Symantec 2000 Annual Report Download - page 29

in fiscal 1999. The payments declined in fiscal 2000 and 1999,
because the HP payments ended in the December 1998 quarter and
the payments from JetForm have been declining in accordance with
the payment terms. The last JetForm payment of approximately
$0.4million was received in the June 2000 quarter.
Income Taxes Our effective tax rate on income before one-time
charges (acquired in-process research and development and
restructuring and other expenses), goodwill amortization expense
and gain on sale of product lines, was 32%for fiscal 2000 and 1999.
Our effective tax rate was 24%for fiscal 1998. Our fiscal 2000 and
1999 effective tax rates were lower than the U.S. federal and state
combined statutory rate primarily due to a lower statutory tax rate
on our Ireland operations. In addition, our fiscal 1998 effective tax
rate was lower due to the utilization of previously unbenefited
losses and credits. We project our effective tax rate to be 32%
in fiscal 2001. This projection, however, is subject to change due
to potential tax law changes and fluctuations in the geographic
allocation of earnings.
The effective tax rate on income after goodwill amortization, but
before one-time charges was 34%, 32%and 24%for fiscal 2000,
1999 and 1998, respectively, reflecting the partial non-deductibil-
ity of goodwill amortization in fiscal 2000. In addition, for fiscal
2000, tax has been provided on the gain on sale of product lines
at an effective tax rate of 34%. This rate is also lower than the U.S.
federal and state combined statutory rate because a portion of the
gain is attributable to our Ireland operations and, accordingly,
subject to a lower tax rate.
Our tax provision for fiscal 2000, 1999 and 1998 includes tax bene-
fits attributable to one-time charges of $3.9million, $2.0million
and zero, respectively.
Realization of a significant portion of the $79 million of net
deferred tax assets is dependent on our ability to generate suffi-
cient future U.S. taxable income. The amount of future U.S.
taxable income that would have to be generated in order to realize
the net deferred tax assets is approximately $175 million. We
believe it is more likely than not that the $79 million of net
deferred tax assets will be realized based on historical earnings
and expected levels of future U.S. taxable income. Levels of future
taxable income are subject to the various risks and uncertainties
identified in the risk factors set forth in our previously filed Form
10K for the year ended March 31, 2000. A valuation allowance
against net deferred tax assets may be necessary if it is more
likely than not that all or a portion of the net deferred tax assets
will not be realized. We will assess the need for a valuation
allowance on a quarterly basis.
Liquidity and Capital Resources Cash, cash equivalents, short-
term investments and long-term investments increased
approximately $235 million to $432 million at the end of fiscal 2000
from $197 million at the end of fiscal 1999. This increase is largely
due to cash provided from operations, net proceeds from the
exercise of stock options under our stock option plans, sales of
common stock through our employee stock purchase plan and the
receipt of restricted stock and cash from our divestitures of the
ACT! and Visual Café product lines.
Quarterdeck had issued $25 million of 6% convertible senior sub-
ordinated notes, or Notes, due in 2001. These Notes were issued to
an institutional investor in a private placement pursuant to the
terms of a Note Agreement dated March 1, 19 9 6 . These Notes were
paid in full on March 30, 1999.
In addition to cash and short-term investments, we have $82 mil-
lion of restricted investments related to collateral requirements
under certain lease agreements. We are obligated under these
lease agreements for two office buildings in Cupertino, Califor-
nia to maintain a restricted cash balance invested in U.S. Treasury
securities with maturities not to exceed three years. In accor-
dance with the lease terms, these funds are not available to meet
our operating cash requirements. We are in compliance with our
covenants on these lease agreements as of March 31, 2000. Future
acquisitions or other events could cause us to be in violation of
these covenants.
In May 2000, we amended our $10 million line of credit, which
expires in May 2001, to minimize the potential violation of certain
financial covenants due to future acquisitions. The amendment
allows for future acquisitions of less than $75 million in cash,
annually. We were in compliance with the debt covenants for this
line of credit as of March 31, 2000. As of March 31, 2000, there were
no borrowings and less than $1million of standby letters of credit
outstanding under this line. Future acquisitions could cause us
to be in violation of the line of credit covenants. However, we
believe that if the line of credit is canceled or amounts are not
available under the line, there will not be a material adverse
impact on our financial results, liquidity or capital resources.
Net cash provided by operating activities was approximately $224
million and was comprised of net income of approximately $170
million, non-cash related expenses of $55 million and a net
increase in assets and liabilities of $109 million.
Net trade accounts receivable decreased $26 million to approxi-
mately $47 million and to 30 days sales outstanding at March 31,
2000 from approximately $76 million and 39 days sales outstanding
at March 31, 1999.
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