Symantec 2008 Annual Report Download - page 172

Note 9. Debt
Convertible senior notes
In June 2006, we issued $1.1 billion principal amount of 0.75% Convertible Senior Notes due June 15, 2011, or
the 0.75% Notes, and $1.0 billion principal amount of 1.00% Convertible Senior Notes due June 15, 2013, or the
1.00% Notes, to initial purchasers in a private offering for resale to qualified institutional buyers pursuant to SEC
Rule 144A. We refer to the 0.75% Notes and the 1.00% Notes collectively as the Senior Notes. We received
proceeds of $2.1 billion from the Senior Notes and incurred net transaction costs of approximately $33 million,
which were allocated proportionately to the 0.75% Notes and the 1.00% Notes. The transaction costs were primarily
recorded in other long-term assets and are being amortized to interest expense using the effective interest method
over five years for the 0.75% Notes and seven years for the 1.00% Notes. The 0.75% Notes and 1.00% Notes were
each issued at par and bear interest at 0.75% and 1.00% per annum, respectively. Interest is payable semiannually in
arrears on June 15 and December 15, beginning December 15, 2006.
Each $1,000 of principal of the 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 Senior Notes may convert their 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 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 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 March 28, 2008, none of the conditions allowing holders of the Senior Notes to convert had been met. In
addition, upon a change in control of Symantec, the holders of the Senior Notes may require us to repurchase for
cash all or any portion of their Senior Notes for 100% of the principal amount.
Under the terms of the Senior Notes, we were required to use reasonable efforts to file a shelf registration
statement regarding the Senior Notes with the SEC and cause the shelf registration statement to be declared
effective within 180 days of the closing of the offering of the Senior Notes. In addition, we must maintain the
effectiveness of the shelf registration statement for a period of two years after the closing of the offering of the
Senior Notes. If we fail to meet these terms, we will be required to pay additional interest on the Senior Notes in the
amount of 0.25% per annum. We have filed the shelf registration statement with the SEC and it became effective on
December 11, 2006.
Concurrently with the issuance of the Senior Notes, we entered into note hedge transactions with affiliates of
certain of the 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 net shares. The cost of the note hedge
transactions to us was approximately $592 million. In addition, we sold warrants to affiliates of certain of the initial
purchasers whereby they have the option to purchase up to 110 million shares of our common stock at a price of
$27.3175 per share. The warrants expire on various dates from July 2011 through August 2013 and must be settled
in net shares. We received approximately $326 million in cash proceeds from the sale of these warrants.
The cost incurred in connection with the note hedge transactions, net of the related tax benefit and the proceeds
from the sale of the warrants, is included as a net reduction in Capital in excess of par value in the accompanying
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)