Convertible Senior Notes | 3 Months Ended |
Mar. 30, 2015 |
Convertible Senior Notes | (6) Convertible Senior Notes |
Convertible Senior Notes due 2020 |
The Company issued 1.75% convertible senior notes due December 15, 2020, in a public offering for an aggregate principal amount of $250,000. The convertible senior notes bear interest at a rate of 1.75% per annum. Interest is payable semiannually in arrears on June 15 and December 15 of each year. The convertible senior notes are senior unsecured obligations and rank equally to the Company’s future unsecured senior indebtedness and senior in right of payment to any of the Company’s future subordinated indebtedness. |
The maximum number of shares issuable upon conversion, including the effect of a fundamental change and subject to certain conversion adjustments, would be 32,425. |
Convertible Note Hedge and Warrant Transaction: In connection with the issuance of the convertible senior notes due 2020, the Company entered into a convertible note hedge and warrant transaction (Call Spread Transaction), with respect to the Company’s common stock. The convertible note hedge consists of the Company’s option to purchase up to 25,940 common stock shares at a price of $9.64 per share. The hedge expires on December 15, 2020 and can only be executed upon the conversion of the above mentioned convertible senior notes due 2020. Additionally, the Company sold warrants to purchase 25,940 shares of its common stock at a price of $14.26 per share. The warrants expire ratably from March 2021 through January 2022. The 2020 Call Spread Transaction has no effect on the terms of the convertible senior notes due 2020 and reduces potential dilution by effectively increasing the conversion price of the convertible senior notes due 2020 to $14.26 per share of the Company’s common stock. |
Convertible Senior Notes due 2015 |
The Company issued 3.25% convertible senior notes due on May 15, 2015, in a public offering for an aggregate principal amount of $175,000. On May 15, 2015, the outstanding principal of $32,395 plus accrued interest is due and payable. The convertible senior notes are senior unsecured obligations and rank equally to the Company’s future unsecured senior indebtedness and senior in right of payment to any of the Company’s future subordinated indebtedness. |
The maximum number of shares issuable upon conversion, including the effect of a fundamental change and subject to certain conversion adjustments, would be 2,587. |
As of March 30, 2015 and December 29, 2014, the following summarizes the liability and equity components of the convertible senior notes: |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | As of March 30, 2015 | | | As of December 29, 2014 | |
| | Principal | | | Unamortized | | | Net | | | Principal | | | Unamortized | | | Net | |
Discount | Carrying | Discount | Carrying |
| Amount | | Amount |
| | (in thousands) | |
Liability components: | | | | |
Convertible senior notes due 2020 | | $ | 250,000 | | | $ | (51,120 | ) | | $ | 198,880 | | | $ | 250,000 | | | $ | (52,958 | ) | | $ | 197,042 | |
Convertible senior notes due 2015 | | | 32,395 | | | | (187 | ) | | | 32,208 | | | | 32,395 | | | | (554 | ) | | | 31,841 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | 282,395 | | | $ | (51,307 | ) | | $ | 231,088 | | | $ | 282,395 | | | $ | (53,512 | ) | | $ | 228,883 | |
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| | As of March 30, 2015 and December 29, 2014 | | | | | | | | | | | | | |
| | Embedded | | | Embedded | | | Total | | | | | | | | | | | | | |
conversion | conversion | | | | | | | | | | | | |
option — | option — | | | | | | | | | | | | |
Convertible | Convertible | | | | | | | | | | | | |
Senior | Senior Notes | | | | | | | | | | | | |
Notes | Issuance | | | | | | | | | | | | |
| Costs | | | | | | | | | | | | |
| | (in thousands) | | | | | | | | | | | | | |
Equity components: | | | | | | | | | | | | | | | | | | | | | | | | |
Additional paid-in capital: | | | | | | | | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2020 | | $ | 60,227 | | | $ | (1,916 | ) | | $ | 58,311 | | | | | | | | | | | | | |
Convertible senior notes due 2015 | | | 39,781 | | | | (1,413 | ) | | | 38,368 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 100,008 | | | $ | (3,329 | ) | | $ | 96,679 | | | | | | | | | | | | | |
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The components of interest expense resulting from the convertible senior notes for the quarters ended March 30, 2015 and March 31, 2014 are as follows: |
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| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarter Ended | | | | | | | | | | | | | | | | | |
| | March 30, | | | March 31, | | | | | | | | | | | | | | | | | |
2015 | 2014 | | | | | | | | | | | | | | | | |
| | (In thousands) | | | | | | | | | | | | | | | | | |
Contractual coupon interest | | | | | | | | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2020 | | $ | 1,094 | | | $ | 1,085 | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2015 | | | 263 | | | | 263 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 1,357 | | | $ | 1,348 | | | | | | | | | | | | | | | | | |
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Amortization of debt discount | | | | | | | | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2020 | | $ | 1,838 | | | $ | 1,764 | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2015 | | | 367 | | | | 338 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 2,205 | | | $ | 2,102 | | | | | | | | | | | | | | | | | |
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Amortization of debt issuance costs | | | | | | | | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2020 | | $ | 184 | | | $ | 177 | | | | | | | | | | | | | | | | | |
Convertible senior notes due 2015 | | | 37 | | | | 34 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 221 | | | $ | 211 | | | | | | | | | | | | | | | | | |
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As of March 30, 2015 and December 29, 2014, remaining unamortized debt issuance costs included in other non-current assets were $5,142 and $5,363, respectively. The debt issuance costs and debt discount are being amortized to interest expense over the term of the convertible senior notes using the effective interest rate method. At March 30, 2015, the remaining weighted average amortization period for the unamortized senior convertible note discount and debt issuance costs was 5.7 years. |
For the quarters ended March 30, 2015 and March 31, 2014, the amortization of debt discount and debt issuance costs for the 2020 convertible senior notes and the 2015 convertible senior notes is based on an effective interest rate of 6.48% and 8.37%, respectively. |