Symantec 2001 Annual Report Download

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20 01 annual report
Solutions. Services. Response.

Table of contents

  • Page 1
    Solutions. Services. Response. 20 01 annual report

  • Page 2
    ..., firewall and virtual private network, vulnerability management, intrusion detection, Internet content and e-mail filtering, remote management technologies and security services to enterprises around the world. Symantec's Norton brand of consumer security products leads the market in worldwide...

  • Page 3
    ...consumer market. Without the contributions of everyone at Symantec, our accomplishments in 2001 would not have been possible. We also value the support of our customers and business partners worldwide. I believe when customers choose a security partner, their decision comes down to four key factors...

  • Page 4
    ... world alerting us to new viruses and security threats, our enterprise customers can take advantage of an unparalleled early warning system. In addition, Symantec offers the broadest array of products and services of any security vendor -including virus protection, intrusion detection, vulnerability...

  • Page 5
    ... 500 0 19 9 9 2000 2 0 01 0 19 9 9 2000 2 0 01 GAAP financial information the pro forma financial information includes results of AXENT Technologies as if the acquisition had occurred at the beginning of fiscal year 1999 and exclude results from Visual Café and ACT! product lines divested on...

  • Page 6
    Solutions. Lily De Los Rios and Rowan Trollope - Enterprise and Consumer Product Engineering As a worl d l eader i n I nt ernet securi t y, Symant ec draws on t he di verse t al ent s of our engineers to develop a broad range of virus protection, intrusion detection, fi rewal l and ent erpri se ...

  • Page 7
    ... Server 2.0 solution allows service providers such as Y ahoo!® to scan dozens of e-mail files per second, shielding millions of users from viruses. Enterprise Administration Secure, economical, centralized network management is critical for corporations today. Symantec Ghost ™ gives enterprise...

  • Page 8
    ... edgeabl e servi ce engi neers, t echni ci ans, consul t ant s and instructors deliver security expertise when and where it 's needed. Because security know-how is in short supply, enterprises are increasingly turning to Symantec ' s outsourcing services to safeguard their vital data and systems.

  • Page 9
    ...-time virus alerts for all their sites worldwide. Plus, they receive personalized care from a support analyst with detailed knowledge of their unique business and networking environment. Besides support plans for enterprises, Symantec also offers carrier-grade security support for Internet and other...

  • Page 10
    ... Motoaki Yamamura and Carey Nachenberg - Symantec Security Response Working around the clock, analysts in Symantec ' s Security Response facilities worldwide do the keen detective work that cures virus infections, keeps malicious intruders from invading networks, and brings system vulnerabilities to...

  • Page 11
    ... virus definitions without human intervention. Critical Advisories Symantec Security Response delivers the latest program updates to Symantec products via our LiveUpdate system. This includes anti-virus updates as well as enhancements to Enterprise Security Manager, NetProwler and other solutions...

  • Page 12
    ..., NetProwler, NetRecon, Norton Internet Security, Norton Personal Firewall, Norton SystemWorks, PowerVPN, Symantec Alerting Service, Symantec Desktop Firewall, Symantec Enterprise Firewall and Symantec Security Response are trademarks of Symantec Corporation. Other brands and products are trademarks...

  • Page 13
    ... Financial Data Business Overview Management's Discussion and Analysis of Financial Condition and Results of Operations 30 31 35 38 54 Quantitative and Qualitative Disclosures about Market Risk Consolidated Financial Statements Summary of Significant Accounting Policies Notes to Consolidated...

  • Page 14
    ... ended March 31, 2000. During fiscal 2001, we acquired AXENT Technologies, Inc. ( "AXENT "). During fiscal 2000, we acquired URLabs, L-3 Network Security's operations and 20/20 Software. During fiscal 1999, we acquired Quarterdeck, Intel's and IBM 's anti-virus businesses and the operations of...

  • Page 15
    ...0.42 0.41 Market Information Common Stock Our common stock is traded on the Nasdaq National Market under the symbol "SYMC." The high and low closing prices are as reported on the Nasdaq National Market. prices are in Canadian dollars as reported on the Toronto Stock Exchange. Delrina exchangeable...

  • Page 16
    ... (Family Edition only). The users of Norton Internet Security also can block banner ads. Norton SystemWorks is a fully integrated suite of problem-solving utilities that protects PC users from viruses and crashes, solves Windows problems, removes unneeded files, and updates users' applications...

  • Page 17
    ... the application and network levels. Web Access Management Our Web Access Management solutions enable customers, partners, suppliers and employees to connect to a network safely, reducing operational costs and enabling new business opportunities. Webthority's advanced product architecture provides...

  • Page 18
    .... Sales and Marketing, International Sales and Customer Support We market our products worldwide utilizing a multi-channel strategy of direct and indirect sales through independent software distributors, major retail chains, resellers, and value-added resellers focusing on security solutions and...

  • Page 19
    ... annual support contracts to all enterprise customers worldwide. Our annual support contracts provide 1) hot-line service delivered by telephone, fax, e-mail and over the Internet; 2) immediate patches for severe problems; 3) periodic software updates; 4) access to our technical knowledge base...

  • Page 20
    ... of stock options and shares to be issued under our employee stock option and purchase plans. of Windows; • hardware vendors incorporate additional server-based network management and security tools into network operating systems; or • competitors license certain of their products to...

  • Page 21
    .... In September 1998, we entered into an agreement with Intel to acquire its anti-virus business and to license its systems management technology. The acquisition was accounted for as a purchase and was paid for with cash. We recorded acquired product rights and other intangibles as of the date...

  • Page 22
    ...to the continued strength of our virus protection solution, growth from our vulnerability management and intrusion detection solutions, as a result of the AXENT acquisition, and the new release of our Ghost Corporate Edition product. Net revenues increased in fiscal 2000 as compared to fiscal 1999...

  • Page 23
    ... and 84% of net revenues in fiscal 2000 and 1999. The improvement in gross margin in fiscal 2001 was primarily due to higher margins associated with the increase in enterprise related sales and cost savings achieved in reduced packaging costs. Acquired Product Rights As indicated in the overview...

  • Page 24
    ... Security's operations and 20/20 Software in fiscal 2000. Acquired In-Process Research and Development Expenses In fiscal 2001, we acquired AXENT. In fiscal 2000, we acquired URLabs and L-3 Network Security's operations. In fiscal 1999, we acquired IBM 's and Intel's anti-virus businesses...

  • Page 25
    ... based on information at the time and should not be taken as indications of actual results, which could vary materially based on the risks and uncertainties identified in the Business Risk Factors. L-3 Network Security The in-process technology acquired in the L-3 Network Security purchase consisted...

  • Page 26
    ... the ACT! product line to Interact. In consideration for the license and assets, Interact transferred to us 623,247 shares of its unregistered common stock. These shares were valued at approximately $20 million as of December 6, 1999, the date the license was signed and the date the number of shares...

  • Page 27
    ... outstanding common stock. On January 16, 2001, the Board replaced this authorization with a new authorization to repurchase up to $700 million, not to exceed 15 million shares, of Symantec common stock with no expiration date. During fiscal 2001, we repurchased 5.0 million shares at prices ranging...

  • Page 28
    ... loss of key employees; and/or • the diversion of management's attention from other ongoing business concerns. Further, the market price of our common stock could decline if: • the integration of AXENT is unsuccessful; • we are unable to successfully market our products and services to AXENT...

  • Page 29
    ... Windows 3.1, Windows 95 and Windows 98. The release of future editions of Windows, including Windows XP in our December 2001 quarter, could adversely affect our financial results and stock price. Additionally, as hardware vendors incorporate additional server-based network management and security...

  • Page 30
    symantec 2001__28 We must effectively adapt to changes in the dynamic technological environment. We are increasingly focused on the Internet security Product returns may negatively affect our net revenues. Product returns can occur when we introduce upgrades and new versions of products or when ...

  • Page 31
    ... States, and we may be subject to unauthorized use of our products. Any legal action that we may bring to protect proprietary information could be expensive and may distract management from day-to-day operations. software industry, technical support costs comprise a significant portion of our...

  • Page 32
    ... As of March 31, 2001, the fair market value We believe that the use of forward contracts should reduce the risks that arise from conducting business in international markets. We employ established policies and procedures governing the use of financial instruments to manage our exposure to such...

  • Page 33
    symantec 2001__31 consolidated fi nancial statements SYMAN TEC CORPORATION CON SOLIDATED BALAN CE SHEETS March 31 (In thousands, except par value) 2001 2000 Assets Current assets: Cash, cash equivalents and short-term investments Trade accounts receivable Inventories Deferred income taxes ...

  • Page 34
    symantec 2001__32 SYMAN TEC CORPORATION CON SOLIDATED STATEMEN TS OF IN COME Y ear Ended March 31 (In thousands, except net income per share) 2001 $ 853,554 123,860 729,694 126,673 349,921 44,784 71,336 1,416 22,300 3,664 - 2000 $ 745,725 121,073 624,652 108,425 306,755 42,150 17...

  • Page 35
    ...plans 100 shares of restricted stock Amortization of unearned compensation Agreement with former CEO Repurchased 1,000 shares of common stock Income tax benefit related to stock options Balances, March 31, 2000 Components of comprehensive income: Net income Unrealized gain on short-term investments...

  • Page 36
    ... for purchase of 20/20 Software Proceeds from divestiture of Visual Café product line Purchase of L-3 Network Security's operations Purchase of URLabs Payment for the purchase of IBM 's anti-virus business Payment for the purchase of Quarterdeck Purchase of Intel's anti-virus business Purchase of...

  • Page 37
    ... policies Business Symantec Corporation, a world leader in Internet security Foreign Currency Translation The functional currency of our foreign technology, provides a broad range of content and network security solutions to individuals and enterprises. We are a leading provider of virus protection...

  • Page 38
    ... accordance with purchased with an original maturity of 90 days or less to be cash equivalents. All of our cash equivalents, short-term investment, and restricted investments are classified as available-for-sale as of the balance sheet dates. These securities are reported at fair market value and...

  • Page 39
    ... as well as goodwill arising from acquisitions completed after the application of the new standard. Amortization of the remaining book value of goodwill would cease and the new impairment-only approach would apply. The FASB expects to release the final statement in July 2001. We will not adopt the...

  • Page 40
    ...) 2001 $ 26,968 $ 46,884 2000 $ 32,427 $ 43,630 1999 $ 34,219 $ 50,779 Technical support costs included in sales and marketing Advertising expense Technical support costs included in sales and marketing relate to the estimated cost of providing free post-contract support (generally telephone...

  • Page 41
    ... Black-Scholes option pricing model using the following assumptions: fair market value of the underlying shares which is based on the average closing price of Symantec's common stock on July 26, 2000 and for the three days before and after July 26, 2000; the remaining contractual life of each option...

  • Page 42
    ... an agreement whereby we purchased Intel Corporation's anti-virus business for approximately $16.5 million. We also licensed Intel's systems management technology. The transaction was accounted for as a purchase. Under the transaction, we recorded approximately $5.0 million for acquired in-process...

  • Page 43
    ... 's license arrangements with customers of IBM anti-virus products. In return for the various rights we acquired from IBM, we agreed to pay $16 million in installments over a specified period as well as pay royalties on revenues received by us from distribution of immune-enabled Symantec products...

  • Page 44
    ...006 15,262 7,479 $ 459,342 $ 2000 8,929 324,834 4,790 16,027 - Money market funds Corporate securities Bank securities and deposits Taxable auction rate securities US government and government-sponsored securities Equity securities Total available-for-sale and trading investments 16,867 $ 371,447

  • Page 45
    ... Treasury securities. The restricted marketable securities have a contractual maturity of less than one year. Our available-for-sale restricted investments relate to certain collateral requirements for lease agreements associated with our corporate facilities in Cupertino, California. Fair values of...

  • Page 46
    ... ended March 31, 2001, 2000 and 1999, respectively. In fiscal 1997, we entered into lease agreements for two existing office buildings, City Center One ( "CC1") and World Headquarters ( "WHQ"), land and one office building under construction in Cupertino, California, City Center Five ( "CC5"). In...

  • Page 47
    ... 31, 2001 and $2 million for each of the years ended March 31, 2000 and 1999. Employee Stock Purchase Plans In October 1989, we established the 79,016 $ 79,016 1989 Employee Stock Purchase Plan ( "89 Purchase Plan"). Since inception, we have reserved a total of approximately 3.4 million shares of...

  • Page 48
    ... under the AXENT Purchase Plan at a purchase price per share equal to 85% of the lower of (i) fair market value of a share of AXENT common stock at the relevant grant date under the AXENT Purchase Plan divided by 0.5 or (ii) the fair market value of a share of Symantec common stock on the relevant...

  • Page 49
    ... March 31, 2001 ranged from $1.00 to $47.38. In 1999, we issued 100,000 restricted shares to our current CEO for a purchase price of par ($0.01 per share), vesting 50% at each anniversary date beginning April 14, 2000. Unearned compensation equivalent to the market value of the common stock on the...

  • Page 50
    ...Repurchases Expected life (years) Expected volatility Risk free interest rate On January 16, 2001, the Board of Directors replaced the March 22, 2001 0.50 0.84 6.00 Employee Stock Purchase Plans 2000 1999 0.50 0.50 0.68 0.79 % 5.20 % 4.80 % 1999 stock repurchase program with a new authorization to...

  • Page 51
    ...services for two members of senior management due to the realignment of our business units and their resulting departures during the March 2000 quarter. During the December 1999 quarter, we reduced our Internet Tools business unit's workforce and reduced our sales workforce. There were 48 employees...

  • Page 52
    ... had their severance packages communicated to them. Additionally, we accrued estimated costs associated with outplacement services to be provided to terminating employees, as these costs have no future economic benefit to us. The remaining accrual at March 31, 2001 was for outstanding severance and...

  • Page 53
    ...fied Symantec products including Norton Ghost Enterprise Edition, infringed...class of purchasers of preversion 4.0 Norton AntiVirus products. A similar complaint was filed in the same court on March 6, 1998, by an Oregon law firm. Those actions were consolidated and a consolidated amended complaint...

  • Page 54
    ... by customer needs. We have five operating segments: Consumer Products, Enterprise Security, Enterprise Administration, Services and Other. The Consumer Products segment focuses on delivering our security and problem-solving products to individual users, home offices and small businesses. The...

  • Page 55
    ...3,497 2,017 6,950 $ 171,325 Long-lived assets: United States United Kingdom Ireland Japan Canada Other foreign countries Signifi cant Customers The following distributors covered all segments and accounted for more than 10% of net revenues during fiscal 2001, 2000 and 1999. Y ear Ended March 31...

  • Page 56
    ... in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial...

  • Page 57
    ...St. Postal Station Attn: Courier Window Toronto, Ontario M5C2W9 Canada (800) 387-0825 The annual meeting of stockholders will be held on September 12, 2001 at Symantec Corporate Worldwide Headquarters, Cupertino, California. Common Stock The Company's stock is traded on the Nasdaq under the symbol...

  • Page 58
    20330 Stevens Creek Blvd. Cupertino, CA 95014 USA www.symantec.com