Symantec 2004 Annual Report Download - page 47

SYMANTEC CORPORATION «45»
Our intellectual property and proprietary rights may not be
adequately protected from all unauthorized uses, which could
adversely impact our financial results. We regard our software
and underlying technology as proprietary. We seek to protect our
proprietary rights through a combination of confidentiality agree-
ments and copyright, patent, trademark and trade secret laws.
Third parties may copy aspects of our products or otherwise obtain
and use our proprietary information without authorization or
develop similar technology independently. All of our products are
protected by copyright laws, and we have a number of patents
and patent applications pending. We may not achieve the desired
protection from, and third parties may design around, our patents.
In addition, existing copyright laws afford limited practical protec-
tion. Furthermore, the laws of some foreign countries do not offer
the same level of protection of our proprietary rights as the laws
of the United 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.
We continue to make substantial changes to our information
systems that could disrupt our business and our financial results.
We plan to continuously improve our Enterprise Resource Planning,
Customer Relationship Management and Data Warehouse
Information systems to support the form, functionality and scale
of the business.
These types of transitions frequently prove disruptive to the
underlying business of an enterprise and may cause us to incur
higher costs than we anticipate. Failure to manage a smooth
transition to the new systems and the ongoing operations and
support of the new systems could materially harm our
business operations.
In addition, our order management and product shipping centers
are geographically dispersed. A business disruption could occur
as a result of natural disasters or the interruption in service by
communications carriers. If our communications between these
centers are disrupted, particularly at the end of a fiscal quarter,
we may suffer an unexpected shortfall in net revenues and a
resulting adverse impact on our operating results. Communication
outages, Internet connectivity disruptions, and/or increased volumes
of electronic distribution transactions may also cause delays in
customer access to our Internet-based services or product sales.
We hold minority interests in non-public companies and if
these companies face financial difficulties in their operations,
our investments could be impaired and could adversely affect
our financial results. We continue to hold minority interests in
privately held companies. These investments are inherently risky
because these companies are still in the development stage and
depend on third parties for financing to support their ongoing
operations. In addition, the markets for their technologies or
products are typically in the early stages and may never develop.
If these companies do no have adequate cash funding to support
their operations, or if they encounter difficulties developing their
technologies or products, our investments in these companies
may be impaired and could adversely affect our financial results.
We may be subject to a higher effective tax rate that could
negatively affect our financial results and financial position.
Our effective tax rate could be adversely affected by several factors,
many of which are outside of our control. Our future effective tax
rate could be unfavorably affected by unanticipated changes in
the mix of earnings in countries with differing statutory tax rates.
We are also subject to changes in tax laws or their interpretations
in the various jurisdictions in which we operate which may adversely
impact our effective tax rate. In addition, our effective tax rate
could be affected by the changes in accounting and tax treatment
of stock-based compensation.
If the carrying value of our long-lived assets is not recoverable,
an impairment loss must be recognized which would adversely
affect our financial results. We evaluate our long-lived assets,
including property and equipment, goodwill, acquired product
rights and other intangible assets, whenever events or circumstances
occur which indicate that these assets might be impaired. In addition,
goodwill is evaluated annually for impairment in the fourth quarter
of each fiscal year, regardless of events and circumstances. We
will continue to evaluate the recoverability of the carrying amount
of our long-lived assets, and we may incur substantial impairment
charges, which could adversely affect our financial results.
2004 Annual Report