Symantec 2001 Annual Report Download - page 45

The estimated fair value of available-for-sale and trading investments
by contractual maturity as of March 31, 2001 was as follows:
Cash equivalents and short-term investments (in thousands)
Due in one year or less $ 401,894
Due after one year and through 2 years 49,969
No maturity (equity securities) 7,479
$ 459,342
Except for equity securities, fair values of cash equivalents, short-term
investments, and trading assets approximate cost primarily due to the
short-term maturities of the investments and the absence of changes
in security credit ratings. Equity securities consist of approximately
600,000 shares of Interact, a publicly traded company, which will be
merged with another entity, whereby shareholders of Interact are
entitled to receive $12.00 per share, subject to applicable withholdings,
upon surrender of each stock certificate. A loss of approximately $12.5
million was recognized as other expense during the March 2001 quar-
ter for other than temporary decline in the value of this investment.
As of March 31, 2001, we held unregistered equity securities of $5.4
million in a privately held company, which are classified as Other
Assets. The fair value of these equity securities are recorded at cost,
decreased for the other than temporary decline in value of $12.6
million, which was recognized during the March 2001 quarter as other
expense. As a result of our acquisition of AXENT, we acquired unregis-
tered equity securities in another privately held company. During
the March 2001 quarter, we recorded a gain on the investment of
approximately $1 million as other income, as a result of the privately
held company being acquired by another entity.
As of March 31, 2001 and 2000, the estimated fair value of our
restricted investments was $75 million and $82 million, respectively,
and consisted of U.S. Treasury securities. The restricted marketable
securities have a contractual maturity of less than one year. Our
available-for-sale restricted investments relate to certain collateral
requirements for lease agreements associated with our corporate facili-
ties in Cupertino, California. Fair values of the restricted investments
approximate cost due to the short-term maturities of the investments
and the absence of changes in security credit ratings.
Unrealized losses on all available-for-sale securities are reported as a
component of stockholders’equity, net of tax effect, of approximately
$0.6 million and $2.4 million as of March 31, 2001 and 2000, respectively.
During the period covered by the consolidated financial statements, we
did not use any derivative instrument for trading purposes. We utilize
some natural hedging to mitigate our foreign currency exposures and
we hedge certain residual exposures through the use of one-month
foreign currency forward exchange contracts, or forward contracts. We
enter into forward contracts with financial institutions primarily to
protect against currency exchange risks associated with certain balance
sheet positions. The fair value of forward contracts is based on quoted
market prices. At March 31, 2001, the notional amount of our forward
contracts was approximately $215 million, all of which mature in 35
days or less. The fair value of forward contracts approximates cost due
to the short maturity periods. We do not hedge our translation risk.
Note 6. Convertible Subordinated Debentures
On April 2, 1993, we issued convertible subordinated debentures
totaling $25 million. The debentures bore interest at 7.75% payable
semiannually and were convertible into Symantec common stock at
$12 per share at the option of the investor. The debentures were due
in three equal annual installments beginning in 1999 and were
redeemable at the option of the investors in the event of a change in
control of Symantec or the sale of all or substantially all of its assets. At
our option, we could redeem the notes at any time with 30 to 60 days
notice; however, we would have incurred a prepayment penalty for
early redemption. The holders were entitled to certain registration
rights relating to the shares of common stock resulting from the
conversion of the debentures. In fiscal 1996 and 1998, convertible
subordinated debentures totaling approximately $11 million were con-
verted into Symantec common stock. During February 1999, the entire
remaining $14 million principal amount of our convertible subordi-
nated debentures were converted into approximately 1.2 million shares
of Symantec common stock. The conversion to shares of common
stock was exempt from registration under the Securities Act of 1933.
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 had a $10 million bank line of credit that expired in May 2001. The
line of credit was available for general corporate purposes and bore
interest at either the banks’reference (prime) interest rate (8.00% at
March 31, 2001); the U.S. offshore rate (4.88% at March 31, 2001) plus
1.25%; a CD rate (4.82% at March 31, 2001) plus 1.25%; or LIBOR
(4.88% at March 31, 2001) plus 1.25%, at our discretion. As of March
31, 2001, we were in compliance with all covenants under this credit
agreement and there were no borrowings and less than $1 million in
standby letters of credit outstanding under this line.
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