Symantec 1999 Annual Report Download - page 37

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Restructuring and Other Expenses .
During the September quarter of fiscal 1999, we implemented a plan to restructure certain of our operations, which
included outsourcing our domestic manufacturing operations. We recorded approximately $4 million of employee
severance and outplacement expenses to reduce the workforce by approximately 5% in both domestic and international
operations. We recorded approximately $1 million for excess facilities and equipment from the abandonment of our
manufacturing facility lease. As of March 31, 1999, these activities were substantially completed. See Note 14 of the
Notes to Consolidated Financial Statements in this Form 10-K.
There were no acquisition, restructuring and other expenses incurred in fiscal 1998.
In fiscal 1997, we recorded total acquisition charges of approximately $1 million in connection with the acquisition of
Fast Track. We also recorded a charge of approximately $3 million for costs related to the restructuring of certain
domestic and international sales and research and development operations, certain legal settlements and other
expenses. Other charges recorded in fiscal 1997 included approximately $2 million in connection with the write-off of
an equity investment. See Summary of Significant Accounting Policies and Note 14 of Notes to Consolidated
Financial Statements of this Form 10-K.
Remaining acquisition, restructuring and other expense accruals as of March 31, 1999 were approximately $4 million.
Interest Income, Interest Expense and Other Income (Expense) .
Interest income was approximately $14 million, $13 million and $7 million in fiscal 1999, 1998 and 1997,
respectively. Interest income increased 3% in fiscal 1999 over fiscal 1998. This increase was primarily due to higher
average invested cash balances, gains on the sale of investments and interest income received from income tax refunds.
Interest income increased 83% in fiscal 1998 over fiscal 1997. This increase was due to higher average invested cash
balances.
Interest expense was approximately $2 million in 1999 and $1 million in both fiscal 1998 and 1997. The interest
expense was principally related to our convertible subordinated debentures, which were converted in February 1999
and Quarterdeck’s subordinated notes, that were paid off in March 1999. See Note 6 of Notes to Consolidated
Financial Statements of this Form 10-K.
Other income (expense) is primarily comprised of foreign currency exchange gains and losses from fluctuations in
currency exchange rates. Foreign currency exchange gains and losses accounted for approximately $2 million in
income in 1999, which primarily resulted from the payoff of an intercompany loan. In fiscal 1998 there was less than
$1 million in expense and in 1997 there was approximately $2 million in expense.
Income, net of expense, from Sale of Technologies and Product Lines .
Income from sale of technologies and product lines was approximately $41 million, $45 million and $9 million for the
fiscal years 1999, 1998 and 1997, respectively. This income is related to the sale of our electronic forms product line
to JetForm Corporation and our network administration technologies to Hewlett-Packard, both of which took place in
fiscal 1997. For fiscal 1997 the income is net of expenses related to the sale of these technologies and product lines,
which is comprised of approximately $8 million for the write-off of purchased intangibles and developed software
costs and approximately $3 million in legal , accounting and other expenses. See Note 13 of Notes to Consolidated
Financial Statements of this Form 10-K.
Income Taxes .
Our effective tax rate on income before income taxes for fiscal 1999, excluding charges for acquired in-process
research and development expenses, was 32%. Our effective tax rate was 24% and 14% for fiscal 1998 and 1997,
respectively. Our 1999 income tax rate of 32% is lower than the U.S. federal and state combined statutory rate of 40%
primarily due to a lower statutory tax rate for our Irish operations. The effective tax rate for fiscal 1998 and 1997 was
lower due to the utilization of previously unbenefitted losses and credits.
Our tax provision for fiscal 1999 consists of two items: 1) a $35 million tax provision (or 32% effective tax rate) on
income before income taxes of $110 million, which excludes a $27 million charge for acquired in-process research and
development expenses and 2) a $2 million tax benefit on the $27 million charge for in-process research and
development. We have established a valuation allowance for the portion of the deferred tax asset attributable to the
acquired in-process research and development expenses that is not expected to be realized within five years.
Realization of the $28 million of net deferred tax assets is dependent upon our ability to generate sufficient future U.S.
taxable income. Based on our forecast of U.S. earnings, we believe that it is more likely than not that we will realize