Note 11. Debt

As of December 29, 2018 and June 30, 2018, the Company’s short and long-term debt on the Consolidated Balance Sheets represented the carrying amount of the liability component, net of unamortized debt discounts and issuance cost, of the Senior Convertible Notes. The following table presents the carrying amounts of the liability and equity components (in millions):



	December 29, 2018			June 30, 2018
Principal amount of 0.625% Senior Convertible Notes	$	—		$	277.0
Principal amount of 1.00% Senior Convertible Notes	460.0			460.0
Principal amount of 1.75% Senior Convertible Notes	225.0			225.0
Unamortized discount of liability component	(109.6		)	(121.1		)
Unamortized debt issuance cost	(7.0		)	(7.7		)
Carrying amount of liability component	$	568.4		$	833.2
Current portion of long-term debt	—			275.3
Long-term debt, net of current portion	$	568.4		$	557.9

Carrying amount of equity component ⁽¹⁾	$	136.7		$	239.1


⁽¹⁾	Included in additional paid-in-capital on the Consolidated Balance Sheets.

The Company was in compliance with all debt covenants as of December 29, 2018 and June 30, 2018.

1.75% Senior Convertible Notes (“2023 Notes”)

On May 29, 2018, the Company issued $225.0 million aggregate principal amount of 1.75% Senior Convertible Notes due 2023 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company issued $155.5 million aggregate principal of the 2023 Notes to certain holders of the 2033 Notes in exchange for $151.5 million principal of the 2033 Notes (the “Exchange Transaction”) and issued and sold $69.5 million aggregate principal amount of the 2023 Notes in a private placement to accredited institutional buyers (the “Private Placement”). The carrying value of the liability component at issuance was calculated as the present value of its cash flows using a discount rate of 5.3% based on the 5-year swap rate plus credit spread as of the issuance date. As of December 29, 2018, the expected remaining term of the 2023 Notes is 4.4 years.

The proceeds from the 2023 Notes Private Placement amounted to $67.3 million after issuance costs. The 2023 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.75% payable in cash semi-annually in arrears on June 1st and December 1st of each year, beginning December 1, 2018. The 2023 Notes mature on June 1, 2023 unless earlier converted, redeemed or repurchased.

Based on quoted market prices as of December 29, 2018 and June 30, 2018, the fair value of the 2023 Notes was approximately $224.6 million and $232.4 million, respectively. The 2023 Notes are classified within Level 2 as they are not actively traded in markets.

1.00% Senior Convertible Notes (“2024 Notes”)

On March 3, 2017, the Company issued $400.0 million aggregate principal amount of 1.00% Senior Convertible Notes due 2024 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. On March 22, 2017, the Company issued an additional $60.0 million upon exercise of the over-allotment option of the initial purchasers. The total proceeds from the 2024 Notes amounted to $451.1 million after issuance costs. The 2024 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 1.00% payable in cash semi-annually in arrears on March 1 and September 1 of each year. The 2024 Notes mature on March 1, 2024 unless earlier converted or repurchased. The carrying value of the liability component at issuance was calculated as the present value of its cash flows using a discount rate of 4.8% based on the 7-year swap rate plus credit spread as of the issuance date. As of December 29, 2018, the expected remaining term of the 2024 Notes is 5.2 years.

Based on quoted market prices as of December 29, 2018 and June 30, 2018, the fair value of the 2024 Notes was approximately $453.2 million and $465.3 million, respectively. The 2024 Notes are classified within Level 2 as they are not actively traded in markets.

0.625% Senior Convertible Notes (“2033 Notes”)

On August 21, 2013, the Company issued $650.0 million aggregate principal amount of 0.625% Senior Convertible Notes due 2033 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The proceeds from the 2033 Notes amounted to $636.3 million after issuance costs. The 2033 Notes are an unsecured obligation of the Company and bear interest at an annual rate of 0.625% payable in cash semi-annually in arrears on February 15 and August 15 of each year. The carrying value of the liability component at issuance was calculated as the present value of its cash flows using a discount rate of 5.4% based on the 5-year swap rate plus credit spread as of the issuance date.

On August 15, 2018, certain Noteholders exercised the put option and an aggregate principal amount of $134.3 million of the 2033 Notes were validly surrendered for repurchase. The Company accepted all such notes for payment with available cash. On September 5, 2018, the Company elected to exercise its optional redemption right to redeem all $142.7 million aggregate principal amount of its outstanding 2033 Notes. The date fixed for the redemption of the Notes was October 10, 2018 (Redemption Date), the redemption price for the Notes was equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest thereon to, but excluding the Redemption Date. In connection with the redemption, holders of $112.0 million aggregate principal amount of Notes converted their Notes in accordance with the terms and conditions of the Notes. Note holders who converted their notes received an aggregate payout of $111.8 million in cash and were issued 231,795 shares of the Company’s common stock.

The Company redeemed the remaining $30.7 million aggregate principal amount of outstanding Notes in accordance with its notice of redemption dated September 5, 2018. The Company paid to the registered holders of the Notes that were redeemed an aggregate of approximately $30.8 million, including accrued and unpaid interest to, but excluding, the Redemption Date. As of December 29, 2018, zero of the 2033 Notes remain outstanding.

Based on quoted market prices as of December 29, 2018 and June 30, 2018, the fair value of the 2033 Notes was approximately zero and $281.0 million, respectively. The 2033 Notes are classified within Level 2 as they are not actively traded in markets.

Interest Expense

The following table presents the interest expense for contractual interest, amortization of debt issuance cost and accretion of debt discount (in millions):



	Three Months Ended				Six Months Ended
	December 29, 2018		December 30, 2017		December 29, 2018		December 30, 2017
Interest expense-contractual interest	$	2.1	$	1.8	$	4.5	$	3.8
Amortization of debt issuance cost	0.3		0.6		0.7		1.3
Accretion of debt discount	$	4.9	$	8.4	$	11.4	$	17.5