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11
We expect interest and other income to be approximately $5.0 million per quarter in
fiscal 2001. We expect interest income to increase slightly in fiscal 2001, even though we
plan to continue to repurchase stock under our share repurchase program. However, we
believe that the increase in interest income may be offset by foreign currency charges for
purchased options and market price volatility under our implementation of Statement
of Financial Accounting Standards No. 133 (“SFAS 133”), “Accounting for Derivative
Instruments and Hedging Activities.” Further, our cash balances could also be reduced in
fiscal 2001 due to the purchase of software companies, products, or technologies that are
complementary to our business.
INCOME TAX PROVISION
2000 CHANGE 1999 CHANGE 1998
Income tax provision $ 155.9 14% $ 136.7 119% $ 62.6
Percentage of total revenue 12.3% 13.5% 7.0%
Effective tax rate 35.1% 36.5% 37.3%
Our effective tax rate decreased in fiscal 2000 from fiscal 1999, due to tax benefits associ-
ated with the restructuring of our international operations.
Our effective tax rate decreased in fiscal 1999 compared to fiscal 1998, primarily due to
a decrease in nondeductible goodwill amortization.
We have targeted our effective tax rate to decrease in fiscal 2001 to approximately 34%.
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
We believe that in the future our results of operations could be affected by various factors,
including:
• delays in shipment of our new products and major new versions of existing products
• lack of market acceptance of new products and upgrades
• adverse changes in general economic conditions in any of the countries in which
we do business, including the recent slow-down affecting the U.S. and other
geographic areas
• introduction of new products by major competitors
• weakness in demand for application software and printers
• lack of growth in worldwide personal computer and printer sales and downward
sales price adjustments
• renegotiation of royalty arrangements
• consolidation in the OEM printer business
• ongoing weakness in our printing business due to product transitions
• industry transitions to new business and information delivery models
• market risks associated with our equity investments (as discussed later under
“Quantitative and Qualitative Disclosures about Market Risk”)
We have stated that we are targeting at least 25% annual revenue growth in fiscal 2001.
Additionally, for fiscal 2001 we have stated the following operating model targets: gross
margin of 93%, operating profit margin of 32%, and general and administrative expenses at
9% of revenue. For the first quarter of fiscal 2001, we have stated operating model targets for
research and development expenses of 18% of revenue and sales and marketing expenses of
34% of revenue; and for the remainder of fiscal 2001, research and development expenses of
19% of revenue and sales and marketing expenses of 33% of revenue. We have also stated
10