Symantec 1999 Annual Report Download - page 31

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Our Security and Assistance business unit represented approximately 57%, 54% and 50% of total net revenues for
fiscal 1999, 1998 and 1997, respectively. Increased net revenues for this business unit in fiscal 1999 were primarily
due to sales of Norton AntiVirus. New product releases of Norton SystemWorks and Norton Ghost also contributed to
the fiscal 1999 net revenue increase. These year over year increases were partly offset by reductions in net revenues
for Norton Utilities. Increased net revenues for this business unit in fiscal 1998 as compared to fiscal 1997 were
primarily due to sales of Windows 95, Windows NT and Macintosh versions of Norton Utilities, as well as the multi-
platform workstations/servers version of Norton AntiVirus. New product releases of Norton CrashGuard Deluxe and
Norton Uninstall contributed to the fiscal 1998 net revenue increase.
Our Remote Productivity Solutions business unit represented approximately 39%, 41% and 37% of total net revenues
for fiscal 1999, 1998 and 1997, respectively. Despite the reduced percentage of revenue from this business unit,
absolute net revenues for this business unit increased in fiscal 1999 over fiscal 1998. This increase was primarily due
to increased sales of pcANYWHERE. Increased net revenues for this business unit in fiscal 1998 as compared to
fiscal 1997 were primarily due to increased sales of WinFax PRO for Windows 95, pcANYWHERE and ACT!
Our Internet Tools business unit represented approximately 4% of total net revenues in each of the fiscal years 1999,
1998 and 1997. This business unit’s net revenues in absolute dollars increased in fiscal 1999 as compared to fiscal
1998, and also increased in fiscal 1998 as compared to fiscal 1997. The increases in both comparative years were due
to increased sales of our Visual Café Database and Professional Editions.
Our Corporate Sunset segment’s revenues are generated from sales of products that are nearing the end of their life
cycles. Net revenues from this segment were less than 1% of net revenues for fiscal 1999 and 1% and 9% of our net
revenues for fiscal 1998 and 1997, respectively.
During fiscal 1999, 1998 and 1997, the financial impact of product price reductions for certain of our principal
products was more than offset by the increase in the volume of products sold, resulting in increased net revenues.
International. Net revenues from international sales, or revenues outside of North America, were $219 million and
$179 million and represented 37% and 34% of net revenues in fiscal 1999 and 1998, respectively. The increase was
largely due to stronger sales to Europe and Japan. Net revenues from international sales increased by $42 million in
fiscal 1998, from $137 million in fiscal 1997. This increase in net revenues was the result of our penetration of new
and emerging markets in Latin America and Asia/Pacific, as well as increased sales in Europe. Foreign exchange rate
fluctuations during fiscal 1999, 1998 and 1997 did not materially affect annual revenue.
Product Returns. We estimate and maintain reserves for product returns. Product returns principally relate to stock
balancing and the replacement of obsolete products which are offset by orders of equal or greater value for the current
versions of the products. The mix of products returned from the distributors/resellers as compared to products sold to
the distributors/resellers does not impact the gross margins, as Symantec’s gross margins are consistent across its
various product families. Changes in the level of product returns and related product returns provision are generally
offset by a change in the level of gross revenue. As a result, the product returns provision did not have a material
impact on reported net revenues in any period presented.
Gross Margin .
Gross margin represents net revenues less cost of revenues. Cost of revenues consists primarily of manufacturing
expenses, costs for producing manuals, packaging costs, royalties paid to third parties under publishing contracts and
amortization and write-off of capitalized software.
Gross margin was 84% of net revenues in fiscal 1999 and fiscal 1998 and 82% in fiscal 1997. Factors contributing to
an increase in gross margin percentage during fiscal 1998 as compared to fiscal 1997 include reduction of direct
material costs, which were accomplished by shifting product media from more expensive diskettes to lower priced CD-
ROMs and reductions in the size of bound manuals, accomplished through a shift in documentation for our principal
products from paper manuals to electronic manuals. Additional cost reductions occurred in manufacturing overhead
costs due to improved economies of scale and reductions in capitalized software amortization and write-offs as
discussed below.
Purchased Product Rights and Capitalized Software. As indicated in the overview, during fiscal 1999 we acquired
Quarterdeck, Intel’s anti-virus business and Binary’s operations, as a result of these transactions we recorded
purchased product rights and technology of approximately $8 million, $11 million and $17 million, respectively. See