Symantec 2004 Annual Report Download - page 30

«28»SYMANTEC CORPORATION
that some portion or all of our net-deferred tax assets will not be
realized, we establish a valuation allowance against the deferred
tax assets. To the extent we establish a valuation allowance or
change the allowance in a period, we reflect the change with
a corresponding increase or decrease to our tax provision in our
Consolidated Statements of Operations.
Legal Contingencies From time to time, we are involved in
disputes that arise in the ordinary course of business, and we do
not expect this trend to change in the future. We are currently
involved in the legal proceedings as discussed in Note 15 of the
Notes to Consolidated Financial Statements.
When the likelihood of the incurrence of costs related to our legal
proceedings is probable and management has the ability to
estimate such costs, we provide for estimates of external legal fees
and any probable losses through charges to our Consolidated
Statements of Operations. These estimates have been based on
our assessment of the facts and circumstances at each balance
sheet date and are subject to change based upon new information
and intervening events. Our accrual for legal contingencies as
of March 31, 2004 represented insignificant amounts related to
external legal fees and no amounts were accrued for probable
losses, as we believe that we have meritorious defenses to the
claims against us, and we will defend ourselves vigorously. However,
even if we are successful, estimated costs for external legal fees
could be more than anticipated. And, if we are unsuccessful, we
might be forced to pay significant damages and licensing fees, or
modify our business practices for which we have not accrued any
amounts for loss contingencies. Any such results could materially
harm our business and could result in a material adverse impact
on the financial position, results of operations or cash flows.
Results of Operations
OVERVIEW
Our goal for fiscal 2004 was to continue serving customer
needs while reshaping the competitive landscape by offering
integrated solutions.
Within the Consumer Products segment, we grew our base
of individual users and accelerated our expansion into the small
business market. In addition, we released new versions of our
award winning consumer products, including Norton Internet
Security, Norton AntiVirus, Norton™Personal Firewall, Norton
AntiSpam™and Norton SystemWorks, which includes Norton™
Password Manager. These new products provide protection
from viruses, intrusion attempts and piracy threats, and offer
expanded protection from emerging threats.
Within the Enterprise Security segment, we continued to enhance
and expand our product portfolio in order to address the evolving
threat environment with the release of our new line of integrated
solutions: the Symantec Gateway Security, Symantec Deep Sight
Threat Management System, Symantec Enterprise Security
Manager, Symantec Incident Manager and Symantec ManHunt. In
addition, we maintained our focus on delivering strong integrated
solutions, enhanced manageability, and more comprehensive
intrusion protection.
Within the Enterprise Administration segment, sales of our
pcAnywhere product continued to decline and we expect this
trend to continue due to the extended functionality of Microsoft
operating system products. Conversely, the Enterprise Administration
segment benefited from our new product introductions related
to our business acquisitions of ON Technology and PowerQuest
in the second half of fiscal 2004.
Net revenue during fiscal 2004 increased as compared to fiscal 2003
due primarily to increased sales of our consumer and enterprise
security products, which can be attributable to the numerous
security threat outbreaks that occurred during fiscal 2004, including
the Beagle, Welchia, Blaster, Sobig, MyDoom and Netsky viruses.
In addition, increased demand for our security protection solutions
from large organizations as well as from small businesses and
consumers also contributed to the growth.
Net revenue during fiscal 2003 increased as compared to fiscal 2002
due primarily to increased sales of our consumer and enterprise
security products, which can be attributable to the numerous
security threat outbreaks that occurred during fiscal 2003, including
the Code Red, Nimda, Klez, Bugbear and Slammer viruses.
From a regional standpoint, sales outside of the United States
contributed strongly to revenue growth while sales in the United
States also grew during these periods. Strength in major foreign
currencies during fiscal 2004 and fiscal 2003 also positively
impacted our international revenue growth.
A significant portion of our deferred revenue balance of $590 million
as of March 31, 2003 contributed to our total net revenues during
fiscal 2004. Deferred revenue increased during fiscal 2004 as
compared to fiscal 2003 due primarily to increased maintenance
obligations. We anticipate that approximately one-third of our
deferred revenue balance of $971 million as of March 31, 2004 will
contribute to our net revenues during the June 2004 quarter.
Headcount during fiscal 2004 increased as compared to fiscal
2003 due primarily to the growth of the company and due to
business acquisitions. Of this increase, approximately 60% was
due to the growth of the company and approximately 40%
was due to business acquisitions.
2004 Annual Report