Symantec 2008 Annual Report Download - page 173

Consolidated Balance Sheet as of March 28, 2008, in accordance with the guidance in EITF No. 00-19, Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.
In accordance with SFAS No. 128, Earnings per Share, the Senior Notes will have no impact on diluted
earnings per share, or EPS, until the price of our common stock exceeds the conversion price of $19.12 per share
because the principal amount of the Senior Notes will be settled in cash upon conversion. Prior to conversion, we
will include 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. 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 there would be dilution of approximately 5.4 million shares.
As the share price continues to increase, additional dilution would occur at a declining rate such that an average
price of $27.3175 per share would yield cumulative dilution of approximately 32.9 million shares. If the average
price of our common stock exceeds $27.3175 per share for a quarterly period we will also include the effect of the
additional potential shares that may be issued related to the warrants using the treasury stock method. The Senior
Notes along with the warrants have a combined dilutive effect such that for the first $1.00 by which the average price
exceeds $27.3175 per share there would be cumulative dilution of approximately 39.5 million shares prior to
conversion. As the share price continues to increase, additional dilution would occur but at a declining rate.
Prior to conversion, the note hedge transactions are not considered for purposes of the EPS calculation, as their
effect would be anti-dilutive. Upon conversion, the note hedge will automatically serve to neutralize the dilutive
effect of the Senior Notes when the stock price is above $19.12 per share. For example, if upon conversion the price
of our common stock was $28.3175 per share, the cumulative effect of approximately 39.5 million shares in the
example above would be reduced to approximately 3.9 million shares.
The preceding calculations assume that the average price of our common stock exceeds the respective
conversion prices during the period for which EPS is calculated and exclude any potential adjustments to the
conversion ratio provided under the terms of the Senior Notes. See Note 13 for information regarding the impact on
EPS of the Senior Notes and warrants in the current period.
Line of credit
In July 2006, we entered into a five-year $1 billion senior unsecured revolving credit facility that expires in
July 2011. Borrowings under the facility bear interest, at our option, at either a rate equal to the bank’s base rate or a
rate equal to LIBOR plus a margin based on our leverage ratio, as defined in the credit facility agreement. In
connection with the credit facility, we must maintain certain covenants, including a specified ratio of debt to
earnings before interest, taxes, depreciation, and amortization, as defined, as well as various other non-financial
covenants.
On November 29, 2007, we borrowed $200 million under this credit agreement to partially finance our
acquisition of Vontu. This outstanding borrowing amount bears interest at 4.7075% per annum, which is due and
payable quarterly. Payment of the principal amount is due on November 28, 2008. Total interest expense
accumulated as of March 28, 2008 is approximately $3 million, of which $2 million was paid and $1 million
was accrued and included in Other current liabilities on the Consolidated Balance Sheets. On March 28, 2008, we
had $200 million in outstanding borrowings included in Short-term borrowings on our Consolidated Balance Sheets
related to this credit facility and were in compliance with all of the covenants. There were no borrowings under this
credit facility at March 30, 2007.
Note 10. Assets Held for Sale
During fiscal 2008, following a review of our real estate holdings we determined that certain long-term assets
were underutilized. As a result, we have committed to sell vacant buildings and land with a total carrying value of
$39 million and no associated liabilities. In accordance with the provisions of SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, we designated these buildings and land as assets held for sale and
91
SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)