the credit facility and was in compliance with all financial covenants.

The following table presents the amount of interest cost recognized relating to both the contractual interest coupon and amortization of the debt discount, issuance costs, and effective portion of interest rate contracts with respect to the Senior Notes, convertible notes, the term loan agreement, commercial paper, and the revolving credit facility during the three months ended September 23, 2018, and September 24, 2017.



	Three Months Ended
	September 23, 2018		September 24, 2017
	(in thousands)
Contractual interest coupon	$	17,427	$	17,956
Amortization of interest discount	900		4,104
Amortization of issuance costs	329		485
Effect of interest rate contracts, net	753		(349		)
Total interest cost recognized	$	19,409	$	22,196