Symantec 2004 Annual Report Download - page 65

SYMANTEC CORPORATION «63»
Fair values of cash equivalents and short-term investments
approximate cost primarily due to the short-term maturities of the
investments and the absence of changes in security credit ratings.
Unrealized gains and losses on available-for-sale securities
were reported as a component of Stockholders’ Equity and were
immaterial for all periods presented.
Equity Investments in Privately Held Companies As of
March 31, 2004 and 2003, we held equity investments with
a carrying value of $11 million in several privately held companies.
These investments were recorded at cost as we do not have
significant influence over the investee and are classified as Other
long-term assets on the Consolidated Balance Sheets. During
fiscal 2004 and 2003 we recognized a decline in value of these
investments determined to be other-than-temporary of $3 million
and $1 million, respectively. During fiscal 2003 and 2002, declines
in our unregistered equity investment value were immaterial. The
other than temporary declines in fair value were recorded as
Other expense, net on the Consolidated Statements of Operations.
Derivative Financial Instruments During the periods covered
by the consolidated financial statements, we did not use any
derivative instrument for trading purposes. We utilize some natural
hedging to mitigate our exposures and we manage certain residual
balance sheet exposures through the use of one-month forward
foreign exchange contracts. We enter into forward foreign
exchange contracts with financial institutions primarily to minimize
currency exchange risks associated with certain balance sheet
positions. The fair value of forward foreign exchange contracts
approximates cost due to the short maturity periods. As of
March 31, 2004, the notional amount of our forward foreign
exchange contracts was $113 million, all of which mature in 35 days
or less. We do not hedge our foreign currency translation risk.
Note 6. Convertible Subordinated Notes
On October 24, 2001, we completed a private offering of $600 million
of 3% convertible subordinated notes due November 1, 2006, the
net proceeds of which were $585 million. The notes are convertible
into shares of our common stock by the holders at any time before
maturity at a conversion price of $17.07 per share, subject to certain
adjustments. During fiscal 2004 and 2003, an insignificant principal
amount of our notes were converted into shares of our common
stock. No shares were converted during fiscal 2002. We may
redeem the remaining notes on or after November 5, 2004, at a
redemption price of 100.75% of stated principal during the period
November 5, 2004 through October 31, 2005 and 100% thereafter.
Interest is paid semi-annually and we commenced making these
payments on May 1, 2002. Debt issuance costs of $16 million, related
to the notes, are amortized on a straight-line basis through
November 1, 2006. We have reserved 35.1 million shares
of common stock for issuance upon conversion of the notes.
Note 7. Commitments
We lease certain of our facilities and equipment under operating
leases that expire at various dates through 2018. We currently
sublease some space under various operating leases that will expire
at various dates through 2012.
The future fiscal year minimum operating lease commitments
were as follows as of March 31, 2004:
(In thousands)
2005 $ 35,637
2006 30,774
2007 22,902
2008 13,046
2009 5,356
Thereafter 10,719
Operating lease commitments 118,434
Sublease income (17,846)
Net operating lease commitments $100,588
Based on existing subleases, we expect to record future sublease
income of $6 million, $6 million and $3 million during fiscal 2005,
2006, 2007, respectively, and immaterial amounts thereafter.
Rent expense charged to operations totaled $27 million, $25 million
and $25 million during fiscal 2004, 2003 and 2002, respectively.
In March 2003, we terminated our operating lease obligations for
four facilities located in Cupertino, California, Springfield, Oregon,
and Newport News, Virginia by purchasing the land and buildings
for $124 million.
Note 8. Stock Split
On October 22, 2003, our Board of Directors approved a two-for-
one stock split of Symantec’s common stock effected in the form
of a stock dividend. Shareowners of record at the close of business
on November 5, 2003 were issued one additional share of common
stock for each share owned as of that date. The stock split increased
the number of total shares outstanding from 154 million shares
to 308 million shares. The additional shares resulting from the stock
dividend were issued in book-entry form on November 19, 2003.
Symantec share and per share amounts in the Consolidated
Statements of Operations and the Notes to Consolidated Financial
Statements retroactively reflect the two-for-one stock split effected
as a stock dividend, which occurred on November 19, 2003.
2004 Annual Report