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Subsequent Events (Notes)
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3 Months Ended |
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Sep. 30, 2014
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| Subsequent Events [Abstract] | |
| Subsequent Events |
SUBSEQUENT EVENTS
On October 23, 2014, the Company announced that the Company’s Board of Directors has authorized the financing of a leveraged recapitalization, which would feature a special cash dividend (the “Special Cash Dividend”) of $16.50 per share, and an increase to the Company’s existing stock repurchase program for up to 3.6 million additional shares of the Company’s common stock. This increase is in addition to the prior repurchase authorizations under which approximately 13.3 million shares remained available for repurchase as of September 30, 2014.
The intended Special Cash Dividend of $16.50 per share, which is estimated to be approximately $2.75 billion in the aggregate after including the portion of the special cash dividend that could be payable to holders of outstanding equity awards under the 2004 Plan, will be funded in part with a portion of the cash on the Company’s balance sheet, and in part with incremental debt. To fund the debt financed portion of the Special Cash Dividend, the Company intends to add up to $2.5 billion of incremental debt, consisting of a combination of investment grade senior notes and a pre-payable term loan facility, subject to market conditions. The Company also expects to enter into a revolving credit facility, subject to market conditions.
The declaration and payment of the Special Cash Dividend are conditioned on the Company’s ability to obtain requisite debt financing on satisfactory terms and conditions. Subject to the close of necessary financing, the Board of Directors currently expects to declare and pay the Special Cash Dividend before the end of the second quarter of the fiscal year ending June 30, 2015. The Special Cash Dividend is intended to be in addition to the Company’s regular $0.50 per share quarterly cash dividend.
In anticipation of obtaining the intended debt financing, the Company has entered into certain forward contracts (“Rate Lock Agreements”) to lock the 10-year treasury rate (“benchmark rate”) on a portion of the intended debt. The objective of the Rate Lock Agreements is to hedge the risk associated with the variability in interest rates due to the changes in the benchmark rate leading up to the closing of the intended financing, on the notional amount being hedged. The Rate Lock Agreements have a notional amount of $1 billion in aggregate with contract termination dates in the second quarter of the fiscal year ending June 30, 2015. Each forward contract will be closed out when the pricing of the portion of intended debt being hedged is completed or the expiration date, whichever happens earlier. The Company designated each of the Rate Lock Agreements as a qualifying hedging instrument to be accounted for as a cash flow hedge. The effective portion of the gain or loss on the close out of the Rate Lock Agreements will be initially recognized in accumulated other comprehensive income (loss) as a component of total stockholders’ equity which will be amortized into earnings as a component of interest expense over the term of the underlying debt. The ineffective portion, if any, shall be recognized into earnings immediately.
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