Symantec 2001 Annual Report Download - page 32

quantitative and qualitative
disclosures about market risk
We do not undertake any specific actions to cover our exposure to
interest rate risk and we are not a party to any interest rate risk
management transactions. We do not purchase or hold any derivative
financial instruments for trading purposes.
Interest Rate Sensitivity As of March 31, 2001, the fair market value
of our financial instruments with exposure to interest risk was approx-
imately US $317 million and euro 244 million. Sensitivity analysis for a
six-month horizon was performed on our floating rate and fixed rate
financial investments and floating rate liabilities. Parallel shifts in the
yield curve of both +/-50 basis points would result in changes in fair
market values for these investments and floating rate liabilities of less
than $1 million. For the euro investments, parallel shifts in the yield
curve of both +/-50 basis points would result in changes in fair market
values for these investments of less than euro 1 million.
Exchange Rate Sensitivity We conduct business in 36 international
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 transaction 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 non-functional currency 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 forward contracts should reduce the risks
that arise from conducting business in international markets. We
employ established policies and procedures governing the use of
financial instruments to manage our exposure to such risks. However,
significant changes in exchange rates may still result in adverse effects
on our operating results.
We use sensitivity analyses to quantify the impact that market risk
exposures may have on the fair market values of our financial instru-
ments. 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 values 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.
As of March 31, 2001, the notional amount of our forward contracts
was approximately US $215 million. A +/-10% movement in the levels
of foreign currency exchange rates would result in a decrease in our
forward contracts by approximately US $1 million and an increase in
our forward contracts by approximately US $1 million, respectively.
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.
As of March 31, 2001, the fair value of our investments denominated
in foreign currencies was approximately US $212 million. A +/-10%
movement in the levels of foreign currency exchange rates would result
in an increase in the fair value of our investments by approximately
US $22 million and a decrease in the fair value of our investments by
approximately US $22 million, respectively.
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