Transocean Proxy Statement and 2010 Annual Report

TRANSOCEAN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued
creating liens, engaging in sale/leaseback transactions and engaging in merger, consolidation or reorganization transactions. At
December 31, 2010, $100 million and $57 million principal amount of the 7.45% Notes and the 8% Debentures, respectively, were
outstanding.
GSF Explorer capital lease obligation—During the year ended December 31, 2010, we acquired GSF Explorer, an asset
formerly held under a capital lease, in exchange for a cash payment of $15 million, thereby terminating the capital lease obligation. In
connection with the termination of the capital lease obligation, we recognized a gain on debt retirement of $2 million, which had no per
diluted share or tax effect. See Note 9—Drilling Fleet.
1.625% Series A, 1.50% Series B and 1.50% Series C Convertible Senior Notes—In December 2007, we issued $2.2 billion
aggregate principal amount of 1.625% Series A Convertible Senior Notes due December 2037 (the “Series A Convertible Senior Notes”),
$2.2 billion aggregate principal amount of 1.50% Series B Convertible Senior Notes due December 2037 (the “Series B Convertible Senior
Notes”) and $2.2 billion aggregate principal amount of 1.50% Series C Convertible Senior Notes due December 2037 (the “Series C
Convertible Senior Notes,” and together with the Series A Convertible Senior Notes and Series B Convertible Senior Notes, the
“Convertible Senior Notes”). The Convertible Senior Notes may be converted under the circumstances specified below at a rate of 5.9310
shares per $1,000 note, equivalent to a conversion price of $168.61 per share, subject to adjustments upon the occurrence of certain
events. Upon conversion, we will deliver, in lieu of shares, cash up to the aggregate principal amount of notes to be converted and shares
in respect of the remainder, if any, of our conversion obligation. In addition, if certain fundamental changes occur on or before
December 20, 2011, with respect to Series B Convertible Senior Notes, or December 20, 2012, with respect to Series C Convertible Senior
Notes, we will, in some cases, increase the conversion rate for a holder electing to convert notes in connection with such fundamental
change.
Holders may convert their notes only under the following circumstances: (1) during any calendar quarter if the last reported sale
price of our shares for at least 20 trading days in a period of 30 consecutive trading days ending on the last trading day of the preceding
calendar quarter is more than 130 percent of the conversion price, (2) during the five business days after the average trading price per
$1,000 principal amount of the notes is equal to or less than 98 percent of the average conversion value of such notes during the
preceding five trading-day period as described herein, (3) during specified periods if specified distributions to holders of our shares are
made or specified corporate transactions occur, (4) prior to the close of business on the business day preceding the redemption date if the
notes are called for redemption or (5) on or after September 15, 2037 and prior to the close of business on the business day prior to the
stated maturity of the notes. As of December 31, 2010, no shares were issuable upon conversion of any series of the Convertible Senior
Notes since none of the circumstances giving rise to potential conversion were present.
We may redeem some or all of the notes at any time after December 20, 2011, in the case of the Series B Convertible Senior
Notes, and December 20, 2012, in the case of the Series C Convertible Senior Notes, in each case at a redemption price equal to
100 percent of the principal amount plus accrued and unpaid interest, if any. Holders of the Series B Convertible Senior Notes have the
right to require us to repurchase their notes on December 15, 2011. In addition, holders of any series of notes will have the right to require
us to repurchase their notes on December 14, 2012, December 15, 2017, December 15, 2022, December 15, 2027 and December 15,
2032, and upon the occurrence of a fundamental change, at a repurchase price in cash equal to 100 percent of the principal amount of the
notes to be repurchased plus accrued and unpaid interest, if any.
The carrying amounts of the liability components of the Convertible Senior Notes were as follows (in millions):
Principal
amount
December 31, 2010 December 31, 2009
AR-95
Unamortized
discount
Carrying
amount
Principal
amount
Unamortized
discount
Carrying amount of liability component
Series A Convertible Senior Notes due 2037 $ 11 $ — $ 11 $ 1,299 $ (38) $ 1,261
Series B Convertible Senior Notes due 2037 1,680 (55 ) 1,625 2,200 (143) 2,057
Series C Convertible Senior Notes due 2037 1,722 (117 ) 1,605 2,200 (221) 1,979
The carrying amounts of the equity components of the Convertible Senior Notes were as follows (in millions):
December 31,
2010 2009
Carrying amount of equity component
Series A Convertible Senior Notes due 2037 $ 1 $ 114
Series B Convertible Senior Notes due 2037 210 275
Series C Convertible Senior Notes due 2037 276 352
Carrying
amount