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 DECEMBER 30, 1994. 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 as of February 7, 1995: COMMON STOCK, PAR VALUE $0.01 PER SHARE 36,779,026 SHARES

SYMANTEC CORPORATION FORM 10-Q QUARTERLY PERIOD ENDED DECEMBER 30, 1994 TABLE OF CONTENTS PART I. FINANCIAL INFORMATION Page Item 1 Financial Statements Consolidated Balance Sheets as of December 31, 1994 and March 31, 1994................ 3 Consolidated Statements of Operations for the three and nine months ended December 31, 1994 and 1993................................ 4 Consolidated Statements of Cash Flow for the nine months ended December 31, 1994 and 1993.................................................. 5 Notes to Consolidated Financial Statements..................... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................................... 22 Item 4. Submission of Matters to a Vote of Security Holders............. 22 Item 5. Other Information............................................... 23 Item 6. Exhibits and Reports on Form 8-K................................ 23 Signatures................................................................ 24 2

PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SYMANTEC CORPORATION CONSOLIDATED BALANCE SHEETS <TABLE> <CAPTION> December 31, March 31, (In thousands) 1994 1994 - ----------------------------------------- ------------ ------------- ASSETS (unaudited) <S> <C> <C> CURRENT ASSETS: Cash and short-term investments $ 87,046 $ 60,534 Trade accounts receivable 44,513 48,342 Inventories 5,572 7,842 Deferred income taxes 12,705 17,975 Other 6,243 13,660 ---------- ---------- Total current assets 156,079 148,353 Equipment and leasehold improvements 25,276 25,369 Purchased intangibles 9,870 11,228 Other 4,742 3,842 ---------- ---------- $ 195,967 $ 188,792 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 14,305 $ 27,556 Accrued compensation and benefits 10,839 12,257 Accrued other expenses 50,887 57,745 Income taxes payable 707 367 Current portion of long-term obligations 574 847 ---------- ---------- Total current liabilities 77,312 98,772 Long-term obligations 25,543 25,966 Commitments and contingencies STOCKHOLDERS' EQUITY: Preferred stock (authorized: 1,000 shares; issued and outstanding: none) -- -- Common stock (authorized: 70,000 and 50,000 shares; issued and outstanding: 36,452 and 34,990 shares) 365 350 Capital in excess of par value 169,039 157,637 Notes receivable from stockholders (144) (149) Translation adjustment (2,265) (2,183) ---------- ---------- Accumulated deficit (73,883) (91,601) ---------- ---------- Total stockholders' equity 93,112 64,054 ---------- ---------- $ 195,967 $ 188,792 ---------- ---------- ---------- ---------- </TABLE> The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 3

SYMANTEC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS <TABLE> <CAPTION> Three Months Ended Nine Months Ended December 31, December 31, ------------------------ -------------------------- (In thousands, except per share data; unaudited) 1994 1993 1994 1993 - ------------------------------------------------ --------- --------- ----------- ----------- <S> <C> <C> <C> <C> Net revenues $ 84,128 $ 82,661 $ 246,319 $ 251,169 Cost of revenues 14,935 18,612 46,147 62,085 --------- --------- ----------- ----------- Gross margin 69,193 64,049 200,172 189,084 Operating expenses: Research and development 15,410 15,031 44,906 48,129 Sales and marketing 38,060 37,044 109,110 124,864 General and administrative 3,958 5,464 12,295 19,223 Acquisition, restructuring and other expenses -- 21,500 9,545 40,558 --------- --------- ----------- ----------- Total operating expenses 57,428 79,039 175,856 232,774 --------- --------- ----------- ----------- Operating income (loss) 11,765 (14,990) 24,316 (43,690) Interest income 864 327 1,980 1,055 Interest expense (639) (566) (1,842) (1,872) Other income (expense), net 88 (186) 26 (343) --------- --------- ----------- ----------- Income (loss) before income taxes 12,078 (15,415) 24,480 (44,850) Income tax provision (benefit) 3,020 (4,342) 6,399 (8,986) --------- --------- ----------- ----------- Net income (loss) $ 9,058 $ (11,073) $ 18,081 $ (35,864) --------- --------- ----------- ----------- Net income (loss) per share $ 0.25 $ (0.33) $ 0.50 $ (1.07) --------- --------- ----------- ----------- Shares used to compute per share data 36,865 33,960 36,527 33,479 --------- --------- ----------- ----------- </TABLE> The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 4

SYMANTEC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOW <TABLE> <CAPTION> Nine Months Ended December 31, ------------------------ (In thousands; unaudited) 1994 1993 - --------------------------------------------------------- --------- --------- <S> <C> <C> OPERATING ACTIVITIES: Net income (loss) $ 18,081 $(35,864) Fifth Generation net loss for the three months ended March 31, 1993 -- (16,390) XTree net loss for the six months ended March 31, 1993 -- (1,040) Adjustments to reconcile net income (loss) to net cash provided by (used in) operations: Depreciation and amortization of equipment and leasehold improvements 9,694 10,899 Write-off of equipment and leasehold improvements -- 2,183 Amortization and write-off of capitalized software costs 6,544 13,431 Deferred income taxes 5,296 (4,500) Net change in assets and liabilities: Trade accounts receivable 5,036 14,785 Inventories 2,377 912 Other current assets 7,680 9,696 Other assets (272) 1,004 Accounts payable (13,639) (11,455) Accrued compensation and benefits (1,520) (1,385) Accrued other expenses (7,241) 14,180 Income taxes payable 238 (2,364) --------- --------- Net cash provided by (used in) operating activities 32,274 (5,908) --------- --------- INVESTING ACTIVITIES: Capital expenditures (9,183) (5,507) Purchased intangibles (6,795) (10,883) Purchases of short-term investments (80,377) (54,199) Proceeds from sales of short-term investments 43,645 16,877 --------- --------- Net cash used in investing activities (52,710) (53,712) --------- --------- FINANCING ACTIVITIES: Principal payments on long-term obligations (710) (11,728) Net proceeds from sales of common stock and other 11,059 20,329 --------- --------- Net cash provided by financing activities 10,349 8,601 --------- --------- Effect of exchange rate fluctuations on cash and cash equivalents (133) (687) Decrease in cash and cash equivalents (10,220) (51,706) Beginning cash and cash equivalents 32,911 66,700 --------- --------- Ending cash and cash equivalents $ 22,691 $ 14,994 --------- --------- </TABLE> The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 5

SYMANTEC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. BASIS OF PRESENTATION The consolidated financial statements of Symantec Corporation ("Symantec" or the "Company") as of December 31, 1994 and for the three and nine months ended December 31, 1994 and 1993 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 Registration Statement on Form S-3, as declared effective on February 3, 1995, the Consolidated Financial Statements and notes thereto included in Symantec's Annual Report on Form 10-K, as amended, for the year ended March 31, 1994, the Central Point Consolidated Financial Statements and the Symantec and Central Point Pro Forma Combined Balance Sheet and Combined Statements of Operations and notes thereto included on Symantec's Current Report on Form 8-K filed on June 16, 1994, as amended on June 24, 1994 and the Fifth Generation Consolidated Financial Statements and the Symantec and Fifth Generation Pro Forma Combined Balance Sheet and Combined Statements of Operations and notes thereto included on Symantec's Current Report on Form 8-K filed on October 19, 1993. The results of operations for the three and nine months ended December 31, 1994 are not necessarily indicative of the results to be expected for the entire year. Symantec has a 52/53-week fiscal accounting year. Accordingly, all references as of and for the periods ended December 31, 1994, March 31, 1994 and December 31, 1993 reflect amounts as of and for the periods ended December 30, 1994, April 1, 1994 and December 31, 1993, respectively. Symantec acquired the following companies during fiscal 1995 and 1994: <TABLE> <CAPTION> Acquired Shares of Company Symantec Stock Common Options Companies Acquired Date Acquired Stock Issued Assumed - ---------------------------------------------- --------------- ------------ ------- <S> <C> <C> <C> Intec Systems Corporation ("Intec") August 31, 1994 133,332 -- Central Point Software, Inc. ("Central Point") June 1, 1994 4,029,429 707,452 SLR Systems, Inc. ("SLR") May 31, 1994 170,093 -- Fifth Generation Systems, Inc. ("Fifth Generation") October 4, 1993 2,769,010 -- Contact Software International, Inc. ("Contact") June 2, 1993 2,404,019 232,589 </TABLE> In addition, during the year ended March 31, 1994, Central Point acquired Executive Systems, Inc. ("XTree"). All of these acquisition were accounted for as poolings of interest and with the exception of Intec and SLR, which had results of operations that were immaterial to Symantec, all financial information has been restated to reflect the combined operations of these companies and Symantec. Due to differing fiscal year ends of Central Point and XTree, financial information related to XTree's fiscal year ended September 30, 1992 has been combined with financial information related to Central Point's year ended March 31, 1993. Accordingly, XTree's results of operations for the six months ended March 31, 1993 were charged to stockholders' equity. XTree reported net revenues of $6.9 million and a net loss of $1.0 million for the six months ended March 31, 1993. 6

The table below sets forth the composition of combined net revenues and net income (loss) for the pre-acquisition periods indicated. Information with respect to Central Point for the nine months ended December 31, 1994 reflects the two months ended June 1, 1994, the date Central Point was acquired. Net revenues and net income (loss) for the pre-acquisition periods with respect to Intec and SLR were immaterial. <TABLE> <CAPTION> Three Months Ended Nine Months Ended December 31, December 31, ----------------------- ------------------------ (In thousands; unaudited) 1994 1993 1994 1993 - ------------------------------------- -------- --------- --------- ---------- <S> <C> <C> <C> <C> Net revenues: Symantec $ 84,128 $ 67,053 $ 232,833 $ 197,829 Central Point -- 15,608 13,486 53,340 -------- --------- --------- ---------- $ 84,128 $ 82,661 $ 246,319 $ 251,169 -------- --------- --------- ---------- Net income (loss): Symantec $ 9,058 $ (9,187) $ 15,430 $ (18,318) Central Point -- (1,886) 2,651 (17,546) -------- --------- --------- ---------- $ 9,058 $(11,073) $ 18,081 $ (35,864) -------- --------- --------- ---------- </TABLE> NOTE 2. BALANCE SHEET INFORMATION <TABLE> <CAPTION> December 31, March 31, (In thousands) 1994 1994 - ------------------------------------------ ------------ --------- (unaudited) <S> <C> <C> Cash and short-term investments: Cash and cash equivalents. . . . . . . . $ 22,691 $ 32,911 Short-term investments . . . . . . . . . 64,355 27,623 ------------ --------- $ 87,046 $ 60,534 ------------ --------- Trade accounts receivable: Receivables. . . . . . . . . . . . . . . $ 48,416 $ 52,676 Less: allowance for doubtful accounts (3,903) (4,334) ------------ --------- $ 44,513 $ 48,342 ------------ --------- Inventories: Raw materials. . . . . . . . . . . . . . $ 1,180 $ 1,189 Finished goods . . . . . . . . . . . . . 4,392 6,653 ------------ --------- $ 5,572 $ 7,842 ------------ --------- Equipment and leasehold improvements: Computer equipment . . . . . . . . . . . $ 43,287 $ 39,804 Office furniture and equipment . . . . . 19,023 20,723 Leasehold improvements . . . . . . . . . 7,850 7,201 ------------ --------- 70,160 67,728 Less: accumulated depreciation and amortization . . . . . . . . . . . . . (44,884) (42,359) ------------ --------- $ 25,276 $ 25,369 ------------ --------- Purchased intangibles: Product rights . . . . . . . . . . . . . $ 31,192 $ 29,998 Less:accumulated amortization. . . . . . (21,322) (18,770) ------------ --------- $ 9,870 $ 11,228 ------------ --------- 7

December 31, March 31, (In thousands) 1994 1994 - ------------------------------------------ ------------ --------- (unaudited) <S> <C> <C> Accrued other expenses: Acquisition and restructuring expenses . $ 10,026 $ 14,076 Deferred revenue . . . . . . . . . . . . 23,063 23,612 Marketing development funds. . . . . . . 6,925 6,438 Other. . . . . . . . . . . . . . . . . . 10,873 13,619 ------------ --------- $ 50,887 $ 57,745 ------------ --------- Long-term obligations: Long-term obligations. . . . . . . . . . $ 26,117 $ 26,813 Less: current portion. . . . . . . . . . (574) (847) ------------ --------- $ 25,543 $ 25,966 ------------ --------- </TABLE> NOTE 3. LINE OF CREDIT The Company has a $10.0 million bank line of credit that expires in October 1995. The line of credit is available for general corporate purposes and bears interest at the banks' reference (prime) interest rate (8.50% at December 31, 1994), the U.S. offshore rate plus 1.5%, a CD rate plus 1.5% or LIBOR plus 1.5%, at the Company's discretion. The line of credit requires bank approval for the payment of cash dividends. Borrowings under this line are unsecured and are subject to the Company maintaining certain financial ratios and profits. The Company was in compliance with the line of credit covenants as of December 31, 1994. At December 31, 1994, there was approximately $0.5 million of standby letters of credit outstanding under this line of credit. There were no borrowings outstanding under this line at December 31, 1994. NOTE 4. ACQUISITION, RESTRUCTURING AND OTHER EXPENSES Acquisition, restructuring and other expenses consist of the following: <TABLE> <CAPTION> Three Months Ended Nine Months Ended December 31, December 31, ---------------------- ---------------------- (In thousands) 1994 1993 1994 1993 - ------------------------------------------ ------- ------- ------- ------- <S> <C> <C> <C> <C> Central Point acquisition $ -- $ -- $ 9,000 $ -- SLR acquisition -- -- 545 -- Fifth Generation acquisition -- 15,000 -- 15,000 XTree acquisition -- -- -- 3,457 Contact acquisition -- -- -- 7,400 Class action lawsuit settlement -- 6,500 -- 6,500 Central Point purchased in-process research and development -- -- -- 1,275 Central Point restructuring charge -- -- -- 2,226 Centralization expense -- -- -- 4,700 ------- ------- ------- ------- Total acquisition, restructuring and other expenses $ -- $21,500 $ 9,545 $40,558 ------- ------- ------- ------- </TABLE> On August 31, 1994, Symantec completed the acquisition of Intec Systems Corporation ("Intec"). No significant acquisition expenses related to the combination of Symantec and Intec were incurred. 8

In connection with the acquisitions of Central Point and SLR in the quarter ended June 30, 1994, (see Note 1), Symantec recorded total acquisition charges of $9.5 million. The charges included $3.2 million for legal, accounting and financial advisory services, $1.0 million for the write-off of duplicative product-related expenses and modification of certain development contracts, $0.9 million for the elimination of duplicative and excess facilities, $3.1 million for personnel severance and outplacement expenses, and $1.3 million for the consolidation and discontinuance of certain operational activities and other acquisition related expenses. In connection with the acquisition of Fifth Generation in the quarter ended December 31, 1993, (see Note 1), Symantec recorded an acquisition charge of $15.0 million. The charge included $2.0 million for legal, accounting and financial advisory services, $7.6 million for the write-off of duplicative product related expenses and modification of certain development contracts, $0.8 million for the elimination of duplicative and excess facilities, $2.4 million for personnel severance and outplacement expenses, and $2.2 million for the consolidation and discontinuance of certain operational activities and other acquisition related expenses. In connection with the acquisition of XTree by Central Point in the quarter ended September 30, 1993, Central Point recorded an acquisition charge of $3.5 million. The charge included $0.2 million for legal, accounting and financial advisory services, $1.8 million for the elimination of duplicative and excess facilities, $1.0 million for personnel severance and outplacement expenses, and $0.5 million for the consolidation and discontinuance of certain operational activities and other acquisition related expenses. In connection with the acquisition of Contact in the quarter ended June 30, 1993 (see Note 1), Symantec recorded an acquisition charge of $7.4 million. The charge included $2.1 million for legal, accounting and financial advisory services, $1.1 million for the elimination of duplicative and excess facilities, $1.9 million for personnel severance and outplacement expenses, and $2.3 million for the consolidation and discontinuance of certain operational activities and other acquisition related expenses. In the quarter ended December 31, 1993, Symantec reached an agreement with the plaintiffs and Symantec's insurance carriers to settle two securities class actions and a related derivative lawsuit brought by stockholders of Symantec (see Note 8). The combined settlement amount of the cases was $19.0 million, approximately $12.5 million of which was paid by Symantec's insurance carriers. Symantec recorded a charge of $6.5 million in the quarter ended December 31, 1993, representing Symantec's portion of the class action settlement (see Note 8). In the quarter ended September 30, 1993, Central Point purchased from unrelated parties certain in-process software technologies for $1.3 million which were immediately expensed. In the quarter ended September 30, 1993, Central Point incurred $2.2 million of expenses related to the restructuring of its operations in order to reduce its overall cost structure and to redirect its software development and marketing efforts away from the personal desktop computer market toward the personal computer network market. In the quarter ended June 30, 1993, Symantec announced a plan to consolidate and centralize certain operational activities. The plan was designed to reduce operating expenses and enhance operational efficiencies by centralizing certain order administration, technical support and customer service activities in Eugene, Oregon. The Company recorded a charge of $4.7 million in the quarter ended June 30, 1993, which included $1.1 million for the elimination of duplicative and excess facility expenses, $1.5 million for the relocation of the Company's existing operations and equipment, $1.1 million for employee relocation expenses and $1.0 million for employee severance payments. The Company's centralization has been completed. 9

As of December 31, 1994, Symantec had approximately $10.2 million of accrued acquisition and restructuring related expenses related to company acquisitions and the restructuring of Central Point's software development efforts away from the personal desktop computer market toward the personal computer network market which occurred in fiscal 1994. Total accrued acquisition expenses were $6.8 million and total accrued restructuring expenses were $3.4 million as of December 31, 1994. These cash related expenses include $1.4 million for duplicative product-related expenses and modification of certain development contracts, $2.6 million for the elimination of duplicative and excess facilities, $4.1 million for personnel severance and outplacement expenses, and $2.1 million for the consolidation and discontinuance of certain operational activities and other acquisition and restructuring related expenses. NOTE 5. INCOME TAXES Income taxes are computed in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Symantec provides for income taxes during interim reporting periods based upon an estimate of its annual effective tax rate. This estimate reflects U.S. federal, state and foreign income taxes. NOTE 6. NET INCOME (LOSS) PER SHARE Net income (loss) per share is calculated using the treasury stock method. Under the treasury stock method, net income (loss) per share is calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each period. Common stock equivalents consist principally of the assumed exercises of stock options net of the assumed repurchase of shares with any related proceeds. In those periods where the Company recorded net income and the number of shares of common stock obtainable on exercises of outstanding options and warrants exceeds 20 percent of the number of common shares outstanding at the end of the period, all of the options and warrants are assumed to have been exercised and the aggregate proceeds to have been applied to the repurchase of up to 20 percent of the outstanding common shares at the average market price during the period, with the balance of the funds first applied to reduce borrowings and any remaining funds are assumed to be invested in U.S. government securities, net of any income tax effect. The difference between primary and fully diluted net income (loss) per share is either not significant or anti-dilutive in all periods presented. NOTE 7. STOCK OPTION PLANS As of September 30, 1994, the Company had granted options representing approximately 1.7 million shares in excess of the total number of shares authorized under the 1988 Employee Stock Option Plan. During the quarter ended December 31, 1994, the Company obtained stockholder approval of an increase in the number of shares authorized under that Plan sufficient to cover these options. NOTE 8. LITIGATION On December 30, 1994, Software Engineering Carmel ("Carmel") filed a lawsuit in the U.S. District Court for the District of Oregon against Central Point, a wholly owned subsidiary of the Company. Carmel developed and maintains the anti-virus program distributed by Central Point. The complaint alleges that Central Point breached its contract with Carmel by not fulfilling an implied obligation under the contract to use its best efforts or, alternatively, its reasonable efforts to market the anti-virus program developed by Carmel. The complaint also alleges that Central Point violated the non-competition provision in its agreement, by selling a competing anti-virus program, apparently based on Symantec's sale of its own anti-virus product. The complaint seeks damages in the amount of $6.75 million and a release of Carmel from its obligation not to sell competing products. Symantec believes the complaint has no merit. On September 3, 1992, Borland International, Inc. ("Borland") filed a lawsuit in the Superior Court for Santa Cruz County, California against Symantec, Gordon E. Eubanks, Jr. (Symantec's President and Chief Executive Officer) 10

and Eugene Wang (an Executive Vice President of Symantec who is a former employee of Borland). The complaint, as amended, alleges misappropriation of trade secrets, unfair competition, inducing breach of contract, interference with prospective economic advantage and unjust enrichment. Borland alleged that prior to joining Symantec, Mr. Wang transmitted to Mr. Eubanks confidential information concerning Borland's product and marketing plans. Borland claims damages in an unspecified amount. Symantec has denied the allegations of Borland's complaint and contends that Borland has suffered no damages from the alleged actions. Borland obtained a temporary restraining order and a preliminary injunction prohibiting the defendants from using, disseminating or destroying any Borland proprietary information or trade secrets. Symantec filed a cross complaint against Borland alleging that Borland had committed abuse of process and defamation in publishing statements that Symantec had acted in contempt of a temporary restraining order. The case is not being actively prosecuted at this time pending the outcome of the criminal proceedings, discussed below. Symantec believes the charges have no merit. On September 2, 1992, the Scotts Valley, California police department, operating with search warrants for Borland proprietary and trade secret information, searched Symantec's offices and the homes of Messrs. Eubanks and Wang and removed documents and other materials. On February 26, 1993, criminal indictments were filed against Messrs. Eubanks and Wang for allegedly violating various California Penal Code Sections relating to the misappropriation of trade secrets and unauthorized access to a computer system. On August 23, 1993, the Court recused the District Attorney's Office from prosecution of the action. On October 5, 1993, the State Attorney General and the District Attorney's Office filed a Notice of Appeal of the Order. Symantec believes the criminal charges against Messrs. Eubanks and Wang have no merit. On December 11, 1992 and April 19, 1993, class action complaints were filed in U.S. District Court for the Northern District of California against the Company, all of its directors and certain of its officers. The complaints as amended alleged violations of federal securities laws and claimed that during the period from June 3, 1991 through October 8, 1992, the defendants disseminated and allowed to be disseminated, misleading statements and concealed adverse material information. The December 11, 1992 complaint also contained two claims for relief asserted derivatively on behalf of the Company against the individual defendants for breach of fiduciary duty, including permitting or engaging in alleged illegal insider trading. Symantec reached an agreement with the plaintiffs and Symantec's insurance carriers and settled these two securities class actions and the related derivative lawsuit. The settlement was approved by the Court on June 6, 1994. The settlement concluded all outstanding securities class actions and derivative claims that were pending against Symantec. The combined settlement amount of the cases was $19.0 million, approximately $12.5 million of which was paid by Symantec's insurance carriers. Symantec recorded a charge of $6.5 million in the quarter ended December 31, 1993 representing Symantec's portion of the settlement. On June 11, 1992, Dynamic Microprocessor Associates, Inc. ("DMA"), a wholly- owned subsidiary of 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 and unfair competition and breach of contract. On July 14, 1992, the Suffolk County sheriff's department conducted a search of EKD's premises and seized and impounded thousands of infringing articles. On July 21, 1992, the Court issued a preliminary injunction against EKD and Mr. Green, enjoining them from manufacturing, marketing, distributing, copying or purporting to license DMA's pcANYWHERE III or using DMA's marks. On February 19, 1993, EKD moved to vacate the preliminary injunction. The Court denied the motion orally in April 1993 and issued a written opinion in September 1993, and EKD appealed this denial. EKD's appeal was denied in March 1994, leaving the preliminary injunction in place. On July 20, 1992 and in a subsequent amendment, EKD and Mr. Green answered Symantec's complaint denying all liability and asserting counterclaims against Symantec and Lee Rautenberg, a former principal of DMA. In 11

May 1993, EKD and Mr. Green were granted permission to file a Second Amended Answer and counterclaims that dropped every previously raised claim and now allege that DMA obtained the temporary restraining order and preliminary injunction in bad faith and that DMA, Symantec and Mr. Rautenberg breached certain license agreements and violated certain federal and New York State antitrust laws. In March 1994, Symantec moved for judgment on certain of EKD's claims including that Symantec, DMA and Mr. Rautenberg had violated the antitrust laws. In August 1994, DMA moved to amend its complaint to assert additional claims against EKD. Both of these motions are currently pending. Symantec believes the charges made by EKD and Mr. Green have no merit. As a result of the acquisition of DMA by Symantec, an individual formerly associated with DMA has filed a lawsuit in the Supreme Court of the State of New York against DMA, Symantec and Lee Rautenberg. The lawsuit alleges that Peter Byer was promised 8% of the outstanding DMA common stock in connection with his performance of services for DMA. The suit also alleges that Mr. Byer was to be paid additional compensation based upon sales made by DMA. Mr. Byer has further amended his complaint to claim that DMA was unjustly enriched because it paid Mr. Byer less than the fair value of his services. The lawsuit seeks damages of at least $5.3 million. Symantec believes the charges have no merit. Furthermore, Mr. Rautenberg and the other stockholders of DMA have an obligation to indemnify Symantec for liabilities resulting from this action. Symantec is involved in other judicial and administrative proceedings incidental to its business. Although occasional adverse decisions (or settlements) may occur, the final disposition of such matters is not expected to be material. The Company intends to defend all of the aforementioned pending 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. NOTE 9. SUBSEQUENT EVENT During February 1995, Symantec announced a plan to consolidate certain research and development activities. This plan is designed to gain greater synergy between the Company's Third Generation Language and Fourth Generation Language development groups. The Company expects to incur costs of approximately $4.0 million to $5.0 million for the relocation of the Company's existing research and development activities, equipment and personnel from Shelton, Connecticut to Cupertino, California. The Company expects to complete this relocation by December 1995 with the bulk of the costs occurring in the September 1995 quarter. 12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion should be read in conjunction with the unaudited consolidated financial statements included elsewhere herein. Due to a number of factors and risks, including the rapid change in hardware and software technology, market conditions, seasonality in the retail software market, the timing of product announcements, the release of new or enhanced products, the introduction of competitive products by existing or new competitors and the significant risks associated with acquisitions of companies, technology and software product rights, historical results and percentage relationships will not necessarily be indicative of the operating results of any future period. The pending release of a new operating system ("Windows 95") by Microsoft is a particularly important event that increases the uncertainty and will likely increase the volatility of Symantec's results and stock price over the next year. 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, which 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 growing percentage of the Company's revenues are generated from enterprise software products which are frequently sold through site licenses which 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. Finally, the Company participates in a highly dynamic industry, which often results in significant volatility of the Company's common stock price. In particular, investor enthusiasm surrounding Microsoft's new operating system, Windows 95, may result in a significant increase in the volatility in Symantec's stock price during the first year after the introduction of that operating system. Net income (loss) per share is calculated using the treasury stock method (see Note 6 of Notes to Consolidated Financial Statements). Increases in the price of the Company's common stock can have an adverse impact on the calculation of net income per share in that period. During fiscal 1995 and 1994, Symantec completed acquisitions of the following companies: <TABLE> <CAPTION> Acquired Shares of Company Symantec Stock Common Options Companies Acquired Date Acquired Stock Issued Assumed - ---------------------------------------------------------------------- ------------ ------- <S> <C> <C> <C> Intec Systems Corporation ("Intec") August 31, 1994 133,332 -- Central Point Software, Inc. ("Central Point") June 1, 1994 4,029,429 707,452 SLR Systems, Inc. ("SLR") May 31, 1994 170,093 -- Fifth Generation Systems, Inc. ("Fifth Generation") October 4, 1993 2,769,010 -- Contact Software International, Inc. ("Contact") June 2, 1993 2,404,019 232,589 </TABLE> In addition, during the year ended March 31, 1994, Central Point acquired Executive Systems, Inc. ("XTree"). All of these acquisition were accounted for as poolings of interest and with the exception of Intec and SLR, which had results of operations which were immaterial to Symantec, all financial information has been restated to reflect the combined operations of these companies and Symantec. 13

RESULTS OF OPERATIONS The following table sets forth each item from the consolidated statements of operations 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 Nine Months Ended Percent Ended Percent December 31, Change December 31, Change ------------- in Dollar --------------- in Dollar 1994 1993 Amounts 1994 1993 Amounts ---- ---- ------- ---- ---- ------- <S> <C> <C> <C> <C> <C> <C> Net revenues. . . . . . . . . . . . . . . 100% 100% 2% 100% 100% (2)% Cost of revenues . . . . . . . . . . . . 18 23 (20) 19 25 (26) ---- ---- ---- ---- Gross margin . . . . . . . . . . . . 82 77 8 81 75 6 Operating expenses: Research and development . . . . . . . . 18 18 3 18 19 (7) Sales and marketing . . . . . . . . . . 45 44 3 44 50 (13) General and administrative . . . . . . . 5 7 (28) 5 7 (36) Acquisition, restructuring and other expenses . . . . . . . . . . . . . . . -- 26 (100) 4 16 (77) ---- ---- ---- ---- Total operating expenses . . . . . . . 68 95 (27) 71 92 (25) ---- ---- ---- ---- Operating income (loss) . . . . . . . . . . 14 (18) * 10 (17) * Interest income . . . . . . . . . . . . . . 1 -- 164 1 -- 88 Interest expense . . . . . . . . . . . . . (1) (1) 13 (1) (1) (2) Other income (expense), net . . . . . . . . -- -- * -- -- * ---- ---- ---- ---- Income (loss) before income taxes . . . . . 14 (19) * 10 (18) * Income tax provision (benefit) . . . . . . 3 (6) * 3 (4) * ---- ---- ---- ---- Net income (loss) . . . . . . . . . . . . . 11% (13)% * 7% (14)% * ---- ---- ---- ---- <FN> - ----------------------------------- * percentage change is not meaningful. </TABLE> 14

NET REVENUES. Net revenues increased 2%, from $82.7 million in the quarter ended December 31, 1993 to $84.1 million in the current year's comparable quarter, principally due to an increase in network/communication utility and security utility revenues which was partially offset by a decrease in advanced utility and development tools revenues. This reflects, in part, what Symantec believes is the market's transition to enterprise-wide computing oriented environments which use network/communication and security utility products. Symantec believes that many of its customers are moving toward an enterprise- wide computing oriented environment where more desktop personal computers will be interconnected into large local-area and wide-area networks administered by corporate MIS departments. Revenues from enterprise products increased from 20% of total net revenues in the quarter ended December 31, 1993 to 33% in the quarter ended December 31, 1994. Net revenues from international sales decreased from approximately $31.9 million to $31.1 million and represented 39% and 37% of total net revenues for the quarters ended December 31, 1993 and 1994, respectively. Revenues for the nine months ended December 31, 1994 decreased 2%, from $251.2 million for the nine months ended December 31, 1993 to $246.3 million for the nine months ended December 31, 1994, due to a decrease in Central Point and Fifth Generation product revenues. Various software products developed and sold by acquired companies, including Central Point and Fifth Generation, duplicate the functionality of Symantec products. Symantec may continue to separately market each of the duplicative products, combine certain features of the products into a single product and/or discontinue marketing a particular duplicative product. As a result, future product revenues may be adversely affected. Due to the inherent uncertainties in software development and in the microcomputer software industry, the Company is unable to predict whether the net revenue trends listed above will continue. The Company's products include enterprise products which are frequently sold through site licenses where a license for multiple workstations is sold to a customer and desktop software products which are generally sold through the distribution channel or directly to end-users. Enterprise product revenues are typically comprised of lower volume, high dollar site license transactions compared to desktop product revenues which are typically comprised of higher volume, low dollar pre-packaged product sales. The prices of site licenses tend to vary based upon the individual products purchased, the number of units licensed and the number of work stations at the customer's site. There was no material impact to net revenues resulting from changes in desktop product pricing. During the March 1995 quarter, Symantec announced a rebate program for The Norton AntiVirus and The Norton pcANYWHERE products. This rebate program is designed to increase volume shipments of these products by offering a cash rebate to endusers. Should volume shipments of these products not increase, net revenues associated with these products would be adversely affected. While the acquisition of Central Point and Fifth Generation has enabled further development of software products for enterprise-wide computing, these products are expected to result in Symantec's competing with companies with which it has not previously competed. As a result, there is uncertainty regarding customer acceptance of the Company's products as Symantec has not been a major supplier in the enterprise market. These factors increase the uncertainty of forecasting financial results. While the Company expects the shift toward enterprise products to continue, there can be no assurance that the Company's enterprise products will be successful. With the expansion to enterprise-wide computing systems markets, Symantec believes that it must develop relationships with systems integrators and other third-party vendors that provide consulting and integration services to customers and deliver products developed for this market segment. Furthermore, the length of the sales cycle with respect to enterprise products is longer and customers of enterprise products may take delivery of a product subject to integration and acceptance by the customer. In addition, a very high proportion of enterprise product sales are completed in the last few days of each quarter, in part because customers are able, or believe that they are able, to negotiate lower prices and more favorable terms. Each of these factors increases the risk that forecasts of quarterly financial results will not be achieved. 15

During the quarter ended December 31, 1994, Symantec released The Norton pcANYWHERE for Windows v. 2.0, The Norton pcANYWHERE Access Server v. 1.0, More PC Tools for DOS and Windows, MacTools Pro v. 4.0 and Time Line for Windows v. 6.1. Enhanced product releases typically result in net revenue increases during the first three to six months following their introduction due to upgrade purchases by existing users, usually at discounted prices, and initial inventory purchases by the Company's distributors. In addition, between the date the Company 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. While Symantec's diverse product line has tended to lessen fluctuations in quarterly net revenues caused by the timing of announcements and releases of new or enhanced versions of its products and product upgrades, the introduction of competitive products by existing or new competitors, reduced demand for any given product, the market's transition between operating systems, and the transition from a desktop PC environment to an enterprise-wide environment, these fluctuations have occurred recently and are likely to occur in the future and may cause significant fluctuations in sales revenues and, accordingly, operating results. The Company's pattern of revenues and earnings may also be affected by a phenomenon known as "channel fill." Channel fill occurs following the introduction of a new product or a new version of a product as distributors buy significant quantities of the new product or version in anticipation of sales of such product or version. 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." The phenomenon of "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 are unable to, or 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 levels deemed appropriate in the domestic distribution channel; however, net revenues may still be materially affected favorably or adversely by the effects of channel fill. Channel fill did not have a material impact on the Company's net revenues in the three and nine months ended December 31, 1994 and 1993. The Company is devoting substantial efforts to the development of software products that are designed to operate on Microsoft Corporation's new operating system ("Windows 95"), which is currently under development. Microsoft may incorporate advanced utilities in Windows 95 that may decrease the demand for certain of the Company's products, including those currently under development. Further, should Microsoft incur further delays in the development or release of Windows 95, which is scheduled by Microsoft to be released around August 1995, should Windows 95 not achieve market acceptance, or should Symantec be unable to successfully or timely develop products that function under Windows 95, Symantec's future revenues would be adversely affected. In addition, as the timing of delivery and adoption of many products is dependent on Microsoft's delivery of beta and final versions of Windows 95 and the adoption rate of Windows 95, which the Company is unable to predict, the Company's and securities analysts' ability to forecast the Company's revenues is being adversely impacted. A delay in the shipment of Windows 95 may adversely affect Symantec's stock price. Also, the Company expects that demand for certain of its existing utility products will decline in advance of Windows 95 release. It is difficult for securities analysts or the Company to forecast the extent of this decline. For all of the preceding reasons, there is a heightened risk that revenues and profits will not be in line with analysts' expectations in the periods preceding and following the introduction of Windows 95. 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 16

is not able to quantify the magnitude of revenues that were deferred or lost as a result of any particular delay because Symantec is not able to predict the amount of revenues that would have been obtained had the original development expectations been met. Delays in product development are likely to occur in the future 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. In addition, there can be no assurance that any products currently being developed by Symantec, including products being developed for Windows 95, 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. During fiscal 1993, Symantec believes revenues were adversely affected by an unexpected substantial price reduction in 486-based personal computers that caused a shift in customer spending from software to personal computer hardware. Symantec also believes that the shift was caused by the introduction of Windows 3.1, which requires more computing capability. If the next class of personal computers, including those based on the Pentium microprocessor and/or the Power- PC, are also rapidly reduced in price, there may be another unexpected shift in customer buying away from software and Symantec's products, which could result in significantly reduced revenues and a material adverse effect on operating results. Symantec has noted that Pentium processors are being reduced in price by Intel. The shift of customer spending from software to hardware could also result if Windows 95 requires more computing capability than that delivered by most existing computers. Price competition is significant in the microcomputer business software market and will continue to increase and become even more significant in the future, resulting in reduced profit margins. Should competitive pressures in the industry increase, Symantec may be required to increase its spending on sales, marketing and research and development as a percentage of net revenues, resulting in lower profit margins. In addition, aggressive pricing strategies of competitors in other software markets, some of whom have significantly more financial resources than Symantec, may further cause the Company to reduce software prices and/or increase sales and marketing expenses on a number of the Company's products. The Company estimates and maintains reserves for product returns. Product returns occur when the Company introduces upgrades and new versions and discontinues products. In addition, competitive factors require the Company to offer rights of return for products that distributors or retail stores are unable to sell. The Company has set its reserves for returns in accordance with historical experience. Setting reserves involves making judgments about future competitive conditions and product life cycles. Those judgments involve evaluating information that often is unclear and in conflict. Symantec prepares detailed analyses of historical return rate experiences in its estimation of reserves for product returns. In addition to detailed historical return rates, the Company's estimation of return reserves takes into consideration upcoming product upgrades, current market conditions, distributor and "superstore" inventory balances and any other known factors that could impact anticipated product returns. Based upon returns experienced, the Company's estimates have been materially accurate. However, there can be no assurance that historical experience will be an accurate guide for the future because the rate of returns is primarily a function of the competitive state of the market in the future and thus, in large part, is a function of the actions of the Company's competitors, which the Company cannot anticipate. The Company's product return reserve balances typically fluctuate from period to period based upon the level and timing of product upgrade releases. The level of actual product returns and related product return reserves is largely a factor of the level of product sell-in (gross revenue) from normal sales activity and the replacement of obsolete quantities with the current version of the product. As a result, gross revenues generally move in the same direction as product returns. Changes in the levels of product returns and related product return reserves are generally offset by changing levels of gross revenue and, therefore, do not typically have a material impact on reported net revenues. In March 1994, due to the market's concerns regarding Central Point's long-term viability and the announced merger between Central Point and Symantec, Central Point was unable to reasonably estimate future product 17

returns from its distributors and resellers. In addition, there were high levels of inventory in the channel which had been shipped into the channel prior to the acquisition. Central Point believed that there was a high risk of this inventory being returned. As a result, revenues relating to product inventory at Central Point's distributors and resellers as of March 31, 1994 were deferred until sold by the distributors or resellers to endusers. Symantec has been analyzing returns related to the Central Point products for the last three quarters to determine when such products were sold through to the end users. Symantec believes that its marketing and sales programs are being successful in moving this deferred channel inventory through to endusers, and Symantec expects to recognize the associated remaining deferred revenue once Symantec verifies that product sell through has occurred and it is able to estimate any remaining returns exposures. Symantec expects to recognize the remaining deferred revenue associated with this distributor inventory in the March 1995 and June 1995 quarters. A significant portion of the Company's revenues are from sales to two large distributors and a large "superstore." These customers tend to make the great 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-quarter buying pattern means that forecasts of quarterly 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 distribution and superstore customers also carry the products of the Company's competitors, some of which have greater financial resources than the Company. The distributors and superstores have limited capital to invest in inventory and their decisions to purchase the Company's products and, in the case of superstores, to give them critical shelf space, is partly a function of pricing, terms and special promotions offered by the Company and its competitors, over which the Company has no control and which it cannot predict. 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 a material adverse effect on revenues and on the Company's operating results. Symantec maintains a research and development facility in Santa Monica, California that was damaged during the January 1994 earthquake in Southern California. Much of the Company's administration, sales and marketing, manufacturing facilities and research and development efforts 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. During the March 1994 quarter, Symantec introduced a new product support program that provides a wide variety of free and fee-based technical support services to its customers. Symantec provides its customers with free technical support via electronic and automated services as well as 90 days complimentary free telephone support for certain of the Company's products. In addition, Symantec offers both individual users and corporate customers a variety of fee-based support options for certain of the Company's products, designed to meet their individual technical support requirements. Fee-based technical support services did not generate significant revenues in the quarter or nine month period ended December 31, 1994 and are not expected to generate significant revenues in the near future. 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. Amortization of capitalized software, including amortization and write-off of both purchased product rights and capitalized software development expenses, totaled $0.9 million and $1.3 million for the quarters ended December 31, 1994 and 1993 and $6.5 million and $13.4 million for the nine months ended December 31, 1994 and 1993, respectively. The decrease in amortization and write-off of capitalized software costs for the nine month period December 31, 1994 is largely due to the write-off of duplicative capitalized technology in connection with the acquisitions of Central Point and Fifth Generation and 18

the restructuring of Central Point's software development efforts away from the personal desktop computer market toward the personal computer network market which occurred in the quarter ended March 31, 1994. Gross margin increased to 82% of net revenues in the quarter ended December 31, 1994 from 77% of net revenues in the quarter ended December 31, 1993. Gross margin increased to 81% of net revenues in the nine months ended December 31, 1994 from 75% of net revenues in the nine months ended December 31, 1993. The increase in gross margin percentage is primarily due to the reduction in software amortization and write-offs for the nine months ended December 31, 1994, the gradual shift in Symantec's product mix from desktop products toward higher margin enterprise products and improvements in the gross margin percentage of Fifth Generation's products. This improvement in the gross margin percentage of Fifth Generation's products was largely due to the absence of significant software amortization and write-offs of capitalized software by Fifth Generation during fiscal 1993 and Symantec's ability to produce the Fifth Generation products with a lower cost structure than Fifth Generation was able to prior to the merger. The microcomputer business software market has been subject to rapid changes that can be expected to continue. Future technology or market changes, including the release of Windows 95, may cause certain products to become obsolete more quickly than expected and thus may result in capitalized software write-offs and an increase in required inventory reserves and, therefore, reduced gross margins and net income. RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses increased 3% from $15.0 million or 18% of net revenues in the quarter ended December 31, 1993 to $15.4 million or 18% of net revenues in the quarter ended December 31, 1994. The increase in research and development expenses for the quarter was due to increased product development efforts in the network/communication, client server and security utility product groups which was partially offset by a reduction in research and development expenses due to the consolidation of certain product development efforts in connection with the acquisition of Central Point. Research and development expenses for the nine months ended December 31, 1994 decreased 7% to $44.9 million or 18% of net revenues from $48.1 million or 19% of net revenues for the comparable 1993 period. The decrease in research and development expenses for the nine months ended December 31, 1994 is primarily due to the consolidation of certain product development efforts in connection with the acquisitions of Central Point and Fifth Generation. Symantec believes increased research and development expenditures will be necessary in order to remain competitive and to increase future revenues and expects research and development expenses to increase in dollar amount. During February 1995, Symantec announced a plan to consolidate certain research and development activities. This plan is designed to gain greater synergy between the Company's Third Generation Language and Fourth Generation Language development groups. The Company expects to incur costs of approximately $4.0 million to $5.0 million for the relocation of the Company's existing research and development activities, equipment and personnel from Shelton, Connecticut to Cupertino, California. The Company expects to complete this relocation by December 1995 with the bulk of the costs occurring in the September 1995 quarter. Research and development expenditures are charged to operations as incurred. Financial accounting rules requiring capitalization of certain internal software development costs did not materially affect the Company in the periods presented. SALES AND MARKETING EXPENSES. Sales and marketing expenses increased 3% to $38.1 million or 45% of net revenues in the quarter ended December 31, 1994 from $37.0 million or 44% of net revenues in the prior year's comparable quarter. The increase for the quarter was primarily due to an increase in marketing development funds and commissions associated with higher revenues. Sales and marketing expenses were $109.1 million and $124.9 million and represented 44% and 50% of total net revenues for the nine months ended December 31, 1994 and 19

1993, respectively. The decrease for the nine month period is principally due to the elimination of duplicative sales organizations as a result of the acquisitions of Central Point and Fifth Generation. Symantec believes substantial sales and marketing efforts are essential to achieve revenue growth and to maintain and enhance Symantec's competitive position. Accordingly, with the continued expansion of its international operations, as well as the introduction of new and upgraded products, Symantec expects the expenses associated with these efforts to increase in dollar amount and to continue to constitute its most significant operating expense. There can be no assurance that these increased efforts will be successful. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses decreased 28%, from $5.5 million or 7% of net revenues in the quarter ended December 31, 1993 to $4.0 million or 5% of net revenues, in the quarter ended December 31, 1994. General and administrative expenses decreased 36%, from $19.2 million or 7% of total net revenues for the nine months ended December 31, 1993 to $12.3 million or 5% of total net revenues, for the nine months ended December 31, 1994. The decrease was principally due to benefits resulting from the consolidation of the general and administrative functions of the acquired companies at Symantec's corporate headquarters and the decrease in legal expenses as a result of the settlement of two class action complaints in the December 1993 quarter. Future growth of the Company is expected to result in an increase in the dollar amount of general and administrative spending from current levels. ACQUISITION, RESTRUCTURING AND OTHER EXPENSES. In connection with the various acquisitions completed in fiscal 1995 and 1994 (see Notes 1 and 4 of Notes to Consolidated Financial Statements), significant acquisition expenses were incurred. These acquisition expenses principally included fees for legal, accounting and financial advisory services, the write- off of duplicative capitalized technology, the modification of certain development contracts and expenses related to the combination of the companies, including the elimination of duplicative and excess facilities and personnel. These charges approximated $9.5 million and $25.9 million in the nine months ended December 31, 1994 and 1993, respectively. Symantec has completed a number of acquisitions and expects to acquire other companies in the future. In addition to the significant business risks associated with acquisitions, including the successful combination of the companies in an efficient and timely manner, the coordination of research and development and sales efforts, the retention of key personnel, diversion of management's attention away from day-to-day matters and the integration of the acquired products, Symantec typically incurs significant acquisition expenses for legal, accounting and financial advisory services, the write-off of duplicative technology and other expenses related to the combination of the companies. These expenses may have a significant adverse impact on the Company's future profitability and financial resources. Additionally, there may be an adverse impact on revenues of acquired companies due to the transition of product sales and marketing and research and development activities. Symantec often experiences significant declines in revenues of acquired company products immediately subsequent to an acquisition. To date the Company has not experienced any material change in estimated acquisition or restructuring expenses; however, there can be no assurances that the Company will not experience material adverse changes of any estimated expenses in the future or in connection with any future acquisition or restructuring charge. Symantec is involved in a number of judicial and administrative proceedings incidental to its business (see Note 8 of Notes to Consolidated Financial Statements). The Company intends to defend 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 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. INTEREST INCOME, INTEREST EXPENSE AND OTHER INCOME (EXPENSE). Interest income increased to $0.8 million in the quarter ended December 31, 1994 from $0.3 million in the prior year's comparable quarter due to higher 20

interest rates and higher average cash balances. Interest expense increased $0.1 million to $0.6 million in the quarter ended December 31, 1994 from $0.5 million in the prior year's comparable quarter. The Company 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 consummated. Symantec utilizes some natural hedging to mitigate the Company's transaction exposures and, effective December 31, 1993, the Company commenced hedging some residual transaction exposures through the use of 30-day forward contracts. There have been no significant gains or losses to date with respect to these activities. Gains or losses would occur on 30-day forward contracts held by the Company 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, intercompany balances and trade payables. There can be no assurance that these strategies will continue to be effective or that transaction losses can be minimized or forecasted accurately. The Company does not hedge either its translation risk or its economic risk. INCOME TAX PROVISION (BENEFIT). The effective income tax provision for the nine months ended December 31, 1994 was 26% which compared to an effective income tax benefit rate of 20% in the prior year's comparable period. The low benefit rate for the nine months ended December 31, 1993 was primarily attributable to unbenefitted temporary differences from Central Point. LIQUIDITY AND CAPITAL RESOURCES Cash and short-term investments were $87.0 million at December 31, 1994 and $60.5 million at March 31, 1994. This increase in cash is principally due to cash provided by operating activities and cash generated from sales of common stock and the exercise of stock options. Cash provided by operating activities includes the Company's net income of $18.1 million, tax refunds of $7.2 million and a decrease in accounts receivable of $3.8 million. In addition to cash and short-term investments of $87.0 million at December 31, 1994, the Company has $9.5 million available under a bank line of credit which expires in October 1995. Company acquisitions in the future may cause the Company to be in violation of the line of credit covenants; however, Symantec 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. Due to cash payments expected to be made during the remainder of fiscal 1995 related to costs associated with the previous acquisitions and restructurings (see Note 4 of Notes to Consolidated Financial Statements), the Company anticipates that aggregate cash and short-term investments may decline. Further, the Company may utilize additional cash in connection with the potential acquisition of additional companies and software product rights in the future. The Company believes existing cash and short-term investments will be sufficient to fund operations for the next year. However, if the Company were to sustain further significant losses, there can be no assurances that the bank line of credit, which is available through October 1995, would remain available. Additionally, the Company could be required to reduce operating expenses, which could result in further product delays; reassess acquisition opportunities, which could negatively impact the Company's growth objectives; and/or pursue further financing options. Trade accounts receivable decreased from $48.3 million at March 31, 1994 to $44.5 million at December 31, 1994 due to improved cash collections. Working capital increased from $49.6 million at March 31, 1994 to $78.8 million at December 31, 1994, principally due to working capital provided by operating activities and proceeds from the sales of common stock under the Company's employee stock plans which were partially offset by capital expenditures and payments of acquisition expenses made with respect to the acquisitions of Central Point and Fifth Generation and the Central Point restructuring. Long- term obligations at December 31, 1994 and March 31, 1994 consisted primarily of convertible subordinated debentures. 21

PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Information with respect to this item is incorporated by reference to Note 8 of Notes to Consolidated Financial Statements included herein on page 10 of this Form 10-Q. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) An annual meeting of stockholders of Symantec was held on November 21, 1994. (b) Matters voted on at the meeting and votes cast on each were as follows: <TABLE> <CAPTION> Total Vote Authority Total Vote Withheld Withheld for Each From Each from All Director Director Nominees --------- -------- -------- <S> <C> <C> <C> 1. To elect six directors to Symantec's Board of Directors, each to hold office until his successor is elected and qualified or until his earlier resignation or removal. Charles M. Boesenberg. . . . . . 30,157,794 348,913 222,778 Walter W. Bregman. . . . . . . . 30,246,828 259,879 222,778 Carl D. Carman . . . . . . . . . 30,257,718 248,989 222,778 Gordon E. Eubanks, Jr. . . . . . 30,039,990 466,717 222,778 Robert S. Miller . . . . . . . . 30,260,165 246,542 222,778 Leslie L. Vadasz . . . . . . . . 30,262,768 243,939 222,778 <CAPTION> Broker For Against Abstain "Non-Votes" ---------- ------- -------- ----------- <S> <C> <C> <C> <C> 2. To consider and act upon a proposal 29,522,386 502,265 370,066 111,990 to amend Symantec's Certificate of Incorporation to increase by 20,000,000 (from 50,000,000 to 70,000,000) the number of shares of Common Stock authorized for issuance. 3. To consider and act upon a proposal 22,493,651 3,467,005 530,745 4,015,306 to amend the 1989 Employee Stock Purchase Plan to increase the number of shares authorized for issuance by 400,000 to 1,500,000. 4. To consider and act upon a proposal to 14,549,270 11,169,373 533,434 1,254,630 amend the 1988 Employees Stock Option Plan to increase the number of shares authorized for issuance by 4,000,000 to 12,700,000. 5. To consider and act upon a proposal to 30,021,073 17,637 467,997 -- ratify the Board of Director's selection of Ernst & Young as Symantec's independent auditors. </TABLE> 22

ITEM 5. OTHER INFORMATION On January 30, 1995, the Company filed a Registration Statement on Form S-3, as declared effective on February 3, 1995, covering "All of the shares of Common Stock of Symantec Corporation being sold by three purchasers of the Company's subordinated notes convertible into shares of the Company's Common Stock and by two purchasers of warrants to purchase the Company's Common Stock." This registration statement registered 2,198,295 shares. The holders of the subordinated notes are required to provide five business days advance notice of any sale of the shares covered by this registration statement. To date, no such notice has been given. Under the agreement which required the Company to register these shares, the shares can only be sold after receipt of a notice from the debentureholders as described above that they intend to sell their shares. On January 23, 1995, the Company's registration statement of Form S-8 covering an amendment to the "1988 Employees Stock Option Plan" and the "1989 Employee Stock Purchase Plan" became effective. This registration statement registered 4,400,000 shares. 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: 4.01 Restated Certificate of Incorporation of the Registrant. (Incorporated by reference to Exhibit 4.01 filed with the Registrant's Registration Statement on Form S-3 (No. 33- 82012) as declared effective on February 3, 1995.) 10.01* Employment and Consulting Agreement among Symantec Corporation, Symantec Acquisition Corp. and Charles M. Boesenberg. (Confidential treatment has been granted with respect to portions of this exhibit.) 11.01 Computation of Net Income (Loss) Per Share. (b) Reports on Form 8-K None ITEMS 2 AND 3 ARE NOT APPLICABLE AND HAVE BEEN OMITTED. - -------------------------- * Indicates a management contract or compensatory plan or arrangement 23

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: February 9, 1995 SYMANTEC CORPORATION By /s/ Robert R. B. Dykes ---------------------------- Robert R. B. Dykes Executive Vice President/Worldwide Operations and Chief Financial Officer (duly authorized officer) 24

EXHIBIT 10.01 EMPLOYMENT AND CONSULTING AGREEMENT This EMPLOYMENT and CONSULTING AGREEMENT("AGREEMENT") is made as of March 31, 1994 among Symantec Corporation, a Delaware corporation ("Symantec"), Symantec Acquisition Corp., a Delaware corporation ("SYMANTEC ACQUISITION"), and Charles M. Boesenberg ("BOESENBERG") BACKGROUND This Agreement is entered into in connection with an Agreement and Plan of Reorganization (the "PLAN" ) dated as of March 31, 1994, among Symantec, Symantec Acquisition and Central Point Software, Inc., a Delaware corporation ("CENTRAL POINT"), pursuant to which Central Point is to merge with and into Symantec Acquisition, the wholly owned subsidiary of Symantec. The effective date of this Agreement will be the date the merger becomes effective under the terms of the Plan (the "EFFECTIVE DATE") Should the Plan be terminated prior to the effectiveness of the merger, this Agreement shall be of no further force or effect. Boesenberg and Central Point have entered into a certain letter agreement (the "LETTER AGREEMENT") dated September 6, 1993, which gives to Boesenberg certain rights in the event of a change in control as contemplated by the Plan. If the merger under the terms of the Plan becomes effective, Boesenberg agrees to waive his rights under the Letter Agreement in consideration for the rights granted under this Agreement. Boesenberg is the President, Chief Executive Officer and Chairman of the Board of Central Point and has been actively involved in the operations of Central Point. To preserve and protect the intangible assets of Central Point, including Central Point's good will, customers and trade secrets of which Boesenberg has knowledge, and in consideration for Symantec's and Symantec Acquisition's entering into and performing under the Plan and in consideration for Boesenberg waiving his rights under the Letter Agreement, the parties hereto enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing background and the mutual agreements of the parties contained herein, Symantec, Symantec Acquisition and Boesenberg hereby agree as follows: 1. PERIOD OF SERVICE. Boesenberg shall be employed by Symantec, on a full-time basis, from the Effective Date to and including March 31, 1995 ("EMPLOYMENT PERIOD"), unless terminated pursuant to Section 6 hereof. During the Employment Period, Boesenberg and Symantec shall meet and confer about the possibility of continuing Boesenberg's employment after March 31, 1995. Symantec agrees that it in good faith will offer a position to Boesenberg which will meet or exceed Boesenberg's level of responsibility during the Employment Period at the same or greater level of base compensation and benefits provided in this Agreement. Boesenberg in his own discretion may accept or decline any offer of employment beyond the Employment Period which offer may be declined for any reason or no reason at all. If Symantec for any reason fails to make an offer of employment, or if Boesenberg declines or fails to accept any offer by March 31, 1995, then from April 1, 1995, to March 31, 1996 (the "CONSULTING PERIOD"), Boesenberg shall act as a consultant to Symantec. During the Consulting Period, Boesenberg will devote such time as may reasonably be required to provide services hereunder, it being agreed that Boesenberg will render services for not less than twelve (12) days of service hereunder per calendar quarter during the Consulting Period. 2. DUTIES. Boesenberg will during the Employment Period and Consulting Period perform services and devote his energy, knowledge and training in the advancement of Symantec's interests in accordance with Boesenberg's experience and skills. Symantec agrees that the services requested of Boesenberg during the Employment Period will be commensurate with those of other officers of Symantec with similar responsibilities. Boesenberg will perform the duties reasonably and appropriately requested of him from time to time by Gordon Eubanks President and Chief Executive Officer of Symantec ("EUBANKS"), or his successor, and Boesenberg will 1

diligently and conscientiously perform such duties. Boesenberg shall report directly to Eubanks or his successor at Symantec's Beaverton office. At the first Board of Directors meeting following the Effective Date Boesenberg shall be made a member of the Board of Directors of Symantec. At the commencement of the Consulting Period, Boesenberg shall be entitled to the compensation paid to other nonemployee directors for their services including, but not limited to, an option to purchase 30,000 (or such other amount specified by Symantec's Directors Stock Option Plan) shares of Symantec common stock. Such option shall be granted at the first Board of Directors meeting following the commencement of the Consulting Period and shall have an exercise price equal to the fair market value of Symantec common stock as of the first Board of Directors meeting following the commencement of the Consulting Period. Such fair market value shall be determined according to the consistently applied past practice of Symantec. The compensation paid under this paragraph shall be in addition to the compensation and benefits paid under this Agreement. 3. COMPENSATION. For the services provided during the Employment Period, Symantec agrees to pay compensation at the rate of $235,000.00 per year. For the services provided during the Consulting Period, Symantec agrees to pay compensation of $360,000.00 per year. Payments shall be paid to Boesenberg twice a month during the Employment Period and Consulting Period. In addition, Symantec will reimburse Boesenberg for all reasonable out-of-pocket expenses, including travel, and entertainment expenses incurred by Boesenberg in providing the services under this Agreement within thirty (30) days after receiving written evidence of such expenses from Boesenberg as required pursuant to Symantec's standard policies and record keeping procedures applicable to its employees. Subject to the limitations set forth below and provided that Boesenberg has remained an employee of Symantec through March 31, 1995 (unless terminated by Symantec without cause or as a result of his death or disability pursuant to Section 6(b)), Symantec agrees to pay to Boesenberg as additional incentive compensation, at such time as Symantec announces its financial results for the fiscal quarters ending September 30, 1994, December 30, 1994 and March 31, 1995, respectively, a bonus based on a bonus target amount of $31,250 per quarter. The amount of such target bonus actually payable with respect to any such quarter will be a function of the recognizable revenue (as such term is defined below) generated by Central Point business unit which Boesenberg will control during such quarter (the CP Unit"), as compared to the quarterly revenue goals for the CP Unit set forth on Schedule A hereto. The amount of the bonus target payable to Boesenberg for any such quarter shall be: (i) none, if the recognizable revenue from the CP Unit during such quarter is less than eighty one percent (81%) of the revenue goal for such quarter, or (ii) twenty-five percent (25%) if the recognizable revenue from the CP Unit during such quarter is eighty one percent (81%) of the revenue goal for such quarter, with the bonus increasing by 3.947% of the bonus target for each percent increase in the recognizable revenue from the CP Unit during such quarter in excess of eighty one percent (81%) of the revenue goal and with the bonus increasing by 2% of the bonus target for each percent increase in the recognizable revenue from the CP Unit during such quarter in excess of one hundred percent (100%) of the bonus target. Additionally, provided that Boesenberg has remained an employee of Symantec through March 31, 1995 (unless terminated by Symantec without cause or as a result of his death or disability pursuant to Section 6(b)), Boesenberg will be entitled to an additional bonus payable at such time as Symantec announces its financial results for the fiscal quarter ending March 31, 1995 equal to (i) $25,000 if the recognizable revenue from the CP Unit during three of the quarters referenced on Schedule A is no less than one hundred percent (100%) of the revenue goals for such three quarters and the recognizable revenue for the remaining quarter is no less than eighty percent (80%) of the revenue goals for such quarter or (ii) $100,000 if the recognizable revenue from the CP Unit during all four of the quarters referenced on Schedule A is no less than one hundred percent (100%) of the revenue goals for such quarters. In all cases, revenue from the CP Unit shall be calculated as: the revenue value of sales of Central Point-branded products (except those offered for the Chicago Operating System) and those network products that are today Central Point branded and which may be rebranded by Symantec by the following distributors (800 Software, Corporate Software, Egghead, IMD, Kenfil, MacWarehouse, Merisel, PC Connection, Softmart, Tech Data, 2

ASAP, Software, Multiple Zones, Computers 2000 and Software Spectrum) to their customers less returns to those distributors plus the value of OEM sales and direct sales (including, without limitation, sales of Central Point branded product through direct mail and telesales efforts) less returns from other customers. Additionally, for the purposes of determining whether such financial goals have been met for the purposes of paying the bonuses specified in the preceding paragraph or extending the non-compete provisions of Section 8(a), revenue from the CP Unit will also be deemed to include revenue from the sale of Symantec products as a result of direct mail solicitations of customers through the use of the CP Unit registered customer database. Notwithstanding any other provision of this Agreement, no quarterly financial goal will be deemed to have been met for the purpose of paying bonuses or vesting of stock options hereunder if the CP Unit exceeds the expense budget for such quarter set forth on Schedule A hereto (subsequent to the Effective Date) unless a variance to such budget is approved in writing by the CEO of Symantec, provided however, that the expense budget may be exceeded in the June quarter to the extent of any bonuses paid where revenues for such quarter exceed the revenues goal for such quarter by at least the amount of any such bonuses. As additional incentive compensation, Symantec agrees to grant to Boesenberg an option to purchase 50,000 shares of its common stock at the first regular board meeting after the Effective Date, which option shall have a per share exercise price equal to the fair market value of Symantec's common stock as of the date of such meeting. Provided that Boesenberg has remained an employee of Symantec through March 31, 1995 (unless terminated by Symantec without cause or as a result of his death or disability pursuant to Section 6(b)), such option will vest upon Symantec's announcement of its financial results for the fiscal quarter ending March 31, 1995 (i) as to 16,666 shares if the Central Point business unit which Boesenberg will control during such quarter met the quarterly financial goal specified above for the fiscal quarter ending September 30, 1994, (ii) as to 16,666 shares if the Central Point business unit which Boesenberg will control during such quarter met the quarterly financial goal specified above for the fiscal quarter ending December 30, 1994, (iii) as to 16,667 shares if the Central Point business unit which Boesenberg will control during such quarter met the quarterly financial goal specified above for the fiscal quarter ending March 31, 1995. Any of such options which did not vest as a result of the failure of the Central Point business unit which Boesenberg will control to have met one or more quarterly financial goals, will vest on the fifth anniversary of the Effective Date, provided that Boesenberg is then still an employee of Symantec or one of its subsidiaries. If Boesenberg voluntarily leaves Symantec (other than as a result of his death or disability pursuant to Section 6(b)) or is terminated for cause before the end of the Employment Period, Boesenberg shall forfeit the compensation yet to be paid or received under this Section including all compensation for the remaining Employment Period and Consulting Period. 4. BENEFITS (a) EMPLOYEE BENEFITS. During the Employment Period, Boesenberg shall be entitled to all employee benefits customarily and regularly granted to the employees of Symantec responsible for similar duties, including vacations, holidays, etc. with the exclusion of participation in Symantec's Management Bonus Objective Plan. (b) RELOCATION BENEFITS. Symantec also agrees that it will reimburse Boesenberg's reasonable actual packing and moving expenses from his residence in the Portland area to anywhere in the continental United States made anytime on or before September 30, 1997. Such reimbursement shall include real estate commissions and standard closing costs incurred in connection with the sale of Boesenberg's home in the Portland area and packing and transportation of his household goods. For the purpose of this paragraph, real estate commissions of 7% or less shall be deemed reasonable and Symantec agrees to pay in full the lowest of three written bids to pack and transport such household goods provided by Boesenberg. Standard closing costs shall be determined by the custom and practice for single family real estate sales; in the Portland area at the time of the sale. Symantec also agrees to pay an additional amount to cover any federal, state or local income and employment taxes due in connection with the reimbursement of such relocation expenses (the "Expenses Gross-up"). In calculating the Expenses Gross-up, it shall be assumed that Boesenberg has paid the maximum federal, state and local tax rate then in effect. 3

(c) STOCK PURCHASE PLAN . Until the termination or expiration of this Agreement, Boesenberg shall be eligible to participate in any applicable Symantec stock purchase plan then in effect. (d) OFFICE EQUIPMENT. In order to perform the services hereunder, Symantec and Symantec Acquisition hereby transfer all right title and interest to the Toshiba portable computer and docking station, H-P Laser Writer and panofax facsimile machine presently in the possession of Boesenberg and which have been previously provided to Boesenberg by Central Point. 5. Innovations. (a) DISCLOSURE OF INNOVATIONS. Boesenberg agrees to disclose in writing to Symantec all inventions, products, computer programs, procedures, improvements, developments, drawings, notes, documents, information and materials made, conceived or developed by Boesenberg, alone or jointly with others, in the course of performing work for Symantec, Central Point, or Symantec Acquisition under the Agreement ("Innovations"). (b) ASSIGNMENT OF OWNERSHIP. Boesenberg hereby irrevocably transfers and assigns any and all of his right, title and interest in and to the Innovations, including but not limited to all copyrights, patent rights, trade secrets and trademarks, to Symantec. All Innovations will be the sole property of Symantec and Symantec will have the sole right to determine the treatment of any Innovations, including the right to keep them as trade secrets, to file and execute patent applications on them, to use and disclose them without prior patent application, to file registrations for copyright or trademark on them in its own name, or to follow any other procedure that Symantec deems appropriate. Boesenberg agrees: (i) to disclose promptly in writing to Symantec all Innovations; (ii) to cooperate with and assist Symantec at its expense to apply for, and to execute any applications and/or assignments reasonably necessary to obtain, any patent, copyright, trademark or other statutory protection for Innovations in Symantec's name as Symantec deems appropriate and, (iii) to otherwise treat all Innovations as "Confidential Information," as defined below. These obligations to disclose, assist, execute and keep confidential will survive any expiration or termination of this Agreement. (c) MORAL RIGHTS WAIVER. "Moral Rights" means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty. Boesenberg hereby irrevocably transfers and assigns to Symantec any and all Moral Rights that Boesenberg may have in any Innovation. Boesenberg also hereby forever waives and agrees never to assert against Symantec, its successors or licensees, any and all Moral Rights Boesenberg may have in any Innovation, even after expiration or termination of this Agreement. 6. TERMINATION. (a) FOR CAUSE. Symantec may terminate Boesenberg's employment at any time for "cause," effective immediately upon written notice to Boesenberg, without prejudice to any other remedy which Symantec may be entitled at law, in equity, or under this Agreement. As used in this Subsection 6(a), "cause" will mean (i) an intentional tort (excluding any tort relating to a motor vehicle) which causes loss, damage or injury to the property or reputation of Symantec or its subsidiaries, (ii) any crime or act of fraud or dishonesty against Symantec or its subsidiaries, (iii) the commission of a felony, (iv) Boesenberg's habitual neglect of his duties which is not cured within ten (10) days after written notice thereof by the President of Symantec to Boesenberg, (v) the disregard of the written policies of Symantec or its subsidiaries which causes loss, damage or injury to the property or reputation of Symantec or its subsidiaries which is not cured within ten (10) days after written notice of such neglect by the President of Symantec to Boesenberg, (vi) or any material breach or Articles 5, 8 or 9 of this Agreement. In the event of any termination for cause hereunder, Boesenberg will receive all compensation under Section 3 until the date of termination, all benefits under Section 4 until the date of termination (except as to those benefits which must be continued pursuant to applicable law) and Boesenberg shall have the right to exercise vested options as provided under Section 27. (b) UPON DEATH OR DISABILITY. Symantec may terminate Boesenberg's employment upon written notice if Boesenberg dies or suffers any physical or mental disability reasonably preventing him from performing 4

his substantial or material duties for a period of three (3) consecutive months. However, such death or disability, whether during the Employment Period or Consulting Period, shall not terminate the obligations of Symantec to pay the compensation under Section 3 until the expiration of this agreement and provide the benefits under Section 4 for the Consulting Period. Such compensation and benefits shall be paid to Boesenberg, his wife, Nancy B. Boesenberg, or, if she is deceased, Boesenberg's estate. Furthermore, such death or disability shall not terminate the indemnification obligation referred to in Section 26 any outstanding option at the time of disability shall continue to vest and become exercisable, as provided in Section 27 and in the case of death become immediately excercisable and Boesenberg, his wife or, if she is deceased, his estate shall have the right to exercise such vested option as provided in such Section. (c) EXPIRATION Unless terminated earlier as provided by paragraph (a), this Agreement shall continue to and expire at midnight March 31, 1996. (d) TERMINATION BY SYMANTEC OTHER THAN FOR "CAUSE". Symantec may terminate Boesenberg's employment or consulting services at any time for whatever reason it deems appropriate. Upon such termination, Symantec shall continue to pay compensation under Section 3 as if all revenue goals for the CP Unit had been achieved at the 100% level and provide the benefits under Section 4 to the original dates contemplated for the Employment Period and Consulting Period. Boesenberg's sole remedy at law, in equity or under this Agreement shall be the payment of such compensation and benefits. Furthermore, after such termination Boesenberg shall have the right to exercise vested options as provided in Section 27. 7. EFFECT OF EXPIRATION OR TERMINATION. Upon the expiration or termination of this Agreement as provided in Section 6: (a) Each party will be released from all obligations to the other arising after the date of expiration or termination, except that expiration or termination of this Agreement will not relieve Boesenberg of his obligations; under Sections 5, 8 and 9, nor will expiration or termination relieve Boesenberg, Symantec or Symantec Acquisition from any liability arising from any breach of this Agreement, nor will expiration or termination relieve Symantec or Symantec Acquisition of any obligations (except to the extent that this Agreement is terminated by Symantec for cause) under Section 3 for consulting fees to the extent that the termination is as a result of Bosenberg's death or disability as provided in Section 6(b), under Sections 4, paragraph (a) (to the extent benefit coverage is thereafter provided under terms of such coverage or as required by law) and paragraph (b), 25 ( to the extent Boesenberg has rights under such insurance policies and 26, or pursuant to stock purchase options which are vested at the time of such expiration or termination of this Agreement or which continue to vest as provided under Section 27; and (b) Boesenberg will promptly notify Symantec of all Confidential Information (as hereinafter defined), including but not limited to the Innovations, in Boesenberg's possession and, at the expense of Symantec and in accordance with Symantec's instructions will promptly deliver to Symantec all such Confidential Information. 8. CONFIDENTIAL INFORMATION. Boesenberg acknowledges that Boesenberg will acquire information and materials from Symantec, Central Point and Symantec Acquisition and acknowledge about the business, products, programming techniques, experimental work, customers, clients and suppliers of Symantec and that all such knowledge, information and materials acquired, the existence, terms and conditions of this Agreement, and the Innovations, are and will be the trade secrets and confidential and proprietary information of Symantec (collectively "CONFIDENTIAL INFORMATION"). Confidential Information will not include, however, any information which is or becomes part of the public domain through no fault of Boesenberg or that Symantec regularly gives to third parties without restriction on use or disclosure. Boesenberg agrees to hold all such Confidential Information in strict confidence, not to disclose it to others or use it in any way, commercially or otherwise, except in performing the services required hereunder, and not to allow any unauthorized person access to it, either before or after expiration or termination of this Agreement. Boesenberg further agrees to take all action reasonably necessary to protect the confidentiality of the Confidential Information including, without limitation, implementing and 5

enforcing operating procedures to minimize the possibility of unauthorized use or copying of the Confidential Information. 9. AGREEMENT NOT TO COMPETE. (a) From the Effective Date until the date specified below, Boesenberg shall not, directly or indirectly, individually or as an employee, partner, officer or shareholder or in any other capacity whatsoever (other than as a director) of or for any person, firm, partnership, company or corporation other than Symantec or its subsidiaries own, manage, operate, sell, control or participate in the ownership, management, operation, sales or control of or be connected in any manner with any business engaged in the design, research, development, marketing, sales, or licensing of any computer hardware, software or other high technology products. The foregoing limitation will apply until at least March 31, 1995 and will be extended (i) until June 30, 1995 if the quarterly revenue targets referenced in Section 3 are missed by fifteen percent (15%) of such revenue targets for two of such quarters and (ii) until September 30, 1995 if the quarterly revenue targets referenced in Section 3 are missed by fifteen percent (15%) of such revenue targets for three or four of such quarters. Notwithstanding the foregoing, for the purpose of determining the length of the restriction set forth in this Section 9(a), any recognizable revenue generated by the CP Unit for any such quarter in excess of one hundred percent (100%) of the quarterly revenue target for such quarter may be applied to cover any shortfall for any other quarter. From the Effective Date until March 31, 1995, Boesenberg may continue as a director of AER Enterprises and any other corporation with the consent of Symantec. After March 31, 1995, Boesenberg may be a director of any corporation consistent with Boesenberg's obligation not to compete as set forth in this remaining Section (b) For the two year period following the Effective Date, Boesenberg shall not, directly or indirectly, individually or as an employee, partner, officer, director or shareholder or in any other capacity whatsoever of or for any person, firm, partnership, company or corporation other than Symantec or its subsidiaries: (i) Own, manage, operate, sell, control or participate in the ownership, management, operation, sales or control of or be connected in any manner with any business engaged in the design, research, development, marketing, sales, or licensing of computer software that is substantially similar to or competitive with any computer program or products created, distributed or known by him to be under development by Symantec or any of its subsidiaries or by Central Point prior to the termination of Boesenberg's employment with Symantec; or (ii) To Boesenberg's knowledge, directly or indirectly develop computer software for any one or more of the following or any entity owned by or under common control with any of the following: Microsoft, Novell, Intel, Hewlett-Packard and Cheyenne Software, Inc. (c) For the four year period following the Effective Date, Boesenberg shall not, directly or indirectly, individually or as an employee, partner, officer, director or shareholder or in any other capacity whatsoever of or for any person, firm, partnership, company or corporation other than Symantec or its subsidiaries: (i) Own, manage, operate, sell, control or participate in the ownership, management, operation, sales or control of or be connected in any manner with any business engaged in design, research, development, marketing, sales, or licensing of "utility computer software" that is substantially similar to or competitive with any computer program or products created, distributed or under development by Central Point prior to the Effective Date. (ii) Recruit, attempt to hire, solicit, assist others in recruiting or hiring, or refer to others concerning employment, any person who is or was, an employee of Central Point or Symantec or any of its subsidiaries or induce or attempt to induce any such employee to terminate his employment with Central Point, Symantec or any of its subsidiaries. (d) The foregoing restrictions will not apply to Boesenberg's personal investments in publicly traded corporations regardless of the business they are engaged in, provided that Boesenberg does not at any time own in excess of one percent (1%) of the issued and outstanding stock of any such corporation. 6

10. OTHER AGREEMENTS. Boesenberg represents that Boesenberg has no other agreements or commitments that would hinder the performance of Boesenberg's obligations under this Agreement and Boesenberg will not enter into any such agreements. Boesenberg will indemnify Symantec and hold it harmless from any claims, damages, losses and expenses incurred by Symantec as a result of any breach of Boesenberg's representations and obligations under Section 10 of this Agreement. Unless authorized by law, Boesenberg will not disclose to Symantec any innovation or confidential information belonging to any former or current employer or to any person other than Symantec. 11. STATUS AS INDEPENDENT CONTRACTOR. It is understood and agreed that during the Consulting Period that Boesenberg will not be independent contractor and that Boesenberg will not be an agent or employee of Symantec and has no authority whatsoever to bind Symantec by contract or otherwise. Boesenberg represents to Symantec that no third party or other entity has participated in the making of this Agreement as a broker, agent or otherwise. 12. EMPLOYMENT TAXES AND BENEFITS. Boesenberg acknowledges that during the Consulting Period it shall be Boesenberg's sole obligation to report as self-employment income all compensation received by Boesenberg from Symantec for Boesenberg's service as a consultant. 13. REMEDY. Because Boesenberg's breach of Sections 5, 8 and 9 of this Agreement will cause Symantec irreparable harm for which money is inadequate compensation, Symantec will be entitled to injunctive and other preliminary and equitable relief against any material breach or threatened breach of this Agreement, in addition to damages and any other available remedies. 14. ASSIGNMENT; SUCCESSORS. Due to the unique nature of the services to be provided hereunder, Boesenberg may not delegate his duties under this Agreement. This Agreement is binding upon and inures to the benefit of Symantec and Symantec Acquisition and their successors and assigns. 15. MODIFICATION. This Agreement may be modified or amended only by a writing signed by Symantec, Symantec Acquisition and Boesenberg. 16. GOVERNING LAW. The validity, construction and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of California, excluding that body of law pertaining to conflict of laws. 17. SEVERABILITY. If any provision of this Agreement is to any extent invalid under applicable law, that provision shall be enforced to the extent permissible, and the remaining provisions of this Agreement shall continue in full force and effect. 18. NON-WAIVER. No failure or delay by Symantec or Boesenberg in exercising any right or remedy under this Agreement shall wave any provision of this Agreement, nor shall any single or partial exercise by Symantec or Boesenberg of any right or remedy under the Agreement preclude any of them from otherwise or further exercising these rights or remedies, or any other rights or remedies by law or any related documents. 19. CAPTIONS. The headings in this Agreement are for convenience only and do not effect interpretation of this Agreement. 20. ENTIRE AGREEMENT. This Agreement, together with attachments hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all previous and contemporaneous oral and written negotiations, agreements or other commitments. 21. NOTICES. All notices and other communications required or permitted under this Agreement shall be in writing and hand delivered, or sent by facsimile, certified first class and hand delivered, or sent by facsimile, certified first class mail, postage pre-paid, or sent by an internationally recognized express courier service. Such 7

notices and other communications shall be effective upon receipt if personally delivered or on the next business day if sent by facsimile, three (3) business days after mailing if sent by mail, and one (1) business day after dispatch if sent by express courier, to the following addresses, or such other addresses as either party shall notify the other party: If to Symantec: Symantec Corporation 10201 Torre Avenue Cupertino, CA 94014-2132 Attn: General Counsel If to Boesenberg: Charles M. Boesenberg 2470 Summit Court Lake Oswego, OR 97034 22. ATTORNEYS' FEES. In the event of any claim, demand arbitration or suit arising out of or with respect to this Agreement, the prevailing party shall be entitled to reasonable costs and attorneys' fees, including any such costs and fees upon appeal. 23. ARBITRATION AGREEMENT. Any controversy between the parties regarding the construction or application of this Agreement, and any claim arising out of this Agreement or its breach, shall be submitted to arbitration on the written request of one party by the service of that request on the other party. Such arbitration shall be held under the California Code of Civil Procedure, section 1280 et seq., as amended. 24. FORUM SELECTION. The parties agree that any arbitration or court proceeding if the matter is not arbitrated shall be held in Santa Clara County, California, and both parties waive any objection they may have concerning venue or personal jurisdiction to such county. 25. INSURANCE. From the Effective Date until such time as Boesenberg ceases to be an officer or director of Symantec, Symantec shall provide or cause to be provided to Boesenberg insurance coverage under its policies for directors' and officers' liability. 26. INDEMNIFICATION. Neither this Agreement, its termination nor the merger of Central Point into Symantec Acquisition shall act to modify or terminate any written agreement or obligation under operation of law that Central Point may have to indemnify Boesenberg for actions or failures to act during the term of Boesenberg's employment with Central Point and Central Point, as the surviving entity in the merger contemplated by the Plan, will continue to have all such indemnification obligations. 27. VESTING AND EXERCISE OF STOCK OPTIONS. On the Effective Date, each outstanding option previously granted to Boesenberg by Central Point shall become immediately exercisable for an additional number of shares equal to that number of shares for which each such option would have become exercisable during the two years after the date of the merger. Until the termination or expiration of this Agreement, any outstanding options held by Boesenberg after the merger under the Plan shall continue to vest and become excercisable as provided in such option. Notwithstanding anything contained in any other agreement, Boesenberg shall have to and including March 31, 1997, to exercise any vested options issued to Boesenberg pursuant to the Plan. IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first written above. SYMANTEC BOESENBERG Symantec Corporation 10201 Torre Avenue __________________________________ 8

Cupertino, CA 95014-2132 Charles M. Boesenberg 2470 Summit Court Lake Oswego, OR 97034 Taxpayer ID#:______________________ (If foreign citizen, copy of visa must be attached.) By:_______________________________ Title:______________________________ SYMANTEC ACQUISITION Symantec Acquisition Address:___________________________ ___________________________________ By:________________________________ Title:_____________________________ SIGNATURE PAGE TO EMPLOYMENT AND CONSULTING AGREEMENT PLEASE RETURN ORIGINAL TO SYMANTEC LEGAL 9

[MATERIAL OMITTED PURSUANT TO ORDER DECLARING CONFIDENTIAL TREATMENT]

Charles Boesenberg December 28, 1994 10201 Torre Avenue Cupertino, CA 95014 Dear Chuck, I am writing to confirm our agreement to modify the terms of your Employment and Consulting Agreement with Symantec dated March 31, 1994 (the "Agreement") to allow you to take a position with another employer prior to the end of the Employment Period specified in that Agreement. Capitalized terms which are defined in the Agreement will have the same meaning as are ascribed to them in the Agreement when used in this letter. Subject to your agreement by countersignature of this letter, the Agreement will be modified as follows: 1) The Employment Period will terminate as of December 31, 1994 and you will be free to seek full-time employment elsewhere, subject to the restrictions on competition with Symantec set forth in Section 9 of the Agreement. 2) Except as set forth in this letter, you will not lose any of the benefits that would have been provided to you under the Agreement if you had remained employed by Symantec through March 31, 1995. 3) Your Consulting Period will commence on January 1, 1995 and end on the anniversary of that date. 4) You will not receive the salary or quarterly bonus that would have been payable to you if you had been employed by Symantec from January 1 through March 31, 1995 and the final 16,667 unvested shares under the 50,000 share option you were granted by Symantec at the commencement of the Employment Period will be canceled without becoming exercisable. 5) For purposes of calculating the bonus payable to you under the third paragraph of Section 3 of the Agreement as a result of the financial performance of the CP Unit during the one year period ending March 31, 1995, as well as for determining the period of your non-compete under Section 9(a), it will be deemed that the CP Unit did not meet its recognizable revenue goal for the March 1995 quarter, regardless of the actual performance of the CP Unit during that period. If the foregoing is consistent with your understanding, please countersign a copy of this letter and return that copy to Derek Witte at Symantec. Sincerely Your, /s/ Gordon E. Eubanks, Jr. Gordon E. Eubanks, Jr. President and CEO Countersigned /s/ Charles Boesenberg - ----------------------- Charles Boesenberg

EXHIBIT 11.01 SYMANTEC CORPORATION COMPUTATION OF NET INCOME (LOSS) PER SHARE <TABLE> <CAPTION> Three Months Ended Nine Months Ended December 31, December 31, ----------------------- ----------------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) 1994 1993 1994 1993 - ---------------------------------------------- ------- --------- ------- --------- <S> <C> <C> <C> <C> PRIMARY NET INCOME (LOSS) PER SHARE Net income (loss) $ 9,058 $(11,073) $18,081 $(35,864) Interest on assumed conversion of convertible subordinated debentures, and assumed repayment of short-term and long-term borrowings and investment in U.S. government securities, net of income tax effect 5 -- 361 -- ------- -------- ------- -------- Net income (loss), as adjusted $ 9,063 $(11,073) $18,442 $(35,864) ------- -------- ------- -------- ------- -------- ------- -------- Weighted average number of common shares outstanding during the period 35,871 33,960 35,533 33,479 Shares issuable from assumed exercise of options 8,284 -- 8,284 -- Shares assumed repurchased with proceeds, limited to 20% of total shares outstanding (7,290) -- (7,290) -- ------- -------- ------- -------- Common and common stock equivalent shares outstanding for purpose of calculating primary net income (loss) per share 36,865 33,960 36,527 33,479 ------- -------- ------- -------- ------- -------- ------- -------- Primary net income (loss) per share $ 0.25 $(0.33) $0.50 $(1.07) ------- -------- ------- -------- ------- -------- ------- -------- FULLY DILUTED NET INCOME (LOSS) PER SHARE Net income (loss) $ 9,058 $(11,073) $18,081 $(35,864) Interest on assumed conversion of convertible subordinated debentures, and assumed repayment of short-term and long-term borrowings and investment in U.S. government securities, net of income tax effect 334 -- 963 -- ------- -------- ------- -------- Net income (loss), as adjusted $ 9,392 $(11,073) $19,044 $(35,864) ------- -------- ------- -------- ------- -------- ------- -------- Weighted average number of common shares outstanding during the period 35,871 33,960 35,533 33,479 Shares issuable from assumed exercise of options 8,284 -- 8,284 -- Shares issuable from assumed conversion of convertible subordinated debentures 2,083 -- 2,083 -- Shares assumed repurchased with proceeds, limited to 20% of total shares outstanding (7,082) -- (6,895) -- ------- -------- ------- -------- Total shares for purpose of calculating fully diluted net income (loss) per share 39,156 33,960 39,005 33,479 ------- -------- ------- -------- ------- -------- ------- -------- Fully diluted net income (loss) per share $ 0.24 $(0.33) $0.49 $(1.07) ------- -------- ------- -------- ------- -------- ------- -------- </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 period ended December 30, 1994 and is qualified in its entirety by reference to such financial statements. </LEGEND> <MULTIPLIER> 1,000 <CURRENCY> U.S. DOLLARS <S> <C> <PERIOD-TYPE> 9-MOS <FISCAL-YEAR-END> MAR-31-1995 <PERIOD-START> APR-02-1994 <PERIOD-END> DEC-30-1994 <EXCHANGE-RATE> 1.00 <CASH> 22691 <SECURITIES> 64355 <RECEIVABLES> 48416 <ALLOWANCES> 3903 <INVENTORY> 5572 <CURRENT-ASSETS> 156079 <PP&E> 70160 <DEPRECIATION> 44884 <TOTAL-ASSETS> 195967 <CURRENT-LIABILITIES> 77312 <BONDS> 25543 <COMMON> 365 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <OTHER-SE> 92747 <TOTAL-LIABILITY-AND-EQUITY> 195967 <SALES> 246319 <TOTAL-REVENUES> 246319 <CGS> 46147 <TOTAL-COSTS> 46147 <OTHER-EXPENSES> 175856 <LOSS-PROVISION> 31 <INTEREST-EXPENSE> 1842 <INCOME-PRETAX> 24480 <INCOME-TAX> 6399 <INCOME-CONTINUING> 18081 <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> 18081 <EPS-PRIMARY> 0.50 <EPS-DILUTED> 0.49 </TABLE>