(2) In the third quarter of fiscal 2012, the company issued $550 million of 2.375% Convertible Senior Notes due May 1, 2032 (the "2032C Notes") and $450 million of 3.125% Convertible Senior Notes due May 1, 2032 (the "2032D Notes" and, together with the 2032C Notes, the "2032 Notes"). Issuance costs for the 2032 Notes totaled $21 million. The initial conversion rate for the 2032C Notes is 103.8907 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $9.63 per share of common stock. The initial conversion rate for the 2032D Notes is 100.1803 shares of common stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $9.98 per share of common stock. Upon the issuance of the 2032 Notes, the company recorded $805 million of debt, $191 million of additional capital and $17 million of deferred debt issuance costs (included in other noncurrent assets). The difference between the debt recorded at inception and the principal amount ($104 million for the 2032C Notes and $92 million for the 2032D Notes) is being accreted to principal through interest expense through May 2019 for the 2032C Notes and May 2021 for the 2032D Notes, the expected life of the notes. Concurrent with the offering of the 2032C and 2032D Notes, the company entered into capped call transactions (the "2012C Capped Calls" and "2012D Capped Calls") that have an initial strike price of approximately $9.80 and $10.16 per share, respectively, subject to certain adjustments, which was set to be slightly higher than the initial conversion prices of the 2032C Notes and 2032D Notes. The 2012C and 2012D Capped Calls have cap prices that range from approximately $14.26 per share to $16.04 per share. The 2012C and 2012D Capped Calls are intended to reduce the potential dilution upon conversion of the 2032C and 2032D Notes. The 2012C and 2012D Capped Calls are considered capital transactions and the related cost of $103 million was recorded as a charge to additional capital. In the third quarter of fiscal 2012, the company provided a written notice to redeem the company's 2013 convertible senior notes (the "2013 Notes") on June 4, 2012. In the third quarter of fiscal 2012, $23 million of principal amount of the 2013 Notes was converted by holders into 4.4 million shares. The remaining $116 million principal amount was converted by holders into 22.9 million shares in the fourth quarter of fiscal 2012. In connection with the redemption, the company paid a "make-whole premium" of $9 million, which was reflected in interest expense for the third quarter of fiscal 2012.
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