corporate transactions and events of default, and no sinking fund is provided for the Notes. The Notes do not
contain any financial covenants.
component representing the conversion option is equal to the fair value of the Convertible Note Hedge, as
described below, which is a substantially identical instrument and was purchased on the same day as the Notes.
The carrying amount of the liability component was determined by deducting the fair value of the equity
component from the par value of the Notes as a whole, and represents the fair value of a similar liability that does
not have an associated convertible feature. A liability of $525 million as of the date of issuance was recognized
for the principal amount of the Notes representing the present value of the Notes' cash flows using a discount
rate of 4.54 percent. The excess of the principal amount of the liability component over its carrying amount is
amortized to interest expense over the term of the Notes using the effective interest method. The equity
component is not remeasured as long as it continues to meet the conditions for equity classification.
liability component and $2 million to the equity component. Debt issuance costs attributable to the liability
component are being amortized to expense over the term of the Notes, and issuance costs attributable to the
equity component were netted with the equity component in additional paid-in capital.
Sheets as follows (in millions):
Hedge") with certain counterparties to reduce the potential dilution with respect to our common stock upon
conversion of the Notes. The Convertible Note Hedge, subject to customary anti-dilution adjustments, provide us
with the option to acquire, on a net settlement basis, approximately 19.9 million shares of our common stock at a
strike price of $31.74, which corresponds to the conversion price of the Notes and is equal to the number of
shares of our common stock that notionally underlie the Notes. As of March 31, 2013, we have not purchased
any shares under the Convertible Note Hedge. We paid $107 million for the Convertible Note Hedge, which was
recorded as an equity transaction.
counterparties whereby we sold to independent third parties warrants (the "Warrants") to acquire, subject to
customary anti-dilution adjustments that are substantially the same as the anti-dilution provisions contained in
the Notes, up to 19.9 million shares of our common stock (which is also equal to the number of shares of our
common stock that notionally underlie the Notes), with a strike price of $41.14. The Warrants could have a
dilutive effect with respect to our common stock to the extent that the market price per share of its common stock
exceeds $41.14 on or prior to the expiration date of the Warrants. We received proceeds of $65 million from the
sale of the Warrants.