Debt

3 Months Ended

Jul. 03, 2020

The following table summarizes components of our debt:


(In millions, except percentages)	July 3, 2020		April 3, 2020		Effective Interest Rate
4.2% Senior Notes due September 15, 2020	$	750	$	750	4.25	%
New 2.5% Convertible Senior Notes due April 1, 2022	250		250		2.63	%
3.95% Senior Notes due June 15, 2022	400		400		4.05	%
2.0% Convertible Senior Notes due August 15, 2022	—		625		2.66	%
New 2.0% Convertible Senior Notes due August 15, 2022	625		625		2.62	%
Term Loan due November 4, 2024	500		500		LIBOR plus ⁽¹⁾
5.0% Senior Notes due April 15, 2025	1,100		1,100		5.23	%
Total principal amount	3,625		4,250
Less: unamortized discount and issuance costs	(21)		(29)
Total debt	3,604		4,221
Less: current portion	(763)		(756)
Total long-term debt	$	2,841	$	3,465

(1)The term loan bears interest at a rate equal to the London Interbank Offered Rate (LIBOR) plus a margin based either on the current debt rating of our non-credit-enhanced, senior unsecured long-term debt or consolidated adjusted leverage as defined in the underlying loan agreement. The interest rate for the outstanding term loan is as follows:


	July 3, 2020		April 3, 2020
Term Loan due November 4, 2024	1.69	%	2.88	%

As of July 3, 2020, the future contractual maturities of debt by fiscal year are as follows:


(In millions)
Remainder of 2021	$	756
2022	275
2023	1,050
2024	25
2025	419
Thereafter	1,100
Total future maturities of debt	$	3,625

Repayments of Convertible Senior Notes

In May 2020, we settled the $625 million principal and conversion rights of the 2.0% Convertible Senior Note in cash. The aggregate settlement amount of $1,179 million was based on $19.25 per underlying share into which the 2.0% Convertible Notes were convertible. In addition, we paid $3 million of accrued and unpaid interest through the date of settlement. The repayments resulted in an adjustment to stockholders’ equity of $581 million and a gain on extinguishment of $20 million.

As of July 3, 2020 and April 3, 2020, the Convertible Senior Notes consisted of the following:


	July 3, 2020						April 3, 2020
(In millions)	New 2.5% Convertible Notes		New 2.0% Convertible Notes		New 2.5% Convertible Notes		New 2.0% Convertible Notes		2.0% Convertible Notes
Liability components:
Principal	$	250	$	625	$	250	$	625	$	625
Unamortized discount and issuance costs	(1)		(8)		(1)		(9)		(6)
Net carrying amount	$	249	$	617	$	249	$	616	$	619

Equity component net of tax	$	43	$	56	$	43	$	56	$	12

Based on the closing price of our common stock of $20.01 on July 2, 2020, the if-converted value of the New 2.5% Convertible Notes exceeded the principal amount by approximately $48 million. Based on the closing price of our common stock of $20.01 on July 2, 2020, the if-converted value of the New 2.0% Convertible Notes is less than the principal amount.

The following table sets forth total interest expense recognized related to our Convertible Senior Notes:


	Three Months Ended
(In millions)	July 3, 2020		July 5, 2019
Contractual interest expense	$	6	$	10
Amortization of debt discount and issuance costs	$	1	$	4
Payments in lieu of conversion price adjustments ⁽¹⁾	$	2	$	—

(1) Payments in lieu of conversion price adjustments include $2 million paid to holders of the Convertible Senior Notes because our dividend of $0.125 per share to our common stockholders that was paid in June 2020 exceeded the amounts defined in the Convertible Senior Notes agreements.

Revolving credit facility

We have a revolving line of credit of $1,000 million through November 2024. Borrowings under the revolving line of credit bear interest at a floating rate based on our debt ratings and our consolidated leverage ratios. The unused revolving line of credit is subject to a commitment fee ranging from 0.125% to 0.30% per annum. As of July 3, 2020 and April 3, 2020, there were no borrowings outstanding under our revolving credit facilities.

Debt covenant compliance

Our term loan and revolving credit facility agreement contains customary representations and warranties, non-financial covenants for financial reporting, affirmative and negative covenants, including a covenant that we maintain a consolidated leverage ratio of not more than 5.25 to 1.0, or 5.75 to 1.0 if we acquire assets or business in an aggregate amount greater than $250 million, and restrictions on indebtedness, liens, investments, stock repurchases, and dividends (with exceptions permitting our regular quarterly dividend and other specific capital returns). As of July 3, 2020, we were in compliance with all debt covenants.