Symantec 2001 Annual Report Download - page 46

Note 8. Commitments
We lease all of our facilities and certain equipment under operating
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, 2001:
(In thousands)
2002 $ 19,853
2003 17,010
2004 14,656
2005 9,640
2006 7,035
Thereafter 19,336
Operating lease commitments 87,530
Sublease income (11,585)
Net operating lease commitments $ 75,945
Rent expense charged to operations totaled approximately $23 million,
$16 million and $15 million for the years ended March 31, 2001, 2000
and 1999, 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 CC5 for another building, City Center Two
(“CC2”) in Cupertino, California and committed to sell WHQ. In
fiscal 2000, we completed the appropriate leasehold improvements to
CC2, and vacated WHQ. When we moved into CC2, we were relieved
of the lease liability associated with WHQ. Lease payments 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, purchase the property under lease or arrange a
third party purchase, then we will be obligated to the lessor for a guar-
anteed 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 resid-
ual 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 maturities not to exceed
three years. We are restricted in our use of these investments per the
terms of the lease agreement. At March 31, 2001, the investments total
approximately $75 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
requirements. This lease is classified as an operating lease. In addition,
we are obligated to comply with certain financial covenants. Future
acquisitions may cause us to be in violation of these financial covenants.
On March 30, 2001, we entered into a master lease agreement for land
and the construction of two office buildings, one approximately
100,000 square feet in Newport News,Virginia, effective June 6, 2001,
and another approximately 175,000 to 200,000 square feet in
Springfield, Oregon, effective April 6, 2001. Our lease payments will
vary based on one-, three- or six-month LIBOR plus a margin. We
have the right to acquire the related properties at any time during the
six and one-half year lease period, which includes an eighteen-month
construction period. If, at the end of the lease term we do not renew
the lease, purchase the properties under lease or arrange a third party
purchase, then we will be obligated to the lessor for a guaranteed resid-
ual amount equal to a specified percentage of the lessor’s purchase
price of the properties.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 pay-
ment on the lease agreements for the two facilities totals approximately
$55 million. As security against these guaranteed residual payments,
we are required to maintain a corresponding investment in U.S.
Treasury securities with maturities not to exceed two years, during the
construction period, or in certificates of deposit issued by certain
lenders, after the construction period. We are restricted in our use of
these investments per the terms of the lease agreement. As of March
31, 2001, we had no restricted funds associated with these facilities.
This lease is classified as an operating lease. In addition, we are obli-
gated to comply with certain financial covenants. Future acquisitions
may cause us to be in violation of these financial covenants.
Note 9. Income Taxes
The components of the provision for income taxes were as follows:
Year Ended March 31
(In thousands) 2001 2000 1999
Current:
Federal $ 55,019 $ 51,193 $ 11,649
State 14,741 16,600 5,335
International 30,411 27,995 22,226
100,171 95,788 39,210
Deferred:
Federal (16,677) (5,735) (1,949)
State (5,386) (1,957) (597)
International (1,264) (953) (3,692)
(23,327) (8,645) (6,238)
$ 76,844 $ 87,143 $ 32,972
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