(1) Conversion Based on Common Stock Price. On any date during any calendar quarter (and only during such calendar quarter) beginning after March 31, 2015, if the Closing Sale Price for the Common Stock was more than 130% of the applicable Conversion Price on each applicable Trading Day for at least 20 Trading Days (whether or not consecutive) in the period of the 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding previous calendar quarter;
($72.37 per share x 130% = $94.0
https://www.sec.gov/Archives/edgar/data/1405495/000119312515087314/d888367d8k.htm
Convertible Note Hedge Transactions
On March 5 and March 9, 2015, in connection with the offering of the Notes, the Company entered into convertible note hedge transactions with respect to its Common Stock with Barclays Bank PLC, through its agent Barclays Capital Inc., and Goldman, Sachs & Co. (the “Counterparties”). The convertible note hedge transactions cover, subject to customary anti-dilution adjustments, approximately 3.8 million and approximately 0.6 million shares of Common Stock, respectively, at a strike price that corresponds to the initial conversion price of the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes.
The convertible note hedge transactions are intended generally to reduce the potential dilution to the Common Stock and/or offset any potential cash payments the Company is required to make in excess of the principal amount of the converted Notes, as the case may be, upon conversion of the Notes in the event that the market price per share of the Common Stock is greater than the strike price.
The cost of the March 5 and March 9, 2015 convertible note hedge transactions was approximately $51.7 million and approximately $7.7 million, respectively. (59.4 million)
The convertible note hedge transactions are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Notes. Holders of the Notes have no rights with respect to the convertible note hedge transactions. A form of the confirmation for the convertible note hedge transactions is attached as Exhibit 10.1 to this report and is incorporated herein by reference.
Warrant Transactions
On March 5 and March 9, 2015, the Company also entered into privately-negotiated warrant transactions with the Counterparties, whereby the Company sold to the Counterparties warrants to acquire, subject to customary anti-dilution adjustments, approximately 3.8 million and approximately 0.6 million shares, respectively, of Common Stock at a strike price of approximately $88.46 per share, also subject to adjustment. The warrants become exercisable in tranches starting in June 2020. As consideration for the warrants issued on March 5 and March 9, 2015, the Company received approximately $37.3 million and approximately $5.6 million, respectively. (4.4 million share warrant for 42.9 million = $9.75 per warrant)
If the market value per share of the Common Stock, as measured under the warrants, exceeds the strike price of the warrants at the time the warrants are exercisable, the warrants will have a dilutive effect on the Company’s earnings per share.
The warrants were sold in separate warrant transactions pursuant to the exemption from the registration requirements afforded by Section 4(a)(2) of the Securities Act. A form of the confirmation for the warrant transactions is attached as Exhibit 10.2 to this report and is incorporated herein by reference.
The warrant transactions are separate transactions, entered into by the Company with the Counterparties, and are not part of the terms of the Notes. Holders of the Notes have no rights with respect to the warrant transactions.
| 