Symantec 1999 Annual Report Download - page 46

32
Software Defects and Product Liability
Software products frequently contain errors or defects, especially when first introduced or when new versions or
enhancements are released. For example, in the past, our anti-virus software products have incorrectly detected viruses
that do not exist. We have not experienced any material adverse effects resulting from any of these defects or errors to
date and we test our products prior to release. Nonetheless, defects and errors could be found in current versions of
our products, future upgrades to current products or newly developed and released products. Software defects could
result in delays in market acceptance or unexpected reprogramming costs, which could materially adversely affect our
operating results. Most of our license agreements with customers contain provisions designed to limit our exposure to
potential product liability claims. It is possible, however, that these provisions limiting our liability may not be valid as
a result of federal, state, local or foreign laws or ordinances or unfavorable judicial decisions. A successful product
liability claim could have a material adverse affect on Symantec’s business, operating results and financial condition.
Our software products and web site may be subject to intentional disruption. While we have not been the target
of software viruses specifically designed to impede the performance of our products, such viruses could be created and
deployed against our products in the future. Similarly, experienced computer programmers, or hackers, may attempt to
penetrate our network security or the security of our web site from time to time. A hacker who penetrates our network
or web site could misappropriate proprietary information or cause interruptions of our services. We might be required
to expend significant capital and resources to protect against, or to alleviate, problems caused by virus creators and
hackers.
The conversion of the European currencies to the euro may impact our foreign exchange hedging program. On
January 1, 1999, the euro became the common currency of 11 of the 15 member countries of the European Union. The
national currencies of these 11 countries will coexist with the euro at fixed exchange rates through December 31, 2001.
Euro denominated bills and coins will be introduced on January 1, 2002 and, by July 1, 2002, the national currencies
will no longer be legal tender.
We established a euro task force to address the business implications of the euro. The task force implemented changes
to our system and processes in order to be euro-ready on January 1, 1999. We will continue to evaluate the impact of
the euro and expect to make further changes to accommodate doing business in the euro.
We expect that the euro will dictate changes in our foreign exchange hedging program. These changes may lead to
increased fluctuations in foreign currency hedging results. Based on current information, we do not believe that the
euro will have a material adverse impact on our operations or financial condition.
We may experience reduced demand for our products due to changes in customer behavior resulting from Year
2000 preparation. With the emerging requirements on Year 2000 compliance and functionality, many enterprise
customers may use their Information Technology budgets in 1999 to focus on Year 2000 issues. In addition, our
customer’s Information Technology organizations may be unwilling to deploy new software until after the Year 2000
in order to reduce the complexity of any changes in their systems required by any actual Year 2000 failures. Either of
these factors could reduce sales of our products and could have an adverse affect on revenues.
We may experience disruption of our internal systems as a result of the Year 2000. We have completed a major
evaluation of our internal applications, systems and databases. We are modifying or replacing portions of our
hardware and associated software to enable our operational systems and networks to function properly with respect to
dates leading up to January 1, 2000 and thereafter. We continue to evaluate interfaces between our systems and third-
party systems, such as those of key suppliers, distributors and financial institutions, for Year 2000 functionality. In
addition, the systems of other companies with which we do business may not address Year 2000 problems on a timely
basis. We expect the process of evaluating third-party Year 2000 compliance to be an ongoing process. We are
evaluating Year 2000 exposures of our key suppliers, as well as our buildings and related facilities. We expect that the
costs to complete the Year 2000 project to be approximately $2 million and will be expensed as incurred.
Our Year 2000 Project is divided into several phases:
Assessment - where the vulnerability of the hardware, software, process or service element is identified.
Planning - where corrective action is determined for each vulnerable element.
Remediation and Unit Test - where the corrective action is taken and initial testing is performed.
Limited System Test - where related elements are tested together, using dates in the vulnerable range and any
necessary follow-up remediation is completed.