Symantec 2001 Annual Report Download - page 26

Litigation Judgment During the June 1998 quarter, we accrued
litigation expenses of approximately $6 million related to a judgment
by a Canadian court on a decade-old copyright action assumed by us
as a result of our acquisition of Delrina Corporation.
Interest Income, Interest Expense and Other Income (Expense)
Interest income was approximately $33 million in 2001 and was
relatively flat at $13 million in fiscal 2000 and 1999. Interest income
increased 148% in fiscal 2001 over fiscal 2000. The increase was
primarily due to a higher average cash balance during fiscal 2001 as
compared to prior years.
Interest expense was approximately $2 million in fiscal 1999. The inter-
est expense in fiscal 1999 was principally related to our convertible
subordinated debentures, which were converted into our common
stock in February 1999 and for interest on Quarterdeck’s subordinated
notes that were paid off in March 1999. Interest expense was not
significant in fiscal 2001 and 2000.
Other expense, net was approximately $23 million in fiscal 2001 and
consisted primarily of net losses on our equity investments. Other
income, net was approximately $1 million and $2 million in fiscal 2000
and 1999, respectively, and was primarily comprised of gains and losses
from non-functional currency exchange transactions.
Income, Net of Expense, from Sale of Technologies and Product
Lines The components of income, net of expense, from sale of
technologies and product lines are as follows:
Year Ended March 31
(In thousands) 2001 2000 1999
Royalties from Interact $ 19,250 $ 5,000 $ —
Gain on divestiture of:
Visual Café product line —68,523 —
ACT! product line —18,285 —
Transition fees 801 894 —
Payments from HP and JetForm 397 14,656 41,155
Income, net of expense, from
sale of technologies and
product lines $ 20,448 $ 107,358 $ 41,155
Gain on Divestiture of Visual CaféOn December 31, 1999, we sold
the principal assets and liabilities of the Visual Café product line to
WebGain, Inc. (“WebGain”). The assets primarily consisted of fixed
assets and intangible assets. The liabilities related to certain revenue
deferrals. In exchange for the assets and liabilities sold to WebGain, we
received $75.0 million in a lump-sum cash payment on December 31,
1999. We wrote off or transferred approximately $4.7 million of capi-
talized software, fixed assets and inventory related to the Visual Café
product line. In addition, we accrued approximately $1.4 million in
transaction costs and $0.4 million in retention packages for the affected
employees.As a result, we recorded a pre-tax gain of approximately
$68.5 million on the divestiture.
Gain on Divestiture of ACT! and Royalties from Interact On
December 31, 1999, we licensed substantially all of the ACT! product
line technology, on an exclusive basis, to Interact Commerce
Corporation, previously SalesLogix Corporation (“Interact”), for a
period of four years. In addition, we sold the inventory and fixed
assets related to 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 approxi-
mately $20 million as of December 6, 1999, the date the license was
signed and the date the number of shares was determined. As a result
of the license, we recognized approximately $20 million of income
from the shares received, which was offset by approximately $0.4
million of inventory and fixed assets attributed to the ACT! product
line that was written off and transferred to Interact. In addition, we
accrued approximately $1.3 million for transaction related costs
incurred at December 31, 1999. After recognizing the above amounts,
we recorded a pre-tax gain of approximately $18.3 million.
During the March 2001 quarter, Interact entered into a plan to merge
with The Sage Group plc and we recorded a loss of approximately
$12.5 million as other expense related to the other than temporary
decline in value of our investment in Interact.
In addition to the shares received from Interact, Interact is required to
pay us quarterly royalty payments for four years. Interact will pay these
royalties based on future revenues, up to an aggregate maximum of
$57 million. Because the royalties are not guaranteed and the quarterly
amounts to be received are not determinable until earned, we are
recognizing these royalties as payments are due. We recorded approxi-
mately $19.3 million and $5 million of royalty payments in income,
net of expense, from sale of technologies and product lines in fiscal
2001 and 2000, respectively.
Transition Fees In accordance with individual transition agreements,
WebGain and Interact paid us fees for invoicing, collecting receivables,
shipping and other operational and support activities through fiscal
2001, until they had the ability to take over these activities. We
recorded approximately $0.8 million and $0.9 million for these fees
during fiscal 2001 and 2000, respectively, in income, net of expense,
from sale of technologies and product lines.
Payments from HP and JetForm Payments from HP and JetForm
were associated with our sale of certain software products, technolo-
gies and tangible assets to the Hewlett-Packard Company and JetForm
Corporation during fiscal 1997. The payments decreased from approx-
imately $15 million in fiscal 2000 to $0.4 million in fiscal 2001. These
payments also decreased from approximately $41 million in fiscal 1999
to $15 million in fiscal 2000. The payments declined in fiscal 2001 and
2000, because the HP payments ended in the December 1998 quarter
and the payments from JetForm ended in the June 2000 quarter.
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