Symantec 1998 Annual Report Download - page 22

SYMANTEC CORPORATION SYMANTEC CORPORATION 31
(In thousands, except net income per share; unaudited)
Fiscal 1998 Fiscal 1997
Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Dec. 31, Sep. 30, Jun. 30,
1998 1997 1997 1997 1997 1996 1996 1996
Net revenues $ 156,092 $ 148,240 $ 139,013 $ 135,016 $ 129,706 $ 124,081 $ 109,178 $ 109,218
Gross margin 134,561 125,649 116,624 114,096 100,352 102,105 88,448 87,734
Acquisition, restructuring and other expenses * — — — — — — 7,290 1,295
Net income ** 24,138 21,836 20,580 18,535 8,269 13,852 882 3,035
Net income per share - basic $ 0.43 $ 0.39 $ 0.37 $ 0.33 $ 0.15 $ 0.25 $ 0.02 $ 0.06
diluted $ 0.40 $ 0.37 $ 0.35 $ 0.32 $ 0.15 $ 0.25 $ 0.02 $ 0.06
See Note 13 of Notes to Consolidated Financial Statements.
Quarterly operating results for the period ended March 31, 1997 include revenue and charges related to the sale of Symantec’s networking business unit
(see Note 12 of Notes to Consolidated Financial Statements).
Annual Financial Statements
See Part IV, Item 14 of this Form 10-K.
Selected Quarterly Data
Symantec has a 52/53-week fiscal accounting year. Accordingly, all quarterly fiscal
periods presented comprised 13 weeks, with the exception of the quarter ended
June 30, 1997, which comprised 14 weeks.
30
ware viruses specifically designed to
impede the performance of the
Company’s products, there can be no
assurance that such viruses will not be
created in the future.
The Company’s license agreements
with its customers contain provisions
designed to limit the exposure to poten-
tial product liability claims. It is
possible, however, that the limitation of
liability provisions contained in such
license agreements may not be valid as a
result of federal, state, local laws or ordi-
nances or unfavorable judicial decisions.
A successful product liability claim could
have a material adverse affect on the
Company’s business, operating results
and financial condition.
Year 2000 – Product Liability. While
the Company believes that most of its
currently developed and actively mar-
keted products are Year 2000 compliant
for significantly all functionality, these
software products could contain errors or
defects related to the Year 2000.
Versions of the Company’s products
which are not the most currently released
or which are not currently being devel-
oped may not be Year 2000 compliant.
The Company sells some of its older
product lines, which are not being
actively developed and updated, as such
products are not necessarily Year 2000
compliant. Symantec is currently party
to a lawsuit related to the alleged inabil-
ity of pre-version 4.0 Norton AntiVirus
products to function properly in respect
to Year 2000. Symantec believes that this
lawsuit has no merit and intends to
defend itself vigorously. The final resolu-
tion of this lawsuit is not expected to
have a material adverse affect on the
results of operations and financial condi-
tion of the Company, although it is not
possible to estimate the possible loss.
However, depending on the amount and
timing of an unfavorable resolution of
even from a patent that has already been
issued whether it is potentially applicable
to a particular software product. This
increases the risk that Symantec’s products
may be subject to claims of patent in-
fringement. Although such claims may
ultimately prove to be without merit,
they are time consuming and expensive
to defend. Symantec has been involved
in disputes claiming patent infringement
in the past, is currently involved in a
number of such disputes and litigation,
and may be involved in the future in such
disputes and/or litigation. If Symantec is
alleged to infringe one or more patents,
it may choose to litigate the claim and/or
seek an appropriate license. If litigation
were to commence and a license were not
available on reasonable terms or if another
party were found to have a valid patent
claim against Symantec, such a result could
have a material adverse affect on Symantec’s
business, operating results and financial
condition (See Note 15 of Notes to
Consolidated Financial Statements in
Part IV, Item 14 of this Form 10-K).
Software Defects and Product Liability.
Software products frequently contain
errors or defects, especially when first
introduced or when new versions or
enhancements are released. In the past,
for example, Symantec’s anti-virus soft-
ware products have incorrectly detected
viruses which do not exist. Although the
Company has not experienced any mate-
rial adverse effects resulting from any
such defects or errors to date, defects and
errors could be found in current ver-
sions, future upgrades to current
products or newly developed and
released products, despite testing prior to
release. Software defects could result in
delays in market acceptance or unex-
pected reprogramming costs, which
could have a material adverse affect on
the Company’s operating results. While
Symantec has not been the target of soft-
this lawsuit, it is possible that the
Company’s future results of operations
or cash flows could be materially
adversely affected in a particular period.
(See Note 15 of Notes to Consolidated
Financial Statements in Part IV, Item 14
of this Form 10-K.)
Year 2000 – Corporate Systems. The
Company has completed an assessment
of its computer systems and software and
is modifying or replacing portions of its
software so that its operating systems will
function properly with respect to dates
in the Year 2000 and thereafter. The
Company is currently evaluating system
interfaces with third-party systems, such
as those of key suppliers, distributors and
financial institutions, for Year 2000
functionality. The Year 2000 project cost
is not expected to be material. The pro-
ject is estimated to be significantly
completed during the 1998 calendar year.
The Company believes that, with modi-
fications to existing software and
conversions to new software, the Year
2000 issue will not pose significant oper-
ational problems for its computer
systems. However, if such modifications
and conversions are not made, or are not
completed timely, the Year 2000 issue
could have a material adverse impact on
the operations of the Company.
Additionally, the systems of other com-
panies with which Symantec does
business may not address any Year 2000
problems on a timely basis, which could
have an adverse affect on Symantec’s sys-
tems or business transactions. As testing
of Year 2000 functionality of the
Company’s systems must occur in a sim-
ulated environment, the Company will
not be able to test full system Year 2000
interfaces and capabilities prior to Year
2000. The Company believes that its
exposure on Year 2000 issues is not
material to its business as a whole.
None.
*
**