Symantec 1997 Annual Report Download - page 48

46 SYMANTEC CORPORATION
Cash equivalents and short-term investments
(In thousands) 1997 1996
Taxable commercial paper $64,196 $ 77,392
Money market funds 2,598 21,601
Taxable corporate notes 5,130 5,022
Taxable certificates of deposit 5,030 5,008
Treasury bills 33,648 —
Taxable fixed deposit 15,725 —
$126,327 $ 109,023
All of the Company’s available-for-sale cash equivalent
and short-term investment securities as of March 31, 1997 and
1996 have a contractual maturity of less than one year. As of
March 31, 1997 and 1996, the estimated fair value of the
restricted investments consisted of the following:
Restricted investments
(In thousands) 1997 1996
Maturities of less than one year:
Money market funds $ 6 $ —
Treasury bills 19,815 —
$ 19,821 $ —
Maturities of one to three years:
Treasury notes $27,627 $ —
$ 27,627 $ —
The Company’s available-for-sale restricted investments
relate to certain collateral requirements for lease agreements
associated with the Symantec’s corporate Cupertino,
California facilities and have maturities of three years or less
(See Note 6 of Notes to Consolidated Financial Statements).
Fair values of cash, cash equivalents, short-term invest-
ments and restricted investments approximate cost due to the
nature of the investments and/or their short period to maturity.
During the period covered by the financial statements,
the Company has not used any derivative instrument for
trading purposes. Symantec utilizes some natural hedging to
mitigate the Company’s transaction exposures and hedges
some residual transaction exposures through the use of one-
month foreign exchange forward contracts. The Company
enters into foreign exchange forward contracts with financial
institutions primarily to protect against currency exchange
risks associated with certain firmly committed transactions.
Fair value of foreign exchange forward contracts are based on
quoted market prices. At March 31, 1997, there was a total
notional amount of approximately $46.3 million of out-
standing foreign exchange forward contracts all of which
mature in 35 days or less. The net liability of forward
contracts was a notional amount of approximately $45.8
million at March 31, 1997. The fair value of foreign currency
exchange forward contracts approximates cost due to the
short maturity periods and the minimal fluctuations in
foreign currency exchange rates. The Company does not
hedge its translation risk.
Note 4. Convertible Subordinated
Debentures
On April 2, 1993, the Company issued convertible subordi-
nated debentures totaling $25.0 million. The debentures bear
interest at 7.75% payable semiannually and are convertible
into Symantec common stock at $12 per share at the option
of the investor. The debentures are due in three equal annual
installments beginning in 1999 and are 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 the assets of
the Company. Symantec, at its option, may redeem the notes
at any time on 30 to 60 days notice; however, the Company
could incur a prepayment penalty for early redemption. The
holders are entitled to certain registration rights relating to
the shares of common stock resulting from the conversion of
the debentures. The Company reserved 2,083,333 shares of
common stock to be issued upon conversion of these deben-
tures. The debentures limit the payment of cash dividends and
the repurchase of capital stock to a total of $10.0 million plus
25% of cumulative net income subsequent to April 2, 1993.
On April 26, 1995, convertible subordinated debentures
totaling $10.0 million were converted into 833,333 shares of
Symantec common stock, leaving 1,250,000 shares of common
stock reserved for future conversion as of March 31, 1997.
The estimated fair value of the $15.0 million convertible
subordinated debentures was approximately $17.9 million at
March 31, 1997. The estimated fair value was based on the
total shares of common stock reserved for issuance upon
conversion of the debentures at the closing price of the
Company’s common stock at March 31, 1997, which exceeded
the conversion price of $12 per share, plus accrued interest.
Note 5. Line of Credit
The Company has a $10.0 million bank line of credit that
expires in March 1998. The line of credit is available for
general corporate purposes and bears interest at the banks’