Symantec 1997 Annual Report Download

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™
Symantec Corporation
10201 Torre Avenue
Cupertino, California
95014-2132
© 1997 Symantec Corporation. All rights reserved. Printed in the U.S.A. 8/97 21571 09-71-00242
We make our
customers
productive
and keep
their computers
safeand
reliable.
Anywhere.
Anytime.
“
”
We make our
customers
productive
and keep
their computers
safeand
reliable.
Anywhere.
Anytime.
“
”
™
Symantec Corporation 1997 Annual Report
Symantec Corporation 1997 Annual Report
SYMANTEC CORPORATION 1997 ANNUAL REPORT

Table of contents

  • Page 1
    ... t " customers p ro d u c t i ve We m a k e o u r and keep their computers S Y M A N T E C C O R P O R A T I O N ™ 1 9 9 7 A N N U A L R E P O R T safe and re l i a b l e. A n y w h e re . A n y t i m e ." ™ Symantec Corporation 10201 Torre Avenue Cupertino, California 95014-2132 © 1997...

  • Page 2
    ... Palo Alto, California 94306 Independent Auditors e Company is focused on addressing a customer needs in three main application areas: the Norton product line of antivirus and PC-assistance products; the pcANYWHERE, WinFax, and ACT! product lines that cater to remote user productivity; and the...

  • Page 3
    S Y M A N T E C 1997 Annual R e p o r t

  • Page 4
    L e t t e r t o S h a r e h o l d e r s G O R D O N E . E U B A N K S , J R . O f f i c e r P r e s i d e n t a n d C h i e f E x e c u t i v e 2 S Y M A N T E C C O R P O R A T I O N

  • Page 5
    ...customer need for a product that prevents system crashes and allows users to save their work, our product and marketing teams shortened the normal 6 to 12 month development cycle and delivered Norton CrashGuard in only 80 days. As a standalone product, and as part of the new Norton Utilities, Norton...

  • Page 6
    ... distinct business units: Security and Assistance, Remote Productivity Solutions, and Internet Tools. Composed primarily of our Norton AntiVirus and Norton Utilities products, the Security and Assistance unit is dedicated to reducing the frustration and increasing the productivity of our customers...

  • Page 7
    ... working together to serve our customers. These changes leave me extremely optimistic for the opportunities that lie ahead for us. We are in an everchanging business, in exciting times, with products that people simply can't do without. It's a good place to be. Thank you for your continued support...

  • Page 8
    ... (SAM®) Symantec AntiVirus for Macintosh (SAM®) Administrator Healthy PC.com™ for Windows 95 WinFax Internet FastFind Norton Commander Norton Commander® for Windows 95/NT Norton CrashGuard Norton Your Eyes Only Norton Utilities Norton CrashGuard™ for Windows 95/NT Norton Your Eyes Only...

  • Page 9
    ... of the registrant, based upon the closing sale price of the Symantec common stock on June 1, 1997 as reported on the Nasdaq National Market and with respect to the Delrina exchangeable stock on the Toronto Stock Exchange: Number of shares outstanding of each of the registrant's classes...

  • Page 10
    ... 10: Item 11: Item 12: Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management Item 13: Certain Relationships and Related Transactions 31 31 29 31 Part IV Item 14: Exhibits, Financial Statement Schedules and Reports on...

  • Page 11
    ...") Peter Norton Computing, August 31, 1990 Incorporated ("Norton") Network Management Utilities Remote Productivity Solutions Applications Security and Assistance Internet Tools Security and Assistance Remote Productivity Solutions Security and Assistance Internet Tools Internet Tools Marketing...

  • Page 12
    ...Networks offers comprehensive support for the most common e-mail packages, enabling users to receive faxes directly to their e-mail address. It also uses Symantec's LiveUpdate to download and install the latest free updates. WinFax PRO runs on the Windows, Windows 95 and Windows NT operating systems...

  • Page 13
    ... access to Symantec's AntiVirus, disk repair and LiveUpdate software. Healthy PC.com runs on the MS-DOS, Windows, Windows 95 and Windows NT operating systems. PC Handyman works continuously in the background to fix all kinds of PC operation problems such as screen freezes and hard drive crashes, and...

  • Page 14
    ... This product runs on the Windows 95, Windows NT, Macintosh and Power Macintosh operating systems. Sales, International Sales and Customer Support Symantec markets its products worldwide utilizing a multi-channel strategy of direct sales and indirect sales through independent software distributors...

  • Page 15
    ... End user rebates are accrued when revenue is recorded. International Sales Note 12 of the Notes to Consolidated Financial Statements in Part IV, Item 14 of this Form 10- K. Customer Support Symantec's product support program provides a wide variety of free and fee-based technical support services...

  • Page 16
    ... other products from various other utilities vendors. Norton AntiVirus competes with PC-cillin 95 from TouchStone, Dr Solomon's Anti-Virus Toolkit from Dr Solomon's and Viruscan from McAfee. Symantec's pc ANYWHERE competes mainly with Laplink from Traveling Software, Carbon Copy from Microcom, Close...

  • Page 17
    ... of new or enhanced versions of Symantec's products and product upgrades, the introduction of competitive products by existing or new competitors, reduced demand for any given product, seasonality in the retail software market in foreign markets, customer end-ofperiod buying patterns and the market...

  • Page 18
    ... the quarter ended March 31, 1997. Location N O R T H A M E R I C A Purpose Cupertino, California Corporate Headquarters Emerging Business and Remote Productivity Solutions Symantec Technology Center Sunnyvale, California Santa Monica, California Administration, sales and marketing Research...

  • Page 19
    ....50 $ 37.25 29.38 Item 5: Market for Registrant's Common Equity and Related Stockholder Matters Symantec's common stock is traded on the Nasdaq National Market under the Nasdaq symbol "SYMC". The high and low closing sales prices set forth below are as reported on the Nasdaq National Market. As...

  • Page 20
    ...Ended March 31, (In thousands, except net income (loss) per share) 1997 1996 1995 1994 1993 STATEMENT OF OPERATIONS DATA: Net revenues Acquisition, restructuring and other expenses Operating... 31, (In thousands) 1997 1996 1995 1994 1993 BALANCE SHEET DATA: Working capital Total assets Long-term...

  • Page 21
    ... * * Symantec develops, markets and supports a diversified line of application and system software products designed to enhance individual and workgroup productivity. Founded in 1982, the Company has offices in the United States, Canada, Asia, Australia, Europe, Africa and Latin America. During the...

  • Page 22
    ...of several Windows 95 products; however, this increase was substantially offset by a decrease in net revenues related to Windows 3.1 and DOS products. Symantec markets its products through a number of distribution channels, including retail, site licenses, OEM , direct marketing and upgrades and the...

  • Page 23
    ... due to an increase in the amortization and write-off of purchased product rights and capitalized software development expenses noted above and increased inventory reserves related to Delrina products designed to operate on Windows 3.1 and other products de-emphasized by Symantec during fiscal 1996...

  • Page 24
    ... of increased product development efforts associated with Symantec's and Delrina's development of new products designed to operate on the Windows 95 operating system. Research and development expenditures are charged to operations as incurred. Prior to fiscal 1997, capitalization of certain software...

  • Page 25
    ... write-off of certain in-process research and development acquired by the Company. In fiscal 1996, Symantec sold the assets of Time Line Solutions Corporation, a wholly-owned subsidiary, to a group comprised of Time Line Solutions Corporation's management and incurred a $3 million loss on the sale...

  • Page 26
    ...,000 shares of Symantec common stock by June 13, 1997. The shares will be used for employee stock purchase programs and option grants. As of June 13, 1997, management completed the repurchase of 500,000 shares at prices ranging from $16.57 to $17.00 per share. The Company has a $10 million line of...

  • Page 27
    ...trading price of the Company's common stock. Personal Computer and Hardware Growth Rates timely manner, the retention of key employees, the difficulty of presenting a unified corporate image, the coordination of research and development and sales efforts and the integration of the acquired products...

  • Page 28
    ...channel; however, net revenues may still be materially affected favorably or adversely by the effects of channel fill. Between the date Symantec announces a new version or new product and the date of release, distributors, dealers and end users often delay purchases, cancel orders or return products...

  • Page 29
    ... upgrades and new versions of products or when distributors have excess inventories. Symantec's return policy allows its distributors, subject to certain limitations, to return purchased products in exchange for new products or for credit towards future purchases. End users may return products...

  • Page 30
    ...To date, Symantec has not experienced any material difficulties or delays in production of its software and related documentation and packaging. However, shortages may occur in the future. For example, shortages of certain materials may occur when Microsoft introduces new operating systems. Employee...

  • Page 31
    ...ended March 31, 1997, includes revenue and charges related to the sale of Symantec's networking business unit (see Note 9 of Notes to Consolidated Financial Statements). Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Executive Officer of Symantec...

  • Page 32
    ... applications, and high performance 5-¼" disk drives for personal computers) where he assisted those management teams in growing their businesses through raising over $50 million in venture capital and controlling hyper-growth. His previous experience includes senior financial and accounting...

  • Page 33
    ..., Director of Development, General Manager and most recently, Vice President, Communication Products. Mr. Calisi joined Symantec in 1992 from Unify Corporation, a relational database and 4 GL tools vendor where he served as the Manager of Sales Engineers. Prior to Unify Corporation, Mr. Calisi held...

  • Page 34
    ... Investor Relations Symantec Corporation 10201 Torre Avenue Cupertino, California 95014-2132 (800) 883-4497 (a) The following documents are filed a s part of this report: 1. Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors Report of Price Waterhouse, Independent...

  • Page 35
    ... Symantec Corporation and Webcor Builders. Office building lease dated as of April 10, 1991, between the Registrant and Maguire Thomas Partners Colorado Place regarding property located in Santa Monica, California. (Incorporated by reference to Exhibit 10.25 filed with the Registrant's Annual Report...

  • Page 36
    ..., 1996.) Asset Purchase Agreement, as amended, dated as of March 27, 1997 by and between Hewlett-Packard Company and Symantec Corporation. Class action complaint filed by the law firm of Milberg Weiss Bershad Hynes & Lerach in Superior Court of the State of California, County of Santa Clara against...

  • Page 37
    ... and 1995 Consolidated Statements of Stockholders' Equity for the years ended March 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flow for the years ended March 31, 1997, 1996 and 1995 Summary of Significant Accounting Policies Notes to Consolidated Financial Statements 36 37 38 39 40...

  • Page 38
    ... of Symantec Corporation as of March 31, 1997 and 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended March 31, 1997. Our audits also included the financial statement schedule listed in the Index at Item 14...

  • Page 39
    ... statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well...

  • Page 40
    ...Trade accounts receivable Inventories Deferred income taxes Other Total current assets Equipment and leasehold improvements Restricted investments Capitalized software... Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are an integral part of these statements....

  • Page 41
    ... Ended March 31, (In thousands, except net income (loss) per share) 1997 1996 1995 Net revenues Cost of revenues Gross margin Operating expenses: Research and development Sales and marketing General and administrative Acquisition, restructuring and other expenses Total operating expenses Operating...

  • Page 42
    ...554 12,045 - $ 291,548 $ - - (144) - 11 $ (7,580) - - $ (66,399) 12,057 11 $ 217,979 The accompanying Summary of Significant Accounting Policies and Notes to Consolidated Financial Statements are an integral part of these statements. 40 S Y M A N T E C C O R P O R A T I O N

  • Page 43
    ... write-off of capitalized software costs Write-off of equipment and leasehold improvements Deferred income taxes Net change in assets and liabilities: Trade accounts receivable Inventories Other current assets Capitalized software costs Other assets Accounts payable Accrued compensation and benefits...

  • Page 44
    ... three major product groups: Remote Productivity Solutions, Security and Assistance and Emerging Businesses and Other. Customers consist primarily of corporations, higher education institutions, government agencies and individual users, which are mainly located in North America, Europe and Asia...

  • Page 45
    ... 1997, Symantec wrote off approximately $0.6 million of unamortized purchased product rights The Company's product revenues are concentrated in the personal computer software industry, which is highly competitive and rapidly changing. Significant technological changes in the industry or customer...

  • Page 46
    ... authorized the repurchase of up to 1,000,000 shares of Symantec common stock by June 13, 1997. The shares will be used for employee stock purchase programs and option grants. As of June 13, 1997, management completed the repurchase of 500,000 shares at prices ranging from $16.57 to $17.00 per...

  • Page 47
    ...'s equity. Delrina reported net revenues of $19.8 million and net loss of $4.8 million in the quarter ended June 30, 1995. The results of operations of Fast Track were not material to Symantec's consolidated financial statements, and therefore, amounts prior to the date of acquisition were...

  • Page 48
    ... 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...

  • Page 49
    ... the related properties at any time during the seven year lease period. If at the end of the lease term Symantec does not renew the lease, purchase the property under lease or arrange a third party purchase, then the (In thousands) 1997 1996 1995 Current: Federal State International $ 514...

  • Page 50
    ...Internal Revenue Code. Symantec matches 100% of the first $500 of employees' contributions and then 50% of the employee's contribution up to 6% of the employees... compensation and benefits Deferred revenue Sales incentive programs Allowance for doubtful accounts Acquired software Accrued acquisition,...

  • Page 51
    ... Company's business and to provide employees with incentives to pursue patent protection for new technologies that may be valuable to the Company. The Company's executive officers are not eligible for awards under the 1994 Patent Incentive Plan. As of March 31, 1997, approximately 9,000 shares had...

  • Page 52
    ... the related revenue as payments are due and collectibility is assured from JetForm. Symantec recognized revenue of approximately $18.3 million from JetForm during fiscal 1997. In March 1997, Symantec also sold the software products and related tangible assets of its Networking Business Unit...

  • Page 53
    ...of certain operational activities and other acquisition-related expenses. In November 1995, Symantec sold the assets of Time Line Solutions Corporation, a wholly-owned subsidiary, to a group comprised of Time Line Solution Corporation's management and incurred a $2.7 million loss on the sale. During...

  • Page 54
    ... 13, 1997, Trend Micro Incorporated filed a lawsuit in the United States District Court, Northern District of California, against Symantec Corporation and McAfee Associates, alleging against Symantec patent infringement by the Symantec product known as Norton AntiVirus for Internet E -mail Gateways...

  • Page 55
    ..., respectively. Significant Customers Symantec operates in the microcomputer software industry business segment. The Company markets its products in North America and international countries primarily through retail and distribution channels. Information by Geographic Area Year Ended March 31, (In...

  • Page 56
    ... on its behalf by the undersigned, thereunto duly authorized. Symantec Corporation (Registrant) (Gordon E. Eubanks, Jr., President and Chief Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf...

  • Page 57
    SCHEDULE II V a l u a t i o n a n d Q u a l i f y i n g A c c o u n t s (In thousands) Classification Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period Allowance for doubtful accounts: Year ended March 31, 1995 Year ended March 31, 1996 Year ...

  • Page 58