Symantec 2013 Annual Report Download - page 183

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)
interest expense was $10 million, $11 million, and $16 million in fiscal 2013, 2012, and 2011, respectively.
Amortization of the debt discount was $55 million, $56 million, and $96 million in fiscal 2013, 2012, and 2011,
respectively.
The following table summarizes information regarding the equity and liability components of the
convertible senior notes:
As of
March 29,
2013
March 30,
2012
(In millions)
Principal amount ................................................. $1,000 $1,000
Equity component ................................................ 313 313
Liability component .............................................. 997 941
Unamortized discount ............................................. 3 59
Conversion features. Each $1,000 of principal of the 1.00% notes will initially be convertible into
52.2951 shares of our common stock, which is the equivalent of $19.12 per share, subject to adjustment upon the
occurrence of specified events. Holders of the 1.00% notes may convert their 1.00% notes prior to maturity
during specified periods as follows: (1) during any calendar quarter, 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) 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 1.00% notes falls below a certain threshold. Upon conversion, we would pay the holder the cash
value of the applicable number of shares of our 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
1.00% 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 March 29, 2013, none of the conditions allowing holders of the 1.00%
notes to convert had been met.
Concurrently with the issuance of the 1.00% notes, we entered into note hedge transactions with affiliates of
certain initial purchasers whereby we have the option to purchase up to 52 million shares, which corresponds to
the conversion price $19.12 per share of the notes and is equal to the number of shares of our common stock that
notionally underlie the notes. The outstanding options for 52 million shares will expire on June 15, 2013. The
options must be settled in the same manner as we settle the 1.00% notes (cash or net shares). Separately, we
entered into warrants to affiliates of certain initial purchasers whereby they have the option to purchase up to
52 million shares of our common stock at a price of $27.3175 per share. The warrants expire on various dates
through August 30, 2013 and must be settled in net shares on any date which the price per share is at or exceeds
$27.3175.
Effect of conversion on earning per share (“EPS”). In periods prior to conversion, we have included the
effect of the additional shares that may be issued if our common stock price exceeds $19.12 per share using the
treasury stock method since the notes may be settled in cash or shares at our option. As a result, for the first
$1.00 by which the average price of our common stock for a quarterly period exceeds $19.12 per share, the
dilutive effect is approximately 2.6 million shares. As the share price continues to increase, additional dilution
would occur, and when the average price reaches $27.3175 per share it would yield a dilutive effect of
approximately 15.7 million shares. If the average price of our common stock exceeds $27.3175 per share for any
quarterly period up through their expiration dates, there is an additional dilutive effect for potential shares that
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