Symantec 2001 Annual Report Download - page 37

summary of significant accounting policies
Business Symantec Corporation, a world leader in Internet security
technology, provides a broad range of content and network security
solutions to individuals and enterprises.We are a leading provider of
virus protection, firewall, virtual private network, vulnerability man-
agement, intrusion detection, remote management technologies and
security services to consumers and enterprises around the world.
Founded in 1982, we have offices in 37 countries worldwide.
Principles of Consolidation The accompanying consolidated finan-
cial statements include the accounts of Symantec Corporation and its
wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Acquisitions and Divestitures During the December 2000 quarter,
we acquired AXENT Technologies, Inc. This acquisition was accounted
for as a purchase and, accordingly, their operating results have been
included in our consolidated financial statements since the date of
acquisition.
During the March 2000 quarter, we acquired L-3 Network Security’s
operations and 20/20 Software. During the September 1999 quarter,
we acquired URLabs. Each of these acquisitions was accounted for as a
purchase and, accordingly, their operating results have been included
in our consolidated financial statements since their respective dates
of acquisition.
During the June 1998 quarter, we acquired IBM’s anti-virus business
and Binary Research’s operations. During the September 1998 quarter,
we acquired Intel’s anti-virus business. During the December 1998
quarter, we completed a tender offer for the common stock of
Quarterdeck, obtaining 63% of the outstanding shares. During the
March 1999 quarter, we acquired the remaining shares of Quarterdeck.
Each of these acquisitions was accounted for as a purchase and,
accordingly, their operating results have been included in our consoli-
dated financial statements since their respective dates of acquisition.
On December 31, 1999, we divested our Visual Café and substantially
all of our ACT! product lines. Because these divestitures were effective
at the close of business on December 31, 1999, these product lines are
included in the results of operations through December 31, 1999 and
are included in our results of operations for fiscal 1999.
Fiscal Years We have a 52/53-week fiscal accounting year. Accordingly,
all references as of and for the periods ended March 31, 2001, 2000,
and 1999 reflect amounts as of and for the periods ended March 30,
2001, March 31, 2000, and April 2, 1999, respectively. The fiscal
accounting years ended March 30, 2001, March 31, 2000 and April 2,
1999 each comprised 52 weeks of operations.
Use of Estimates The preparation of financial statements in conform-
ity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes.Actual results could
differ from those estimates.
Foreign Currency Translation The functional currency of our foreign
subsidiaries is the local currency. Assets and liabilities denominated
in foreign currencies are translated using the exchange rate on the
balance sheet dates. The translation adjustments resulting from this
process are shown separately as a component of stockholders’equity.
Revenues and expenses are translated using average exchange rates
prevailing during the year. Foreign currency transaction gains and
losses are included in the determination of net income.
Revenue Recognition Revenue is recognized under Statement of
Position (“SOP”) 97-2 as modified by SOP 98-9, when the following
conditions have been meet:
•persuasive evidence of an arrangement;
•passage of title;
•delivery has occurred or services have been rendered;
•if applicable, customer acceptance;
•collection of a fixed or determinable license fee is considered
reasonably assured; and
•if appropriate, reasonable estimates of future returns.
Revenue is derived primarily from sales of packaged products, perpet-
ual license agreements, product maintenance and professional services.
Packaged products are sold through a multi-tiered distribution chan-
nel. We defer revenue relating to all distribution and reseller channel
inventory in excess of certain inventory levels in these channels.
We offer the right of return of our products under various policies.
We estimate and maintain reserves for product returns and channel
and end-users rebates and account for these reserves as an offset to
revenue. For packaged products, which generally include insignificant
post-contract support obligations (generally telephone support), the
estimated cost for providing post-contract support is accrued at the
time of the sale.
We enter into perpetual software license agreements through direct
sales to customers and indirect sales with distributors and resellers.
The license agreements generally include product maintenance
agreements, which are deferred and recognized ratably over the period
of the agreements.
Our professional service revenues include consulting, implementation,
education, and managed security services. Consulting and implemen-
tation services revenue are recognized as services are performed and
upon written acceptance from customers. Education services revenue
is recognized as services are performed. Managed security services
revenue is recognized ratably over the period that such contracted
services are provided.
In arrangements that include software licenses and maintenance and/or
professional services (“multiple elements”), we allocate and defer rev-
enue for the undelivered items, based on vendor-specific objective
evidence of fair value, and recognize the difference between the total
arrangement fee and the amount deferred for the undelivered items as
revenue. If vendor-specific objective evidence does not exist for unde-
livered items such as maintenance or professional services, then the
entire arrangement fee is recognized over the performance period.
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