Note 10. Debt

As of September 30, 2017 and July 1, 2017, the Company’s short-term debt 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 as discussed below. The following table presents the carrying amounts of the liability and equity components (in millions):



	September 30, 2017			July 1, 2017
Principal amount of 0.625% Senior Convertible Notes	$	463.5		$	610.0
Principal amount of 1.00% Senior Convertible Notes	460.0			460.0
Unamortized discount of liability component	(113.5		)	(129.4		)
Unamortized debt issuance cost	(7.9		)	(9.2		)
Carrying amount of liability component	$	802.1		$	931.4
Current portion of long-term debt	443.3			—
Long-term debt, net of current portion	$	358.8		$	931.4

Carrying amount of equity component (1)	$	210.4		$	229.7


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

The Company was in compliance with all debt covenants as of September 30, 2017 and July 1, 2017.

1.00% Senior Convertible Notes (“2024 Notes”)

On March 3, 2017, the Company issued $400 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 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.

Based on quoted market prices as of September 30, 2017 and July 1, 2017, the fair value of the 2024 Notes was approximately $463.1 million and $481.7 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 2033 Notes mature on August 15, 2033 unless earlier converted, redeemed 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 5.4% based on the 5-year swap rate plus credit spread as of the issuance date.

Holders of the 2033 Notes may require the Company to purchase all or a portion of the 2033 Notes on each of August 15, 2018, August 15, 2023 and August 15, 2028, or upon the occurrence of a fundamental change, in each case, at a price equal to 100% of the principal amount of the 2033 Notes to be purchased, plus accrued and unpaid interest to, but excluding the purchase date. As of September 30, 2017, the expected remaining term of the 2033 Notes is 0.9 years and thus was classified as current portion of long-term debt.

During the first quarter of fiscal 2018, the Company repurchased $146.5 million aggregate principal amount of the notes for $162.0 million in cash. In connection with the repurchase, a loss on extinguishment of $3.6 million was recognized in interest and other income, net in compliance with the authoritative guidance. After giving effect to the repurchase, the total amount of 0.625% Senior Convertible Notes outstanding as of September 30, 2017 was $463.5 million.

Based on quoted market prices as of September 30, 2017 and July 1, 2017, the fair value of the 2033 Notes was approximately $488.0 million and $676.1 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
	September 30, 2017		October 1, 2016
Interest expense-contractual interest	$	2.0	$	1.0
Amortization of debt issuance cost	0.7		0.6
Accretion of debt discount	9.1		6.9