Symantec 2000 Annual Report Download - page 44

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Our acquired subsidiary, Quarterdeck, had issued 6%convertible
senior subordinated notes totaling $25 million, due in 2001, to an
institutional investor in a private placement pursuant to the terms
of a Note Agreement dated March 1, 1996. These Notes were paid
in full on March 30, 1999.
NOTE 7. LINE OF CREDIT
We have a $10 million bank line of credit, which expires in May
2001. The line of credit was renewed and amended in May 2000, to
minimize the potential violation of certain financial covenants due
to future acquisitions. The amendment permits future acquisi-
tions of less than $75 million in cash, annually. The line of credit
is available for general corporate purposes and bears interest at
either the banks’ reference (prime) interest rate (9.00%at March
31, 2000); the U.S. offshore rate (6.29%at March 31, 2000) plus
1.25%; a CD rate (6.23%at March 31, 2000), plus 1.25%; or LIBOR
(6.29%at March 31, 2000) plus 1.25%, at our discretion. As of March
31, 2000, we are in compliance with all covenants under this credit
agreement and there were no borrowings and less than $1million
in standby letters of credit outstanding under this line. Future
acquisitions or payment of dividends by us may cause us to be in
violation of the line of credit covenants. However, we believe that if
the line of credit was canceled or amounts were not available
under the line, there would not be a material adverse impact on
our financial results, liquidity or capital resources.
NOTE 8. COMMITMENTS
We lease all of our facilities and certain equipment under oper-
ating leases that expire at various dates through 2026. We
currently sublease some space under various operating leases
that will expire at various dates through 2004.
The future fiscal year minimum operating lease commitments
were as follows at March 31, 2000:
(In thousands)
2001 $14,462
2002 11,131
2003 9,222
2004 8,155
2005 6,732
Thereafter 26,703
Operating lease commitments 76,405
Sublease income (12,420)
Net operating lease commitments $ 63,985
Rent expense charged to operations totaled approximately $16
million, $15 million and $14 million for the years ended March 31,
2000, 1999 and 1998, respectively.
In fiscal 1997, we entered into lease agreements for two existing
office buildings, City Center One (“CC1”) and World Headquarters
(“WHQ”), land and one office building under construction in
Cupertino, California, City Center Five (“CC5”). In fiscal 1999, the
landlord exchanged CC5for another building, City Center Two
(“CC2”) in Cupertino, California and committed to sell WHQ. In fis-
cal 2000, we completed the appropriate leasehold improvements
to CC2and vacated WHQ. As we have moved into CC2, we were
relieved of the lease liability associated with WHQ. Lease pay-
ments are based on the three-month LIBOR in effect at the
beginning of each fiscal quarter. We have the right to acquire the
related properties at any time during the seven-year lease period.
If, at the end of the lease term we do not renew the lease, pur-
chase the property under lease or arrange a third party purchase,
then we will be obligated to the lessor for a guaranteed residual
amount equal to a specified percentage of the lessor’s purchase
price of the property. We will also be obligated to the lessor for
all or some portion of this amount if the price paid by the third
party is below the guaranteed residual amount. The guaranteed
residual payment on the lease agreements for the two office
buildings totals approximately $68 million. As security against
these guaranteed residual payments, we are required to maintain
a corresponding investment in U.S. Treasury securities with matu-
rities not to exceed three years. We are restricted in our use of
these investments per the terms of the lease agreement. At
March 31, 2000, the investments total approximately $82 million
and are classified as non-current restricted investments within
the financial statements. In accordance with the lease terms,
these funds are not available to meet operating cash require-
ments. In addition, we are obligated to comply with certain
financial covenants. Future acquisitions may cause us to be in vio-
lation of these financial covenants.
We currently occupy a portion of these office buildings and have
assumed the right to sub-lease income provided by the other ten-
ants. The sub-lease agreements have terms expiring in February
2001 through October 2004.