Cash Flow Essay
Symantec Inc. is known as the developers of Norton Utilities one of leading computer security and virus protection software on the market. Symantec is also one of the world leading software development companies, which has products that span from mime cellular phone ring tone development software to partnerships with NASA and other Federal agencies. Symantec founded in 1982, originally focused on hiring computer scientists to develop programs for the company. In 1990 Symantec purchases Norton Utilities and moved from developing its on software to find its market niche – finding small software companies with innovative products, buying the company and added the software – both as add-on’s to exist product and as new product lines to the company’s library.
Symantec is an international company. Symantec is one of the top three leading software developers in the UK and Europe its outsourcing of services covers 40 countries. Symantec’s one of the first U.S. companies to tap Ireland’s and India’s technical labor markets. Symantec has a total of 17,500 employees worldwide. In 2007 Symantec’s had $567.6 million in cash with $4.7 billion in total current assets the company has 149 million in accounts payable and 3.8 billion in total current liabilities (Symantec, 2007).
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Symantec is one of the world leading software focused merger and acquisitions companies. Symantec has been able in achieve two competitive advantages as a company that essentially grows by taking over new companies; using its innovations and corporate culture to communicate from the management down to the employees with little miscommunication. The company’s vision is clear and its ability to easily adapt new companies to its growing structure has been successful.
In the paper, we will analyze the equity, cash flow and financial note of Symantec. Components of the Statement of Changes in Owners Equity and Statement of Cash Flows (line items and balances)
In the section of the statement of cash flows are broken down into four sections; the operating activities, investment activities, financing activities and balance sections. The operating activities include the net income from income statement and adjustments for non-operating activities which have affected the calculation of net income such as deprecation.
The investment activities section includes the company’s investment in equipment, buildings and acquisitions. The financing activities section show the stock purchased, and debt paid by the company. The financing activities section also shows the money borrowed during the fiscal year. The Symantec statement of cash flow shows an adjustment for exchange rates, the prior year’s cash balance as a starting balance and the ending year’s cash balance. The net change show the net difference between the ending and stating balance.
Symantec Corporation had a much higher net income in the 2008 year primarily due to increase in revenue and a net gain of $59 million from settlements of litigation for which there was no corresponding gain in the fiscal 2007 year. This gain was partially offset by their higher operating expenses, including a loss on sale of business of $95 million that was related to the disposition of their APM business, for which there was not a corresponding change in the fiscal 2007 year. Revenue increased in the 2008 year as there were revenue growths across all of their geographic regions compared to the revenue growths in the 2007 year. Their deferred revenue increased in 2008 by 12% and that was due to increased sales related to some of their enterprise products and the depreciation of the U.S. dollar against foreign currencies.
Original Equipment Manufacturers had a change in their contact terms of some of their relationships with Symantec Corporation that affected Symantec Corporation gross margins and operating expenses. This change resulted in some payments to Original Equipment Manufacturers partners being included in Symantec Corporation’s Consolidated Statements of Income as Operating expenses rather than Cost of revenues. This increase in Operating Expenses will greatly offset the decrease in Cost of revenues due to placement fee arrangements are expensed on an estimated average cost basis, while revenue-sharing arrangements are generally amortized ratably over a one-year period, and because payments to Original Equipment Manufacturers increased. Symantec doesn’t foresee this trend to continue.
Cash flows were strong in the 2008 year as there was an operating cash flow of $1.8 billion. The fiscal year of 2008 ended with $2.4 in cash, short-term investments, and cash equivalents. In addition, 81 million shares of Symantec Corporation’s common stock were repurchased at an average price of $18.53 which was for $1.5 billion. The management discussion for Symantec included an analysis the owners’ equity and cash flow for the fiscal year. Because of the changes in the global lending market for 2007 and 2008, Symantec has taken loss for the first time in 10 years. In 2006, the company commented to its stock holders, employees, and the 40 counties which host the company’s operation that Symantec implemented a plan to expand its call centers, operations, and research facilities overseas – increasing the number of employee and leveraged capital. As part of this oversea expansion the company built new facilities and opened a new round of acquisitions and subsidiaries. The result of expansion is that the company’s outlay of cash is greater than the income made in 2008.
Important notes of Financial Statements Despite the challenging economic environment, Symantec was able to deliver some solid revenue performance to date and even looking at their forward looking balance sheet figures. Due to the recurring nature of their business and the mission-critical nature of their storage, back-up, data loss prevention and archiving products – their financials statements have been able to remain sound. In addition, Symantec continued to tightly manage expenses even though the foreign currency negatively impacted their results compared to a year ago.
The accompanying notes are an integral part of any financial statement especially for such companies as Symantec Corporation. These notes are often found at the bottom of the financial statements and can lead managers as well as investor to carry out the vital decisions needed to offer success to their corporation. Reading the notes in conjunction with the financial statements will provide a more complete picture of the company’s financial position and the results of its operations. The notes serve to explain, clarify, and expand upon the figures presented in the financial statements, and provide some additional information as well.