Symantec 1997 Annual Report Download - page 22

The market’s acceptance of the Windows 95 and
Windows NT operating systems, as well as the further expansion
of personal computer sales, enabled Symantec to experience
strong fiscal 1997 sales of its Windows 95 products first intro-
duced during the last half of fiscal 1996 and Windows NT
products introduced in fiscal 1997. The most significant
product line sales growth was related to the Norton AntiVirus
products from the Security and Assistance product group and
pcANYWHERE products from the Remote Productivity
Solutions product group. During fiscal 1997, the financial
impact of product price reductions for Symantec’s core products
was more than offset by the increase in the volume of products
sold, resulting in increased net revenues.
Symantec’s third business unit is the Emerging Business
and Other product group, which includes products providing
an easy to use Java development environment, as well as
revenue streams from the sale of certain of the Company’s
software product lines and revenues from products nearing
the end of their life cycles. Fiscal 1997 net revenues for the
Emerging Business product group decreased from fiscal 1996,
largely as the result of declining sales from products which
Symantec no longer actively develops or markets. Symantec
expanded its line of Java development tools in fiscal 1997 in
response to wider acceptance of the Java development envi-
ronment, resulting in an increase in net revenues for the Java
product line during fiscal 1997. The Emerging Business and
Other product group also recorded approximately $6 million
of consulting net revenues in fiscal 1997, resulting from
a non-recurring consulting contract which was completed
during the fiscal year.
As a result of the sale of its electronic forms software
products and related tangible assets to JetForm Corporation
(“JetForm”) for approximately $100 million in fiscal 1997, the
Emerging Business and Other product group recognized
revenue of approximately $18 million during the 1997 fiscal
year and is contractually entitled to quarterly revenue pay-
ments through the June 2000 quarter. JetForm has the option
to tender payment in either cash or in registered JetForm
common stock, within a contractually defined quantity
threshold. Due to the uncertainty regarding the ultimate
collectibility of these installments, Symantec is recognizing
the related revenue as payments are due and collectibility is
assured from JetForm.
During the fourth quarter of fiscal 1997, Symantec also
sold the software products and related tangible assets of its
Networking Business Unit to the Hewlett-Packard Company
(“Hewlett-Packard”), resulting in the receipt of approxi-
mately $1 million of revenue and $2 million research and
development expense reimbursement by the Emerging
Business and Other product group. Additionally, over the
next two years, Hewlett-Packard is contractually obligated to
pay to Symantec a royalty stream not to exceed the present
value of $27 million, which is contingent upon future sales
of certain products by Hewlett-Packard. Due to the uncer-
tainty regarding the amounts upon which these royalties will
be determined, Symantec is recognizing these amounts as
they are estimable.
During fiscal 1996, the Company experienced increased
net revenues from its Security and Assistance product group,
offset in part by decreased revenues from its Remote
Productivity Solutions product group and products which
Symantec no longer actively develops or markets. Symantec
experienced an increase in net revenue from the introduction
of several Windows 95 products; however, this increase was
substantially offset by a decrease in net revenues related to
Windows 3.1 and DOS products.
Symantec markets its products through a number of
distribution channels, including retail, site licenses, OEM,
direct marketing and upgrades and the Internet. The retail
channel is Symantec’s single largest product channel and
comprises approximately 60% of total product revenues.
International
Net revenues from international sales were $138 million and
$142 million and represented 29% and 32% of total net
revenues in fiscal years 1997 and 1996, respectively. The
decrease in international net revenue as a percentage of total
net revenue is the result of domestic revenue growth outpacing
international revenue growth during the fiscal year.
Additionally, international revenues for fiscal 1996 includes
the one time recognition of approximately $7 million,
previously deferred Central Point revenue. Foreign exchange
rate fluctuations during fiscal 1997 did not materially contribute
to the fluctuation in results from fiscal 1996 to fiscal 1997.
Net revenues from international sales increased by $7 million
in fiscal 1996, from $135 million in fiscal 1995 to $142 million
in fiscal 1996. This increase was largely the result of the
one-time recognition in fiscal 1996 of approximately $7
million of previously deferred Central Point revenue.
20 SYMANTEC CORPORATION