<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 4, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _____________ .
COMMISSION FILE NUMBER 0-17781
- --------------------------------------------------------------------------------
SYMANTEC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0181864
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
10201 TORRE AVENUE, CUPERTINO, CALIFORNIA 95014-2132
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code:(408) 253-9600
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, including 2,727,519 shares of Delrina exchangeable stock, as of
August 1, 1997:
COMMON STOCK, PAR VALUE $0.01 PER SHARE 55,806,514 SHARES
================================================================================
<PAGE> 2
SYMANTEC CORPORATION
FORM 10-Q
QUARTERLY PERIOD ENDED JULY 4, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
as of June 30, 1997 and March 31, 1997............................... 3
Consolidated Statements of Income
for the three months ended June 30, 1997 and 1996.................... 4
Consolidated Statements of Cash Flow
for the three months ended June 30, 1997 and 1996.................... 5
Notes to Consolidated Financial Statements.............................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk.............. 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................... 20
Item 6. Exhibits and Reports on Form 8-K........................................ 20
Signatures...................................................................... 21
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYMANTEC CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands) 1997 1997
--------- ---------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and short-term investments $ 187,272 $ 160,082
Trade accounts receivable 40,972 47,650
Inventories 3,293 4,476
Deferred income taxes 12,801 12,823
Other 14,538 13,166
--------- ---------
Total current assets 258,876 238,197
Equipment and leasehold improvements 51,454 51,610
Restricted investments 50,291 47,448
Capitalized software 1,970 2,037
Other 2,974 2,381
--------- ---------
$ 365,565 $ 341,673
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,657 $ 30,328
Accrued compensation and benefits 17,322 16,241
Other accrued expenses 55,023 53,742
Income taxes payable 10,713 8,276
Current portion of long-term obligations 39 41
--------- ---------
Total current liabilities 113,754 108,628
Convertible subordinated debentures 15,000 15,000
Long-term obligations 59 66
Commitments and contingencies
Stockholders' equity:
Preferred stock (authorized: 1,000 shares; issued and outstanding: none) -- --
Common stock (authorized: 100,000; issued and outstanding: 55,677
and 55,427 shares) 557 554
Capital in excess of par value 291,837 291,548
Notes receivable from stockholders (144) (144)
Cumulative translation adjustment (7,634) (7,580)
Accumulated deficit (47,864) (66,399)
--------- ---------
Total stockholders' equity 236,752 217,979
--------- ---------
$ 365,565 $ 341,673
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
3
<PAGE> 4
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended June 30,
(In thousands, except per share data; unaudited) 1997 1996
--------- ---------
<S> <C> <C>
Net revenues $ 135,016 $ 109,218
Cost of revenues 20,920 21,484
--------- ---------
Gross margin 114,096 87,734
Operating expenses:
Research and development 21,581 23,006
Sales and marketing 61,655 53,779
General and administrative 9,034 7,267
Acquisition, restructuring and
other expenses -- 1,295
--------- ---------
Total operating expenses 92,270 85,347
--------- ---------
Operating income 21,826 2,387
Interest income 2,907 1,684
Interest expense (257) (331)
Other expense, net (404) (368)
--------- ---------
Income before income taxes 24,072 3,372
Provision for income taxes 5,537 337
--------- ---------
Net income $ 18,535 $ 3,035
========= =========
Net income per share $ .32 $ .06
========= =========
Shares used to compute net income per share 57,125 55,132
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
4
<PAGE> 5
SYMANTEC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Three Months Ended June 30,
(In thousands; unaudited) 1997 1996
--------- ---------
<S> <C> <C>
Operating Activities:
Net income $ 18,535 $ 3,035
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of equipment and
leasehold improvements 6,057 5,782
Amortization and write-off of capitalized software costs 316 786
Write-off of equipment and leasehold improvements 1,069 276
Deferred income taxes 41 10
Net change in assets and liabilities:
Trade accounts receivable 6,340 3,688
Inventories 1,139 1,950
Other current assets (1,408) 3,952
Capitalized software costs (6) (2,753)
Other assets (522) (1,071)
Accounts payable 561 (1,084)
Accrued compensation and benefits 1,089 (605)
Accrued other expenses 1,445 (253)
Income taxes payable 2,501 (53)
--------- ---------
Net cash provided by operating activities 37,157 13,660
--------- ---------
Investing Activities:
Capital expenditures (6,996) (7,838)
Purchased intangibles (258) (195)
Purchases of short-term, available-for-sale investments (51,500) (55,000)
Maturities of short-term, available-for-sale investments 40,264 38,869
Purchases of long-term, restricted investments (2,843) --
--------- ---------
Net cash used in investing activities (21,333) (24,164)
--------- ---------
Financing Activities:
Principal payments on long-term obligations (7) (85)
Repurchase of Company's common stock (8,373) --
Net proceeds from sales of common stock and other 8,665 4,131
--------- ---------
Net cash provided by financing activities 285 4,046
Effect of exchange rate fluctuations on cash and cash equivalents (155) 224
--------- ---------
Increase (Decrease) in cash and cash equivalents 15,954 (6,234)
Beginning cash and cash equivalents 95,758 41,777
--------- ---------
Ending cash and cash equivalents $ 111,712 $ 35,543
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
5
<PAGE> 6
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 1. BASIS OF PRESENTATION
The consolidated financial statements of Symantec Corporation ("Symantec" or the
"Company") as of June 30, 1997 and for the three months ended June 30, 1997 and
1996 are unaudited and, in the opinion of management, contain all adjustments,
consisting of only normal recurring items necessary for the fair presentation of
the financial position and results of operations for the interim periods. These
consolidated financial statements should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in Symantec's
Annual Report on Form 10-K for the year ended March 31, 1997. The results of
operations for the three months ended June 30, 1997 are not necessarily
indicative of the results to be expected for the entire year. All significant
intercompany accounts and transactions have been eliminated. Certain previously
reported amounts have been reclassified to conform to the current presentation
format.
Symantec has a 52/53-week fiscal accounting year. Accordingly, all references as
of and for the periods ended June 30, 1997, March 31, 1997 and June 30, 1996
reflect amounts as of and for the periods ended July 4, 1997, March 28, 1997 and
June 28, 1996, respectively. The June 30, 1997 quarter comprised 14 weeks of
activity, while the comparable prior year period comprised 13 weeks.
6
<PAGE> 7
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 2. BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
June 30, March 31,
(In thousands) 1997 1997
--------- ---------
(unaudited)
<S> <C> <C>
Cash, cash equivalents and short-term investments:
Cash $ 27,299 $ 33,755
Cash equivalents 84,413 62,003
Short-term investments 75,560 64,324
--------- ---------
$ 187,272 $ 160,082
========= =========
Trade accounts receivable:
Receivables $ 45,305 $ 51,950
Less: allowance for doubtful accounts (4,333) (4,300)
--------- ---------
$ 40,972 $ 47,650
========= =========
Inventories:
Raw materials $ 1,397 $ 1,736
Finished goods 1,896 2,740
--------- ---------
$ 3,293 $ 4,476
========= =========
Equipment and leasehold improvements:
Computer equipment $ 95,118 $ 91,533
Office furniture and equipment 27,843 27,706
Leasehold improvements 19,150 17,697
--------- ---------
142,111 136,936
Less: accumulated depreciation and amortization (90,657) (85,326)
--------- ---------
$ 51,454 $ 51,610
========= =========
Capitalized software:
Purchased product rights $ 849 $ 591
Capitalized software costs 2,470 2,465
Less: accumulated amortization of purchased product rights (177) (55)
Less: accumulated amortization of capitalized software costs (1,172) (964)
--------- ---------
$ 1,970 $ 2,037
========= =========
Other accrued expenses:
Acquisition and restructuring expenses $ 3,319 $ 3,833
Deferred revenue 16,205 13,825
Marketing development funds 12,702 12,529
Other 22,797 23,555
--------- ---------
$ 55,023 $ 53,742
========= =========
</TABLE>
NOTE 3. ACQUISITION, RESTRUCTURING AND OTHER EXPENSES
In connection with the acquisition of Fast Track, Inc. in May 1996, Symantec
recorded total acquisition charges of $0.6 million in the quarter ended June 30,
1996. The charges included $0.4 million for legal, accounting and financial
advisory services and $0.2 million for the consolidation and discontinuance of
certain operational activities and other acquisition related expenses.
During the quarter ended June 30, 1996, Symantec also recorded $0.7 million for
costs related to the centralization of certain research and development
activities, litigation settlement costs and other non-recurring expenses.
7
<PAGE> 8
NOTE 4. LITIGATION AND CONTINGENCIES
On March 18, 1996, a class action complaint was filed by the law firm of
Milberg, Weiss, Bershad, Hynes & Lerach in Superior Court of the State of
California, County of Santa Clara, against the Company and several of its
current and former officers and directors. The complaint alleges that Symantec
insiders inflated the stock price and then sold stock based on inside
information that sales were not going to meet analysts' expectations. The
complaint seeks damages in an unspecified amount. The complaint has been refiled
twice in state court, most recently on January 10, 1997, to reflect changes
brought about by Symantec's demurrer to previous complaints. The same plaintiffs
have further filed, on January 7, 1997, a complaint in federal court based on
the same facts as the state court complaint, for violation of the Securities
Exchange Act of 1934. Symantec believes that neither the state court complaint
nor the federal court complaint has any merit and will vigorously defend itself
against both complaints. The Company has accrued certain estimated legal fees
and expenses related to this matter; however, actual amounts may differ
materially from those estimated amounts.
On June 11, 1992, Dynamic Microprocessor Associates, Inc. ("DMA"), a former
wholly-owned subsidiary of Symantec which has since been merged into Symantec,
commenced an action against EKD Computer Sales & Supplies Corporation ("EKD"), a
former licensee of DMA and Thomas Green, a principal of EKD, for copyright
infringement, violations of the Lanham Act, trademark infringement,
misappropriation, deceptive acts and practices, unfair competition and breach of
contract. EKD and Mr. Green have signed a settlement agreement which fully
settles this case. Under the settlement agreement EKD and Mr. Green have agreed
not to take certain actions related to Symantec/DMA and its products, including
manufacturing pcANYWHERE, using the pcANYWHERE mark or distributing, exploiting,
marketing, advertising, selling, promoting or purporting to license any of
Symantec/DMA's products. EKD and Mr. Green are also permanently enjoined from
representing or in any way suggesting that EKD is an authorized reseller or
licensee of DMA or Symantec. In addition, under the settlement agreement, EKD
and Mr. Green release DMA and Symantec from any claims that EKD or Mr. Green
have against Symantec/ DMA as of the date of the agreement. The settlement
agreement does not require Symantec/DMA to make any payments to EKD or Mr.
Green.
On April 10, 1997, Trio Systems LLC filed a lawsuit in the United States
District Court, Central District of California, against Symantec, for damages,
injunctive and declaratory relief and for the imposition of a constructive trust
claiming copyright infringement, fraud, misrepresentation and breach of
contract, based on Symantec's alleged inclusion, in its Norton Utilities, Norton
Your Eyes Only and pcANYWHERE products, of Trio's C-Index code. Symantec
believes these claims have no merit and intends to defend this action
vigorously.
On April 23, 1997, Symantec filed a lawsuit against McAfee Associates in the
United States District Court, Northern District of California, for copyright
infringement and unfair competition. Symantec believes McAfee Associates copied
portions of Symantec's copyrighted software code and unlawfully incorporated
such code into certain of McAfee's products. On July 21, 1997 Symantec filed a
motion to amend its complaint in order to expand the lawsuit to include
additional Symantec code in additional McAfee products. The expansion of the
lawsuit is based on Symantec's findings through the discovery process in the
lawsuit, confirmed by an independent software expert operating under the Court's
order, that Symantec's copyrighted code appears in additional McAfee products,
including McAfee's flagship product, VirusScan. Symantec plans to aggressively
pursue its remedies under this lawsuit, which include both injunctive relief and
monetary damages.
On May 13, 1997, Trend Micro Incorporated filed a lawsuit in the United States
District Court, Northern District of California, against Symantec Corporation
and McAfee Associates, alleging against Symantec patent infringement by the
Symantec product known as Norton AntiVirus for Internet E-mail Gateways. The
lawsuit requests damages, injunctive relief and costs and attorney fees.
Symantec believes this claim has no merit and intends to defend the action
vigorously.
8
<PAGE> 9
SYMANTEC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
Symantec is currently evaluating claims of patent infringement asserted by IBM
with respect to certain of the Company's products. While the Company believes
that it has valid defenses to these claims, there can be no assurance that the
outcome of any related litigation or negotiation would not have a material
adverse impact on the Company's future results of operations or cash flows.
Symantec is involved in a number of other judicial and administrative
proceedings incidental to its business. The Company intends to defend all of the
aforementioned pending lawsuits vigorously and although adverse decisions (or
settlements) may occur in one or more of the cases, the final resolution of
these lawsuits, individually or in the aggregate, is not expected to have a
material adverse effect on the financial position of the Company. However,
depending on the amount and timing of an unfavorable resolution of these
lawsuits, it is possible that the Company's future results of operations or cash
flows could be materially adversely affected in a particular period.
NOTE 5. 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. As of June
13, 1997, management completed the repurchase of 500,000 shares at prices
ranging from $16.57 to $17.00 per share.
NOTE 8. 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 $0.33 and $0.06 for the
quarters ended June 30, 1997 and June 30, 1996, respectively. The Company does
not expect the new diluted calculation to be materially different to primary and
fully diluted earnings per share.
In June 1997, the Financial Accounting Standards Board issued Statement (SFAS)
No.130, "Reporting Comprehensive Income", which establishes standards for
reporting and displaying comprehensive income and its components in a full set
of general-purpose financial statements and is required to be adopted by
Symantec beginning in fiscal 1999. Additionally, the Financial Accounting
Standards Board issued Statement (SFAS) No. 131, "Disclosures about Segments of
an Enterprise and Related Information", which establishes standards for the way
that public business enterprises report information in annual statements and
interim financial reports regarding operating segments, products and services,
geographic areas and major customers. SFAS 131 is first effective for Symantec
for fiscal 1999 and will apply to both annual and interim financial reporting
subsequent to this date. Symantec management is currently evaluating the
implication of these statements on operations.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The following discussion contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended, and section
27A of the Securities Act of 1933, as amended. These forward-looking statements
are subject to significant risks and uncertainties, including those identified
in the section "Factors That May Affect Future Results" and in the Company's
annual report on Form 10-K for the year ended March 31, 1997, and may cause
actual results to differ materially from those discussed in such forward-looking
statements. The forward-looking statements within this Form 10-Q are identified
by words such as "believes," "anticipates," "expects," "intends," "may" and
other similar expressions. However, these words are not the exclusive means of
identifying such statements. In addition, any statements which refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. The Company undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
occurring subsequent to the filing of this Form 10-Q with the Securities and
Exchange Commission. Readers are urged to carefully review and consider the
various disclosures made by the Company in this report and in the Company's
other reports filed with the Securities and Exchange Commission, including its
Form 10-K, that attempt to advise interested parties of the risks and factors
that may affect the Company's business.
FACTORS THAT MAY AFFECT FUTURE RESULTS
RAPID TECHNOLOGICAL CHANGE AND DEVELOPMENT RISKS. The Company participates in a
highly dynamic industry. Future technology or market changes may cause certain
of Symantec's products to become obsolete more quickly than expected and the
trend towards server-based applications in networks and applications distributed
over the Internet could have a material adverse effect on sales of the Company's
products. The impact of diminished market acceptance and adoption rate of
Symantec's products may result in reduced revenues, gross margins and net
income, as well as significant increases in the volatility of Symantec's stock
price.
STOCK PRICE VOLATILITY. The Company's earnings and stock price have been and may
continue to be subject to significant volatility, particularly on a quarterly
basis. Symantec has previously experienced shortfalls in revenue and earnings
from levels expected by securities analysts and investors, which has had an
immediate and significant adverse effect on the trading price of the Company's
common stock. This may occur again in the future. Additionally, as a significant
portion of the Company's revenues often occur late in the quarter, the Company
may not learn of revenue shortfalls until late in the fiscal quarter, which
could result in an even more immediate and adverse effect on the trading price
of the Company's common stock.
PERSONAL COMPUTER AND HARDWARE GROWTH RATES. Fluctuations in customer spending
from software to hardware as the result of technological advancements in
hardware or price reductions of hardware have in the past and may in the future
result in reduced revenues which would have a material adverse effect on
operating results.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. While Symantec's diverse product
line has tended to lessen fluctuations in quarterly net revenues, these
fluctuations have occurred in the past and are likely to occur in the future.
These fluctuations may be caused by a number of factors, including the
introduction of competitive products by competitors, the timing of new product
introductions by Symantec and market acceptance of such products, reduced demand
for any given product, seasonality in the retail software market, the market's
transition between operating systems, the impact of the Internet and general
economic conditions. These factors may cause significant fluctuations in net
revenues and, accordingly, operating results.
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
MANAGEMENT OF EXPANDING OPERATIONS. Symantec continually evaluates its product
and corporate strategy and has in the past and will in the future undertake
organizational changes and product and marketing strategy modifications which
are designed to maximize market penetration, maximize use of limited corporate
resources and develop new products and product channels. These organizational
changes increase the risk that objectives will not be met due to the allocation
of valuable resources to implement changes. Further, due to the uncertain nature
of any of these undertakings, there can be no assurance that these efforts will
be successful or that the Company will realize any benefit from these efforts.
Symantec has completed a number of acquisitions and may acquire other companies
in the future. Acquisitions involve a number of special risks, including the
diversion of management's attention to assimilation of the operations and
personnel of the acquired companies in an efficient and timely manner, the
retention of key employees, the difficulty of presenting a unified corporate
image, the coordination of research and development and sales efforts and the
integration of the acquired products.
The Company has lost certain key employees of acquired companies, and, in some
cases, the assimilation of the operations of acquired companies took longer than
initially had been anticipated by the Company. In addition, because the
employees of acquired companies have frequently remained in their existing,
geographically diverse facilities, the Company has not realized certain
economies of scale that might otherwise have been achieved.
Symantec typically incurs significant expenses in connection with acquisitions,
which have a significant adverse impact on the Company's profitability and
financial resources. These expenses may have a significant adverse impact on the
Company's future profitability and financial resources.
FOREIGN OPERATIONS. A significant portion of Symantec's revenues, manufacturing
costs and marketing is transacted in foreign currencies. As a result, the
Company may be materially and adversely affected by fluctuations in currency
exchange rates, as well as increases in duty rates, exchange or price controls
or other restrictions on foreign currencies. The Company's international
operations are subject to certain risks common to international operations, such
as government regulations, import restrictions, currency fluctuations,
repatriation restrictions and, in certain jurisdictions, reduced protection for
the Company's copyrights and trademarks.
PRICE COMPETITION. Price competition is intense in the microcomputer business
software market and is expected to continue to increase and become even more
significant in the future, resulting in reduced profit margins. Should
competitive pressures in the industry continue to increase, Symantec may be
required to reduce software prices and/or increase its spending on sales,
marketing and research and development as a percentage of net revenues,
resulting in lower profit margins. There can be no assurance these changes will
be successful.
DISTRIBUTION CHANNELS. These customers tend to make the majority of their
purchases at the end of the fiscal quarter, in part because they are able, or
believe that they are able, to negotiate lower prices and more favorable terms.
This end-of-period buying pattern means that forecasts of quarterly and annual
financial results are particularly vulnerable to the risk that they will not be
achieved, either because expected sales do not occur or because they occur at
lower prices or on less favorable terms to the Company. The Company's retail
distribution customers also carry the products of Symantec's competitors. The
distributors have limited capital to invest in inventory, and their decisions to
purchase the Company's products is partly a function of pricing, terms and
special promotions offered by Symantec as well as by its competitors over which
the Company has no control and which it cannot predict.
Agreements with distributors are generally nonexclusive and may be terminated by
either party without cause. Such distributors are not within the control of
Symantec, are not obligated to purchase products and may also represent
competitors' product lines. There can be no assurance that these distributors
will continue their current relationships with Symantec on the same basis, or
that they will not give higher priority to the sale of competitors' products.
Additionally, certain distributors and resellers have experienced financial
difficulties in the past. There can be no assurance that distributors that
account for significant sales of the Company will not experience financial
difficulties in
11
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
the future. Any such problems could lead to reduced sales and could adversely
affect operating results of the Company. There can be no assurance that Symantec
will be able to continue to obtain adequate distribution channels for all of its
products in the future.
Due to the rapid change in software distribution technology as demonstrated by
the increase in volume of software distributed through the Internet, there can
be no assurance that Symantec will be able to develop an effective method of
distributing its software products utilizing each of the available distribution
channels or that Symantec will develop distribution channels for those channels
which are ultimately accepted by the marketplace. The presence of new channels
could adversely impact existing channels and/or product pricing, which could
have a material adverse impact on the Company's net revenues and profitability.
The Company operates with relatively little backlog; therefore, if near-term
demand for the Company's products weakens in a given quarter, there could be an
immediate, material adverse effect on net revenues and on the Company's
operating results, which would likely result in a precipitous drop in stock
price.
CHANNEL FILL. The Company's pattern of revenues and earnings may be affected by
"channel fill." Channel fill occurs following the introduction of a new product
as distributors buy significant quantities of the new product in anticipation of
sales of such product. Software upgrades typically result in an increase in net
revenues during the first three to six months following their introduction due
to purchases by existing users, usually at discounted prices, and initial
inventory purchases by Symantec's distributors. Following such purchases, the
rate of distributors' purchases often declines in a material amount, depending
on the rates of purchases by end users or "sell-through." As the desktop
applications market has become more saturated, the sales mix is shifting from
standard retail products to lower priced product upgrades. This trend is likely
to continue.
Channel fill may also occur in anticipation of price increases or in response to
sales promotions or incentives, some of which may be designed to encourage
customers to accelerate purchases that might otherwise occur in later periods.
Channels may also become filled simply because the distributors do not sell
their inventories to retail distribution or end users as anticipated. If
sell-through does not occur at a sufficient rate, distributors will delay
purchases or cancel orders in later periods or return prior purchases in order
to reduce their inventories. Such order delays or cancellations can cause
material fluctuations in revenues from one quarter to the next. The impact is
somewhat mitigated by the Company's deferral of revenue associated with
inventories estimated to be in excess of appropriate levels in the distribution
channel; however, net revenues may still be materially affected favorably or
adversely by the effects of channel fill.
Between the date Symantec announces a new version or new product and the date of
release, distributors, dealers and end users often delay purchases, cancel
orders or return products in anticipation of the availability of the new version
or new product.
Channel fill did not have a material impact on the Company's revenues in the
first quarter of fiscal 1998, but may have a material impact in future periods,
particularly in periods where a large number of new products are simultaneously
introduced.
PRODUCT RETURNS. The Company estimates and maintains reserves for product
returns. Product returns can occur when the Company introduces upgrades and new
versions of products or when distributors have excess inventories. Symantec's
return policy allows its distributors, subject to certain limitations, to return
purchased products in exchange for new products or for credit towards future
purchases. End users may return products through dealers and distributors within
a reasonable period from the date of purchase for a full refund, and retailers
may return older versions of products. Symantec prepares detailed analyses of
historical return rates, as well as taking into consideration upcoming product
upgrades, current market conditions, customer inventory balances and any other
known factors when estimating anticipated returns and maintains reserves for
product returns. Symantec has experienced, and may experience in the future,
significant increases in product returns above historical levels from customers
of acquired companies after an acquisition is completed. The impact of actual
returns on net revenues,
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
net of such provisions, has not had a material effect on the Company's liquidity
as the returns typically result in the issuance of credit towards future
purchases as opposed to cash payments to the distributors. However, there can be
no assurance that future returns will not exceed the reserves established by the
Company or that future returns will not have a material adverse effect on the
operating results of the Company.
UNCERTAINTY OF RESEARCH AND DEVELOPMENT EFFORTS. Symantec believes research and
development expenditures will be necessary in order to remain competitive. While
the Company believes its research and development expenditures will result in
successful product introductions, due to the uncertainty of software development
projects, these expenditures will not necessarily result in successful product
introductions. Uncertainties impacting the success of software development
project introductions include technical difficulties, market conditions,
competitive products and customer acceptance of new products and operating
systems.
The length of Symantec's product development cycle has generally been greater
than Symantec originally expected. Although such delays have undoubtedly had a
material adverse effect on Symantec's business, Symantec is not able to quantify
the magnitude of net revenues that were deferred or lost as a result of any
particular delay because Symantec is not able to predict the amount of net
revenues that would have been obtained had the original development expectations
been met. Delays in future product development are likely to occur and could
have a material adverse effect on the amount and timing of future revenues. Due
to the inherent uncertainties of software development projects, Symantec does
not generally disclose or announce the specific expected shipment date of the
Company's product introductions. While the Company performs extensive usability
and beta testing of new products, there can be no assurance that any products
currently being developed by Symantec will be technologically successful, that
any resulting products will achieve market acceptance or that the Company's
products will be effective in competing with products either currently in the
market or introduced in the future.
OPERATING SYSTEM. The release and subsequent customer acceptance of current or
enhanced operating systems are particularly important events that increase the
uncertainty and increase the volatility of Symantec's results.
Microsoft has incorporated advanced utilities including telecommunications,
facsimile and data recovery utilities in Windows 95 and may include additional
product features in Windows 98 or future releases of Windows NT that may
decrease the demand for certain of the Company's products, including those
currently under development.
Should the Company be unable to successfully or timely develop products that
operate under existing or new operating systems, the Company's future net
revenues and operating results would be immediately and significantly adversely
affected. In addition, as the timing of delivery and adoption of many of
Symantec's products is dependent on the adoption rate of these operating
systems, which the Company and securities analysts are unable to predict, the
ability of Symantec and securities analysts to forecast the Company's net
revenues has been and will continue to be adversely impacted. As a result, there
is a heightened risk that net revenues and profits will not be in line with
analysts' expectations in the periods following the introduction of existing or
new operating systems.
INTELLECTUAL PROPERTY RIGHTS. Symantec regards its software as proprietary and
relies on a combination of copyright, patent and trademark laws and license
agreements in an attempt to protect its rights. Despite these precautions, it
may be possible for unauthorized third parties to copy aspects of Symantec's
products or to obtain and use information that Symantec regards as proprietary.
All of Symantec's products are protected by copyright, and Symantec has several
patents and patent applications pending. However, existing patent and copyright
laws afford limited practical protection. In addition, the laws of some foreign
countries do not protect Symantec's proprietary rights in its products to the
same extent as do the laws of the United States. Symantec's products are not
copy protected.
13
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
As the number of software products in the industry increases and the
functionality of these products further overlap, Symantec believes that software
developers will become increasingly subject to infringement claims. This risk is
potentially greater for companies, such as Symantec, that obtain certain of
their products through publishing agreements or acquisitions, since they have
less direct control over the development of those products.
In addition, an increasing number of patents are being issued that are
potentially applicable to software, and allegations of patent infringement are
becoming increasingly common in the software industry. It is impossible to
ascertain all possible patent infringement claims because new patents are being
issued continually, the subject of patent applications is confidential until a
patent is issued, and it may not be apparent even from a patent that has already
been issued whether it is potentially applicable to a particular software
product. This increases the risk that Symantec's products may be subject to
claims of patent infringement. Although such claims may ultimately prove to be
without merit, they are time consuming and expensive to defend. Symantec has
been involved in disputes claiming patent infringement in the past, is currently
involved in such disputes and litigation and may be involved in the future in
such disputes and/or litigation. If Symantec is alleged to infringe one or more
patents, it may choose to litigate the claim and/or seek an appropriate license.
If litigation were to commence and a license were not available on reasonable
terms or if another party were found to have a valid patent claim against
Symantec, it could have a material adverse effect on Symantec's business,
operating results and financial condition (See Note 4 of Notes to Consolidated
Financial Statements).
LITIGATION. Symantec is involved in a number of other judicial and
administrative proceedings incidental to its business (See Note 4 of Notes to
Consolidated Financial Statements). The Company intends to defend and/or pursue
all of these lawsuits vigorously and, although an unfavorable outcome could
occur in one or more of the cases, the final resolution of these lawsuits,
individually or in the aggregate, is not expected to have a material adverse
effect on the financial position of the Company. However, depending on the
amount and timing of an unfavorable resolution of these lawsuits, it is possible
that the Company's future results of operations or cash flows could be
materially adversely effected in a particular period.
SALES AND MARKETING AND SUPPORT INVESTMENTS. Symantec believes substantial sales
and marketing efforts are essential to achieve revenue growth and to maintain
and enhance Symantec's competitive position. There can be no assurance that
these increased sales and marketing efforts will be successful.
BUSINESS DISRUPTION. Much of the Company's administration, sales and marketing,
manufacturing and research and development facilities are located on the west
coast of the United States. Future earthquakes or other natural disasters could
cause a significant disruption to the Company's operations and may cause delays
in product development that could adversely impact future revenues of the
Company.
Order entry and product shipping are geographically separated both domestically
and internationally. A disruption in communications between these facilities,
particularly at the end of a fiscal quarter, would likely result in an
unexpected shortfall in net revenues and could result in an adverse impact on
operating results.
SUPPLY RISK. Symantec has often been able to acquire materials on a
volume-discount basis and has had multiple sources of supply for certain
materials. To date, Symantec has not experienced any material difficulties or
delays in production of its software and related documentation and packaging.
However, shortages may occur in the future. For example, shortages of certain
materials may occur when Microsoft introduces new operating systems.
EMPLOYEE RISK. Competition in recruiting personnel in the software industry is
intense. Symantec believes that its future success will depend in part on its
ability to recruit and retain highly skilled management, marketing and technical
personnel. Symantec believes that it must provide personnel with a competitive
compensation package, which necessitates the continued availability of stock
options and requires ongoing shareholder approval of such option programs.
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
OVERVIEW
Symantec develops, markets and supports a diversified line of application and
system software products designed to enhance individual and workgroup
productivity. Symantec's business strategy is to satisfy customer needs by
developing and marketing products across multiple operating platforms that make
customers productive and keep their computers safe and reliable - anywhere,
anytime.
Founded in 1982, the Company has offices in the United States, Canada, Asia,
Australia, Europe, Africa and Latin America.
Symantec has a 52/53-week fiscal accounting year. The June 30, 1997 quarter
comprised 14 weeks of revenue and expense activity, while the comparable prior
year period comprised 13 weeks.
RESULTS OF OPERATIONS
The following table sets forth each item from the consolidated statements of
income as a percentage of net revenues and the percentage change in the total
amount of each item for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended Percent
June 30, Change
-------------------- in Dollar
1997 1996 Amounts
------ ------ ---------
<S> <C> <C> <C>
Net revenues 100% 100% 24%
Cost of revenues 15 20 (3)
------ ------
Gross margin 85 80 30
Operating expenses:
Research and development 16 21 (6)
Sales and marketing 46 49 15
General and administrative 7 7 24
Acquisition, restructuring and
other expenses -- 1 *
------ ------
Total operating expenses 69 78 8
------ ------
Operating income 16 2 814
Interest income 2 1 73
Interest expense -- -- (22)
Other expense, net -- -- 10
------ ------
Income before income taxes 18 3 614
Provision for income taxes 4 -- 1,543
------ ------
Net income 14% 3% 511
====== ======
</TABLE>
* percentage change is not meaningful.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
NET REVENUES.
Net revenues increased 24% from $109 million in the quarter ended June 30, 1996
to $135 million in the quarter ended June 30, 1997. During the June 1997
quarter, Symantec experienced increased net revenues from each of its business
units: Remote Productivity Solutions and Security and Assistance.
The Remote Productivity Solutions business unit helps remote professionals
remain productive and work reliably, anywhere, anytime. The specific customer
needs focused on by this business unit include: connecting, performance and
remote security, managing multiple data sources, and accessing data, people and
applications. Increased net revenues primarily resulted from increased Norton
pcANYWHERE for Windows 95 and WinFax Pro for Windows 95 version 8.0 sales during
the June 1997 quarter, as compared to the June 1996 quarter. Net revenues from
the Remote Productivity Solutions group comprised approximately 35% of the
Company's net revenues for both June 1997 and June 1996 quarters.
The Security and Assistance business unit is dedicated to being indispensable to
customers' daily use of computers by increasing productivity and keeping
computers safe and reliable. Increased net revenues were primarily related to
Windows 95 and Windows NT platform sales of Norton Utilities and Norton
AntiVirus for the June 1997 quarter, as compared to the June 1996 quarter. Net
revenues from the Security and Assistance business unit comprised approximately
50% of net revenues for both June 1997 and June 1996 quarters.
The remaining 15% of the Company's revenue includes Internet Tools product
revenues, royalty and revenue streams from the sale of certain of Symantec's
software product lines and revenues from products nearing the end of their life
cycles. A majority of the revenue included in the 15% is comprised of payment
and royalty streams related to the sale of software products and related
tangible assets to JetForm Corporation ("JetForm") and Hewlett-Packard
("Hewlett-Packard") during fiscal 1997. For a discussion of the related sale
transactions, see Symantec's annual report on Form 10-K for the year ended March
31, 1997, Note 9. Sale of Product Rights.
Net revenues from international sales were approximately $40 million and $35
million and represented 30% and 32% of total net revenues in the June 1997 and
1996 quarters, respectively. Net revenues from Europe were flat between
comparable June quarterly periods, while net revenues increased by 63% in Asia
Pacific, 12% in Japan and 102% in Latin America.
GROSS MARGIN.
Gross margin represents net revenues less cost of revenues. Cost of revenues
consists primarily of manufacturing expenses, manuals, packaging, royalties paid
to third parties under publishing contracts and amortization and write-off of
capitalized software.
Gross margins were 85% and 80% for the quarters ended June 30, 1997 and 1996,
respectively. The increase in the gross margin percentage is primarily due to a
change in the sales product mix between comparable June quarters. During fiscal
1997, Symantec sold its low margin electronic forms software and Networking
Business Unit software, while sales have grown for the Company's higher margin
core products. As mentioned above, Symantec received payments from JetForm and
Hewlett-Packard during the June 1997 quarter, for which no costs were
associated.
Amortization of capitalized software, including the amortization and write-off
of both purchased product rights and capitalized software development expenses,
decreased during the June 30, 1997 quarter as compared to the June 30, 1996
quarter, as the result of the write-off of a significant portion of Symantec's
capitalized software development costs associated with the Company's Networking
Business Unit, which was sold to Hewlett-Packard during the March 1997 quarter.
16
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
RESEARCH AND DEVELOPMENT EXPENSES.
Research and development expenses decreased 6% to $22 million or 16% of net
revenues in the quarter ended June 30, 1997 from $23 million or 21% of net
revenues in the quarter ended June 30, 1996. Research and development
expenditures are generally charged to operations as incurred. The decrease in
research and development expense is principally due to elimination of research
and development efforts related to the Networking Business Unit, which was sold
to Hewlett-Packard during the March 1997 quarter, as well as decreased product
development efforts associated with certain of the Company's software products.
During the June 30, 1996 quarter, Symantec's research and development costs were
reduced by the capitalization of approximately $3 million of software
development costs, which primarily related to the Company's Networking Business
Unit. Subsequent to the sale of the Networking Business Unit to Hewlett-Packard
during the March 1997 quarter, no software development costs have been
identified by Symantec for capitalization under FAS 86 requirements.
SALES AND MARKETING EXPENSES.
Sales and marketing expenses increased 15% to approximately $62 million or 46%
of net revenues in the quarter ended June 30, 1997 from approximately $54
million or 49% of net revenues in the prior year's comparable quarter. The
increase in sales and marketing expenses was principally related to the
increased sales activity during the June 1997 quarter.
GENERAL AND ADMINISTRATIVE EXPENSES.
General and administrative expenses increased from approximately $7 million or
7% of net revenues in the quarter ended June 30, 1996 to approximately $9
million or 7% of net revenues in the quarter ended June 30, 1997. While general
and administrative expenses remained constant as a percentage of revenue between
comparable June quarters, the absolute dollar increase in these expenses related
to increased business activities and management consulting expenditures.
ACQUISITION, RESTRUCTURING AND OTHER EXPENSES.
Acquisition Expenses. No acquisition expenses were recorded during the quarter
ended June 30, 1997. In the quarter ended June 30, 1996, Symantec recorded total
acquisition charges of $0.6 million in connection with the acquisition of Fast
Track, Inc. The charges included $0.4 million for legal, accounting and
financial advisory services and $0.2 million for the consolidation and
discontinuance of certain operational activities and other acquisition related
expenses.
Other Non-Recurring Expenses. No other non-recurring expenses were recorded
during the quarter ended June 30, 1997. During the quarter ended June 30, 1996,
Symantec recorded $0.7 million for costs related to the centralization of
certain research and development activities, litigation settlement costs and
other non-recurring expenses.
As of June 30, 1997, total remaining accrued acquisition, restructuring and
other expenses were approximately $3 million.
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
INTEREST INCOME, INTEREST EXPENSE AND OTHER INCOME (EXPENSE).
Interest income was $3 million and $2 million in the quarters ended June 30,
1997 and 1996, respectively. The increase in interest income for the comparable
three month periods is due to higher average invested cash balances. Interest
expense was $0.3 million for each of the quarters ended June 30, 1997 and 1996.
Interest expense is principally related to convertible subordinated debentures.
Other expense is primarily comprised of foreign currency exchange gains and
losses from fluctuations in foreign currency exchange rates.
Symantec conducts business in various foreign currencies and is therefore
subject to the transaction exposures that arise from foreign exchange rate
movements between the dates that foreign currency transactions are recorded and
the dates that they are settled. Symantec utilizes some natural hedging to
mitigate Symantec's transaction exposures and hedges some residual transaction
exposures through the use of one-month forward contracts. At June 30, 1997,
there was a total of approximately $54 million of outstanding forward exchange
contracts. The net liability of forward contracts was approximately $41 million
at June 30, 1997. There have been no significant gains or losses to date with
respect to these activities. Gains or losses would occur on forward contracts
held by Symantec when changes in foreign currency exchange rates occur. These
gains and losses should be largely offset by the transaction gains and losses
resulting from foreign currency denominated cash, accounts receivable, trade
payables, intercompany balances, and short-term notes. There can be no assurance
that these strategies will continue to be effective or that transaction gains or
losses can be minimized or forecasted accurately. Symantec does not hedge its
translation risk.
INCOME TAX PROVISION.
The effective tax provision for the three months ended June 30, 1997 was 23%,
which is lower than the U.S. federal statutory tax rate due primarily to the
utilization of previously unbenefitted net operating losses and tax credits.
Symantec believes that the effective tax rate may increase in future fiscal
years. The effective tax provision for the three months ended June 30, 1996 was
10%.
LIQUIDITY AND CAPITAL RESOURCES
Cash, short-term investments and restricted investments increased $30 million to
approximately $238 million at June 30, 1997 from approximately $208 million at
March 31, 1997. This increase was largely due to cash provided from operating
activities, net proceeds from the exercise of stock options and the sales of
common stock under the Employee Stock Purchase Plan, and improved cash
collections of trade accounts receivable. The restricted investment balance
relates to collateral requirements under lease agreements entered into by
Symantec during the 1997 fiscal year. Symantec is obligated under lease
agreements for two existing office buildings, one parcel of land and one office
building under construction in Cupertino, California to maintain a restricted
cash balance invested in U.S. treasury notes with maturities not to exceed three
years. In accordance with the lease terms, these funds are not available to meet
operating cash requirements. Net cash provided by operating activities was
approximately $37 million and was comprised of the Company's net income of $19
million and non-cash related expenses of $7 million and a net decrease in assets
and liabilities of $11 million.
Trade accounts receivable decreased $7 million from approximately $48 million at
March 31, 1997 to approximately $41 million at June 30, 1997 primarily due to
improved cash collections and realization of a lower percentage of quarterly
revenue at the end of the period.
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. As of June
13, 1997, management completed the repurchase of 500,000 shares at prices
ranging from $16.57 to $17.00 per share.
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED
The Company has a $10 million line of credit that expires in March 1998. The
Company was in compliance with the debt covenants at June 30, 1997. At June 30,
1997, there were no borrowings outstanding under this line and there were less
than $1 million of standby letters of credit outstanding under this agreement.
Future acquisitions by the Company may cause the Company to be in violation of
the line of credit covenants; however, the Company believes that if the line of
credit were canceled or amounts were not available under the line, there would
not be a material adverse impact on the financial results, liquidity or capital
resources of the Company.
If Symantec were to sustain significant losses, the Company could be required to
reduce operating expenses, which could result in product delays, reassessment of
acquisition opportunities, which could negatively impact the Company's growth
objectives, and/or pursue further financing options. The Company believes
existing cash and short-term investments will be sufficient to fund operations
for the next year.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
19
<PAGE> 20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item is incorporated by reference to Note 6 of
Notes to Consolidated Financial Statements included herein on page 8 of this
Form 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits The following exhibits are filed as part of, or incorporated by
reference into, this Form 10-Q:
11.01 Computation of Net Income Per Share
27.01 Financial Data Schedule
(b) Reports on Form 8-K
None
ITEMS 2, 3, 4 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 18, 1997 SYMANTEC CORPORATION
By /s/ Howard A. Bain III
--------------------------------------
Howard A. Bain III
Executive Vice President/Worldwide
Operations and Chief Financial Officer
(duly authorized officer)
/s/ Ronald W. Kisling
--------------------------------------
Ronald W. Kisling
Vice President Controller and
Chief Accounting Officer
21
<PAGE> 22
EXHIBIT INDEX
---------------
Exhibits Description
11.01 Computation of Net Income Per Share
27.01 Financial Data Schedule
22
<PAGE> 1
EXHIBIT 11.01
SYMANTEC CORPORATION
COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
June 30,
(In thousands, except per share data) 1997 1996
------- -------
<S> <C> <C>
PRIMARY NET INCOME PER SHARE
Net income $18,535 $ 3,035
======= =======
Weighted average number of common
shares outstanding during the period 55,458 53,962
Shares issuable from assumed exercise
of options 1,667 1,170
------- -------
Common and common stock equivalent
shares outstanding for purpose of
calculating primary net income
per share 57,125 55,132
======= =======
Primary net income per share $ .32 $ .06
======= =======
FULLY DILUTED NET INCOME PER SHARE
Net income $18,535 $ 3,035
Interest expense on assumed conversion of
convertible subordinated debentures 177 --
------- -------
Net income, as adjusted $18,712 $ 3,035
======= =======
Weighted average number of common
shares outstanding during the period 55,458 53,962
Shares issuable from assumed exercise
of options 2,380 1,170
Shares issuable from assumed conversion
of convertible subordinated debentures 1,250 --
------- -------
Total shares for purpose of calculating
fully diluted net income per share 59,088 55,132
======= =======
Fully diluted net income per share $ .32 $ .06
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SYMANTEC CORPORATION'S QUARTERLY REPORT ON FORM 10-Q FOR THE THREE
MONTH PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-03-1997
<PERIOD-START> MAR-29-1997
<PERIOD-END> JUN-04-1997
<CASH> 111,712
<SECURITIES> 75,560
<RECEIVABLES> 45,305
<ALLOWANCES> (4,333)
<INVENTORY> 3,293
<CURRENT-ASSETS> 258,876
<PP&E> 142,111
<DEPRECIATION> (90,657)
<TOTAL-ASSETS> 365,565
<CURRENT-LIABILITIES> 113,754
<BONDS> 15,059
0
0
<COMMON> 557
<OTHER-SE> 236,195
<TOTAL-LIABILITY-AND-EQUITY> 365,565
<SALES> 135,016
<TOTAL-REVENUES> 135,016
<CGS> 20,920
<TOTAL-COSTS> 20,920
<OTHER-EXPENSES> 92,270
<LOSS-PROVISION> 11
<INTEREST-EXPENSE> 257
<INCOME-PRETAX> 24,072
<INCOME-TAX> 5,537
<INCOME-CONTINUING> 18,535
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,535
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
