Symantec 2011 Annual Report Download - page 156

The following table summarizes information regarding the equity and liability components of the Convertible
Senior Notes:
April 1,
2011
April 2,
2010
As of
(In millions)
Equity component ............................................... $ 462 $ 586
Principal amount ................................................ $1,600 $2,100
Unamortized discount ............................................. (115) (229)
Liability component .............................................. $1,485 $1,871
The effective interest rate, contractual interest expense and amortization of debt discount for the Convertible
Senior Notes was as follows:
April 1,
2011
April 2,
2010
April 3,
2009
Fiscal Year Ended
As Adjusted
(In millions)
Effective interest rate ................................... 6.78% 6.78% 6.78%
Interest expense — contractual ............................ $ 16 $ 18 $ 18
Interest expense — amortization of debt discount .............. $ 96 $104 $ 96
As of April 1, 2011, the remaining weighted-average amortization period of the discount and debt issuance
costs is approximately 2 years and the if-converted value of the Convertible Senior Notes does not exceed the
principal amount of the Convertible Senior Notes.
Each $1,000 of principal of the Convertible Senior Notes will initially be convertible into 52.2951 shares of
Symantec common stock, which is the equivalent of $19.12 per share, subject to adjustment upon the occurrence of
specified events. Holders of the Convertible Senior Notes may convert their Convertible Senior Notes prior to
maturity during specified periods as follows: (1) during any calendar quarter, beginning after June 30, 2006, if the
closing price of our common stock for at least 20 trading days in the 30 consecutive trading days ending on the last
trading day of the immediately preceding calendar quarter is more than 130% of the applicable conversion price per
share; (2) if specified corporate transactions, including a change in control, occur; (3) with respect to the
0.75% Notes, at any time on or after April 5, 2011, and with respect to the 1.00% Notes, at any time on or
after April 5, 2013; or (4) during the five business-day period after any five consecutive trading-day period during
which the trading price of the Convertible Senior Notes falls below a certain threshold. Upon conversion, we would
pay the holder the cash value of the applicable number of shares of Symantec common stock, up to the principal
amount of the note. Amounts in excess of the principal amount, if any, may be paid in cash or in stock at our option.
Holders who convert their Convertible Senior Notes in connection with a change in control may be entitled to a
“make whole” premium in the form of an increase in the conversion rate. As of April 1, 2011, none of the conditions
allowing holders of the Convertible Senior Notes to convert had been met. In addition, upon a change in control of
Symantec, the holders of the Convertible Senior Notes may require us to repurchase for cash all or any portion of
their Convertible Senior Notes for 100% of the principal amount.
Concurrently with the issuance of the Convertible Senior Notes, we entered into note hedge transactions with
affiliates of certain initial purchasers whereby we have the option to purchase up to 110 million shares of our
common stock at a price of $19.12 per share. The options as to 58 million shares expire on June 15, 2011 and the
options as to 52 million shares expire on June 15, 2013. The options must be settled in the same manner as we settle
the Convertible Senior Notes (cash or net shares). The cost of the note hedge transactions to us was approximately
$592 million. In addition, we sold warrants to affiliates of certain initial purchasers whereby they have the option to
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)