Symantec 1997 Annual Report Download - page 46

44 SYMANTEC CORPORATION
agents and distributors. Fluctuations of the U.S. dollar against
foreign currencies, changes in local regulatory or economic
conditions, piracy or nonperformance by independent agents
or distributors could adversely affect operating results.
Financial instruments that potentially subject the
Company to concentrations of credit risk consist principally
of short-term investments, restricted investments and trade
accounts receivable. The Company’s investment portfolio is
diversified and consists of investment grade A-1/P-1 securities.
The Company is exposed to credit risks in the event of
default by these institutions to the extent of the amount
recorded on the balance sheet. The credit risk in the
Company’s trade accounts receivable is substantially mitigated
by the Company’s credit evaluation process, reasonably short
collection terms and the geographical dispersion of sales
transactions. The Company generally does not require
collateral and maintains reserves for potential credit losses,
and such losses have been within management’s expectations.
Advertising
Advertising expenditures are charged to operations
as incurred except for certain direct mail campaigns which
are deferred and amortized over the expected period of bene-
fit or twelve months, whichever is shorter. Deferred
advertising costs have not been material in all periods
presented. Advertising expense for fiscal 1997, 1996 and 1995
was approximately $39.1 million, $43.0 million and $41.0
million, respectively.
Impairment of Long-Lived Assets
Statement of Financial Accounting Standards (SFAS) No. 121,
“Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of,” applicable for the
fiscal year beginning April 1, 1996, did not have a material
effect on the Company’s consolidated financial condition or
results of operations.
Common Stock Repurchase
On April 29, 1997, the Board of Directors of Symantec
authorized the repurchase of up to 1,000,000 shares of
Symantec common stock by June 13, 1997. The shares will be
used for employee stock purchase programs and option
grants. As of June 13, 1997, management completed the
repurchase of 500,000 shares at prices ranging from $16.57 to
$17.00 per share.
Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board
issued Statement (SFAS) No. 128, “Earnings per Share”,
which is required to be adopted on December 31, 1997. At
that time, the Company will be required to change the
method currently used to compute earnings per share and to
restate all prior periods. The application of the SFAS 128 new
“basic earnings per share” calculation results in basic earnings
per share of $0.48 for the year ended March 31, 1997, basic loss
per share of $0.76 for the year ended March 31, 1996 and basic
earnings per share of $0.68 for the year ended March 31, 1995.
The Company does not expect the new diluted calculation to
be materially different to fully diluted earnings per share.
Reclassifications
Certain previously reported amounts have been reclassified
to conform to the current presentation format. During fiscal
1997, certain deferred revenue amounts which were previ-
ously classified as accrued liabilities have been reclassified to
accounts receivable. The reclassification amounted to approx-
imately $19.0 million, $13.0 million, and $3.0 million in fiscal
1997, 1996, and 1995, respectively. All financial information
has been restated to conform to this presentation.