Symantec 2007 Annual Report Download - page 63

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income (expense), net. Our objective in managing foreign exchange activity is to preserve stockholder value by
minimizing the risk of foreign currency exchange rate changes. Our strategy is to primarily utilize forward contracts
to hedge foreign currency exposures. Under our program, gains and losses in our foreign currency exposures are
offset by losses and gains on our forward contracts. Our forward contracts generally have terms of 35 days or less.
At the end of the reporting period, open contracts are marked-to-market with unrealized gains and losses included in
Other income (expense), net.
The following table presents a sensitivity analysis on our foreign forward exchange contract portfolio using a
statistical model to estimate the potential gain or loss in fair value that could arise from hypothetical appreciation or
depreciation of foreign currency (in millions):
Foreign Forward Exchange Contracts 10% 5%
Notional
Amount (5)% (10)%
Value of
Contracts
Given X%
Appreciation of
Foreign
Currency
Value of
Contracts
Given X%
Depreciation of
Foreign
Currency
Purchased, March 31, 2007 ...................... $176 $169 $161 $153 $143
Sold, March 31, 2007........................... $258 $270 $284 $299 $316
Purchased, March 31, 2006 ...................... $249 $239 $228 $216 $203
Sold, March 31, 2006........................... $405 $425 $446 $469 $496
Equity Price Risk
In June 2006, we issued $1.1 billion principal amount of 0.75% Convertible Senior Notes due 2011 and
$1.0 billion of 1.00% Convertible Senior Notes due 2013. Holders may convert their Senior Notes prior to maturity
upon the occurrence of certain circumstances. Upon conversion, we would pay the holder the cash value of the
applicable number of shares of Symantec common stock, up to the principal amount of the note. Amounts in excess
of the principal amount, if any, may be paid in cash or in stock at our option. Concurrent with the issuance of the
Senior Notes, we entered into convertible note hedge transactions and separately, warrant transactions, to reduce the
potential dilution from the conversion of the Senior Notes and to mitigate any negative effect such conversion may
have on the price of our common stock.
For business and strategic purposes, we also hold equity interests in several privately held companies, many of
which can be considered to be in the start-up or development stages. These investments are inherently risky and we
could lose a substantial part or our entire investment in these companies. These investments are recorded at cost and
classified as Other long-term assets in the Consolidated Balance Sheets. As of March 31, 2007, these investments
had an aggregate carrying value of $8 million.
Item 8. Financial Statements and Supplementary Data
Annual Financial Statements
The consolidated financial statements and related disclosures included in Part IV, Item 15 of this annual report
are incorporated by reference into this Item 8.
57