Symantec 2000 Annual Report Download - page 31

Download and view the complete annual report

Please find page 31 of the 2000 Symantec annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 59

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59

Exchange Rate Sensitivity We conduct business in 37 interna-
tional currencies through our worldwide operations. We have
established a foreign currency hedging program, utilizing foreign
currency forward exchange contracts, or forward contracts, of one
fiscal month duration to hedge various foreign currency transac-
tion exposures. Under this program, increases or decreases in
our foreign currency transactions are offset by gains and losses
on the forward contracts to mitigate the risk of material foreign
currency transaction losses. We do not use forward contracts for
trading purposes. At the end of each fiscal month, all foreign cur-
rency assets and liabilities are revalued using the month end spot
rate of the maturing forward contracts and the realized gains and
losses are recorded and included in net income as a component of
other income (expense).
We believe that the use of foreign currency financial instruments
should reduce the risks that arise from conducting business in
international markets. We employ established policies and proce-
dures governing the use of financial instruments to manage our
exposure to such risks.
We use sensitivity analyses to quantify the impact market risk
exposure may have on the fair market values of our financial
instruments. The financial instruments included in the sensitivity
analyses consist of all of our foreign currency assets and liabilities
and all derivative instruments, principally forward contracts. The
sensitivity analyses assesses the risk of loss in fair market val-
ues from the impact of hypothetical changes of instantaneous,
parallel shifts in exchange rates and interest rates yield curves on
market sensitive instruments over a six-month horizon. Exchange
rates rarely move in the same direction. The assumption that
exchange rates change in a parallel fashion may overstate the
impact of changing exchange rates on assets and liabilities
denominated in a foreign currency.
As of March 31, 2000, the net fair value liability of our foreign cur-
rency financial instruments was approximately US $230 million.
A 10%movement in the levels of foreign currency exchange rates
against the US dollar would result in a decrease in the fair value of
our financial instruments by approximately US $21 million or an
increase in the fair value of our financial instruments by approxi-
mately US $23 million.
This quantification of exposure to the market risk associated
with foreign financial instruments does not take into account
the offsetting impact of changes in the fair value of our foreign
denominated assets, liabilities and firm commitments.
0{ 31