e10vk
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended April
3, 2009
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the Transition Period
from to .
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Commission File Number
000-17781
SYMANTEC CORPORATION
(Exact name of the registrant as
specified in its charter)
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Delaware
(State or other jurisdiction
of
incorporation or organization)
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77-0181864
(I.R.S. Employer
Identification No.)
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20330 Stevens Creek Blvd.,
Cupertino, California
(Address of principal
executive offices)
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95014-2132
(zip code)
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Registrants telephone number, including area code:
(408) 517-8000
Securities registered pursuant to Section 12(b) of the
Act:
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Common Stock, par value $0.01 per share
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The Nasdaq Stock Market LLC
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(Title of each class)
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(Name of each exchange on which
registered)
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Securities registered pursuant to Section 12(g) of the
Act:
None
(Title of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange
Act. Yes o No þ
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 þ No o
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant
was required to submit and post such
files). Yes o No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer þ
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o No þ
Aggregate market value of the voting stock held by
non-affiliates of the registrant, based upon the closing sale
price of Symantec common stock on October 3, 2008 as
reported on the Nasdaq Global Select Market: $14,129,454,929.
Number of shares outstanding of the registrants common
stock as of May 1, 2009: 817,831,058
DOCUMENTS
INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement to be delivered to
stockholders in connection with our Annual Meeting of
Stockholders for 2009 are incorporated by reference into
Part III herein.
SYMANTEC
CORPORATION
FORM 10-K
For the Fiscal Year Ended April 3, 2009
TABLE OF
CONTENTS
Symantec, we, us, and
our refer to Symantec Corporation and all of its
subsidiaries. Symantec, the Symantec Logo, Norton, and Veritas
are trademarks or registered trademarks of Symantec in the U.S.
and other countries. Other names may be trademarks of their
respective owners.
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FORWARD-LOOKING
STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS
The discussion below contains forward-looking statements, which
are subject to safe harbors under the Securities Act of 1933, as
amended (the Securities Act), and the Securities
Exchange Act of 1934, as amended (the Exchange Act).
Forward-looking statements include references to our ability to
utilize our deferred tax assets, as well as statements including
words such as expects, plans,
anticipates, believes,
estimates, predicts,
projects, and similar expressions. In addition,
statements that refer to projections of our future financial
performance, anticipated growth and trends in our businesses and
in our industries, the anticipated impacts of acquisitions, and
other characterizations of future events or circumstances are
forward-looking statements. These statements are only
predictions, based on our current expectations about future
events and may not prove to be accurate. We do not undertake any
obligation to update these forward-looking statements to reflect
events occurring or circumstances arising after the date of this
report. These forward-looking statements involve risks and
uncertainties, and our actual results, performance, or
achievements could differ materially from those expressed or
implied by the forward-looking statements on the basis of
several factors, including those that we discuss under
Item 1A, Risk Factors. We encourage you to read that
section carefully.
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PART I
Overview
Symantec is a global leader of security, storage and systems
management solutions to help businesses and consumers secure and
manage their information. We conduct our business in three
geographic regions: Americas, which includes United States,
Canada, and Latin America; EMEA, which includes Europe, the
Middle East and Africa; and Asia Pacific Japan (APJ).
Our delivery network includes direct, inside, and channel sales
resources that support our ecosystem of more than 40,000
partners worldwide, as well as various relationships with
original equipment manufacturers (OEMs), Internet
service providers (ISPs), and retail and online
stores. We provide customers worldwide with software and
services that protect, manage and control information risks
related to security, backup and recovery, storage, compliance,
and systems management.
Founded in 1982, Symantec has operations in more than 40
countries and our principal executive offices are located at
20330 Stevens Creek Blvd., Cupertino, California 95014. Our
telephone number at that location is
(408) 517-8000.
Our home page on the Internet is www.symantec.com. Other
than the information expressly set forth in this annual report,
the information contained, or referred to, on our website is not
part of this annual report.
Strategy
Symantecs strategy is to provide software and services to
secure and manage the connected, information-driven world of our
customers against more risks at more points, more completely and
efficiently than any other company. We help individuals, small
businesses, and global organizations ensure that their
information, technology infrastructures and related processes
are protected, managed easily and controlled automatically,
independent of devices, platforms or locations.
We operate primarily in three diversified markets within the
software sector: security, storage and systems management. The
security market includes mission-critical products that protect
consumers and enterprises from threats to electronic
information, endpoint devices, and computer networks. Over the
past year, we have seen a continued rise in the volume of
security threats. Whereas attackers used to mass-distribute a
threat to thousands or millions of targeted machines,
todays attackers often send individually crafted attacks
to each victim. Attackers are also targeting users with
social-engineering attacks, such as phishing websites that steal
financial information, passwords and other personal data. The
Internet has become the primary conduit for attack activity with
hackers funneling threats through legitimate websites, placing a
much larger percentage of the population at risk than in the
past. Security continues to be a top priority for enterprises as
information security is increasingly linked to regulatory
compliance.
The storage software market includes products that manage,
archive, backup, and recover business-critical data. Key drivers
of demand in this market include the increasing volume of
information that organizations of all sizes must manage, which
is doubling every two years, the need for data to be protected
and accessible at all times, and the need for a growing number
of critical applications to be continuously available. Other
factors driving demand in this market include the increasing
pressure on companies to lower storage and server management
costs while simultaneously increasing the utilization,
availability levels, and performance of their existing
information technology (IT) infrastructure.
The systems management market includes products that control the
IT environment by streamlining efforts associated with
deploying, managing, patching and remediating enterprise client
and server assets. The drivers for demand in this market include
customers desire to automate management tasks, to ensure
business productivity and to reduce IT costs and complexity.
We believe that the security, storage and systems management
software markets are converging as customers increasingly
require our help in mitigating their risk profiles and managing
their storage solutions in order to secure and manage their most
valuable asset their information. As the tools and
processes from these formerly discrete
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domains become more integrated, we have taken a more proactive
and policy-driven approach to protecting and managing
information throughout its lifetime.
Business
Developments and Highlights
During fiscal 2009, we took the following actions to support our
business:
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We launched several new products and integrated new features
into our products. Some of the new offerings in our enterprise
business include: advanced electronic discovery and data
de-duplication capabilities in our industry leading archiving
platform; increased ability to discover, monitor and protect
confidential information wherever it is stored or used through
our data loss prevention solution; end-to-end coverage for the
IT compliance lifecycle, including policy management, technical
and procedural controls assessment in our compliance solution;
support for VMware and
Microsoft®
Hyper-V in our backup and recovery solution; offering better
visibility into IT assets, simplified day-to-day manageability
and improved end-user productivity in our systems management
solutions; and workspace management in our endpoint
virtualization solution. In our consumer business, we delivered
more than 300 performance improvements to our 2009 security
products while providing even stronger protection against
web-based attacks and other security threats. In addition, we
expanded our consumer portfolio to include new web-based
offerings for
back-up and
family safety, and we launched a remote PC Help service.
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We completed six acquisitions during fiscal 2009. We expanded
our portfolio in the emerging and high growth areas of
Software-as-a-Service (SaaS) and endpoint
virtualization. In the SaaS space, we acquired MessageLabs Group
Limited (MessageLabs). We also invested in our
Consumer business by acquiring PC Tools Pty Ltd. (PC
Tools) and SwapDrive, Inc. (SwapDrive). The PC
Tools and SwapDrive acquisitions add new products, enhance our
product portfolio with additional features and capabilities as
well as help us acquire new customers.
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We reduced our cost structure in order to better align expenses
with our revenue expectations. Some of the actions we took were:
outsourcing certain IT and back-office finance functions;
tightly managing our headcount costs; consolidating real-estate
facilities; and reducing travel and entertainment expenses and
other discretionary items.
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We made the following key changes to our executive management
team: we announced John Thompsons retirement as Chief
Executive Officer and announced the appointment of Enrique Salem
as President and Chief Executive Officer, each effective
April 4, 2009, the first day of our fiscal 2010. As of that
date, Enrique Salem also joined our Board of Directors and John
Thompson remains the Chairman of the Board.
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We repurchased 42 million shares of our common stock for an
aggregate amount of $700 million.
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Operating
Segments and Products
Our operating segments are significant strategic business units
that offer different products and services, distinguished by
customer needs. During fiscal 2009, we had five operating
segments: Consumer, Security and Compliance, Storage and Server
Management, Services, and Other.
Consumer
Our Consumer segment provides suites and services that include
Internet security, PC tuneup, and backup for individual users
and home offices. Our
Nortontm
brand of consumer security software products provides protection
for
Windows®,
Macintosh®,
Windows-Mobile®,
and
Symbiantm
platforms.
New customer acquisition is driven by increased threats, the
need for identity protection, the growth of online transactions
and the rapid increase of consumer data, such as photos, music
libraries and video. Our award-winning Norton 2009 releases set
a new standard for speed and performance. We continue to acquire
customers through a diversified channel strategy that places our
products where customers want to buy, including most of the top
OEMs and through our number one position in retail. With the
acquisition of PC Tools, Symantec reaches more segments, such as
emerging markets, price sensitive consumers and new
e-commerce
channels.
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Norton retains and leverages its strong existing customer base
through auto-renewal subscriptions, migrating customers from
point products to multi-product suites such as Norton Internet
Security and Norton 360 and selling them additional products or
services such as NortonLive services or the new Norton Online
Backup. Through Norton 360, various partnerships and online
channels, we are the market leader for online backup. Symantec
hosts over 30 petabytes of consumers data and we have more
than 7 million customers.
Symantec continued improving its consumer customer experience,
satisfaction and loyalty during fiscal 2009. Our primary
consumer products are: Norton
360tm,
Norton Internet
Securitytm,
and Norton AntiVirus.
Security
and Compliance
Our Security and Compliance segment helps our customers
standardize, automate and reduce the costs of day-to-day
security activities in order to secure and manage their
information.
Our primary solutions in this segment address the following
areas:
Enterprise
Security
Enterprise security customer demand is driven by the quickly
evolving threat environment, compliance regulations, and the
need to keep confidential information from exposure outside the
organization. Our solutions are built on market-leading policy
management, data loss prevention, endpoint security, antispam,
and content filtering technologies, allowing IT professionals to
proactively mitigate information security risks and policy
violations. We also help customers define, control, and govern
their IT policies from a central location. This enables
customers to protect critical assets and reduce business risk.
Products include Symantec Endpoint Protection, Symantec Data
Loss Prevention, Control Compliance Suite and Symantec
Brightmail Gateway.
Endpoint
Management
Our Endpoint Management business consisting of our systems
management products is driven by the need for automated asset
management, patch management and remediation. Our solutions
offer better visibility into IT assets, simplified day-to-day
manageability and improved end-user productivity, helping
customers realize cost savings and value from their existing IT
investments. Another key demand driver is endpoint
virtualization, which frees up critical information from the
myriad of operating system functions and devices so it can be
secured and managed. Our products include the Altiris Client
Management Suite, Altiris Server Management Suite, Altiris Total
Management Suite, and Symantec Endpoint Virtualization Suite.
Archiving
Growth in our archiving business is driven by increased
e-discovery
requirements and the growth of unstructured data such as email
and instant messaging (IM). Symantec Enterprise
Vaulttm
optimizes storage by reducing expensive long-term storage of
this data in an easy to access format.
Storage
and Server Management
Our Storage and Server Management segment focuses on providing
enterprise customers with storage management, high availability,
and backup and recovery solutions across heterogeneous storage
and server platforms. These solutions enable companies to
standardize on a single layer of infrastructure software that
works on every major distributed operating system and supports
every major storage device, database, and application.
Our primary storage and server management solutions address the
following areas:
Storage
Management and High Availability
Our Storage Management and High Availability business is driven
by our customers need to reduce overall storage costs
through improved utilization of existing systems and
virtualization. The business is also driven by customer
migration to x86 based servers, which provides a reliance on
management and availability tools to manage complexity and
provide business continuity. Our products help customers
simplify their data centers by
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standardizing storage management across their environment for
more efficient use of their existing storage investment. They
also enable enterprises to manage large storage environments and
ensure the availability of critical applications. Products
include Veritas Storage
Foundationtm,
Veritas CommandCentral Storage, and
Veritastm
Cluster Server.
Backup
and Recovery
Growth in the backup and recovery business is driven by
migration from tape to disk-based backup, support for
virtualization, de-duplication, and continuous data protection.
The transition of NetBackup to a platform-based architecture
enables our customers to take advantage of these drivers.
Products include Veritas
NetBackuptm,
Veritas NetBackup
PureDisktm,
Symantec Backup
Exectm,
and Symantec Backup Exec System Recovery.
Services
Symantec Global Services help customers address information
security, availability, storage, and compliance challenges at
the endpoint and in complex, multi-vendor data center
environments. Our Services segment delivers Consulting,
Education and Business Critical Services that help our customers
maximize the value of their investment in our products and
solutions. Managed Services and SaaS offerings provide customers
the additional choice of on-demand services to meet their IT
requirements.
Consulting,
Education and Business Critical Services
Symantec Consulting provides advisory, product enablement and
residency services to enable customers to assess, design,
transform and operate their infrastructure, leveraging Symantec
products and solutions. Education Services provides a full range
of programs, including technical training and security awareness
training, to help customers optimize their Symantec solutions.
Business Critical Services, our highest level of support,
provides personalized, proactive support from technical experts
for enterprises that require secure, uninterrupted access to
their data and applications.
Managed
Services and SaaS
Symantec Managed Services and SaaS offerings enable customers to
place resource-intensive IT operations under the management of
experienced Symantec specialists in order to optimize existing
resources and focus on strategic IT projects. This helps
customers by reducing IT complexity, managing IT risk, and
lowering the cost of operations. Recently acquired SaaS
offerings from MessageLabs, combined with our Symantec
Protection Network backup and recovery offerings provide our
customers the flexibility to manage their business using online
services or hybrid onsite and in-the-cloud solutions. These
services include Symantec Managed Security Services, Symantec
Managed Backup and MessageLabs Email Security Solutions.
Financial
Information by Segment and Geographic Region
For information regarding our revenue by segment, revenue by
geographical area, and long-lived assets by geographical area,
see Note 12 of the Notes to Consolidated Financial
Statements in this annual report. For information regarding the
amount and percentage of our revenue contributed in each of our
segments and our financial information, including information
about geographic areas in which we operate, see Item 7,
Managements Discussion and Analysis of Financial
Condition and Results of Operations and Note 12 of the
Notes to Consolidated Financial Statements in this annual
report. For information regarding risks associated with our
international operations, see Item 1A, Risk Factors.
Sales and
Go-To-Market Strategy
Consumer
We sell our consumer products and services to individuals and
home offices globally through a multi-tiered network of
distribution partners and through
e-commerce
channels. Our products are available to customers through
distributors, retailers, direct marketers, Internet-based
resellers, OEMs, system builders, and ISPs.
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Sales in the Consumer business through our electronic
distribution channel, which includes sales derived from OEMs,
subscriptions, upgrades, online sales, and renewals, grew by
$143 million in fiscal 2009 over fiscal 2008. During fiscal
2009, approximately 79 percent of revenue in the Consumer
segment came from our electronic channels.
Enterprise
We sell and market our products and related services to
enterprise customers through our direct sales force of more than
3,500 and through a variety of indirect sales channels, which
include value-added resellers, large account resellers,
distributors, and system integrators. We also sell our products
through authorized distributors in more than 40 countries and
OEM partners who incorporate our technologies into their
products, bundle our products with their offerings, or serve as
authorized resellers of our products. Our sales efforts are
primarily targeted to senior executives and IT department
personnel responsible for managing a companys IT
initiatives.
During fiscal 2009, we added a SaaS delivery model offering a
pay-as-you-go model that meets the needs of enterprise and small
and medium business with evolving storage and security
requirements.
Marketing
and Advertising
Our marketing expenditure relates primarily to advertising and
promotion, which includes demand generation and brand
recognition of our consumer and enterprise products. Our
advertising and promotion efforts include, but are not limited
to, electronic and print advertising, trade shows, collateral
production, and all forms of direct marketing. We also invest in
cooperative marketing campaigns with distributors, resellers,
retailers, OEMs, and industry partners.
We invest in various retention marketing and customer loyalty
programs to help drive renewals and encourage customer advocacy
and referrals. We also provide focused vertical marketing
programs in targeted industries and countries.
We typically offer two types of rebate programs within most
countries: volume incentive rebates to channel partners and
promotional rebates to distributors and end-users. Distributors
and resellers earn volume incentive rebates primarily based upon
product sales to end-users. We also offer rebates to individual
users who purchase products through various resale channels. We
regularly offer upgrade rebates to consumers purchasing a new
version of a product. Both volume incentive rebates and end-user
rebates are accrued as an offset to revenue.
Support
Symantec has centralized support facilities throughout the world
that provide rapid, around-the-clock response, and are staffed
by technical product experts knowledgeable in the operating
environments in which our products are deployed. Our technical
support experts assist customers with product implementation and
usage, issue resolution and countermeasures, and threat
detection.
Symantec provides customers various levels of enterprise support
offerings. Our enterprise security support program offers annual
maintenance support contracts, including content, upgrades, and
technical support. Our standard technical support includes:
unlimited hotline service delivered by telephone, fax, email,
and over the Internet; immediate patches for severe problems;
periodic software updates; and access to our technical knowledge
base and frequently asked questions.
Our Consumer product support program provides self-help online
services, phone, chat, email support and fee-based premium
support and diagnostic services to consumers worldwide.
Customers that subscribe to LiveUpdate receive automatic
downloads of the latest virus definitions, application bug
fixes, and patches for most of our consumer products.
Customers
In fiscal 2009, 2008 and 2007, one reseller, Digital River
accounted for 10%, 11% and 12%, respectively, of our total net
revenues. Digital River represented the only customer that
accounted for 10 percent or more of
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revenues in fiscal 2009. In fiscal 2008 and 2007, one
distributor, Ingram Micro accounted for 10% and 11%,
respectively, of our total net revenues. Our distributor
arrangements with Ingram Micro consist of several non-exclusive,
independently negotiated agreements with its subsidiaries, each
of which cover different countries or regions. Each of these
agreements is separately negotiated and is independent of any
other contract (such as a master distribution agreement), and
these agreements are not based on the same form of contract.
None of these contracts were individually responsible for over
10 percent of our total net revenues in fiscal 2008 and
2007.
Research
and Development
Research and development expenses, exclusive of in-process
research and development associated with acquisitions, were
$880 million, $894 million and $867 million in
fiscal 2009, 2008 and 2007, respectively, representing
approximately 14%, 15% and 17% of revenue in the respective
periods. We believe that technical leadership is essential to
our success and we expect to continue to commit substantial
resources to research and development.
Symantec embraces a global R&D strategy to drive organic
innovation across the company. Engineers throughout the company
pursue advanced projects and work with our engineering centers,
research labs, global services teams, and new business incubator
to translate R&D into next-generation security, storage and
systems management technologies. Symantec focuses on short,
medium, and long-term applied research, develops new products in
emerging areas, participates in government-funded research
projects, and partners with universities to conduct research to
support Symantecs vision. Symantec holds more than 600
global patents.
Our Security Response experts, located at research centers
throughout the world, are focused on collecting and analyzing
the latest malware threats, ranging from network security
threats and vulnerabilities to viruses and worms. All this data
is collected through the Symantec Global Intelligence Network,
which provides insight into emerging trends in attacks,
malicious code activity, phishing, spam, and other threats. This
hands-on expertise is further leveraged in developing new
technologies and approaches to protecting customers
information and systems.
Acquisitions
Our strategic technology acquisitions are designed to enhance
the features and functionality of our existing products, and
extend our product leadership, as well as to expand into
emerging businesses such as SaaS and endpoint virtualization. We
consider time to market, synergies with existing products, and
potential market share gains when evaluating acquisitions of
technologies, product lines, or companies. We may acquire
and/or
dispose of other technologies, products and companies in the
future.
During fiscal 2009, we completed the following acquisitions:
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Company Name
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Company Description
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Date Acquired
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Mi5, Inc.
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A provider of web security appliances and technology to protect
organizations against web-based threats.
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March 20, 2009
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MessageLabs Group Ltd.
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A provider of managed services to protect, control, encrypt, and
archive electronic communications including email.
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November 14, 2008
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PC Tools Pty. Ltd.
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A global provider of innovative software products designed to
protect the privacy and security of
Windows®
computer users.
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October 6, 2008
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nSuite Technologies, Inc.
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A provider of connection broker and mobile workspace technology
that is utilized in endpoint virtualization.
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August 8, 2008
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SwapDrive, Inc.
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A provider of online backup and storage products.
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June 6, 2008
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AppStream, Inc.
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A provider of application streaming technology that provides an
on-demand application delivery mechanism for endpoint
virtualization.
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April 18, 2008
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For further discussion of our acquisitions, see Note 5 of
the Notes to Consolidated Financial Statements in this annual
report.
Competition
Our markets are consolidating, highly competitive, and subject
to rapid changes in technology. We are focused on integrating
next generation technology capabilities into our solution set in
order to differentiate ourselves from the competition. We
believe that the principal competitive factors necessary to be
successful in our industry also include, time to market, price,
reputation, financial stability, breadth of product offerings,
customer support, brand recognition, and effective sales and
marketing efforts.
In addition to the competition we face from direct competitors,
we face indirect or potential competition from retail,
application providers, operating system providers, network
equipment manufacturers, and other OEMs, who may provide various
solutions and functions in their current and future products. We
also compete for access to retail distribution channels and for
the attention of customers at the retail level and in corporate
accounts. In addition, we compete with other software companies,
operating system providers, network equipment manufacturers and
other OEMs to acquire technologies, products, or companies and
to publish software developed by third parties. We also compete
with other software companies in our effort to place our
products on the computer equipment sold to consumers by OEMs.
The competitive environments in which each segment operates are
described below.
Consumer
Some of the channels in which our consumer products are offered
are highly competitive. Our competitors are intensely focused on
customer acquisition, which has led such competitors to offer
their technology for free, engage in aggressive marketing, or
enter into competitive partnerships. Our primary competitors in
the Consumer segment are Kaspersky Lab, McAfee, Inc.
(McAfee), Microsoft Corporation
(Microsoft), and Trend Micro Inc. (Trend
Micro). There are also several smaller regional security
companies that we compete against primarily in the EMEA and APJ
regions. For our consumer backup offerings, our primary
competitors are Mozy, Inc. (Mozy), acquired by EMC
Corporation, and Carbonite, Inc.
Security
and Compliance
In the security and management markets, we compete against many
companies that offer competing products to our technology
solutions. Our primary competitors in the security and
management market are LANDesk Software, Inc., McAfee, Microsoft,
and Trend Micro. There are also several smaller regional
security companies that we compete against primarily in the EMEA
and APJ regions.
Storage
and Server Management
The markets for storage and backup are intensely competitive.
Our primary competitors are CA, Inc., CommVault Systems, Inc.,
EMC Corporation (EMC), Hewlett-Packard Company
(HP), IBM Corp. (IBM), Microsoft, Sun
Microsystems, Inc., and VMware, Inc.
Services
We believe that the principal competitive factors for our
services segment include technical capability, customer
responsiveness, and our ability to hire and retain talented and
experienced services personnel. Our primary competitors in the
services segment are EMC, HP, IBM, and regional specialized
consulting firms. In the managed security services business, our
primary competitors are IBM, SecureWorks, Inc., and VeriSign,
Inc.
In the SaaS business, which includes the MessageLabs offerings,
our primary competitors are Postini, acquired by Google, Inc.,
and Mozy.
10
Intellectual
Property
Protective
Measures
We regard some of the features of our internal operations,
software, and documentation as proprietary and rely on
copyright, patent, trademark and trade secret laws,
confidentiality procedures, contractual arrangements, and other
measures to protect our proprietary information. Our
intellectual property is an important and valuable asset that
enables us to gain recognition for our products, services, and
technology and enhance our competitive position.
As part of our confidentiality procedures, we generally enter
into non-disclosure agreements with our employees, distributors,
and corporate partners, and we enter into license agreements
with respect to our software, documentation, and other
proprietary information. These license agreements are generally
non-transferable and have a perpetual term. We also educate our
employees on trade secret protection and employ measures to
protect our facilities, equipment, and networks.
Trademarks,
Patents, Copyrights, and Licenses
Symantec and the Symantec logo are trademarks or registered
trademarks in the U.S. and other countries. In addition to
Symantec and the Symantec logo, we have used, registered,
and/or
applied to register other specific trademarks and service marks
to help distinguish our products, technologies, and services
from those of our competitors in the U.S. and foreign
countries and jurisdictions. We enforce our trademark, service
mark, and trade name rights in the U.S. and abroad. The
duration of our trademark registrations varies from country to
country, and in the U.S. we generally are able to maintain
our trademark rights and renew any trademark registrations for
as long as the trademarks are in use.
We have a number of U.S. and foreign issued patents and
pending patent applications, including patents and rights to
patent applications acquired through strategic transactions,
which relate to various aspects of our products and technology.
The duration of our patents is determined by the laws of the
country of issuance and for the U.S. is typically
17 years from the date of issuance of the patent or
20 years from the date of filing of the patent application
resulting in the patent, which we believe is adequate relative
to the expected lives of our products.
Our products are protected under U.S. and international
copyright laws and laws related to the protection of
intellectual property and proprietary information. We take
measures to label such products with the appropriate proprietary
rights notices, and we actively enforce such rights in the
U.S. and abroad. However, these measures may not provide
sufficient protection, and our intellectual property rights may
be challenged. In addition, we license some intellectual
property from third parties for use in our products, and
generally must rely on the third party to protect the licensed
intellectual property rights. While we believe that our ability
to maintain and protect our intellectual property rights is
important to our success, we also believe that our business as a
whole is not materially dependent on any particular patent,
trademark, license, or other intellectual property right.
Seasonality
As is typical for many large software companies, our business is
seasonal. Software license and maintenance orders are generally
higher in our third and fourth fiscal quarters and lower in our
first and second fiscal quarters. A significant decline in
license and maintenance orders is typical in the first quarter
of our fiscal year as compared to license and maintenance orders
in the fourth quarter of the prior fiscal year. In addition, we
generally receive a higher volume of software license and
maintenance orders in the last month of a quarter, with orders
concentrated in the later part of that month. We believe that
this seasonality primarily reflects customer spending patterns
and budget cycles, as well as the impact of compensation
incentive plans for our sales personnel. Revenue generally
reflects similar seasonal patterns but to a lesser extent than
orders because revenue is not recognized until an order is
shipped or services are performed and other revenue recognition
criteria are met, and because a significant portion of our
in-period revenue is provided by the ratable recognition of our
deferred revenue balance.
11
Employees
As of April 3, 2009, we employed more than
17,400 people worldwide, approximately 48 percent of
whom reside in the U.S. Approximately 6,300 employees
work in sales and marketing; 5,600 in research and development;
4,000 in support and services; and 1,500 in management,
manufacturing, and administration.
Other
Information
Our Internet address is www.symantec.com. We make
available free of charge on our website our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
and current reports on
Form 8-K,
and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as
reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange
Commission (SEC). Other than the information
expressly set forth in this annual report, the information
contained, or referred to, on our website is not part of this
annual report.
The public may also read and copy any materials we file with the
SEC at the SECs Public Reference Room at
100 F Street, NE, Room 1580, Washington, DC
20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at
1-800-SEC-0330.
The SEC also maintains a website at www.sec.gov that
contains reports, proxy and information statements, and other
information regarding issuers, such as us, that file
electronically with the SEC.
A description of the risk factors associated with our business
is set forth below. The list is not exhaustive and you should
carefully consider these risks and uncertainties before
investing in our common stock.
The
recent global economic crisis may harm our business, operating
results and financial condition.
The recent global economic crisis has caused a tightening in the
credit markets, increases in the rates of default and
bankruptcy, and extreme volatility in credit, equity and fixed
income markets. These macroeconomic developments could
negatively affect our business, operating results or financial
condition under a number of different scenarios. For example,
current or potential customers may delay or forgo decisions to
license new products or additional instances of existing
products, upgrade their existing hardware or operating
environments (which upgrades are often a catalyst for new
purchases of our software), or purchase services. Customers may
also have difficulties in obtaining the requisite third-party
financing to complete the purchase of our products and services.
The current economic environment could also subject us to
increased credit risk should customers be unable to pay us, or
delay paying us, for previously purchased products and services.
Accordingly, reserves for doubtful accounts and write-offs of
accounts receivable may increase. In addition, weakness in the
market for end users of our products could harm the cash flow of
our distributors and resellers who could then delay paying their
obligations to us or experience other financial difficulties.
This would further increase our credit risk exposure and,
potentially, cause delays in our recognition of revenue on sales
to these customers.
In addition, financial institution difficulties
and/or
failures may make it more difficult either to utilize our
existing debt capacity or otherwise obtain financing for our
operations, investing activities (including potential
acquisitions) or financing activities. Specific economic trends,
such as declines in the demand for PCs, servers, and other
computing devices, or softness in corporate information
technology spending, could have an even more direct, and
harmful, impact on our business. Finally, our cash and our
investment portfolio, which includes short-term debt securities,
is subject to general credit, liquidity, counterparty, market
and interest rate risks that may be exacerbated by the recent
global financial crisis. Our investment in our joint venture
with Huawei Technologies Co. Ltd. could also become impaired. If
the banking system or the fixed income, credit or equity markets
continue to deteriorate or remain volatile, our cash and our
investment portfolio may be impacted and the values and
liquidity of our investments could be harmed.
12
Fluctuations
in demand for our products and services are driven by many
factors, and a decrease in demand for our products could
adversely affect our financial results.
We are subject to fluctuations in demand for our products and
services due to a variety of factors, including general economic
conditions, competition, product obsolescence, technological
change, shifts in buying patterns, financial difficulties and
budget constraints of our actual and potential customers, levels
of broadband usage, awareness of security threats to IT systems,
and other factors. While such factors may, in some periods,
increase product sales, fluctuations in demand can also
negatively impact our product sales. If demand for our products
declines because of general economic conditions or for other
reasons, our revenues and gross margin could be adversely
affected.
If we
are unable to develop new and enhanced products and services
that achieve widespread market acceptance, or if we are unable
to continually improve the performance, features, and
reliability of our existing products and services or adapt our
business model to keep pace with industry trends, our business
and operating results could be adversely affected.
Our future success depends on our ability to respond to the
rapidly changing needs of our customers by developing or
introducing new products, product upgrades, and services on a
timely basis. We have in the past incurred, and will continue to
incur, significant research and development expenses as we
strive to remain competitive. New product development and
introduction involves a significant commitment of time and
resources and is subject to a number of risks and challenges
including:
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Managing the length of the development cycle for new products
and product enhancements, which has frequently been longer than
we originally expected
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Adapting to emerging and evolving industry standards and to
technological developments by our competitors and customers
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Extending the operation of our products and services to new and
evolving platforms, operating systems and hardware products,
such as netbooks
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Entering into new or unproven markets with which we have limited
experience
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Managing new product and service strategies, including
integrating our various security and storage technologies,
management solutions, customer service, and support into unified
enterprise security and storage solutions
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Incorporating acquired products and technologies
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Trade compliance issues affecting our ability to ship new or
acquired products
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Developing or expanding efficient sales channels
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Obtaining sufficient licenses to technology and technical access
from operating system software vendors on reasonable terms to
enable the development and deployment of interoperable products,
including source code licenses for certain products with deep
technical integration into operating systems
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In addition, if we cannot adapt our business models to keep pace
with industry trends, our revenue could be negatively impacted.
In connection with our enterprise software offerings, we license
our applications on a variety of bases, such as per server, per
processor, or based on performance criteria such as per amount
of data processed or stored. If enterprises continue to migrate
towards solutions, such as virtualization, which allow
enterprises to run multiple applications and operating systems
on a single server and thereby reduce the number of servers they
are required to own and operate, we may experience lower license
revenues unless we are able to successfully change our
enterprise licensing model or sell additional software to take
into account the impact of these new solutions.
If we are not successful in managing these risks and challenges,
or if our new products, product upgrades, and services are not
technologically competitive or do not achieve market acceptance,
our business and operating results could be adversely affected.
13
We
operate in a highly competitive environment, and our competitors
may gain market share in the markets for our products that could
adversely affect our business and cause our revenues to
decline.
We operate in intensely competitive markets that experience
rapid technological developments, changes in industry standards,
changes in customer requirements, and frequent new product
introductions and improvements. If we are unable to anticipate
or react to these competitive challenges or if existing or new
competitors gain market share in any of our markets, our
competitive position could weaken and we could experience a drop
in revenue that could adversely affect our business and
operating results. To compete successfully, we must maintain a
successful research and development effort to develop new
products and services and enhance existing products and
services, effectively adapt to changes in the technology or
product rights held by our competitors, appropriately respond to
competitive strategies, and effectively adapt to technological
changes and changes in the ways that our information is
accessed, used, and stored within our enterprise and consumer
markets. If we are unsuccessful in responding to our competitors
or to changing technological and customer demands, we could
experience a negative effect on our competitive position and our
financial results.
Our traditional competitors include independent software vendors
that offer software products that directly compete with our
product offerings. In addition to competing with these vendors
directly for sales to end-users of our products, we compete with
them for the opportunity to have our products bundled with the
product offerings of our strategic partners such as computer
hardware OEMs and ISPs. Our competitors could gain market share
from us if any of these strategic partners replace our products
with the products of our competitors or if they more actively
promote our competitors products than our products. In
addition, software vendors who have bundled our products with
theirs may choose to bundle their software with their own or
other vendors software or may limit our access to standard
product interfaces and inhibit our ability to develop products
for their platform.
We face growing competition from network equipment and computer
hardware manufacturers and large operating system providers.
These firms are increasingly developing and incorporating into
their products data protection and storage and server management
software that competes at some levels with our product
offerings. Our competitive position could be adversely affected
to the extent that our customers perceive the functionality
incorporated into these products as replacing the need for our
products.
Another growing industry trend is the SaaS business model,
whereby software vendors develop and host their applications for
use by customers over the Internet. This allows enterprises to
obtain the benefits of commercially licensed, internally
operated software without the associated complexity or high
initial
set-up and
operational costs. Advances in the SaaS business model could
enable the growth of our competitors and could affect the
success of our traditional software licensing models. We have
released our own SaaS offerings and we recently acquired Message
Labs, a provider of SaaS offerings, and we continue to
incorporate these offerings into our licensing model. However,
it is uncertain whether our SaaS strategy will prove successful
or whether we will be able to successfully incorporate our SaaS
offerings into our current licensing models. Our inability to
successfully develop and market SaaS product offerings could
cause us to lose business to competitors.
Many of our competitors have greater financial, technical,
sales, marketing, or other resources than we do and consequently
may have the ability to influence customers to purchase their
products instead of ours. We also face competition from many
smaller companies that specialize in particular segments of the
markets in which we compete.
If we
fail to manage our sales and distribution channels effectively
or if our partners choose not to market and sell our products to
their customers, our operating results could be adversely
affected.
We sell our products to customers around the world through
multi-tiered sales and distribution networks. Sales through
these different channels involve distinct risks, including the
following:
Direct Sales. A significant portion of our
revenues from enterprise products is derived from sales by our
direct sales force to end-users. Special risks associated with
this sales channel include:
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Longer sales cycles associated with direct sales efforts
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Difficulty in hiring, retaining, and motivating our direct sales
force
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Substantial amounts of training for sales representatives to
become productive, including regular updates to cover new and
revised products
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Indirect Sales Channels. A significant portion
of our revenues is derived from sales through indirect channels,
including distributors that sell our products to end-users and
other resellers. This channel involves a number of risks,
including:
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Our lack of control over the timing of delivery of our products
to end-users
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Our resellers and distributors are not subject to minimum sales
requirements or any obligation to market our products to their
customers
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Our reseller and distributor agreements are generally
nonexclusive and may be terminated at any time without cause
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Our resellers and distributors frequently market and distribute
competing products and may, from time to time, place greater
emphasis on the sale of these products due to pricing,
promotions, and other terms offered by our competitors
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Recent consolidation of electronics retailers has increased
their negotiating power with respect to hardware and software
providers
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OEM Sales Channels. A significant portion of
our revenues is derived from sales through our OEM partners that
incorporate our products into, or bundle our products with,
their products. Our reliance on this sales channel involves many
risks, including:
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Our lack of control over the shipping dates or volume of systems
shipped
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Our OEM partners are generally not subject to minimum sales
requirements or any obligation to market our products to their
customers
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Our OEM partners may terminate or renegotiate their arrangements
with us and new terms may be less favorable due, among other
things, to an increasingly competitive relationship with certain
partners
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Sales through our OEM partners are subject to changes in general
economic conditions, strategic direction, competitive risks, and
other issues that could result in a reduction of OEM sales
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The development work that we must generally undertake under our
agreements with our OEM partners may require us to invest
significant resources and incur significant costs with little or
no associated revenues
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The time and expense required for the sales and marketing
organizations of our OEM partners to become familiar with our
products may make it more difficult to introduce those products
to the market
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Our OEM partners may develop, market, and distribute their own
products and market and distribute products of our competitors,
which could reduce our sales
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As noted above, the amount of our sales through our OEM channels
is significantly affected by our partners sales of new
products into which our products are bundled. The adverse
developments in global economic conditions are, among other
things, adversely affecting personal computer sales, and if this
trend continues our Consumer segment could continue to be
adversely affected.
If we fail to manage our sales and distribution channels
successfully, these channels may conflict with one another or
otherwise fail to perform as we anticipate, which could reduce
our sales and increase our expenses as well as weaken our
competitive position. Some of our distribution partners have
experienced financial difficulties in the past, and if our
partners suffer financial difficulties in the future because of
general economic conditions or for other reasons, these partners
may delay paying their obligations to us and we may have reduced
sales or increased bad debt expense that could adversely affect
our operating results. In addition, reliance on multiple
channels subjects us to events that could cause unpredictability
in demand, which could increase the risk that we may be unable
to plan effectively for the future, and could result in adverse
operating results in future periods.
15
We
have grown, and may continue to grow, through acquisitions that
give rise to risks and challenges that could adversely affect
our future financial results.
We have in the past acquired, and we expect to acquire in the
future, other businesses, business units, and technologies.
Acquisitions can involve a number of special risks and
challenges, including:
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Complexity, time, and costs associated with the integration of
acquired business operations, workforce, products, and
technologies into our existing business, sales force, employee
base, product lines, and technology
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Diversion of management time and attention from our existing
business and other business opportunities
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Loss or termination of employees, including costs associated
with the termination or replacement of those employees
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Assumption of debt or other liabilities of the acquired
business, including litigation related to the acquired business
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The addition of acquisition-related debt as well as increased
expenses and working capital requirements
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Dilution of stock ownership of existing stockholders
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Increased costs and efforts in connection with compliance with
Section 404 of the Sarbanes-Oxley Act
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Substantial accounting charges for restructuring and related
expenses, write-off of in-process research and development,
impairment of goodwill, amortization of intangible assets, and
stock-based compensation expense, such as the $7.4 billion
goodwill write-down we recorded during fiscal 2009
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Integrating acquired businesses has been and will continue to be
a complex, time consuming, and expensive process, and can impact
the effectiveness of our internal control over financial
reporting.
If integration of our acquired businesses is not successful, we
may not realize the potential benefits of an acquisition or
suffer other adverse effects that we currently do not foresee.
To integrate acquired businesses, we must implement our
technology systems in the acquired operations and integrate and
manage the personnel of the acquired operations. We also must
effectively integrate the different cultures of acquired
business organizations into our own in a way that aligns various
interests, and may need to enter new markets in which we have no
or limited experience and where competitors in such markets have
stronger market positions.
Any of the foregoing, and other factors, could harm our ability
to achieve anticipated levels of profitability from acquired
businesses or to realize other anticipated benefits of
acquisitions. In addition, because acquisitions of high
technology companies are inherently risky, no assurance can be
given that our previous or future acquisitions will be
successful and will not adversely affect our business, operating
results, or financial condition.
We
have not historically maintained substantial levels of
indebtedness, and our financial condition and results of
operations could be adversely affected if we do not effectively
manage our liabilities.
In June 2006, we sold $2.1 billion in aggregate principal
amount of convertible senior notes. As a result of the sale of
the notes, we have a substantially greater amount of long-term
debt than we have maintained in the past. In addition, we have
entered into a credit facility with a borrowing capacity of
$1 billion. As of April 3, 2009, we had no borrowings
under our credit facility. From time to time in the future, we
may also incur indebtedness in addition to the amount available
under our credit facility. Our maintenance of substantial levels
of debt could adversely affect our flexibility to take advantage
of certain corporate opportunities and could adversely affect
our financial condition and results of operations. Of our
outstanding convertible notes, $1.1 billion matures and is
repayable in June 2011 and the balance is due in June 2013. We
may be required to use all or a substantial portion of our cash
balance to repay these notes on maturity unless we can obtain
new financing.
16
Our
international operations involve risks that could increase our
expenses, adversely affect our operating results, and require
increased time and attention of our management.
We derive a substantial portion of our revenues from customers
located outside of the U.S. and we have significant
operations outside of the U.S., including engineering, sales,
customer support, and production. We plan to expand our
international operations, but such expansion is contingent upon
the financial performance of our existing international
operations as well as our identification of growth
opportunities. Our international operations are subject to risks
in addition to those faced by our domestic operations, including:
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Potential loss of proprietary information due to
misappropriation or laws that may be less protective of our
intellectual property rights than U.S. laws or may not be
adequately enforced
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Requirements of foreign laws and other governmental controls,
including trade and labor restrictions and related laws that
reduce the flexibility of our business operations
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Regulations or restrictions on the use, import, or export of
encryption technologies that could delay or prevent the
acceptance and use of encryption products and public networks
for secure communications
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Central bank and other restrictions on our ability to repatriate
cash from our international subsidiaries or to exchange cash in
international subsidiaries into cash available for use in the
U.S.
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Fluctuations in currency exchange rates and economic instability
such as higher interest rates in the U.S. and inflation
that could reduce our customers ability to obtain
financing for software products or that could make our products
more expensive or could increase our costs of doing business in
certain countries
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Limitations on future growth or inability to maintain current
levels of revenues from international sales if we do not invest
sufficiently in our international operations
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Longer payment cycles for sales in foreign countries and
difficulties in collecting accounts receivable
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Difficulties in staffing, managing, and operating our
international operations, including difficulties related to
administering our stock plans in some foreign countries
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Difficulties in coordinating the activities of our
geographically dispersed and culturally diverse operations
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Seasonal reductions in business activity in the summer months in
Europe and in other periods in other countries
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Reduced sales due to the failure to obtain any required export
approval of our technologies, particularly our encryption
technologies
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Costs and delays associated with developing software and
providing support in multiple languages
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Political unrest, war, or terrorism, particularly in areas in
which we have facilities
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A significant portion of our transactions outside of the
U.S. are denominated in foreign currencies. Accordingly,
our revenues and expenses will continue to be subject to
fluctuations in foreign currency rates. We expect to be affected
by fluctuations in foreign currency rates in the future,
especially if international sales continue to grow as a
percentage of our total sales or our operations outside the
United States continue to increase.
The level of corporate tax from sales to our
non-U.S. customers
is less than the level of tax from sales to our
U.S. customers. This benefit is contingent upon existing
tax regulations in the U.S. and in the countries in which
our international operations are located. Future changes in
domestic or international tax regulations could adversely affect
our ability to continue to realize these tax benefits.
Our
products are complex and operate in a wide variety of computer
configurations, which could result in errors or product
failures.
Because we offer very complex products, undetected errors,
failures, or bugs may occur, especially when products are first
introduced or when new versions are released. Our products are
often installed and used in large-scale computing environments
with different operating systems, system management software,
and equipment and
17
networking configurations, which may cause errors or failures in
our products or may expose undetected errors, failures, or bugs
in our products. Our customers computing environments are
often characterized by a wide variety of standard and
non-standard configurations that make pre-release testing for
programming or compatibility errors very difficult and
time-consuming. In addition, despite testing by us and others,
errors, failures, or bugs may not be found in new products or
releases until after commencement of commercial shipments. In
the past, we have discovered software errors, failures, and bugs
in certain of our product offerings after their introduction
and, in some cases, may have experienced delayed or lost
revenues as a result of these errors.
Errors, failures, or bugs in products released by us could
result in negative publicity, damage to our brand, product
returns, loss of or delay in market acceptance of our products,
loss of competitive position, or claims by customers or others.
Many of our end-user customers use our products in applications
that are critical to their businesses and may have a greater
sensitivity to defects in our products than to defects in other,
less critical, software products. In addition, if an actual or
perceived breach of information integrity or availability occurs
in one of our end-user customers systems, regardless of
whether the breach is attributable to our products, the market
perception of the effectiveness of our products could be harmed.
Alleviating any of these problems could require significant
expenditures of our capital and other resources and could cause
interruptions, delays, or cessation of our product licensing,
which could cause us to lose existing or potential customers and
could adversely affect our operating results.
If we
are unable to attract and retain qualified employees, lose key
personnel, fail to integrate replacement personnel successfully,
or fail to manage our employee base effectively, we may be
unable to develop new and enhanced products and services,
effectively manage or expand our business, or increase our
revenues.
Our future success depends upon our ability to recruit and
retain our key management, technical, sales, marketing, finance,
and other critical personnel. Our officers and other key
personnel are
employees-at-will,
and we cannot assure you that we will be able to retain them.
Competition for people with the specific skills that we require
is significant. In order to attract and retain personnel in a
competitive marketplace, we believe that we must provide a
competitive compensation package, including cash and
equity-based compensation. The volatility in our stock price may
from time to time adversely affect our ability to recruit or
retain employees. In addition, we may be unable to obtain
required stockholder approvals of future increases in the number
of shares available for issuance under our equity compensation
plans, and accounting rules require us to treat the issuance of
employee stock options and other forms of equity-based
compensation as compensation expense. As a result, we may decide
to issue fewer equity-based incentives and may be impaired in
our efforts to attract and retain necessary personnel. If we are
unable to hire and retain qualified employees, or conversely, if
we fail to manage employee performance or reduce staffing levels
when required by market conditions, our business and operating
results could be adversely affected.
From time to time, key personnel leave our company. While we
strive to reduce the negative impact of such changes, the loss
of any key employee could result in significant disruptions to
our operations, including adversely affecting the timeliness of
product releases, the successful implementation and completion
of company initiatives, the effectiveness of our disclosure
controls and procedures and our internal control over financial
reporting, and the results of our operations. In addition,
hiring, training, and successfully integrating replacement sales
and other personnel could be time consuming, may cause
additional disruptions to our operations, and may be
unsuccessful, which could negatively impact future revenues.
We are
regularly a party to class action lawsuits, which often require
significant management time and attention and result in
significant legal expenses, and which could, if not determined
favorably, negatively impact our business, financial condition,
results of operations, and cash flows.
We have been named as a party to class action lawsuits, and we
may be named in additional litigation. The expense of defending
such litigation may be costly and divert managements
attention from the day-to-day operations of our business, which
could adversely affect our business, results of operations, and
cash flows. In addition, an unfavorable outcome in such
litigation could negatively impact our business, results of
operations, and cash flows.
18
Third
parties claiming that we infringe their proprietary rights could
cause us to incur significant legal expenses and prevent us from
selling our products.
From time to time, we receive claims that we have infringed the
intellectual property rights of others, including claims
regarding patents, copyrights, and trademarks. In addition,
former employers of our former, current, or future employees may
assert claims that such employees have improperly disclosed to
us the confidential or proprietary information of these former
employers. Any such claim, with or without merit, could result
in costly litigation and distract management from day-to-day
operations. If we are not successful in defending such claims,
we could be required to stop selling, delay shipments of, or
redesign our products, pay monetary amounts as damages, enter
into royalty or licensing arrangements, or satisfy
indemnification obligations that we have with some of our
customers. We cannot assure you that any royalty or licensing
arrangements that we may seek in such circumstances will be
available to us on commercially reasonable terms or at all.
In addition, we license and use software from third parties in
our business. These third party software licenses may not
continue to be available to us on acceptable terms or at all,
and may expose us to additional liability. This liability, or
our inability to use any of this third party software, could
result in shipment delays or other disruptions in our business
that could materially and adversely affect our operating results.
If we
do not protect our proprietary information and prevent third
parties from making unauthorized use of our products and
technology, our financial results could be harmed.
Most of our software and underlying technology is proprietary.
We seek to protect our proprietary rights through a combination
of confidentiality agreements and procedures and through
copyright, patent, trademark, and trade secret laws. However,
all of these measures afford only limited protection and may be
challenged, invalidated, or circumvented by third parties. Third
parties may copy all or portions of our products or otherwise
obtain, use, distribute, and sell our proprietary information
without authorization. Third parties may also develop similar or
superior technology independently by designing around our
patents. Our shrink-wrap license agreements are not signed by
licensees and therefore may be unenforceable under the laws of
some jurisdictions. Furthermore, the laws of some foreign
countries do not offer the same level of protection of our
proprietary rights as the laws of the U.S., and we may be
subject to unauthorized use of our products in those countries.
The unauthorized copying or use of our products or proprietary
information could result in reduced sales of our products. Any
legal action to protect proprietary information that we may
bring or be engaged in with a strategic partner or vendor could
adversely affect our ability to access software, operating
system, and hardware platforms of such partner or vendor, or
cause such partner or vendor to choose not to offer our products
to their customers. In addition, any legal action to protect
proprietary information that we may bring or be engaged in,
alone or through our alliances with the Business Software
Alliance (BSA), or the Software &
Information Industry Association (SIIA), could be
costly, may distract management from day-to-day operations, and
may lead to additional claims against us, which could adversely
affect our operating results.
Some
of our products contain open source software, and
any failure to comply with the terms of one or more of these
open source licenses could negatively affect our
business.
Certain of our products are distributed with software licensed
by its authors or other third parties under so-called open
source licenses, which may include, by way of example, the
GNU General Public License (GPL), GNU Lesser General
Public License (LGPL), the Mozilla Public License,
the BSD License, and the Apache License. Some of these licenses
contain requirements that we make available source code for
modifications or derivative works we create based upon the open
source software, and that we license such modifications or
derivative works under the terms of a particular open source
license or other license granting third parties certain rights
of further use. If we combine our proprietary software with open
source software in a certain manner, we could, under certain of
the open source licenses, be required to release the source code
of our proprietary software. In addition to risks related to
license requirements, usage of open source software can lead to
greater risks than use of third party commercial software, as
open source licensors generally do not provide warranties or
controls on origin of the software. We have established
processes to help alleviate these risks, including a review
process for screening requests from our development
organizations for the use of open source, but we cannot be sure
that all
19
open source is submitted for approval prior to use in our
products. In addition, many of the risks associated with usage
of open source cannot be eliminated, and could, if not properly
addressed, negatively affect our business.
Our
software products and website may be subject to intentional
disruption that could adversely impact our reputation and future
sales.
Although we believe we have sufficient controls in place to
prevent intentional disruptions, we expect to be an ongoing
target of attacks specifically designed to impede the
performance of our products. Similarly, experienced computer
programmers may attempt to penetrate our network security or the
security of our website and misappropriate proprietary
information or cause interruptions of our services. Because the
techniques used by such computer programmers to access or
sabotage networks change frequently and may not be recognized
until launched against a target, we may be unable to anticipate
these techniques. Our activities could be adversely affected and
our reputation, brand and future sales harmed if these
intentionally disruptive efforts are successful.
Increased
customer demands on our technical support services may adversely
affect our relationships with our customers and our financial
results.
We offer technical support services with many of our products.
We may be unable to respond quickly enough to accommodate
short-term increases in customer demand for support services. We
also may be unable to modify the format of our support services
to compete with changes in support services provided by
competitors or successfully integrate support for our customers.
Further customer demand for these services, without
corresponding revenues, could increase costs and adversely
affect our operating results.
We have outsourced a substantial portion of our worldwide
consumer support functions to third party service providers. If
these companies experience financial difficulties, do not
maintain sufficiently skilled workers and resources to satisfy
our contracts, or otherwise fail to perform at a sufficient
level under these contracts, the level of support services to
our customers may be significantly disrupted, which could
materially harm our relationships with these customers.
Accounting
charges may cause fluctuations in our quarterly financial
results.
Our financial results have been in the past, and may continue to
be in the future, materially affected by non-cash and other
accounting charges, including:
|
|
|
|
|
Amortization of intangible assets, including acquired product
rights
|
|
|
|
Impairment of goodwill
|
|
|
|
Stock-based compensation expense
|
|
|
|
Restructuring charges
|
|
|
|
Impairment of long-lived assets
|
|
|
|
Loss on sale of a business and similar write-downs of assets
held for sale
|
For example, during fiscal 2009, we recorded a non-cash goodwill
impairment charge of $7.4 billion, resulting in a
significant net loss for the year. Goodwill is evaluated
annually for impairment in the fourth quarter of each fiscal
year or more frequently if events and circumstances warrant as
we determined they did in the third quarter of fiscal 2009, and
our evaluation depends to a large degree on estimates and
assumptions made by our management. Our assessment of any
impairment of goodwill is based on a comparison of the fair
value of each of our reporting units to the carrying value of
that reporting unit. Our determination of fair value relies on
managements assumptions of our future revenues, operating
costs, and other relevant factors. If managements
estimates of future operating results change, or if there are
changes to other key assumptions such as the discount rate
applied to future operating results, the estimate of the fair
value of our reporting units could change significantly, which
could result in a goodwill impairment charge. In addition, we
evaluate our other long-lived assets, including intangible
assets whenever events or circumstances occur which indicate
that the value of these assets might be impaired. If we
determine that impairment has occurred, we could incur an
impairment charge against the value of these assets.
20
The foregoing types of accounting charges may also be incurred
in connection with or as a result of other business
acquisitions. The price of our common stock could decline to the
extent that our financial results are materially affected by the
foregoing accounting charges.
Our
effective tax rate may increase, which could increase our income
tax expense and reduce our net (loss) income.
Our effective tax rate could be adversely affected by several
factors, many of which are outside of our control, including:
|
|
|
|
|
Changes in the relative proportions of revenues and income
before taxes in the various jurisdictions in which we operate
that have differing statutory tax rates
|
|
|
|
Changing tax laws, regulations, and interpretations in multiple
jurisdictions in which we operate as well as the requirements of
certain tax rulings
|
|
|
|
The tax effects of purchase accounting for acquisitions and
restructuring charges that may cause fluctuations between
reporting periods
|
|
|
|
Tax assessments, or any related tax interest or penalties, could
significantly affect our income tax expense for the period in
which the settlements take place.
|
The price of our common stock could decline if our financial
results are materially affected by an adverse change in our
effective tax rate.
We report our results of operations based on our determinations
of the amount of taxes owed in the various tax jurisdictions in
which we operate. From time to time, we receive notices that a
tax authority in a particular jurisdiction in which we are
subject to taxes has determined that we owe a greater amount of
tax than we have reported to such authority. We are regularly
engaged in discussions and sometimes disputes with these tax
authorities. We are engaged in disputes of this nature at this
time. If the ultimate determination of our taxes owed in any of
these jurisdictions is for an amount in excess of the tax
provision we have recorded or reserved for, our operating
results, cash flows, and financial condition could be adversely
affected.
Fluctuations
in our quarterly financial results have affected the price of
our common stock in the past and could affect our stock price in
the future.
Our quarterly financial results have fluctuated in the past and
are likely to vary significantly in the future due to a number
of factors, many of which are outside of our control and which
could adversely affect our operations and operating results. If
our quarterly financial results or our predictions of future
financial results fail to meet the expectations of securities
analysts and investors, our stock price could be negatively
affected. Any volatility in our quarterly financial results may
make it more difficult for us to raise capital in the future or
pursue acquisitions that involve issuances of our stock. Our
operating results for prior periods may not be effective
predictors of our future performance.
Factors associated with our industry, the operation of our
business, and the markets for our products may cause our
quarterly financial results to fluctuate, including:
|
|
|
|
|
Reduced demand for any of our products
|
|
|
|
Entry of new competition into our markets
|
|
|
|
Competitive pricing pressure for one or more of our classes of
products
|
|
|
|
Our ability to timely complete the release of new or enhanced
versions of our products
|
|
|
|
Fluctuations in foreign currency exchange rates
|
|
|
|
The number, severity, and timing of threat outbreaks (e.g. worms
and viruses)
|
|
|
|
Our resellers making a substantial portion of their purchases
near the end of each quarter
|
21
|
|
|
|
|
Enterprise customers tendency to negotiate site licenses
near the end of each quarter
|
|
|
|
Cancellation, deferral, or limitation of orders by customers
|
|
|
|
Movement in interest rates
|
|
|
|
The rate of adoption of new product technologies and new
releases of operating systems
|
|
|
|
Weakness or uncertainty in general economic or industry
conditions in any of the multiple markets in which we operate
that could reduce customer demand and ability to pay for our
products and services
|
|
|
|
Political and military instability, which could slow spending
within our target markets, delay sales cycles, and otherwise
adversely affect our ability to generate revenues and operate
effectively
|
|
|
|
Budgetary constraints of customers, which are influenced by
corporate earnings and government budget cycles and spending
objectives
|
|
|
|
Disruptions in our business operations or target markets caused
by, among other things,
|
|
|
|
|
|
Earthquakes, floods, or other natural disasters affecting our
headquarters located in Silicon Valley, California, an area
known for seismic activity, or our other locations worldwide
|
|
|
|
Acts of war or terrorism
|
|
|
|
Intentional disruptions by third parties
|
|
|
|
Health or similar issues, such as a pandemic
|
Any of the foregoing factors could cause the trading price of
our common stock to fluctuate significantly.
Our
stock price may be volatile in the future, and you could lose
the value of your investment.
The market price of our common stock has experienced significant
fluctuations in the past and may continue to fluctuate in the
future, and as a result you could lose the value of your
investment. The market price of our common stock may be affected
by a number of factors, including:
|
|
|
|
|
Announcements of quarterly operating results and revenue and
earnings forecasts by us that fail to meet or be consistent with
our earlier projections or the expectations of our investors or
securities analysts
|
|
|
|
Announcements by either our competitors or customers that fail
to meet or be consistent with their earlier projections or the
expectations of our investors or securities analysts
|
|
|
|
Rumors, announcements, or press articles regarding our
competitors operations, management, organization,
financial condition, or financial statements
|
|
|
|
Changes in revenue and earnings estimates by us, our investors,
or securities analysts
|
|
|
|
Accounting charges, including charges relating to the impairment
of goodwill
|
|
|
|
Announcements of planned acquisitions or dispositions by us or
by our competitors
|
|
|
|
Announcements of new or planned products by us, our competitors,
or our customers
|
|
|
|
Gain or loss of a significant customer
|
|
|
|
Inquiries by the SEC, NASDAQ, law enforcement, or other
regulatory bodies
|
|
|
|
Acts of terrorism, the threat of war, and other crises or
emergency situations
|
|
|
|
Economic slowdowns or the perception of an oncoming economic
slowdown in any of the major markets in which we operate
|
The stock market in general, and the market prices of stocks of
technology companies in particular, have experienced extreme
price volatility that has adversely affected, and may continue
to adversely affect, the market price of our common stock for
reasons unrelated to our business or operating results.
22
|
|
Item 1B.
|
Unresolved
Staff Comments
|
There are currently no unresolved issues with respect to any
Commission staffs written comments that were received at
least 180 days before the end of our fiscal year to which this
report relates and that relate to our periodic or current
reports under the Exchange Act.
Our properties consist primarily of owned and leased office
facilities for sales, research and development, administrative,
customer service, and technical support personnel. Our corporate
headquarters is located in Cupertino, California in a
438,000 square foot facility that we own of which
409,000 square feet is classified as Assets Held for Sale.
We occupy an additional 782,000 square feet in the
San Francisco Bay Area, of which 592,000 square feet
is owned and 190,000 square feet is leased. Our leased
facilities are occupied under leases that expire at various
times through 2029. The following table presents the approximate
square footage of our facilities as of April 3, 2009:
|
|
|
|
|
|
|
|
|
|
|
Approximate Total Square
Footage(1)
|
|
Location
|
|
Owned
|
|
|
Leased
|
|
|
Americas
|
|
|
1,969,000
|
|
|
|
1,393,000
|
|
Europe, Middle East, and Africa
|
|
|
285,000
|
|
|
|
629,000
|
|
Asia Pacific/Japan
|
|
|
5,000
|
|
|
|
1,384,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,259,000
|
|
|
|
3,406,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Included in the total square footage above are vacant,
available-for-lease properties totaling approximately
130,000 square feet, and certain properties currently
held-for-sale totaling approximately 409,000 square feet.
Total square footage excludes executive suites, and
approximately 256,000 square feet relating to facilities
subleased to third parties. |
We believe that our existing facilities are adequate for our
current needs and that the productive capacity of our facilities
is substantially utilized.
|
|
Item 3.
|
Legal
Proceedings
|
Information with respect to this Item may be found under the
heading Litigation Contingencies in Note 10 of
the Notes to Consolidated Financial Statements in this annual
report which information is incorporated into this Item 3
by reference.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
No matters were submitted to a vote of security holders during
the fourth quarter of fiscal 2009.
23
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
Market
for Our Common Stock
Our common stock is traded on the Nasdaq Global Select Market
under the symbol SYMC. The high and low sales prices
set forth below are as reported on the Nasdaq Global Select
Market.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
Fiscal 2008
|
|
|
Apr. 03,
|
|
Jan. 02,
|
|
Oct. 03,
|
|
July 04,
|
|
Mar. 28,
|
|
Dec. 28,
|
|
Sep. 28,
|
|
June 29,
|
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
2008
|
|
2007
|
|
2007
|
|
2007
|
|
High
|
|
$
|
16.35
|
|
|
$
|
17.27
|
|
|
$
|
22.80
|
|
|
$
|
21.95
|
|
|
$
|
18.72
|
|
|
$
|
21.32
|
|
|
$
|
21.03
|
|
|
$
|
20.70
|
|
Low
|
|
$
|
12.54
|
|
|
$
|
10.05
|
|
|
$
|
16.88
|
|
|
$
|
16.53
|
|
|
$
|
14.54
|
|
|
$
|
15.97
|
|
|
$
|
17.23
|
|
|
$
|
16.77
|
|
As of April 3, 2009, there were 3,140 stockholders of
record of Symantec common stock. Symantec has never declared or
paid any cash dividends on its capital stock. We currently
intend to retain future earnings for use in our business, and,
therefore, we do not anticipate paying any cash dividends on our
capital stock in the foreseeable future.
Repurchases
of Our Equity Securities
Stock repurchases during the three months ended April 3,
2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum Dollar
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
That May Yet be
|
|
|
|
|
|
|
|
|
|
Total Number of Shares
|
|
|
Purchased Under
|
|
|
|
Total Number of
|
|
|
Average Price
|
|
|
Purchased Under Publicly
|
|
|
the Plans
|
|
|
|
Shares Purchased
|
|
|
Paid Per Share
|
|
|
Announced Plans or Programs
|
|
|
or Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
January 3, 2009 to January 30, 2009
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
400
|
|
January 31, 2009 to February 27, 2009
|
|
|
5,149,200
|
|
|
$
|
13.98
|
|
|
|
5,149,200
|
|
|
|
328
|
|
February 28, 2009 to April 3, 2009
|
|
|
2,077,900
|
|
|
$
|
13.47
|
|
|
|
2,077,900
|
|
|
$
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,227,100
|
|
|
$
|
13.84
|
|
|
|
7,227,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We have operated stock repurchase programs in the past. Our most
recent program was authorized by our Board of Directors on
June 14, 2007 to repurchase up to $2 billion of our
common stock. This program does not have an expiration date and
as of April 3, 2009, $300 million remained authorized
for future repurchases. For information with regard to our stock
repurchase programs, see Note 11 of the Notes to
Consolidated Financial Statements in this annual report.
24
Stock
Performance Graphs
These performance graphs shall not be deemed filed
for purposes of Section 18 of the Exchange Act or otherwise
subject to the liabilities under that Section, and shall not be
deemed to be incorporated by reference into any filing of
Symantec under the Securities Act or the Exchange Act.
Comparison
of cumulative total return March 31, 2004 to
March 31, 2009
The graph below compares the cumulative total stockholder return
on Symantec common stock from March 31, 2004 to
March 31, 2009 with the cumulative total return on the
S&P 500 Composite Index and the S&P Information
Technology Index over the same period (assuming the investment
of $100 in Symantec common stock and in each of the other
indices on March 31, 2004, and reinvestment of all
dividends, although no dividends other than stock dividends have
been declared on Symantec common stock). The comparisons in the
graph below are based on historical data and are not intended to
forecast the possible future performance of Symantec common
stock.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Symantec Corporation, The S & P 500 Index
And The S & P Information Technology Index
*$100 invested on
3/31/04 in
stock or index. Fiscal year ending March 31.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/04
|
|
|
3/05
|
|
|
3/06
|
|
|
3/07
|
|
|
3/08
|
|
|
3/09
|
Symantec Corporation
|
|
|
|
100.00
|
|
|
|
|
92.14
|
|
|
|
|
72.70
|
|
|
|
|
74.73
|
|
|
|
|
71.79
|
|
|
|
|
64.54
|
|
S & P 500
|
|
|
|
100.00
|
|
|
|
|
106.69
|
|
|
|
|
119.20
|
|
|
|
|
133.31
|
|
|
|
|
126.54
|
|
|
|
|
78.34
|
|
S & P Information Technology
|
|
|
|
100.00
|
|
|
|
|
97.51
|
|
|
|
|
110.70
|
|
|
|
|
114.13
|
|
|
|
|
113.65
|
|
|
|
|
79.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Comparison
of cumulative total return June 23, 1989 to
March 31, 2009
The graph below compares the cumulative total stockholder return
on Symantec common stock from June 23, 1989 (the date of
Symantecs initial public offering) to March 31, 2009
with the cumulative total return on the S&P 500 Composite
Index and the S&P Information Technology Index over the
same period (assuming the investment of $100 in Symantec common
stock and in each of the other indices on June 30, 1989,
and reinvestment of all dividends, although no dividends other
than stock dividends have been declared on Symantec common
stock). Symantec has provided this additional data to provide
the perspective of a longer time period which is consistent with
Symantecs history as a public company. The comparisons in
the graph below are based on historical data and are not
intended to forecast the possible future performance of Symantec
common stock.
COMPARISON
OF 20 YEAR CUMULATIVE TOTAL RETURN*
Among Symantec Corporation, The S & P 500 Index
And The S & P Information Technology Index
*$100 invested on
6/23/89 in
stock or
5/31/89 in
index. Fiscal year ending March 31.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/89
|
|
|
3/90
|
|
|
3/91
|
|
|
3/92
|
|
|
3/93
|
|
|
3/94
|
|
|
3/95
|
|
|
3/96
|
|
|
3/97
|
|
|
3/98
|
|
|
3/99
|
Symantec Corporation
|
|
|
|
100.00
|
|
|
|
|
173.91
|
|
|
|
|
419.57
|
|
|
|
|
743.48
|
|
|
|
|
223.91
|
|
|
|
|
271.74
|
|
|
|
|
400.00
|
|
|
|
|
223.91
|
|
|
|
|
247.83
|
|
|
|
|
468.48
|
|
|
|
|
294.57
|
|
S & P 500
|
|
|
|
100.00
|
|
|
|
|
108.97
|
|
|
|
|
124.68
|
|
|
|
|
138.45
|
|
|
|
|
159.53
|
|
|
|
|
161.88
|
|
|
|
|
187.08
|
|
|
|
|
247.13
|
|
|
|
|
296.13
|
|
|
|
|
438.26
|
|
|
|
|
519.16
|
|
S & P Information Technology
|
|
|
|
100.00
|
|
|
|
|
102.40
|
|
|
|
|
121.16
|
|
|
|
|
135.31
|
|
|
|
|
154.29
|
|
|
|
|
180.94
|
|
|
|
|
246.67
|
|
|
|
|
327.90
|
|
|
|
|
469.94
|
|
|
|
|
722.04
|
|
|
|
|
1228.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/00
|
|
|
3/01
|
|
|
3/02
|
|
|
3/03
|
|
|
3/04
|
|
|
3/05
|
|
|
3/06
|
|
|
3/07
|
|
|
3/08
|
|
|
3/09
|
Symantec Corporation
|
|
|
|
1306.52
|
|
|
|
|
727.17
|
|
|
|
|
1433.39
|
|
|
|
|
1362.78
|
|
|
|
|
3220.87
|
|
|
|
|
2967.65
|
|
|
|
|
2341.57
|
|
|
|
|
2406.96
|
|
|
|
|
2312.35
|
|
|
|
|
2078.61
|
|
S & P 500
|
|
|
|
612.32
|
|
|
|
|
479.59
|
|
|
|
|
480.75
|
|
|
|
|
361.71
|
|
|
|
|
488.74
|
|
|
|
|
521.45
|
|
|
|
|
582.60
|
|
|
|
|
651.53
|
|
|
|
|
618.45
|
|
|
|
|
382.89
|
|
S & P Information Technology
|
|
|
|
2474.48
|
|
|
|
|
1039.03
|
|
|
|
|
1021.68
|
|
|
|
|
721.26
|
|
|
|
|
1035.85
|
|
|
|
|
1027.01
|
|
|
|
|
1186.45
|
|
|
|
|
1237.05
|
|
|
|
|
1247.60
|
|
|
|
|
877.97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
Item 6.
|
Selected
Financial Data
|
The following selected consolidated financial data is derived
from the Consolidated Financial Statements included in this
annual report. This data is qualified in its entirety by and
should be read in conjunction with the more detailed
Consolidated Financial Statements and related notes included in
this annual report and with Item 7, Managements
Discussion and Analysis of Financial Condition and Results of
Operations. Historical results may not be indicative of
future results.
During the past five fiscal years, we have made the following
acquisitions:
|
|
|
|
|
AppStream, Inc., SwapDrive, Inc., nSuite Technologies, Inc., PC
Tools Pty. Ltd., MessageLabs Group Ltd., and Mi5, Inc. during
fiscal 2009
|
|
|
|
Altiris Inc., Vontu Inc., and Transparent Logic Technologies,
Inc. during fiscal 2008
|
|
|
|
Company-i Limited and 4FrontSecurity, Inc. during fiscal 2007
|
|
|
|
Veritas Software Corporation, XtreamLok Pty. Ltd.,
WholeSecurity, Inc., Sygate Technologies, Inc., BindView
Development Corporation, IMlogic, Inc., and Relicore, Inc.
during fiscal 2006
|
|
|
|
Brightmail, Inc., TurnTide, Inc., @stake, Inc., LIRIC Associates
Ltd, and Platform Logic, Inc. during fiscal 2005
|
Each of these acquisitions was accounted for as a business
purchase and, accordingly, the operating results of these
businesses have been included in the Consolidated Financial
Statements included in this annual report since their respective
dates of acquisition.
Five-Year
Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal(a)
|
|
|
|
2009
|
|
|
2008
|
|
|
2007(b)
|
|
|
2006(c)
|
|
|
2005
|
|
|
|
(In thousands, except per share data)
|
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
6,149,854
|
|
|
$
|
5,874,419
|
|
|
$
|
5,199,366
|
|
|
$
|
4,143,392
|
|
|
$
|
2,582,849
|
|
Operating (loss)
income(d)
|
|
|
(6,469,910
|
)
|
|
|
602,280
|
|
|
|
519,742
|
|
|
|
273,965
|
|
|
|
819,266
|
|
Net (loss)
income(d)
|
|
$
|
(6,728,870
|
)
|
|
$
|
463,850
|
|
|
$
|
404,380
|
|
|
$
|
156,852
|
|
|
$
|
536,159
|
|
Net (loss) income per share
basic(d)
|
|
$
|
(8.10
|
)
|
|
$
|
0.53
|
|
|
$
|
0.42
|
|
|
$
|
0.16
|
|
|
$
|
0.81
|
|
Net (loss) income per share
diluted(d)
|
|
$
|
(8.10
|
)
|
|
$
|
0.52
|
|
|
$
|
0.41
|
|
|
$
|
0.15
|
|
|
$
|
0.74
|
|
Shares used to compute earnings per share basic
|
|
|
830,983
|
|
|
|
867,562
|
|
|
|
960,575
|
|
|
|
998,733
|
|
|
|
660,631
|
|
Shares used to compute earnings per share diluted
|
|
|
830,983
|
|
|
|
884,136
|
|
|
|
983,261
|
|
|
|
1,025,856
|
|
|
|
738,245
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,792,502
|
|
|
|
1,890,225
|
|
|
|
2,559,034
|
|
|
|
2,315,622
|
|
|
|
1,091,433
|
|
Total
assets(d)
|
|
|
10,645,130
|
|
|
|
18,092,094
|
|
|
|
17,750,870
|
|
|
|
17,913,183
|
|
|
|
5,614,221
|
|
Convertible subordinated
notes(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
512,800
|
|
|
|
|
|
Convertible Senior
Notes(f)
|
|
|
2,100,000
|
|
|
|
2,100,000
|
|
|
|
2,100,000
|
|
|
|
|
|
|
|
|
|
Long-term
obligations(g)
|
|
|
89,747
|
|
|
|
106,187
|
|
|
|
21,370
|
|
|
|
24,916
|
|
|
|
4,408
|
|
Stockholders equity
|
|
$
|
3,947,988
|
|
|
$
|
10,973,183
|
|
|
$
|
11,601,513
|
|
|
$
|
13,668,471
|
|
|
$
|
3,705,453
|
|
|
|
|
(a) |
|
We have a 52/53-week fiscal year. Fiscal 2009 was comprised of
53 weeks of operations. Fiscal 2008, 2007, 2006, and 2005
were each comprised of 52 weeks of operations. |
|
(b) |
|
In fiscal 2007, we adopted SFAS No. 123R, Share-Based
Payment (SFAS No. 123R) which resulted in
stock-based compensation charges of $154 million. |
27
|
|
|
(c) |
|
We acquired Veritas Software Corporation on July 2, 2005
and its results of operations are included from the date of
acquisition. |
|
(d) |
|
During fiscal 2009, we recorded a non-cash goodwill impairment
charge of $7.4 billion. For more information, see
Note 6 of the Notes to the Consolidated Financial
Statements in this annual report. |
|
(e) |
|
In fiscal 2006, in connection with our acquisition of Veritas,
we assumed $520 million of 0.25% convertible subordinated
notes. These notes were paid off in their entirety in August
2006. |
|
(f) |
|
In fiscal 2007, we issued $1.1 billion principal amount of
0.75% Convertible Senior Notes and $1.0 billion
principal amount of 1.00% Convertible Senior Notes. For
more information, see Note 8 of the Notes to Consolidated
Financial Statements in this annual report. |
|
(g) |
|
Beginning in fiscal 2008 we entered into OEM placement fee
contracts, which is the primary driver for the increase in
liabilities. |
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
OVERVIEW
Our
Business
Symantec is a global leader in providing security, storage and
systems management solutions to help businesses and consumers
secure and manage their information. We provide customers
worldwide with software and services that protect, manage and
control information risks related to security, data protection,
storage, compliance, and systems management. We help our
customers manage cost, complexity and compliance by protecting
their IT infrastructure as they seek to maximize value from
their IT investments.
We have a 52/53-week fiscal year ending on the Friday closest to
March 31. Unless otherwise stated, references to fiscal
years in this report relate to fiscal year and periods ended
April 3, 2009, March 28, 2008 and March 30, 2007.
Fiscal 2008 and 2007 each consisted of 52 weeks while
fiscal 2009 consisted of 53 weeks. Our 2010 fiscal year
will consist of 52 weeks and will end on April 2, 2010.
Our
Operating Segments
Our operating segments are significant strategic business units
that offer different products and services, distinguished by
customer needs. Since the March 2008 quarter, we have operated
in five operating segments: Consumer, Security and Compliance,
Storage and Server Management, Services, and Other. During the
June 2008 quarter, we changed our reporting segments to better
align our operating structure, resulting in the Altiris services
that were formerly included in the Security and Compliance
segment being moved to the Services segment. We revised the
segment information for the prior year to conform to the new
presentation.
For further descriptions of our operating segments, see
Note 12 of the Notes to Consolidated Financial Statements
in this annual report. Our reportable segments are the same as
our operating segments.
Financial
Results and Trends
Revenue for fiscal 2009 was $6.1 billion, or 5% higher than
revenue for fiscal 2008. For fiscal 2009, we realized revenue
growth in the Americas and Asia Pacific Japan as compared to
fiscal 2008 and experienced revenue growth in all of our
segments. Revenue growth in our EMEA geography was relatively
flat from fiscal 2008 to fiscal 2009. Foreign currency
fluctuations had relatively little overall impact on our
international revenue growth for fiscal 2009 compared to fiscal
2008. In fiscal 2008, foreign currency fluctuations positively
impacted our revenue growth internationally compared to fiscal
2007. We are unable to predict the extent to which revenues in
future periods will be impacted by changes in foreign currency
exchange rates. If international sales become a greater portion
of our total sales in the future, changes in foreign exchange
rates may have a greater impact on our revenues and operating
results.
In fiscal 2009 the global economic slowdown increased
competitive pricing pressures and led to longer lead times in
the sales of some of our products and may have otherwise
adversely affected purchase decisions in our
28
markets. If the challenging economic conditions affecting global
markets continue or deteriorate further, we may experience
slower or negative revenue growth and our business and operating
results might suffer. For example, our revenue declined slightly
in the fourth quarter of fiscal 2009 relative to the fourth
quarter of fiscal 2008, although this was due in part to year
over year changes in foreign exchange rates. In light of these
economic conditions, we will continue to align our cost
structure with our revenue expectations.
Employee-related costs have been the primary driver of our
operating expenses, and we expect this trend to continue.
Employee-related costs include items such as wages, commissions,
bonuses, vacation, benefits, and stock-based compensation. We
had 17,426, 17,648, and 17,131 employees as of the end of
fiscal 2009, 2008 and 2007, respectively. The decrease during
fiscal 2009 was primarily attributable to the impact of our cost
and expense discipline, partially offset by employees added
through acquisitions.
During fiscal 2009, based on a combination of factors, including
the current economic environment and a sustained decline in our
market capitalization, we concluded that there were sufficient
indicators to require us to perform an interim goodwill
impairment analysis. As a result of this interim analysis, we
recorded a $7.4 billion non-cash goodwill impairment during
fiscal 2009. Primarily as a result of this charge, our net loss
was $6.7 billion for fiscal 2009 as compared to our net
income of $464 million and $404 million for fiscal
2008 and 2007, respectively.
On November 14, 2008, we acquired MessageLabs Group Limited
(MessageLabs), a nonpublic United Kingdom-based
provider of managed services to protect, control, encrypt, and
archive electronic communications for $630 million, net of
cash acquired. We believe this acquisition complements our SaaS
business.
On October 6, 2008, we acquired PC Tools Pty Ltd. (PC
Tools), a nonpublic Australia-based provider of security
and systems software, for approximately $262 million in
cash, net of cash acquired. We believe this acquisition
complements our consumer security software business.
We completed four other acquisitions during fiscal 2009 for a
combined cash consideration of $215 million. See
Note 5 of the Notes to Consolidated Financial Statements in
this annual report for further details.
In the face of a challenging economic environment, cash flows
remained strong in fiscal 2009 as we achieved $1.7 billion
in operating cash flow. We ended fiscal 2009 with nearly
$2.0 billion in cash, cash equivalents, and short-term
investments. In addition, during fiscal 2009 we repurchased
42 million shares of our common stock at an average price
of $16.53, for total consideration of $700 million.
CRITICAL
ACCOUNTING ESTIMATES
The preparation of the Consolidated Financial Statements and
related notes included in this annual report in accordance with
generally accepted accounting principles in the United States,
requires us to make estimates, which include judgments and
assumptions, that affect the reported amounts of assets,
liabilities, revenue, and expenses, and related disclosure of
contingent assets and liabilities. We have based our estimates
on historical experience and on various assumptions that we
believe to be reasonable under the circumstances. We evaluate
our estimates on a regular basis and make changes accordingly.
Historically, our critical accounting estimates have not
differed materially from actual results; however, actual results
may differ from these estimates under different conditions. If
actual results differ from these estimates and other
considerations used in estimating amounts reflected in the
Consolidated Financial Statements included in this annual
report, the resulting changes could have a material adverse
effect on our Consolidated Statements of Operations, and in
certain situations, could have a material adverse effect on
liquidity and our financial condition.
A critical accounting estimate is based on judgments and
assumptions about matters that are uncertain at the time the
estimate is made. Different estimates that reasonably could have
been used or changes in accounting estimates could materially
impact the operating results or financial condition. We believe
that the estimates described below represent our critical
accounting estimates, as they have the greatest potential impact
on our consolidated financial statements. See also Note 1
of the Notes to the Consolidated Financial Statements included
in this annual report.
29
Revenue
Recognition
We recognize revenue in accordance with generally accepted
accounting principles that have been prescribed for the software
industry. We recognize revenue primarily pursuant to the
requirements of Statement of Position
97-2,
Software Revenue Recognition, and any applicable
amendments or modifications. Revenue recognition requirements in
the software industry are very complex and require us to make
many estimates.
In arrangements that include multiple elements, including
perpetual software licenses and maintenance
and/or
services, and packaged products with content updates, we
allocate and defer revenue for the undelivered items based on
vendor specific objective evidence (VSOE) of the
fair value of the undelivered elements, and recognize the
difference between the total arrangement fee and the amount
deferred for the undelivered items as revenue. Our deferred
revenue consists primarily of the unamortized balance of
enterprise product maintenance, consumer product content
updates, and arrangements where VSOE does not exist. Deferred
revenue totaled approximately $3.1 billion as of
April 3, 2009, of which $419 million was classified as
Long-term deferred revenue in the Consolidated
Balance Sheets. VSOE of each element is based on the price for
which the undelivered element is sold separately. We determine
fair value of the undelivered elements based on historical
evidence of our stand-alone sales of these elements to third
parties or from the stated renewal rate for the undelivered
elements. When VSOE does not exist for undelivered items, such
as maintenance, then the entire arrangement fee is recognized
ratably over the performance period. Changes to the elements in
a software arrangement, the ability to identify VSOE for those
elements, the fair value of the respective elements, and the
degree of flexibility in contractual arrangements could
materially impact the amount recognized in the current period
and deferred over time.
For our consumer products that include content updates, we
recognize revenue and the associated cost of revenue ratably
over the term of the subscription upon sell-through to
end-users, as the subscription period commences upon sale to an
end-user. We defer revenue and cost of revenue amounts for
unsold product held by our distributors and resellers.
We expect our distributors and resellers to maintain adequate
inventory of consumer packaged products to meet future customer
demand, which is generally four or six weeks of customer demand
based on recent buying trends. We ship product to our
distributors and resellers at their request and based on valid
purchase orders. Our distributors and resellers base the
quantity of orders on their estimates to meet future customer
demand, which may exceed the expected level of a four or six
week supply. We offer limited rights of return if the inventory
held by our distributors and resellers is below the expected
level of a four or six week supply. We estimate future returns
under these limited rights of return in accordance with
Statement of Financial Accounting Standard (SFAS)
No. 48, Revenue Recognition When Right of Return Exists.
We typically offer liberal rights of return if inventory
held by our distributors and resellers exceeds the expected
level. Because we cannot reasonably estimate the amount of
excess inventory that will be returned, we primarily offset
deferred revenue against trade accounts receivable for the
amount of revenue in excess of the expected inventory levels.
Reserves for product returns. We reserve for
estimated product returns as an offset to revenue based
primarily on historical trends. We fully reserve for obsolete
products in the distribution channels as an offset to deferred
revenue for products with content updates and to revenue for all
other products. If we made different estimates, material
differences could result in the amount and timing of our net
revenues for any period presented. More or less product may be
returned than what was estimated
and/or the
amount of inventory in the channel could be different than what
was estimated. These factors and unanticipated changes in the
economic and industry environment could make actual results
differ from our return estimates.
Reserves for rebates. We estimate and record
reserves for channel and end-user rebates as an offset to
revenue. For consumer products that include content updates,
rebates are recorded as a ratable offset to revenue over the
term of the subscription. Our estimated reserves for channel
volume incentive rebates are based on distributors and
resellers actual performance against the terms and
conditions of volume incentive rebate programs, which are
typically entered into quarterly. Our reserves for end-user
rebates are estimated based on the terms and conditions of the
promotional programs, actual sales during the promotion, amount
of actual redemptions received, historical redemption trends by
product and by type of promotional program, and the value of the
rebate. We also consider current market conditions and economic
trends when estimating our reserves for rebates. If actual
redemptions
30
differ from our estimates, material differences may result in
the amount and timing of our net revenues for any period
presented.
Valuation
of goodwill, intangible assets and long-lived
assets
When we acquire businesses, we allocate the purchase price to
tangible assets and liabilities and identifiable intangible
assets acquired. Any residual purchase price is recorded as
goodwill. The allocation of the purchase price requires
management to make significant estimates in determining the fair
values of assets acquired and liabilities assumed, especially
with respect to intangible assets. These estimates are based on
historical experience and information obtained from the
management of the acquired companies. These estimates can
include, but are not limited to, the cash flows that an asset is
expected to generate in the future, the appropriate
weighted-average cost of capital, and the cost savings expected
to be derived from acquiring an asset. These estimates are
inherently uncertain and unpredictable. In addition,
unanticipated events and circumstances may occur which may
affect the accuracy or validity of such estimates.
Goodwill. As of April 3, 2009, goodwill
was $4.6 billion. We review goodwill for impairment on an
annual basis and on an interim basis whenever events or changes
in circumstances indicate that the carrying value may not be
recoverable in accordance with SFAS No. 142,
Goodwill and Other Intangible Assets
(SFAS No. 142). The provisions of
SFAS No. 142 require that a two-step impairment test
be performed on goodwill. In the first step, we compare the
estimated fair value of each reporting unit to its allocated
carrying value (book value). If the carrying value of the
reporting unit exceeds the fair value of the equity assigned to
that unit, there is an indicator of impairment and we must
perform the second step of the impairment test, which requires
determining the implied fair value of that reporting units
goodwill in a manner similar to a purchase price allocation for
an acquired business. If the carrying value of the reporting
units goodwill exceeds its implied fair value, then we
would record an impairment loss equal to the excess.
Our reporting units are identified in accordance with
SFAS No. 142 and are either equivalent to, or
represent one level below, an operating segment. Each reporting
unit constitutes a business for which discrete financial
information is available and for which segment management
regularly reviews the operating results. Our operating segments
are significant strategic business units that offer different
products and services, distinguished by customer needs. Our
reporting units are consistent with our operating segments,
except for the Services segment, which includes the SaaS and the
Services reporting units. The SaaS reporting unit is new for
fiscal 2009 and was primarily the result of an acquisition
during the year.
Prior to performing our second step in the goodwill impairment
analysis, we perform an assessment of long-lived assets for
impairment. Such long-lived assets include tangible and
intangible assets recorded in accordance with
SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets and SFAS No. 86,
Accounting for the Costs of Software to Be Sold, Leased of
Otherwise Marketed.
The process of evaluating the potential impairment of goodwill
requires significant judgment at many points during the
analysis. In determining the carrying value of the reporting
units, we had to apply judgment to allocate the assets and
liabilities, such as accounts receivable and property and
equipment, based on specific identification or relevant driver,
as they are not held by those reporting units but by functional
departments. Goodwill was allocated to the reporting units based
on a combination of specific identification and relative fair
values, which is consistent with the methodology utilized in the
prior year impairment analysis. The use of relative fair values
was necessary for certain reporting units due to changes in our
operating structure in prior years. Furthermore, to determine
the reporting units fair value, we use the income approach
under which we calculate the fair value of each reporting unit
based on the estimated discounted future cash flows of that
unit. The income approach was determined to be the most
representative valuation technique that would be utilized by a
market participant in an assumed transaction, but the results
are corroborated with the market approach which measures the
value of an asset through an analysis of recent sales or
offerings of comparable property. When applied to the valuation
of equity interests, consideration is given to the financial
condition and operating performance of the company being
appraised relative to those of publicly traded companies
operating in the same or similar lines of business, potentially
subject to corresponding economic, environmental, and political
factors and considered to be reasonable investment alternatives.
We also consider our market capitalization on the date we
perform our analysis. Significant assumptions are based on
31
historical and forecasted amounts specific to each reporting
unit, and consider estimates of cash flows, including revenues,
operating costs, growth rates and other relevant factors, as
well as discount rates to be applied. Although our cash flow
forecasts are based on assumptions that are consistent with the
plans and estimates we are using to manage the underlying
reporting units, there is significant judgment in determining
the cash flows attributable to these reporting units over their
remaining useful lives.
Based on a combination of factors, including the current
economic environment and a decline in our market capitalization,
we concluded that there were sufficient indicators to require us
to perform an interim goodwill impairment analysis during the
third quarter of fiscal 2009. The analysis was not completed
during the third quarter of fiscal 2009 and an estimated
impairment charge of $7.0 billion was recorded. The
analysis was subsequently finalized and an additional impairment
charge of $413 million was included in our results for the
fourth quarter of fiscal 2009. As a result, we incurred a total
impairment charge of $7.4 billion for fiscal 2009. We also
performed our annual impairment analysis during the fourth
quarter of fiscal 2009 and determined that no additional
impairment charge was necessary.
The methodology applied in the current year analyses was
consistent with the methodology applied in the prior year
analysis, but was based on updated assumptions, as appropriate.
As a result of the downturn in the economic environment during
the second half of calendar 2008, determining the fair value of
the individual reporting units was even more judgmental than in
the past. In particular, the global economic recession has
reduced our visibility into long-term trends and consequently,
estimates of future cash flows used in the current year analyses
are lower than those used in the prior year analysis. The
discount rates utilized in the analysis also reflect
market-based estimates of the risks associated with the
projected cash flows of individual reporting units and were
increased from the prior year analysis to reflect increased risk
due to current volatility in the economic environment.
If there are changes to the methods used to allocate carrying
values, if managements estimates of future operating
results change, if there are changes in the identified reporting
units or if there are changes to other significant assumptions,
the estimated carrying values for each reporting unit and the
estimated fair value of our goodwill could change significantly,
and could result in an impairment charge. Such changes could
also result in goodwill impairment charges in future periods,
which could have a significant impact on our operating results
and financial condition therein.
Intangible Assets. We assess the impairment of
identifiable intangible assets according to SFAS Nos. 142
or 144, as appropriate, whenever events or changes in
circumstances indicate that an assets carrying amount may
not be recoverable. An impairment loss would be recognized when
the sum of the undiscounted estimated future cash flows expected
to result from the use of the asset and its eventual disposition
is less than its carrying amount. Such impairment loss would be
measured as the difference between the carrying amount of the
asset and its fair value. Our cash flow assumptions are based on
historical and forecasted revenue, operating costs, and other
relevant factors. If managements estimates of future
operating results change, or if there are changes to other
assumptions, the estimate of the fair value of our acquired
product rights and other identifiable intangible assets could
change significantly. Such change could result in impairment
charges in future periods, which could have a significant impact
on our operating results and financial condition.
We account for developed technology or acquired product rights
in accordance with SFAS No. 86. We record
impairment charges on acquired product rights when we determine
that the net realizable value of the assets may not be
recoverable. To determine the net realizable value of the
assets, we use the estimated future gross revenues from each
product. Our estimated future gross revenues of each product are
based on company forecasts and are subject to change.
Long-Lived Assets (including Assets Held for
Sale). We account for long-lived assets in
accordance with SFAS No. 144. We record
impairment charges on long-lived assets to be held and used when
we determine that the carrying value of the long-lived assets
may not be recoverable. Based upon the existence of one or more
indicators of impairment, we measure any impairment of
long-lived assets based on a projected undiscounted cash flow
method using assumptions determined by our management to be
commensurate with the risk inherent in our current business
model. Our estimates of cash flows require significant judgment
based on our historical results and anticipated results and are
subject to many triggering factors which could change and cause
a material impact to our operating results or financial
condition. We record impairment charges on long-lived assets to
be held for sale when
32
we determine that the carrying value of the long-lived assets
may not be recoverable. In determining our fair value, we obtain
market value appraisal information from third-parties.
Fair
Value of Financial Instruments
Beginning in the first fiscal quarter of 2009, the assessment of
fair value for our financial instruments is based on the
provisions of SFAS No. 157, Fair Value
Measurements. SFAS No. 157 establishes a fair
value hierarchy that is based on three levels of inputs and
requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair
value.
We use inputs such as actual trade data, benchmark yields,
broker/dealer quotes and other similar data which are obtained
from independent pricing vendors, quoted market prices or other
sources to determine the ultimate fair value of our assets and
liabilities. We use such pricing data as the primary input, to
which we have not made any material adjustments, to make our
assessments and determinations as to the ultimate valuation of
our investment portfolio, and we are ultimately responsible for
the financial statements and underlying estimates. The fair
value and inputs are reviewed for reasonableness, may be further
validated by comparison to publicly available information and
could be adjusted based on market indices or other information
that management deems material to their estimate of fair value.
As of April 3, 2009, our financial instruments measured at
fair value on a recurring basis included $1.5 billion of
assets. Our cash equivalents primarily consist of money market
funds, bank securities, and government notes and represent 98%
of our total financial instruments measured at fair value on a
recurring basis.
As of April 3, 2009, $392 million of investments were
classified as Level 1, most of which represents investments
in money market funds. These were classified as Level 1
because their valuations were based on quoted prices for
identical securities in active markets. Determining fair value
for Level 1 instruments generally does not require
significant management judgment.
As of April 3, 2009, $1.1 billion of investments were
classified as Level 2, of which $474 million and
$654 million (98% together of total financial instruments
fair valued on a recurring basis) represent investments in
corporate securities and government securities, respectively.
These were classified as Level 2 because either
(1) the estimated fair value is based on the fair value of
similar securities or (2) their valuations were based on
pricing models with all significant inputs derived from or
corroborated by observable market prices for identical
securities in markets with insufficient volume or infrequent
transactions (less active markets). Level 2 inputs
generally are based on non-binding market consensus prices that
are corroborated by observable market data; quoted prices for
similar instruments;
and/or
model-derived valuations in which all significant inputs are
observable or can be derived principally from or corroborated
with observable market data for substantially the full term of
the assets or liabilities or quoted prices for similar assets or
liabilities. While determining the fair value for Level 2
instruments does not necessarily require significant management
judgment, it generally involves the following level of judgment
and subjectivity:
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|
Determining whether a market is considered active. An assessment
of an active market for marketable securities generally takes
into consideration trading volume for each instrument type or
whether a trading market exists for a given instrument. Our
Level 2 financial instruments were so classified due to
either low trading activity in active markets or no active
market existing. For those securities where no active market
existed, amortized cost was used and approximates fair value
because of their short maturities. For these financial
instruments classified as Level 2 as of April 3, 2009,
we used identical securities for determining fair value.
|
|
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|
Determining which model-derived valuations to use in determining
fair value. When observable market prices for identical
securities or similar securities are not available, we may price
marketable securities using: non-binding market consensus prices
that are corroborated with observable market data; or pricing
models, such as discounted cash flow approaches, with all
significant inputs derived from or corroborated with observable
market data. In addition, the credit ratings for issuers of debt
instruments in which we are invested could change, which could
lead to lower fair values. As of April 3, 2009, the fair
value of
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33
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|
|
|
|
$12 million of fixed-income securities was determined using
benchmark pricing models for identical or similar securities.
|
As of April 3, 2009, we have no financial instruments with
unobservable inputs as classified in Level 3 under the
SFAS No. 157 hierarchy. Level 3 instruments
generally would include unobservable inputs to be used in the
valuation methodology that are significant to the measurement of
fair value of assets or liabilities. The determination of fair
value for Level 3 instruments requires the most management
judgment and subjectivity.
Stock-Based
Compensation
We account for stock-based compensation in accordance with
SFAS No. 123R, Share-Based Payment. Under the
fair value recognition provisions of this statement, stock-based
compensation is measured at the grant date based on the fair
value of the award and is recognized as expense over the
requisite service period, which is generally the vesting period
of the respective award.
Determining the fair value of stock-based awards at the grant
date requires judgment. We use the Black-Scholes option-pricing
model to determine the fair value of stock options. The
determination of the fair value of stock-based awards on the
date of grant using an option-pricing model is affected by our
stock price as well as assumptions regarding a number of complex
and subjective variables. These variables include our expected
stock price volatility over the term of the awards, actual and
projected employee stock option exercise and cancellation
behaviors, risk-free interest rates, and expected dividends.
We estimate the expected life of options granted based on an
analysis of our historical experience of employee exercise and
post-vesting termination behavior considered in relation to the
contractual life of the option. Expected volatility is based on
the average of historical volatility for the period commensurate
with the expected life of the option and the implied volatility
of traded options. The risk free interest rate is equal to the
U.S. Treasury constant maturity rates for the period equal
to the expected life. We do not currently pay cash dividends on
our common stock and do not anticipate doing so in the
foreseeable future. Accordingly, our expected dividend yield is
zero.
In accordance with SFAS No. 123R, we only record
stock-based compensation expense for awards that are expected to
vest. As a result, judgment is also required in estimating the
amount of stock-based awards that are expected to be forfeited.
Although we estimate forfeitures based on historical experience,
actual forfeitures may differ. If actual results differ
significantly from these estimates, stock-based compensation
expense and our results of operations could be materially
impacted when we record a
true-up for
the difference in the period that the awards vest.
Contingencies
and Litigation
We evaluate contingent liabilities including threatened or
pending litigation in accordance with SFAS No. 5,
Accounting for Contingencies. We assess the likelihood of
any adverse judgments or outcomes from a potential claim or
legal proceeding, as well as potential ranges of probable
losses, when the outcomes of the claims or proceedings are
probable and reasonably estimable. A determination of the amount
of accrued liabilities required, if any, for these contingencies
is made after the analysis of each separate matter. Because of
uncertainties related to these matters, we base our estimates on
the information available at the time of our assessment. As
additional information becomes available, we reassess the
potential liability related to its pending claims and litigation
and may revise our estimates. Any revisions in the estimates of
potential liabilities could have a material impact on our
operating results and financial position.
Income
Taxes
We account for income taxes in accordance with
SFAS No. 109, Accounting for Income Taxes. The
provision for income taxes is computed using the asset and
liability method, under which deferred tax assets and
liabilities are recognized for the expected future tax
consequences of temporary differences between the financial
reporting and tax bases of assets and liabilities, and for
operating loss and tax credit carryforwards in each jurisdiction
in which we operate. Deferred tax assets and liabilities are
measured using the currently enacted tax rates that apply to
taxable
34
income in effect for the years in which those tax assets are
expected to be realized or settled. We record a valuation
allowance to reduce deferred tax assets to the amount that is
believed more likely than not to be realized.
We are required to compute our income taxes in each federal,
state, and international jurisdiction in which we operate. This
process requires that we estimate the current tax exposure as
well as assess temporary differences between the accounting and
tax treatment of assets and liabilities, including items such as
accruals and allowances not currently deductible for tax
purposes. The income tax effects of the differences we identify
are classified as current or long-term deferred tax assets and
liabilities in our Consolidated Balance Sheets. Our judgments,
assumptions, and estimates relative to the current provision for
income tax take into account current tax laws, our
interpretation of current tax laws, and possible outcomes of
current and future audits conducted by foreign and domestic tax
authorities. Changes in tax laws or our interpretation of tax
laws and the resolution of current and future tax audits could
significantly impact the amounts provided for income taxes in
our Consolidated Balance Sheets and Consolidated Statements of
Operations. We must also assess the likelihood that deferred tax
assets will be realized from future taxable income and, based on
this assessment, establish a valuation allowance, if required.
Our determination of our valuation allowance is based upon a
number of assumptions, judgments, and estimates, including
forecasted earnings, future taxable income, and the relative
proportions of revenue and income before taxes in the various
domestic and international jurisdictions in which we operate. To
the extent we establish a valuation allowance or change the
valuation allowance in a period, we reflect the change with a
corresponding increase or decrease to our tax provision in our
Consolidated Statements of Operations, or to goodwill to the
extent that the valuation allowance related to tax attributes of
the acquired entities.
In July 2008, we reached an agreement with the Internal Revenue
Service (IRS) concerning our eligibility to claim a
lower tax rate on a distribution made from a Veritas foreign
subsidiary prior to the July 2005 acquisition. The distribution
was intended to be made pursuant to the American Jobs Creation
Act of 2004, and therefore eligible for a 5.25% effective
U.S. federal rate of tax, in lieu of the 35% statutory
rate. The final impact of this agreement is not yet known since
this relates to the taxability of earnings that are otherwise
the subject of the tax years
2000-2001
transfer pricing dispute which in turn is being addressed in the
U.S. Tax Court. To the extent that we owe taxes as a result
of the transfer pricing dispute, we anticipate that the
incremental tax due from this negotiated agreement will
decrease. We currently estimate that the most probable outcome
from this negotiated agreement will be $13 million or less,
for which an accrual has already been made. We made a payment of
$130 million to the IRS for this matter in May 2006. We
applied $110 million of this payment as a deposit on the
outstanding transfer pricing matter for the tax years
2000-2001.
RESULTS
OF OPERATIONS
Total Net
Revenues
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Net revenues
|
|
$
|
6,149,854
|
|
|
$
|
275,435
|
|
|
|
5
|
%
|
|
$
|
5,874,419
|
|
|
$
|
675,053
|
|
|
|
13
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%
|
|
$
|
5,199,366
|
|
Net revenues increased for fiscal 2009 as compared to fiscal
2008 primarily due to a $301 million increase in Content,
subscriptions, and maintenance revenues. This increase was
primarily related to increased revenues in our Storage and
Server Management and Services segments. In addition, revenues
for fiscal 2009 benefited from additional amortization of
deferred revenue of approximately $75 million as a result
of fiscal 2009 comprising 53 weeks as compared to
52 weeks in fiscal 2008. The global economic slowdown has
increased competitive pricing pressure and the lead time to
close on sales for some of our products. While we cannot predict
the intensity or duration of this slowdown, we believe the
recurring nature of our business and the mission-critical nature
of our products position us well in this challenging environment.
Net revenues increased for fiscal 2008 as compared to fiscal
2007 primarily due to a $644 million increase in Content,
subscriptions, and maintenance revenues coupled with a
$31 million increase in Licenses revenues. These increases
were primarily related to increased revenues in our Storage and
Server Management, Security and Compliance, and Consumer
segments as a result of higher beginning deferred revenue
balances and increased sales.
35
Included in the increase noted above is $194 million due to
the sales of new products and services from our Altiris
acquisition for which there is no comparable revenue in the
prior period. The increase is also due to a favorable foreign
currency impact. We also benefited in fiscal 2008 from a higher
deferred revenue balance compared to fiscal 2007.
Content,
subscriptions, and maintenance revenues
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Content, subscriptions, and maintenance revenues
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|
$
|
4,862,287
|
|
|
$
|
300,721
|
|
|
|
7
|
%
|
|
$
|
4,561,566
|
|
|
$
|
643,994
|
|
|
|
16
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%
|
|
$
|
3,917,572
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|
Percentage of total revenue
|
|
|
79
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%
|
|
|
|
|
|
|
|
|
|
|
78
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%
|
|
|
|
|
|
|
|
|
|
|
75
|
%
|
Content, subscriptions, and maintenance revenues increased for
fiscal 2009 as compared to fiscal 2008 primarily due to an
aggregate increase in revenue from the Storage and Server
Management and Services segments of $246 million. The
increase in these two segments revenue is largely
attributable to demand for our Storage and Server Management
products and consulting services as a result of increased demand
for security and storage solutions. This increased demand was
driven by the proliferation of structured and unstructured data,
and increasing sales of services in conjunction with our license
sales as a result of our focus on offering our customers a more
comprehensive IT solution. Furthermore, growth in our customer
base through acquisitions and new license sales results in an
increase to Content, subscriptions, and maintenance revenues
because a large number of our customers renew their annual
maintenance contracts.
Content, subscriptions, and maintenance revenues increased in
fiscal 2008 as compared to fiscal 2007 primarily due to an
increase of $394 million in revenue related to enterprise
products and services, excluding acquired Altiris products. This
increase in enterprise product and services revenue was largely
attributable to higher amortization of deferred revenue, as a
result of our larger deferred revenue balances during fiscal
2008 compared to fiscal 2007. In addition, Content,
subscriptions, and maintenance revenues increased from sales of
new products from our Altiris acquisition for which there is no
comparable revenue in the prior period. The increase is also due
to a favorable foreign currency impact for fiscal 2008 compared
to fiscal 2007.
Licenses
revenue
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|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Licenses revenues
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|
$
|
1,287,567
|
|
|
$
|
(25,286
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)
|
|
|
(2
|
)%
|
|
$
|
1,312,853
|
|
|
$
|
31,059
|
|
|
|
2
|
%
|
|
$
|
1,281,794
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|
Percentage of total net revenues
|
|
|
21
|
%
|
|
|
|
|
|
|
|
|
|
|
22
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%
|
|
|
|
|
|
|
|
|
|
|
25
|
%
|
Licenses revenues decreased slightly for fiscal 2009 as compared
to fiscal 2008 primarily due to a decrease in revenue related to
our Security and Compliance products offset by an increase in
revenue related to our Storage and Server Management products.
The decreases in Security and Compliance license revenues are
primarily a result of the challenging economic environment and a
decline in demand from small and medium businesses. Offsetting
increases in Storage and Server Management license revenues are
a result of increased demand for storage solutions driven by the
proliferation of structured and unstructured data.
Licenses revenue increased in fiscal 2008 as compared to fiscal
2007 primarily due to an increase from the sales of new products
from our Altiris acquisition for which there is no comparable
revenue in the prior period and a favorable foreign currency
impact.
36
Net
revenues and operating income by segment
Consumer
segment
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|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Consumer revenues
|
|
$
|
1,773,207
|
|
|
$
|
27,118
|
|
|
|
2
|
%
|
|
$
|
1,746,089
|
|
|
$
|
155,584
|
|
|
|
10
|
%
|
|
$
|
1,590,505
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|
Percentage of total net revenues
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
30
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%
|
|
|
|
|
|
|
|
|
|
|
30
|
%
|
Consumer operating income
|
|
$
|
948,090
|
|
|
$
|
9,463
|
|
|
|
1
|
%
|
|
$
|
938,627
|
|
|
$
|
6,638
|
|
|
|
1
|
%
|
|
$
|
931,989
|
|
Percentage of Consumer revenues
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
|
|
54
|
%
|
|
|
|
|
|
|
|
|
|
|
59
|
%
|
Consumer revenues increased for fiscal 2009 as compared to
fiscal 2008 primarily due to an increase from our core consumer
security products in our electronic channels, offset by a
decrease in our retail channels. Our electronic channels include
sales derived from OEMs, subscriptions, upgrades, online sales,
and renewals. In addition, Consumer revenues increased from the
sale of our consumer services and acquired security products.
Consumer revenues increased for fiscal 2008 compared to fiscal
2007 due to an aggregate increase from our core consumer
security products in our electronic channels. The increase was
also due to a favorable foreign currency impact.
Operating income for this segment increased for fiscal 2009 as
compared to fiscal 2008, as the increase in revenue more than
offset the increase in expenses. Total expenses for fiscal 2009
increased primarily as a result of the PC Tools acquisition.
Operating income for this segment increased for fiscal 2008 as
compared to fiscal 2007, as the increase in revenue more than
offset the increase in expenses. Total expenses for fiscal 2008
increased primarily as a result of higher OEM placement fees.
Security
and Compliance Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Security and Compliance revenues
|
|
$
|
1,610,835
|
|
|
$
|
1,367
|
|
|
|
0
|
%
|
|
$
|
1,609,468
|
|
|
$
|
200,562
|
|
|
|
14
|
%
|
|
$
|
1,408,906
|
|
Percentage of total net revenues
|
|
|
26
|
%
|
|
|
|
|
|
|
|
|
|
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
27
|
%
|
Security and Compliance operating income
|
|
$
|
520,837
|
|
|
$
|
53,988
|
|
|
|
12
|
%
|
|
$
|
466,849
|
|
|
$
|
97,895
|
|
|
|
27
|
%
|
|
$
|
368,954
|
|
Percentage of Security and Compliance revenues
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
29
|
%
|
|
|
|
|
|
|
|
|
|
|
26
|
%
|
Security and Compliance revenues were flat for fiscal 2009 as
compared to fiscal 2008.
Security and Compliance revenues increased for fiscal 2008 as
compared to fiscal 2007 primarily due to sales of new products
from our Altiris acquisition for which there is no comparable
revenue in the prior period. Included in the total Security and
Compliance segment revenue increase for fiscal 2008 is a
favorable foreign currencies impact.
Operating income for the Security and Compliance segment
increased for fiscal 2009 as compared to fiscal 2008, as
expenses decreased while revenue growth remained relatively
flat. Total expenses for fiscal 2009 benefited from continued
cost containment measures.
Operating income for this segment increased for fiscal 2008 as
compared to fiscal 2007, as the increase in revenues more than
offset the increase in expenses. Total expenses increased
primarily as a result of higher salary and commissions which
includes the impact of the fiscal 2008 Altiris and Vontu
acquisitions.
37
Storage
and Server Management Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Storage and Server Management revenues
|
|
$
|
2,294,929
|
|
|
$
|
158,622
|
|
|
|
7
|
%
|
|
$
|
2,136,307
|
|
|
$
|
229,700
|
|
|
|
12
|
%
|
|
$
|
1,906,607
|
|
Percentage of total net revenues
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
37
|
%
|
Storage and Server Management operating income
|
|
$
|
1,024,393
|
|
|
$
|
340,826
|
|
|
|
50
|
%
|
|
$
|
683,567
|
|
|
$
|
49,574
|
|
|
|
8
|
%
|
|
$
|
633,993
|
|
Percentage of Storage and Server Management revenues
|
|
|
45
|
%
|
|
|
|
|
|
|
|
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
33
|
%
|
Storage and Server Management revenues increased for fiscal 2009
as compared to fiscal 2008 primarily due to increased sales of
products related to storage management, data protection,
disaster recovery and products supporting high availability. The
demand for these products is driven by the increase in the
proliferation of structured and unstructured data as well as the
increasing demand for optimization of storage systems.
Storage and Server Management revenues increased for fiscal 2008
as compared to fiscal 2007 primarily due to increased demand for
products related to the standardization and simplification of
data center infrastructure and higher amortization of deferred
revenue, for the reasons discussed above in Total Net
Revenues. Included in the total Storage and Server
Management segment revenue increase for fiscal 2008 is a
favorable foreign currencies impact.
Operating income for the Storage and Server Management segment
increased for the fiscal 2009 as compared to the fiscal 2008, as
revenue growth was coupled with a decrease in expenses. Total
expenses for the fiscal 2009 decreased partly as a result of the
fiscal 2008 divestiture of the APM business.
Operating income for this segment increased for fiscal 2008 as
compared to fiscal 2007, as the increase in revenues more than
offset the increase in expenses. Total expenses from our Storage
and Server Management segment increased primarily as a result of
the impairment of intangible assets related to the APM business
of $95 million. Additionally, increases in sales expenses
drove costs higher for the Storage and Server Management group.
Services
Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Services revenues
|
|
$
|
469,495
|
|
|
$
|
88,875
|
|
|
|
23
|
%
|
|
$
|
380,620
|
|
|
$
|
87,394
|
|
|
|
30
|
%
|
|
$
|
293,226
|
|
Percentage of total net revenues
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
Services operating loss
|
|
$
|
(442
|
)
|
|
$
|
35,659
|
|
|
|
99
|
%
|
|
$
|
(36,101
|
)
|
|
$
|
7,505
|
|
|
|
17
|
%
|
|
$
|
(43,606
|
)
|
Percentage of Services revenues
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
(9
|
)%
|
|
|
|
|
|
|
|
|
|
|
(15
|
)%
|
Services revenues increased for fiscal 2009 as compared to
fiscal 2008 primarily due to an increase in SaaS revenues as a
result of our November 14, 2008 acquisition of MessageLabs.
The remaining increase in revenues was in our consulting
services and Business Critical Services, as a result of
increased demand for more comprehensive software implementation
assistance and increased demand for our Business Critical
Services. Customers are increasingly purchasing our service
offerings in conjunction with the purchase of our products and
augmenting the capabilities of their own IT staff with our
onsite consultants.
Services revenues increased for fiscal 2008 compared to fiscal
2007 primarily due to an increase in consulting services as a
result of increased demand for a more comprehensive solution by
purchasing our service offerings in conjunction with the
purchase of our products and the increased desire for customers
to augment the capabilities of their own IT staff with our
onsite consultants. Services revenues increased as a result of
sales of new services from
38
our Altiris acquisition for which there is no comparable revenue
in the prior period. In addition, Services revenue increased due
to increased demand for our Business Critical Services.
The operating loss for the Services segment decreased for the
fiscal 2009, as revenue growth exceeded expense growth for the
segment. Our focus on margin improvement contributed to the
decrease in operating loss.
Operating loss for this segment decreased for fiscal 2008 as
compared to fiscal 2007, as the increase in revenues more than
offset the increase in expenses. Total expenses from our
Services segment increased $80 million in fiscal 2008 as
compared to fiscal 2007. The increase is primarily a result of
higher salary and wages to support the increase in revenue and
includes the impact of the fiscal 2008 Altiris acquisition.
Other
segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Other revenues
|
|
$
|
1,388
|
|
|
$
|
(547
|
)
|
|
|
(28
|
)%
|
|
$
|
1,935
|
|
|
$
|
1,813
|
|
|
|
|
*
|
|
$
|
122
|
|
Percentage of total net revenues
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
Other operating loss
|
|
$
|
(8,962,788
|
)
|
|
$
|
(7,512,126
|
)
|
|
|
|
*
|
|
$
|
(1,450,662
|
)
|
|
$
|
(79,074
|
)
|
|
|
6
|
%
|
|
$
|
(1,371,588
|
)
|
Revenue from our Other segment is comprised primarily of sunset
products and products nearing the end of their life cycle. Our
Other segment also includes general and administrative expenses;
amortization of acquired product rights, intangible assets, and
other assets; goodwill impairment charges; charges such as
stock-based compensation and restructuring; and certain indirect
costs that are not charged to the other operating segments. The
operating loss of our Other segment for fiscal 2009 primarily
consists of the $7.4 billion charge related to impairment
of goodwill that was recorded during fiscal 2009.
Revenues from the Other segment for fiscal 2008 compared to
fiscal 2007 were immaterial.
Net
revenues by geographic region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Americas (U.S., Canada and Latin America)
|
|
$
|
3,316,132
|
(1)
|
|
$
|
220,639
|
|
|
|
7
|
%
|
|
$
|
3,095,493
|
(2)
|
|
$
|
254,921
|
|
|
|
9
|
%
|
|
$
|
2,840,572(3
|
)
|
Percentage of total net revenues
|
|
|
54
|
%
|
|
|
|
|
|
|
|
|
|
|
53
|
%
|
|
|
|
|
|
|
|
|
|
|
55
|
%
|
EMEA (Europe, Middle East, Africa)
|
|
$
|
1,957,889
|
|
|
$
|
(5,430
|
)
|
|
|
0
|
%
|
|
$
|
1,963,319
|
|
|
$
|
319,142
|
|
|
|
19
|
%
|
|
$
|
1,644,177
|
|
Percentage of total net revenues
|
|
|
32
|
%
|
|
|
|
|
|
|
|
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
32
|
%
|
Asia Pacific/Japan
|
|
$
|
875,833
|
|
|
$
|
60,226
|
|
|
|
7
|
%
|
|
$
|
815,607
|
|
|
$
|
100,990
|
|
|
|
14
|
%
|
|
$
|
714,617
|
|
Percentage of total net revenues
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
14
|
%
|
Total net revenues
|
|
$
|
6,149,854
|
|
|
|
|
|
|
|
|
|
|
$
|
5,874,419
|
|
|
|
|
|
|
|
|
|
|
$
|
5,199,366
|
|
|
|
|
(1) |
|
Americas includes net revenues from the United States of
$3.0 billion, Canada of $176 million, and
Latin America of $115 million during fiscal 2009. |
|
(2) |
|
Americas includes net revenues from the United States of
$2.8 billion, Canada of $171 million, and
Latin America of $110 million during fiscal 2008. |
|
(3) |
|
Americas includes net revenues from the United States of
$2.6 billion, Canada of $176 million, and
Latin America of $104 million during fiscal 2007. |
Americas revenues increased for fiscal 2009 as compared to
fiscal 2008 primarily due to increased revenues related to our
Storage and Server Management and Services segments. In
addition, for fiscal 2009 as compared to fiscal 2008, Americas
revenues related to our Consumer segment increased driven by
demand for our Consumer segment products suites.
39
EMEA revenues decreased slightly for fiscal 2009 as compared to
fiscal 2008 primarily due to decreased revenues related to our
Consumer and Security and Compliance segments as a result of a
strengthening U.S. dollar and a decrease in endpoint
security product sales to small and medium sized businesses.
This decrease was partially offset by an increase in revenues
related to our Storage and Server Management and Services
segments.
Asia Pacific Japan revenues increased for fiscal 2009 as
compared to fiscal 2008 primarily due to increased revenues
related to our Storage and Server Management segment.
International revenues increased in fiscal 2008 as compared to
fiscal 2007 primarily due to increased revenues related to our
Storage and Server Management and Security and Compliance
segments, as a result of increased demand for products related
to the standardization and simplification of data center
infrastructure and higher amortization of deferred revenue for
the reasons described above. These products also contributed to
the increased revenues in the Americas in fiscal 2008 as
compared to fiscal 2007. Sales of new products from our
acquisition of Altiris increased revenues in the international
regions and the Americas for which there is no comparable
revenue in the prior period. Growth in revenues in international
regions and the Americas from sales of our Consumer products was
driven by prior period demand for Norton Internet Security
products. Foreign currencies had a favorable impact on net
revenues in fiscal 2008 compared to fiscal 2007.
Our international sales are and will continue to be a
significant portion of our net revenues. As a result, net
revenues will continue to be affected by foreign currency
exchange rates as compared to the U.S. dollar. While the
current global economic slowdown has recently resulted in a
strengthening U.S. dollar, we are unable to predict the
extent to which revenues in future periods will be impacted by
changes in foreign currency exchange rates. If international
sales become a greater portion of our total sales in the future,
changes in foreign currency exchange rates may have a greater
impact on our revenues and operating results.
Cost of
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Cost of revenues
|
|
$
|
1,226,927
|
|
|
$
|
6,597
|
|
|
|
1
|
%
|
|
$
|
1,220,330
|
|
|
$
|
4,504
|
|
|
|
0
|
%
|
|
$
|
1,215,826
|
|
Gross margin
|
|
|
80
|
%
|
|
|
|
|
|
|
|
|
|
|
79
|
%
|
|
|
|
|
|
|
|
|
|
|
77
|
%
|
Cost of revenues consists primarily of the amortization of
acquired product rights, fee-based technical support costs, the
costs of billable services, payments to OEMs under
revenue-sharing arrangements, manufacturing and direct material
costs, and royalties paid to third parties under technology
licensing agreements.
Gross margin increased slightly in fiscal 2009 as compared to
fiscal 2008 primarily due to higher revenues and, to a lesser
extent, lower OEM royalty payments and distribution costs,
partially offset by a year over year increase in technical
support costs.
Gross margin increased in fiscal 2008 as compared to fiscal 2007
due primarily to an increase in revenue and the fact that the
terms of several of our OEM arrangements changed from
revenue-sharing arrangements to placement fee arrangements in
late fiscal 2007. Placement fee arrangements are expensed on an
estimated average cost basis, while revenue-sharing arrangements
are generally amortized ratably over a one-year period. In
addition, we realized year over year increases in services and
technical support costs.
Cost
of content, subscriptions, and maintenance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Cost of content, subscriptions, and maintenance
|
|
$
|
839,843
|
|
|
$
|
13,504
|
|
|
|
2
|
%
|
|
$
|
826,339
|
|
|
$
|
2,814
|
|
|
|
0
|
%
|
|
$
|
823,525
|
|
As a percentage of related revenue
|
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
18
|
%
|
|
|
|
|
|
|
|
|
|
|
21
|
%
|
40
Cost of content, subscriptions, and maintenance consists
primarily of fee-based technical support costs, costs of
billable services, and payments to OEMs under revenue-sharing
agreements.
Cost of content, subscriptions, and maintenance as a percentage
of related revenue for the fiscal 2009 decreased one percentage
point as compared to the same period last year. The decrease is
primarily driven by higher revenues, lower OEM royalties and
distribution costs, partially offset by a
year-over-year
increase in technical support costs.
Cost of content, subscriptions, and maintenance decreased as a
percentage of the related revenue in fiscal 2008 as compared to
fiscal 2007. The year over year decrease in cost of content,
subscriptions, and maintenance as a percentage of the related
revenue is primarily driven by higher revenues and lower OEM
royalties as a percentage of revenue more than offsetting
increases in Services expenses.
Cost
of licenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Cost of licenses
|
|
$
|
34,657
|
|
|
$
|
(10,007
|
)
|
|
|
(22
|
)%
|
|
$
|
44,664
|
|
|
$
|
(5,304
|
)
|
|
|
(11
|
)%
|
|
$
|
49,968
|
|
As a percentage of related revenue
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
Cost of licenses consists primarily of royalties paid to third
parties under technology licensing agreements and manufacturing
and direct material costs.
Cost of licenses remained stable as a percentage of the related
revenue for the fiscal 2009 as compared to the fiscal 2008.
Decreases in manufacturing and site license costs were partially
offset by higher royalties.
Cost of licenses decreased as a percentage of the related
revenue in fiscal 2008 as compared to fiscal 2007. The year over
year decrease in Cost of licenses as a percentage of the related
revenue is primarily attributable to higher revenues and to a
lesser extent due to lower obsolescence reserves. Fiscal 2007
had relatively high obsolescence reserves due to our decision to
exit certain aspects of the appliance business.
Amortization
of acquired product rights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Amortization of acquired product rights
|
|
$
|
352,427
|
|
|
$
|
3,100
|
|
|
|
1
|
%
|
|
$
|
349,327
|
|
|
$
|
6,994
|
|
|
|
2
|
%
|
|
$
|
342,333
|
|
Percentage of total net revenues
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
7
|
%
|
Acquired product rights are comprised of developed technologies
and patents from acquired companies.
The increase in amortization for the fiscal 2009 as compared to
the fiscal 2008 is primarily due to amortization associated with
SwapDrive, PC Tools and MessageLabs acquisitions during the
fiscal 2009 periods offset in part by the APM business
divestiture in the fiscal 2008 period.
The amortization in fiscal 2008 was higher than fiscal 2007
primarily due to amortization associated with the Altiris
acquisition, offset in part by certain acquired product rights
becoming fully amortized. For further discussion of acquired
product rights and related amortization, see Notes 5 and 6
of the Notes to Consolidated Financial Statements in this annual
report.
Operating
Expenses
Operating
expenses overview
As discussed above under Our Business, our operating
expenses for fiscal 2009 as compared to fiscal 2008 were
adversely impacted by an additional week during fiscal 2009. Our
international expenses during the fiscal
41
2009 were favorably impacted by the strengthening of the
U.S. dollar compared to foreign currencies during fiscal
2008 and by the 2009 restructuring plan. In addition, our
ongoing cost and expense discipline positively contributed to
our increased operating margins for the fiscal 2009 periods.
Our operating expenses for fiscal 2008 as compared to fiscal
2007 were adversely impacted by higher international expenses
resulting from the U.S. dollar weakening in comparison to
foreign currencies coupled with additional headcount resulting
from acquisitions. These increases were partially offset by our
2008 restructuring plan initiatives and our ongoing cost and
expense discipline.
Sales
and marketing expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Sales and marketing
|
|
$
|
2,385,987
|
|
|
$
|
(29,277
|
)
|
|
|
(1
|
)%
|
|
$
|
2,415,264
|
|
|
$
|
407,613
|
|
|
|
20
|
%
|
|
$
|
2,007,651
|
|
Percentage of total net revenues
|
|
|
39
|
%
|
|
|
|
|
|
|
|
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
39
|
%
|
As a percent of net revenues, sales and marketing expenses
decreased to 39% for the fiscal 2009 as compared to 41% for the
fiscal 2008 as a result of the factors discussed above under
Operating expenses overview.
Sales and marketing expense as a percentage of total revenues
increased to 41% in fiscal 2008 as compared to 39% in fiscal
2007. The percentage increase and increase in absolute dollars
in sales and marketing expenses in fiscal 2008 as compared to
fiscal 2007 is primarily due to higher employee compensation
expense as a result of the Altiris and Vontu acquisitions and
the OEM placement fees as discussed above under Financial
Results and Trends. We negotiated new contract terms with
some of our OEM partners in fiscal 2007, for which the expense
commenced being recognized in the fourth quarter of fiscal 2007.
In addition, these new contract terms had the effect of moving
our OEM payments from Cost of revenues to Operating expenses.
Research
and development expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Research and development
|
|
$
|
879,702
|
|
|
$
|
(15,540
|
)
|
|
|
(2
|
)%
|
|
$
|
895,242
|
|
|
$
|
28,360
|
|
|
|
3
|
%
|
|
$
|
866,882
|
|
Percentage of total net revenues
|
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
17
|
%
|
As a percent of net revenues, research and development expense
has remained relatively constant in fiscal 2009 and fiscal 2008.
Research and development expense as a percentage of total
revenues has remained relatively constant in fiscal 2008 and
fiscal 2007. The increase in absolute dollars in fiscal 2008 as
compared to fiscal 2007 is attributable to a higher employee
compensation expense primarily related to the Altiris and Vontu
acquisitions.
General
and administrative expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
General and administrative
|
|
$
|
342,805
|
|
|
$
|
(4,837
|
)
|
|
|
(1
|
)%
|
|
$
|
347,642
|
|
|
$
|
30,859
|
|
|
|
10
|
%
|
|
$
|
316,783
|
|
Percentage of total net revenues
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
6
|
%
|
General and administrative expense as a percentage of total
revenues has remained relatively constant in fiscal 2009, fiscal
2008, and fiscal 2007. The decrease in general and
administrative expenses in fiscal 2009 as compared with the
fiscal 2008 is primarily due to items discussed above under
Operating expenses overview. The increase in
42
general and administrative expenses in fiscal 2008 as compared
with fiscal 2007 is primarily due to higher salaries and wages
resulting from the Altiris and Vontu acquisitions offset by a
gradual reduction in headcount during fiscal 2008.
Amortization
of other purchased intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Amortization of other purchased intangible assets
|
|
$
|
233,461
|
|
|
$
|
8,330
|
|
|
|
4
|
%
|
|
$
|
225,131
|
|
|
$
|
23,629
|
|
|
|
12
|
%
|
|
$
|
201,502
|
|
Percentage of total net revenues
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
4
|
%
|
Other purchased intangible assets are comprised of customer base
and tradenames. Amortization for the fiscal 2009 compared to the
fiscal 2008 remained relatively stable. The increased
amortization in fiscal 2008 is primarily associated with a full
year of amortization of intangible assets associated with the
Altiris purchase which occurred in April 2007.
Restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Severance
|
|
$
|
63,776
|
|
|
$
|
4,443
|
|
|
|
|
|
|
$
|
59,333
|
|
|
$
|
(7,660
|
)
|
|
|
|
|
|
$
|
66,993
|
|
Facilities and other
|
|
|
10,830
|
|
|
|
(3,751
|
)
|
|
|
|
|
|
|
14,581
|
|
|
|
11,338
|
|
|
|
|
|
|
|
3,243
|
|
Transition, transformation and other costs
|
|
|
21,010
|
|
|
|
21,010
|
|
|
|
|
|
|
|
|
|
|
|
(744
|
)
|
|
|
|
|
|
|
744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
|
|
$
|
95,616
|
|
|
$
|
21,702
|
|
|
|
29
|
%
|
|
$
|
73,914
|
|
|
$
|
2,934
|
|
|
|
4
|
%
|
|
$
|
70,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of total net revenues
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
1
|
%
|
In connection with the restructuring plans described in
Note 9 of the Notes to Consolidated Financial Statements in
this annual report, restructuring charges increased to
$96 million for fiscal 2009 from $74 million in fiscal
2008. The 2009 restructuring amount primarily consisted of
severance charges of $64 million largely related to the
2009 Plan (as defined in Note 9) reduction in force
and the 2008 Plan business structure changes, $21 million
related to the outsourcing of back office functions to various
third-party outsourcers and $11 million related to
facilities costs associated with earlier acquisitions. The 2008
amount primarily consisted of severance charges of
$59 million largely related to the reduction in force
actions in both the 2008 Plan and 2007 Plan (each as defined in
Note 9) and $15 million related to facilities
costs associated with earlier acquisitions. Restructuring
charges increased slightly in fiscal 2008 from $71 million
in fiscal 2007. The 2007 amount primarily consisted of severance
charges related to the 2007 Plan reduction in force.
Total remaining costs for the 2008 Plan are estimated to range
from $25 million to $55 million. Total remaining costs
for the transition activities associated with outsourcing back
office functions are estimated to be approximately
$40 million. Total remaining costs related to the 2009 Plan
and 2007 Plan are not expected to be material.
43
Impairment
of goodwill and Impairment of assets held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Impairment of goodwill
|
|
$
|
7,418,574
|
|
|
$
|
7,418,574
|
|
|
|
100
|
%
|
|
$
|
|
|
|
$
|
|
|
|
|
0
|
%
|
|
$
|
|
|
Percentage of total net revenues
|
|
|
121
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
Impairment of assets held for sale
|
|
$
|
46,592
|
|
|
$
|
(49,224
|
)
|
|
|
(51
|
)%
|
|
$
|
95,816
|
|
|
$
|
95,816
|
|
|
|
0
|
%
|
|
$
|
|
|
Percentage of total net revenues
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
Based on a combination of factors, including the current
economic environment and a decline in our market capitalization,
we concluded that there were sufficient indicators to require us
to perform an interim goodwill impairment analysis during the
third quarter of fiscal 2009. The analysis was not completed
during the third quarter of fiscal 2009 and an estimated
impairment charge of $7.0 billion was recorded. The
analysis was subsequently finalized and an additional impairment
charge of $413 million was included in our results for the
fourth quarter of fiscal 2009. As a result, we incurred a total
impairment charge of $7.4 billion for fiscal 2009. We also
performed our annual impairment analysis during the fourth
quarter of fiscal 2009 and determined that no additional
impairment charge was necessary.
For the purposes of this analysis, our estimates of fair value
are based on a combination of the income approach, and the
market approach. The income approach estimates the fair value of
our reporting units based on the future discounted cash flows.
We also consider the market approach, which estimates the fair
value of our reporting units based on comparable market prices.
During the year ended April 3, 2009, we recognized an
impairment of $47 million on certain land and buildings
classified as held for sale. SFAS No. 144 provides
that a long-lived asset classified as held for sale should be
measured at the lower of its carrying amount or fair value less
cost to sell.
During the year ended March 28, 2007, we determined that
the APM business in the Storage and Server Management segment
did not meet the long-term strategic objectives of the segment.
As such, we recognized an impairment of $96 million,
primarily due to sale of the APM business during fiscal 2008.
Patent
settlement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
2009 vs. 2008
|
|
Fiscal
|
|
2008 vs. 2007
|
|
Fiscal
|
|
|
2009
|
|
$
|
|
%
|
|
2008
|
|
$
|
|
%
|
|
2007
|
|
|
($ in thousands)
|
|
Patent settlement
|
|
$
|
(9,900
|
)
|
|
$
|
(9,900
|
)
|
|
|
100
|
%
|
|
$
|
|
|
|
$
|
|
|
|
|
0
|
%
|
|
$
|
|
|
Percentage of total net revenues
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
During the third quarter of fiscal 2009, we settled a patent
lawsuit in which the result was a gain of approximately
$10 million reflected in the Consolidated Statement of
Operations under the caption Patent settlement.
44
Non-operating
Income and Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Interest income
|
|
$
|
37,054
|
|
|
|
|
|
|
|
|
|
|
$
|
76,896
|
|
|
|
|
|
|
|
|
|
|
$
|
122,043
|
|
Interest expense
|
|
|
(29,705
|
)
|
|
|
|
|
|
|
|
|
|
|
(29,480
|
)
|
|
|
|
|
|
|
|
|
|
|
(27,233
|
)
|
Impairment of marketable securities
|
|
|
(3,658
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements of litigation, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net
|
|
|
12,041
|
|
|
|
|
|
|
|
|
|
|
|
4,327
|
|
|
|
|
|
|
|
|
|
|
|
17,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
15,732
|
|
|
$
|
(94,511
|
)
|
|
|
(86
|
)%
|
|
$
|
110,243
|
|
|
$
|
(1,637
|
)
|
|
|
(1
|
)%
|
|
$
|
111,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income decreased during fiscal years 2009 and 2008
primarily due to lower average cash balances outstanding and
lower average yields on our invested cash and short-term
investment balances. We expect that our interest expense will
increase with the adoption of Financial Accounting Standards
Board (FASB) FSP APB
No. 14-1,
Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash
Settlement). Please see Newly Adopted and Recently
Issued Accounting Pronouncements below.
Interest expense is primarily related to the interest and
amortization of issuance costs related to our 0.75% and
1.00% Convertible Senior Notes issued in June 2006. Fiscal
2007 also includes interest and accretion related to the
0.25% Convertible Subordinated Notes that we assumed in
connection with our acquisition of Veritas, which were paid in
full during August 2006.
In fiscal 2008, we recorded a net gain from Settlements of
litigation.
Other income, net includes a net gain of foreign currency for
fiscal 2009, while fiscal 2008 and fiscal 2007 include net
foreign currency losses. In fiscal 2007, Other income, net
includes a gain of $20 million on the sale of our buildings
in Milpitas, California, and Maidenhead, United Kingdom.
Provision
for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
($ in thousands)
|
|
Provision for income taxes
|
|
$
|
221,630
|
|
|
$
|
248,673
|
|
|
$
|
227,242
|
|
Effective tax rate on earnings
|
|
|
(3
|
)%
|
|
|
35
|
%
|
|
|
36
|
%
|
Our effective tax rate was approximately (3)%, 35%, and 36% in
fiscal 2009, 2008, and 2007, respectively. The tax provision for
fiscal 2009 includes a $56 million net tax benefit
associated with the impairment of goodwill charge of
$7.4 billion, materially impacting the overall effective
tax rate. The effective tax rate for fiscal 2009 otherwise
reflects the benefits of lower-taxed foreign earnings and losses
from the joint venture, domestic manufacturing tax incentives,
and research and development credits. The effective tax rate for
fiscal 2008 reflects the impact of non-deductible stock-based
compensation offset by U.S. tax benefits from domestic
manufacturing deductions. The effective tax rate for fiscal 2007
reflects the impact of non-deductible stock-based compensation
offset by foreign earnings taxed at a lower rate than the
U.S. tax rate.
The $56 million net tax benefit arising from the impairment
of goodwill during the year consists of a $112 million tax
benefit from elements of tax deductible goodwill, net of a
$56 million tax provision to increase our valuation
allowances for certain deferred tax assets in a foreign
jurisdiction that will require an extended period of time to
realize. The valuation allowance increased by $63 million
in total in fiscal 2009 and totals $101 million as of
April 3, 2009.
As a result of the impairment of goodwill, we have cumulative
pre-tax book losses, as measured by the current and prior two
years. We considered the negative evidence of this cumulative
pre-tax book loss position on our ability to continue to
recognize deferred tax assets that are dependent upon future
taxable income for realization. Levels of
45
future taxable income are subject to the various risks and
uncertainties discussed in Part I, Item 1A, Risk
Factors, set forth in this annual report. We considered the
following as positive evidence: the vast majority of the
goodwill impairment is not deductible for tax purposes and thus
will not result in tax losses; we have a strong, consistent
taxpaying history; we have substantial U.S. federal income
tax carryback potential; and we have substantial amounts of
scheduled future reversals of taxable temporary differences from
our deferred tax liabilities. We have concluded that this
positive evidence outweighs the negative evidence and, thus,
that the deferred tax assets as of April 3, 2009 of
$702 million, after application of the valuation
allowances, are realizable on a more likely than not
basis.
Other
tax matters
On March 29, 2006, we received a Notice of Deficiency from
the Internal Revenue Service (IRS) claiming that we
owe $867 million of additional taxes, excluding interest
and penalties, for the 2000 and 2001 tax years based on an audit
of Veritas. On June 26, 2006, we filed a petition with the
U.S. Tax Court protesting the IRS claim for such additional
taxes. In the March 2007 quarter, we agreed to pay
$7 million out of $35 million originally assessed by
the IRS in connection with several of the lesser issues covered
in the assessment. The IRS agreed to waive the assessment of
penalties. During July 2008, we completed the trial phase of the
Tax Court case, which dealt with the remaining issue covered in
the assessment. At trial, the IRS changed its position with
respect to this remaining issue, decreasing the remaining amount
at issue from $832 million to $545 million, excluding
interest. We filed our post-trial briefs in October 2008 and
rebuttal briefs in November 2008 with the U.S. Tax Court.
We strongly believe the IRS position with regard to this
matter is inconsistent with applicable tax laws and existing
Treasury regulations, and that our previously reported income
tax provision for the years in question is appropriate. If, upon
resolution, the final assessment differs from our tax provision
the adjustment, including interest, would be accounted for
through income tax expense in the period the matter is resolved,
with the application of SFAS No. 141(Revised 2007),
Business Combinations
(SFAS No. 141(R)) effective in the
first quarter of our fiscal year 2010.
On March 30, 2006, we received notices of proposed
adjustments from the IRS with regard to an unrelated audit of
Symantec for fiscal 2003 and 2004. The IRS claimed that we owed
an incremental tax liability with regard to this audit of
$110 million, excluding penalties and interest. The
incremental tax liability primarily relates to transfer pricing
matters between Symantec and a foreign subsidiary. On
September 5, 2006, we executed a closing agreement with the
IRS with respect to the audit of Symantecs fiscal 2003 and
2004 federal income tax returns. The closing agreement
represents the final assessment by the IRS of additional tax for
these fiscal years of approximately $35 million, including
interest. Based on the final settlement, a tax benefit of
$8 million was recognized.
In July 2008, we reached an agreement with the IRS concerning
our eligibility to claim a lower tax rate on a distribution made
from a Veritas foreign subsidiary prior to the July 2005
acquisition. The distribution was intended to be made pursuant
to the American Jobs Creation Act of 2004, and therefore
eligible for a 5.25% effective U.S. federal rate of tax, in
lieu of the 35% statutory rate. The final impact of this
agreement is not yet known since this relates to the taxability
of earnings that are otherwise the subject of the tax years
2000-2001
transfer pricing dispute which in turn is being addressed in the
U.S. Tax Court. To the extent that we owe taxes as a result
of the transfer pricing dispute, we anticipate that the
incremental tax due from this negotiated agreement will
decrease. We currently estimate that the most probable outcome
from this negotiated agreement will be $13 million or less,
for which an accrual has already been made. We made a payment of
$130 million to the IRS for this matter in May 2006. We
have applied $110 million of this payment as a deposit on
the outstanding transfer pricing matter for the tax years
2000-2001.
In connection with the note hedge transactions discussed in
Note 8 of the Notes to Consolidated Financial Statements in
this annual report, we established a deferred tax asset of
approximately $232 million to account for the book-tax
basis difference in the convertible notes resulting from note
hedge transactions. The establishment of the deferred tax asset
has been accounted for as an increase to additional paid-in
capital. As a result of the adoption of FSP APB
No. 14-1
in the June 2009 quarter, book and tax basis in the convertible
notes will be comparable, and as a result, this deferred tax
asset will be adjusted through additional paid-in capital, as
part of the adoption.
46
The Company adopted the provisions of FASB FIN 48,
Accounting for Uncertainty in Income Taxes, effective
March 31, 2007. FIN 48 addresses the accounting for
and disclosure of uncertainty in income tax positions, by
prescribing a minimum recognition threshold that a tax position
is required to satisfy before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition,
measurement, classification, interest and penalties, accounting
in interim periods, disclosure and transition.
The cumulative effect of adopting FIN 48 was a decrease in
tax reserves of $16 million, resulting in a decrease in
Veritas goodwill of $10 million, an increase of
$5 million to Accumulated earnings balance, and a
$1 million increase in Additional paid-in capital. Upon
adoption, the gross liability for unrecognized tax benefits as
of March 31, 2007 was $456 million, exclusive of
interest and penalties.
Loss
from joint venture
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|
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|
|
|
|
|
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|
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|
Fiscal
|
|
|
2009 vs. 2008
|
|
|
Fiscal
|
|
|
2008 vs. 2007
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
$
|
|
|
%
|
|
|
2008
|
|
|
$
|
|
|
%
|
|
|
2007
|
|
|
|
($ in thousands)
|
|
|
Loss from joint venture
|
|
$
|
53,062
|
|
|
$
|
53,062
|
|
|
|
100
|
%
|
|
$
|
|
|
|
$
|
|
|
|
|
0
|
%
|
|
$
|
|
|
Percentage of total net revenues
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
0
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%
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|
|
|
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0
|
%
|
On February 5, 2008, Symantec formed Huawei-Symantec, Inc.
(joint venture) with a subsidiary of Huawei
Technologies Co., Ltd. (Huawei). The joint venture
is domiciled in Hong Kong with principal operations in Chengdu,
China. The joint venture develops, manufactures, markets and
supports security and storage appliances to global
telecommunications carriers and enterprise customers.
As described further in Note 7 of the Notes to Consolidated
Financial Statements in this annual report, we account for our
investment in the joint venture under the equity method of
accounting. Under this method, we record our proportionate share
of the joint ventures net income or loss based on the
quarterly financial statements of the joint venture. We record
our proportionate share of net income or loss one quarter in
arrears. For the fiscal 2009, we recorded a loss of
approximately $53 million related to our share of the joint
ventures net loss incurred for the period from
February 5, 2008 (its date of inception) to
December 31, 2008.
LIQUIDITY
AND CAPITAL RESOURCES
Sources
of Cash
We have historically relied primarily on cash flows from
operations, borrowings under a credit facility, issuances of
convertible notes and equity securities for our liquidity needs.
Key sources of cash include earnings from operations and
existing cash, cash equivalents, short-term investments, and our
revolving credit facility.
In fiscal 2007, we entered into a five-year $1 billion
senior unsecured revolving credit facility that expires in July
2011. During fiscal 2008, we borrowed $200 million under
the credit facility. In order to be able to draw on the credit
facility, we must maintain certain covenants, including a
specified ratio of debt to earnings (before interest, taxes,
depreciation, and amortization and impairments) as well as
various other non-financial covenants. As of April 3, 2009,
we were in compliance with all required covenants, and there was
no outstanding balance on the credit facility.
As of April 3, 2009, we had cash and cash equivalents of
$1.8 billion and short-term investments of
$199 million resulting in a net liquidity position, defined
as unused availability of the credit facility, cash and cash
equivalents and short-term investments, of approximately
$3.0 billion.
We believe that our existing cash balances, cash that we
generate over time from operations, and our borrowing capacity
will be sufficient to satisfy our anticipated cash needs for
working capital and capital expenditures for at least the next
12 months.
47
Uses of
Cash
Our principal cash requirements include working capital, capital
expenditures, payments of principal and interest on our debt and
payments of taxes. In addition, we regularly evaluate our
ability to repurchase stock, pay debts and acquire other
businesses.
Revolving credit facility. In early fiscal
2009, we repaid the entire $200 million principal amount,
plus $3 million of accrued interest, that we borrowed
during fiscal 2008 under our senior unsecured revolving credit
facility.
Acquisition-Related. We generally use cash to
fund the acquisition of other businesses and from time to time
use our revolving credit facility when necessary. We acquired
six companies for cash totaling $1.1 billion in fiscal
2009, three companies for approximately $1.4 billion in
fiscal 2008 and two companies for approximately $46 million
in fiscal 2007. Also in fiscal 2008, we entered into a joint
venture with Huawei Technologies Co., Ltd. and contributed
$150 million in cash.
Convertible Senior Notes. In June 2006, we
issued $1.1 billion principal amount of
0.75% Convertible Senior Notes due June 15, 2011, and
$1.0 billion principal amount of 1.00% Convertible
Senior Notes (collectively the Senior Notes) due
June 15, 2013, to initial purchasers in a private offering
for resale to qualified institutional buyers pursuant to SEC
Rule 144A. Concurrently with the issuance of the Senior
Notes, we entered into note hedge transactions for
$592 million with affiliates of certain of the initial
purchasers whereby we have the option to purchase up to
110 million shares of our common stock at a price of $19.12
per share.
Stock Repurchases. During fiscal 2009, we
repurchased 42 million shares, or $700 million, of our
common stock. As of April 3, 2009, we have
$300 million remaining under the plan authorized by the
Board of Directors in June 2007. During fiscal 2008, we
repurchased a total of 81 million shares, or
$1.5 billion, of our common stock. During fiscal 2007, we
repurchased 162 million shares, or $2.8 billion, of
our common stock.
Cash
Flows
The following table summarizes, for the periods indicated,
selected items in our Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Net cash provided by (used in)
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
$
|
1,670,598
|
|
|
$
|
1,818,653
|
|
|
$
|
1,666,235
|
|
Investing activities
|
|
|
(961,937
|
)
|
|
|
(1,526,218
|
)
|
|
|
(222,455
|
)
|
Financing activities
|
|
|
(676,107
|
)
|
|
|
(1,065,553
|
)
|
|
|
(1,309,567
|
)
|
Operating
Activities
Net cash provided by operating activities of $1.7 billion
during fiscal 2009 primarily resulted from non-cash charges
related to depreciation and amortization expenses of
$837 million and the $7.4 billion goodwill impairment
charge offset by the net loss of $6.7 billion.
Net cash provided by operating activities during fiscal 2008
resulted largely from net income of $464 million adjusted
for non-cash items depreciation and amortization
charges of $824 million, stock-based compensation expense
of $164 million, income taxes payable of $197 million
and an increase in deferred revenue of $127 million. These
2008 amounts were partially offset by a decrease in non-cash
deferred income taxes of $180 million.
Net cash provided by operating activities during fiscal 2007
resulted largely from net income of $404 million adjusted
for non-cash items depreciation and amortization of
$811 million, stock-based compensation expense of
$154 million and an increase in deferred revenue of
$400 million. These 2007 amounts were partially offset by a
decrease in income taxes payable of $182 million, primarily
due to the timing of tax payments.
48
Investing
Activities
Net cash used in investing activities of $1.0 billion in
fiscal 2009 was primarily due to an aggregate payment of
$1.1 billion in cash payments for acquisitions, net of cash
acquired, and $272 million paid for capital expenditures,
partially offset by net proceeds of $336 million from the
sale of short-term investments which were used to partially fund
acquisitions.
Net cash used in investing activities of $1.5 billion for
2008 was primarily related to an aggregate payment of
$1.2 billion in cash paid for acquisitions and the joint
venture, net of cash acquired.
Net cash used in investing activities of $222 million in
fiscal 2007 was primarily due to a net increase in capital
expenditures of $298 million and $46 million in cash
paid for acquisitions, net of cash acquired, partially offset by
the net proceeds from sales of short-term investments of
$123 million.
Financing
Activities
Net cash used in financing activities of $676 million in
fiscal 2009 was primarily due to stock repurchases of
42 million shares of our common stock for $700 million
and the repayment of $200 million on our revolving credit
facility, partially offset by net proceeds of $229 million
received from the issuance of our common stock through employee
stock plans.
Net cash used in financing activities of $1.1 billion in
fiscal 2008 was primarily related to the repurchase of
81 million shares of our common stock for
$1.5 billion, partially offset by the net proceeds of
$224 million received from the issuance of our common stock
through employee stock plans and a borrowing of
$200 million on our revolving credit facility.
Net cash used in financing activities of $1.3 billion in
fiscal 2007 was primarily related to the repurchase of
162 million shares of our common stock for
$2.8 billion, the purchase of note hedges for
$592 million and repayment of the Veritas notes for
$520 million; partially offset by $2.1 billion
proceeds from the issuance of our Senior Notes, proceeds from
the sale of common stock warrants of $326 million and
$230 million proceeds from the issuance of our common stock
through employee stock plans.
Contractual
Obligations and Commitments
The following table summarizes our significant contractual
obligations and commitments as of April 3, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
|
|
|
|
|
|
Fiscal 2011
|
|
|
Fiscal 2013
|
|
|
Fiscal 2015
|
|
|
|
|
|
|
Total
|
|
|
Fiscal 2010
|
|
|
and 2012
|
|
|
and 2014
|
|
|
and Thereafter
|
|
|
Other
|
|
|
|
(In thousands)
|
|
|
Convertible Senior
Notes(1)
|
|
$
|
2,100,000
|
|
|
$
|
|
|
|
$
|
1,100,000
|
|
|
$
|
1,000,000
|
|
|
$
|
|
|
|
$
|
|
|
Interest payments on Convertible Senior
Notes(1)
|
|
|
59,959
|
|
|
|
18,250
|
|
|
|
29,814
|
|
|
|
11,895
|
|
|
|
|
|
|
|
|
|
Purchase
obligations(2)
|
|
|
443,880
|
|
|
|
394,848
|
|
|
|
48,865
|
|
|
|
167
|
|
|
|
|
|
|
|
|
|
Operating
leases(3)
|
|
|
426,609
|
|
|
|
93,203
|
|
|
|
128,580
|
|
|
|
90,394
|
|
|
|
114,432
|
|
|
|
|
|
Norton royalty
agreement(4)
|
|
|
10,830
|
|
|
|
5,311
|
|
|
|
5,033
|
|
|
|
186
|
|
|
|
300
|
|
|
|
|
|
Uncertain tax
positions(5)
|
|
|
522,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
522,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
3,563,662
|
|
|
$
|
511,612
|
|
|
$
|
1,312,292
|
|
|
$
|
1,102,642
|
|
|
$
|
114,732
|
|
|
$
|
522,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Senior Notes are due in fiscal 2012 and 2014. Holders of the
Senior Notes may convert their Senior Notes prior to maturity
upon the occurrence of certain circumstances. Upon conversion,
we would pay the holder the cash value of the applicable number
of shares of our common stock, up to the principal amount of the
note. Amounts in excess of the principal amount, if any, may be
paid in cash or in stock at our option. As of April 3,
2009, the conditions to conversion had not been met. Interest
payments were calculated based on terms of the related notes. |
49
|
|
|
(2) |
|
These amounts are associated with agreements for purchases of
goods or services generally including agreements that are
enforceable and legally binding and that specify all significant
terms, including fixed or minimum quantities to be purchased;
fixed, minimum, or variable price provisions; and the
approximate timing of the transaction. The table above also
includes agreements to purchase goods or services that have
cancellation provisions requiring little or no payment. The
amounts under such contracts are included in the table above
because management believes that cancellation of these contracts
is unlikely and the Company expects to make future cash payments
according to the contract terms or in similar amounts for
similar materials. |
|
(3) |
|
We have entered into various non-cancelable operating lease
agreements that expire on various dates through 2029. The
amounts in the table above include $27 million related to
exited or excess facility costs related to restructuring
activities. |
|
(4) |
|
In June 2007, we amended an existing royalty agreement with
Peter Norton for the licensing of certain publicity rights. As a
result, we recorded a long-term liability reflecting the net
present value of expected future royalty payments due to
Mr. Norton. |
|
(5) |
|
As of April 3, 2009, we reflected $522 million in long
term taxes payable related to uncertain tax benefits. At this
time, we are unable to make a reasonably reliable estimate of
the timing of payments in individual years beyond the next
twelve months due to uncertainties in the timing of the
commencement and settlement of potential tax audits and
controversies. |
Indemnifications
As permitted under Delaware law, we have agreements whereby we
indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was, serving at
our request in such capacity. The maximum potential amount of
future payments we could be required to make under these
indemnification agreements is not limited; however, we have
directors and officers insurance coverage that
reduces our exposure and may enable us to recover a portion of
any future amounts paid. We believe the estimated fair value of
these indemnification agreements in excess of applicable
insurance coverage is minimal.
We provide limited product warranties and the majority of our
software license agreements contain provisions that indemnify
licensees of our software from damages and costs resulting from
claims alleging that our software infringes the intellectual
property rights of a third party. Historically, payments made
under these provisions have been immaterial. We monitor the
conditions that are subject to indemnification to identify if a
loss has occurred.
Newly
Adopted and Recently Issued Accounting Pronouncements
In April 2009, the FASB issued (1) FSP
FAS 115-2
and FSP
FAS 124-2,
which provides guidance on determining
other-than-temporary
impairments for debt securities; and (2) FSP
FAS 107-1
and FSP APB
28-1, which
provides additional fair value disclosures for financial
instruments in interim periods. Each of these FSPs are effective
for interim and annual periods ending after June 15, 2009.
We do not expect the adoption of these FSPs to have a material
impact on our consolidated financial statements.
In June 2008, the FASB issued EITF Issue
No. 07-5,
Determining Whether an Instrument (or an Embedded Feature) Is
Indexed to an Entitys Own Stock. EITF Issue
No. 07-5
provides guidance on evaluating whether an equity-linked
financial instrument (or embedded feature) is indexed to a
companys own stock, including evaluating the
instruments contingent exercise and settlement provisions.
EITF Issue
No. 07-5
is effective for fiscal years beginning after December 15,
2008. We are currently assessing the impact of EITF Issue
No. 07-5
on our consolidated financial statements.
In May 2008, the FASB issued FSP APB
No. 14-1,
Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash
Settlement). The FSP will require the issuer of convertible
debt instruments with cash settlement features to separately
account for the liability and equity components of the
instrument. The debt will be recognized at the present value of
its cash flows discounted using the issuers nonconvertible
debt borrowing rate at the time of issuance. The equity
component will be recognized as the difference between the
proceeds from the issuance of the note and the fair value of the
liability. The FSP will also require interest to be accreted as
interest expense of the resultant debt discount over the
expected life of the debt.
50
The transition guidance requires retrospective application to
all periods presented, and does not grandfather existing
instruments. The guidance will be effective for fiscal years
beginning after December 15, 2008, and interim periods
within those years. As such, we will adopt the FSP in the first
quarter of fiscal year 2010. Our 0.75% Convertible Senior
Notes due June 15, 2011, and our 1.00% Convertible
Senior Notes due June 15, 2013 (collectively the
Senior Notes), each issued in June 2006, are subject
to the FSP.
Upon adoption, we will record a debt discount, which will be
amortized to interest expense through maturity of the Senior
Notes. Although we have not completed our evaluation of the
impact of adoption, we expect to retrospectively adjust the
original carrying amount of the Senior Notes as of June 2006 to
reflect a discount of approximately $586 million on the
date of issuance, with an offsetting increase in additional
paid-in capital of approximately $354 million and a
decrease in deferred tax assets of approximately
$232 million. Excluding the corresponding impact of income
taxes, we expect to retrospectively record an increase in
non-cash interest expense of approximately $91 million in
fiscal 2008 and approximately $97 million in fiscal 2009.
As a result of applying the FSP, we also expect non-cash
interest expense in fiscal 2010 to increase by approximately
$104 million, excluding the corresponding impact of income
taxes. The additional non-cash interest expense will have no
impact on the total operating, investing and financing cash
flows in prior periods or in future consolidated statements of
cash flows. If future interpretations of, or changes to, the FSP
necessitate a further change in these reporting practices, our
previously reported and future results of operations could be
adversely affected.
In May 2008, the FASB issued SFAS No. 162, The
Hierarchy of Generally Accepted Accounting Principles.
SFAS No. 162 defines the order in which accounting
principles that are generally accepted should be followed.
SFAS No. 162 is effective 60 days following the
SECs approval of the Public Company Accounting Oversight
Board (PCAOB) amendments to AU Section 411,
The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles. We do not expect the
adoption of SFAS No. 162 to have a material impact on
our consolidated financial statements.
In April 2008, the FASB finalized FSP
No. 142-3,
Determination of the Useful Life of Intangible Assets.
The position amends the factors that should be considered in
developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FASB
SFAS No. 142. The position applies to intangible
assets that are acquired individually or with a group of other
assets and both intangible assets acquired in business
combinations and asset acquisitions.
FSP 142-3
is effective for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. We are
currently evaluating the impact of the pending adoption of
FSP 142-3
on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51. The standard
changes the accounting for noncontrolling (minority) interests
in consolidated financial statements including the requirements
to classify noncontrolling interests as a component of
consolidated stockholders equity, to identify earnings
attributable to noncontrolling interests reported as part of
consolidated earnings, and to measure gain or loss on the
deconsolidated subsidiary using the fair value of the
noncontrolling equity investment. Additionally,
SFAS No. 160 revises the accounting for both increases
and decreases in a parents controlling ownership interest.
SFAS No. 160 is effective for fiscal years beginning
after December 15, 2008, with early adoption prohibited. We
do not expect the adoption of SFAS No. 160 to have a
material impact on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141(R).
This standard changes the accounting for business combinations
by requiring that an acquiring entity measures and recognizes
identifiable assets acquired and liabilities assumed at the
acquisition date fair value with limited exceptions. The changes
include the treatment of acquisition related transaction costs,
the valuation of any noncontrolling interest at acquisition date
fair value, the recording of acquired contingent liabilities at
acquisition date fair value and the subsequent re-measurement of
such liabilities after acquisition date, the recognition of
capitalized in-process research and development, the accounting
for acquisition-related restructuring cost accruals subsequent
to the acquisition date, and the recognition of changes in the
acquirers income tax valuation allowance.
SFAS No. 141(R) is effective for fiscal years
beginning after December 15, 2008, with early adoption
prohibited. We are currently evaluating the impact of the
pending adoption of SFAS No. 141(R) on our
consolidated financial statements. The accounting treatment
related to pre-acquisition uncertain tax positions will change
when SFAS No. 141(R) becomes effective, which will be
in the first quarter of
51
our fiscal year 2010. At such time, any changes to the
recognition or measurement of uncertain tax positions related to
pre-acquisition periods will be recorded through income tax
expense, where currently the accounting treatment would require
any adjustment to be recognized through the purchase price. In
April 2009, the FASB issued FSP No. FAS 141(R)-1,
Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies. FSP
No. FAS 141(R)-1 provides guidance on the accounting
and disclosure of contingencies acquired or assumed in a
business combination. FSP No. FAS 141(R)-1 is
effective for fiscal years beginning after December 15,
2008. We are currently evaluating the impact of the pending
adoption of FSP No. FAS 141(R)-1 on our consolidated
financial statements. See Note 14 for further details.
In February 2007, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial
Liabilities, including an amendment of SFAS No. 115.
SFAS No. 159 permits companies to choose to
measure certain financial instruments and certain other items at
fair value and requires unrealized gains and losses on items for
which the fair value option has been elected to be reported in
earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. Effective March 29,
2008, we adopted SFAS 159, but we have not elected the fair
value option for any eligible financial instruments as of
April 3, 2009.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements.
SFAS No. 157 does not require any new fair value
measurements but rather eliminates inconsistencies in guidance
found in various prior accounting pronouncements and is
effective for fiscal years beginning after November 15,
2007. In February 2008, the FASB issued FSP
No. 157-2,
The Effective Date of FASB Statement No. 157, which
delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those
that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), until
fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years. These nonfinancial items
include assets and liabilities such as reporting units measured
at fair value in a goodwill impairment test and nonfinancial
assets acquired and liabilities assumed in a business
combination. Effective March 29, 2008, we adopted
SFAS No. 157 for financial assets and liabilities
recognized at fair value on a recurring basis. The partial
adoption of SFAS No. 157 for financial assets and
liabilities did not have a material impact on our consolidated
financial position, results of operations or cash flows. In
October 2008, the FASB issued FSP
No. FAS 157-3,
Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active. FSP
No. FAS 157-3
provides examples to illustrate key considerations in
determining the fair value of a financial asset when the market
for that financial asset is not active. FSP
No. FAS 157-3
is effective upon issuance. The adoption of the FSP did not have
a material impact on our consolidated financial statements. In
April 2009, the FASB issued FSP
No. FAS 157-4,
Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly. FSP
No. FAS 157-4
provides guidance on estimating fair value when the volume and
level of activity for an asset or liability have significantly
decreased and determining when a transaction is not orderly. FSP
No. FAS 157-4
is effective for interim and annual periods ending after
June 15, 2009. We do not expect adoption of the FSP to have
a material impact on our consolidated financial statements. See
Note 2 for information and related disclosures regarding
our fair value measurements.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
We are exposed to various market risks related to fluctuations
in interest rates, foreign currency exchange rates, and equity
prices. We may use derivative financial instruments to mitigate
certain risks in accordance with our investment and foreign
exchange policies. We do not use derivatives or other financial
instruments for trading or speculative purposes.
Interest
Rate Risk
Our exposure to interest rate risk relates primarily to our
short-term investment portfolio and the potential losses arising
from changes in interest rates. Our investment objective is to
achieve the maximum return compatible with capital preservation
and our liquidity requirements. Our strategy is to invest our
cash in a manner that preserves capital, maintains sufficient
liquidity to meet our cash requirements, maximizes yields
consistent with approved credit risk, and limits inappropriate
concentrations of investment by sector, credit, or issuer. We
classify our cash equivalents and short-term investments in
accordance with SFAS No. 115, Accounting for
Certain Investments in
52
Debt and Equity Securities. We consider investments in
instruments purchased with an original maturity of 90 days
or less to be cash equivalents. We classify our short-term
investments as
available-for-sale,
and short-term investments consist of marketable debt or equity
securities with original maturities in excess of 90 days.
Our cash equivalents and short-term investment portfolios
consist primarily of money market funds, commercial paper,
corporate debt securities, and U.S. government and
government-sponsored debt securities. Our short-term investments
do not include equity investments in privately held companies.
Our short-term investments are reported at fair value with
unrealized gains and losses, net of tax, included in Accumulated
other comprehensive income within Stockholders equity in
the Consolidated Balance Sheets. The amortization of premiums
and discounts on the investments, realized gains and losses, and
declines in value judged to be
other-than-temporary
on
available-for-sale
securities are included in Other income, net in the Consolidated
Statements of Operations. We use the specific identification
method to determine cost in calculating realized gains and
losses upon sale of short-term investments.
The following table presents the fair value and hypothetical
changes in fair values on short-term investments sensitive to
changes in interest rates (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Securities Given an
|
|
|
|
Value of Securities Given an Interest
|
|
|
Interest Rate Increase of
|
|
|
|
Rate Decrease of X
|
|
|
X Basis Points (bps)
|
|
Fair Value
|
|
Basis Points (bps)
|
|
|
150 bps
|
|
100 bps
|
|
50 bps
|
|
As of
|
|
(25 bps)
|
|
(75 bps)
|
|
April 3, 2009
|
|
$
|
680
|
|
|
$
|
680
|
|
|
$
|
680
|
|
|
$
|
680
|
|
|
$
|
681
|
|
|
$
|
681
|
|
March 28, 2008
|
|
$
|
1,301
|
|
|
$
|
1,302
|
|
|
$
|
1,304
|
|
|
$
|
1,305
|
|
|
$
|
1,305
|
|
|
$
|
1,306
|
|
The modeling technique used above measures the change in fair
market value arising from selected potential changes in interest
rates. Market changes reflect immediate hypothetical parallel
shifts in the yield curve of plus 150 bps, plus
100 bps, plus 50 bps, minus 25 bps, and minus
75 bps.
Foreign
Currency Exchange Rate Risk
We conduct business in 40 currencies through our worldwide
operations and, as such, we are exposed to foreign currency
exposure risk. Foreign currency risks are associated with our
cash and cash equivalents, investments, receivables, and
payables denominated in foreign currencies. Fluctuations in
exchange rates will result in foreign exchange gains and losses
on these foreign currency assets and liabilities and are
included in Other income, net. Our objective in managing foreign
exchange activity is to preserve stockholder value by minimizing
the risk of foreign currency exchange rate changes. Our strategy
is to primarily utilize forward contracts to hedge foreign
currency exposures. Under our program, gains and losses in our
foreign currency exposures are offset by losses and gains on our
forward contracts. Our forward contracts generally have terms of
one to six months. At the end of the reporting period, open
contracts are marked-to-market with unrealized gains and losses
included in Other income, net.
The following table presents a sensitivity analysis on our
foreign forward exchange contract portfolio using a statistical
model to estimate the potential gain or loss in fair value that
could arise from hypothetical appreciation or depreciation of
foreign currency (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
Value of
|
|
|
|
Contracts
|
|
|
|
|
|
Contracts
|
|
|
|
Given X%
|
|
|
|
|
|
Given X%
|
|
|
|
Appreciation of
|
|
|
|
|
|
Depreciation of
|
|
|
|
Foreign
|
|
|
|
|
|
Foreign
|
|
|
|
Currency
|
|
|
Notional
|
|
|
Currency
|
|
Foreign Forward Exchange Contracts
|
|
10%
|
|
|
5%
|
|
|
Amount
|
|
|
(5)%
|
|
|
(10)%
|
|
|
Purchased, April 3, 2009
|
|
$
|
264
|
|
|
$
|
252
|
|
|
$
|
240
|
|
|
$
|
228
|
|
|
$
|
216
|
|
Sold, April 3, 2009
|
|
$
|
320
|
|
|
$
|
337
|
|
|
$
|
355
|
|
|
$
|
373
|
|
|
$
|
391
|
|
Purchased, March 28, 2008
|
|
$
|
196
|
|
|
$
|
189
|
|
|
$
|
180
|
|
|
$
|
171
|
|
|
$
|
160
|
|
Sold, March 28, 2008
|
|
$
|
352
|
|
|
$
|
369
|
|
|
$
|
387
|
|
|
$
|
407
|
|
|
$
|
430
|
|
53
Equity
Price Risk
In June 2006, we issued $1.1 billion principal amount of
0.75% Convertible Senior Notes due 2011 and
$1.0 billion of 1.00% Convertible Senior Notes due
2013. Holders may convert their Senior Notes prior to maturity
upon the occurrence of certain circumstances. Upon conversion,
we would pay the holder the cash value of the applicable number
of shares of Symantec common stock, up to the principal amount
of the note. Amounts in excess of the principal amount, if any,
may be paid in cash or in stock at our option. Concurrent with
the issuance of the Senior Notes, we entered into convertible
note hedge transactions and separately, warrant transactions, to
reduce the potential dilution from the conversion of the Senior
Notes and to mitigate any negative effect such conversion may
have on the price of our common stock.
For business and strategic purposes, we also hold equity
interests in several privately held companies, many of which can
be considered to be in the
start-up or
development stages. These investments are inherently risky and
we could lose a substantial part or our entire investment in
these companies. These investments are recorded at cost and
classified as Other long-term assets in the Consolidated Balance
Sheets. As of April 3, 2009, these investments had an
aggregate carrying value of $3 million.
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
Annual
Financial Statements
The consolidated financial statements and related disclosures
included in Part IV, Item 15 of this annual report are
incorporated by reference into this Item 8.
Selected
Quarterly Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2009
|
|
|
Fiscal 2008
|
|
|
|
Apr. 3,
|
|
|
Jan. 2,
|
|
|
Oct. 3,
|
|
|
Jul. 4,
|
|
|
Mar. 28,
|
|
|
Dec. 28,
|
|
|
Sep. 28,
|
|
|
Jun. 29,
|
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2008(a)
|
|
|
2008
|
|
|
2007
|
|
|
2007
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Net revenues
|
|
$
|
1,467,568
|
|
|
$
|
1,513,954
|
|
|
$
|
1,518,010
|
|
|
$
|
1,650,322
|
|
|
$
|
1,539,741
|
|
|
$
|
1,515,251
|
|
|
$
|
1,419,089
|
|
|
$
|
1,400,338
|
|
Gross profit
|
|
|
1,160,529
|
|
|
|
1,215,118
|
|
|
|
1,208,940
|
|
|
|
1,338,340
|
|
|
|
1,233,362
|
|
|
|
1,216,090
|
|
|
|
1,114,563
|
|
|
|
1,090,074
|
|
Impairment of
goodwill(b)
|
|
|
412,872
|
|
|
|
7,005,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
(192,369
|
)
|
|
|
(6,772,902
|
)
|
|
|
216,425
|
|
|
|
278,936
|
|
|
|
213,421
|
|
|
|
195,774
|
|
|
|
58,889
|
|
|
|
134,196
|
|
Net (loss) income
|
|
|
(249,378
|
)
|
|
|
(6,806,257
|
)
|
|
|
140,073
|
|
|
|
186,692
|
|
|
|
186,386
|
|
|
|
131,890
|
|
|
|
50,368
|
|
|
|
95,206
|
|
Net (loss) income per share basic
|
|
$
|
(0.30
|
)
|
|
$
|
(8.23
|
)
|
|
$
|
0.17
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.15
|
|
|
$
|
0.06
|
|
|
$
|
0.11
|
|
Net (loss) income per share diluted
|
|
$
|
(0.30
|
)
|
|
$
|
(8.23
|
)
|
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
$
|
0.22
|
|
|
$
|
0.15
|
|
|
$
|
0.06
|
|
|
$
|
0.10
|
|
|
|
|
(a) |
|
We have a 52/53 week fiscal accounting year. The
first quarter of fiscal 2009 was comprised of 14 weeks
while each of the other quarters presented were comprised of
13 weeks. |
|
(b) |
|
During the third quarter of fiscal 2009, based on a combination
of factors, there were sufficient indicators to require us to
perform an interim goodwill impairment analysis. Based on the
analysis performed, we concluded that an impairment loss was
probable and could be reasonably estimated. Accordingly we
recorded a non-cash goodwill impairment charge of approximately
$7 billion. Upon finalizing our analysis, we recorded an
additional non-cash goodwill impairment charge of
$413 million in the fourth quarter of fiscal 2009. See
Note 6 of the Notes to the Consolidated Financial
Statements in this annual report. |
|
|
Item 9.
|
Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure
|
None.
54
|
|
Item 9A.
|
Controls
and Procedures
|
|
|
(a)
|
Evaluation
of Disclosure Controls and Procedures
|
The SEC defines the term disclosure controls and
procedures to mean a companys controls and other
procedures that are designed to ensure that information required
to be disclosed in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized, and
reported, within the time periods specified in the SECs
rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in
the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuers management,
including its principal executive and principal financial
officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure. Our Chief Executive Officer and our Chief Financial
Officer have concluded, based on an evaluation of the
effectiveness of our disclosure controls and procedures (as
defined in
Rules 13a-15(e)
and
15d-15(e) of
the Exchange Act) by our management, with the participation of
our Chief Executive Officer and our Chief Financial Officer,
that our disclosure controls and procedures were effective as of
the end of the period covered by this report.
|
|
(b)
|
Managements
Report on Internal Control over Financial
Reporting
|
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined
in
Rules 13a-15(f)
and
15d-15(f) of
the Exchange Act) for Symantec. Our management, with the
participation of our Chief Executive Officer and our Chief
Financial Officer, has conducted an evaluation of the
effectiveness of our internal control over financial reporting
as of April 3, 2009, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO). We have excluded from our evaluation, the
internal control over financial reporting of (a) PC Tools
Pty. Ltd. and subsidiaries, which we acquired on October 6,
2008, and is included in the fiscal 2009 consolidated financial
statements of Symantec and constituted $310.5 million of
total assets (of which $273.0 million represents goodwill
and intangible assets included within the scope of the
assessment), as of April 3, 2009, and $13.9 million of
revenue, for the year then ended and (b) MessageLabs Group
Limited and subsidiaries, which we acquired on November 14,
2008, and is included in the fiscal year 2009 consolidated
financial statements of Symantec and constituted
$715.1 million of total assets (of which
$640.1 million represents goodwill and intangible assets
included within the scope of the assessment), as of
April 3, 2009 and $37.8 million of revenues, for the
year then ended.
Our management has concluded that, as of April 3, 2009, our
internal control over financial reporting was effective based on
these criteria.
The Companys independent registered public accounting firm
has issued an attestation report regarding its assessment of the
Companys internal control over financial reporting as of
April 3, 2009, which is included in Part IV,
Item 15 of this annual report.
|
|
(c)
|
Changes
in Internal Control over Financial Reporting
|
There were no changes in our internal control over financial
reporting during the quarter ended April 3, 2009 that have
materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
|
|
(d)
|
Limitations
on Effectiveness of Controls
|
Our management, including our Chief Executive Officer and Chief
Financial Officer, does not expect that our disclosure controls
and procedures or our internal controls will prevent all errors
and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of
the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within our Company have
been detected.
55
|
|
Item 9B.
|
Other
Information
|
None
PART III
|
|
Item 10.
|
Directors,
Executive Officers and Corporate Governance
|
The information required by this item is incorporated by
reference to Symantecs Proxy Statement for its 2009 Annual
Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
April 3, 2009.
|
|
Item 11.
|
Executive
Compensation
|
The information required by this item is incorporated by
reference to Symantecs Proxy Statement for its 2009 Annual
Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
April 3, 2009.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The information required by this item is incorporated by
reference to Symantecs Proxy Statement for its 2009 Annual
Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
April 3, 2009.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The information required by this item is incorporated by
reference to Symantecs Proxy Statement for its 2009 Annual
Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
April 3, 2009.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
The information required by this item is incorporated by
reference to Symantecs Proxy Statement for its 2009 Annual
Meeting of Stockholders to be filed with the SEC within
120 days after the end of the fiscal year ended
April 3, 2009.
56
PART IV
|
|
Item 15.
|
Exhibits
and Financial Statement Schedules
|
Upon written request, we will provide, without charge, a copy of
this annual report, including the consolidated financial
statements and financial statement schedule. All requests should
be sent to:
Symantec Corporation
Attn: Investor Relations
20330 Stevens Creek Boulevard
Cupertino, California 95014
408-517-8000
a) The following documents are filed as part of this report:
|
|
|
|
|
|
|
Page
|
|
|
Number
|
|
1. Consolidated Financial Statements:
|
|
|
|
|
|
|
|
62
|
|
|
|
|
64
|
|
|
|
|
65
|
|
|
|
|
66
|
|
|
|
|
67
|
|
|
|
|
68
|
|
2. Financial Statement Schedule: The following financial
statement schedule of Symantec Corporation for the years ended
April 3, 2009, March 28, 2008, and March 30, 2007
is filed as part of this
Form 10-K
and should be read in conjunction with the consolidated
financial statements of Symantec Corporation
|
|
|
|
|
|
|
|
109
|
|
Schedules other than that listed above have been omitted since
they are either not required, not applicable, or the information
is otherwise included.
|
|
|
|
|
57
3. Exhibits: The following exhibits are filed as part of or
furnished with this annual report as applicable:
EXHIBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
2
|
.01§
|
|
Agreement and Plan of Merger among Symantec Corporation, Atlas
Merger Corp. and Altiris, Inc. dated January 26, 2007
|
|
10-Q
|
|
000-17781
|
|
2.01
|
|
02/09/09
|
|
|
|
3
|
.01
|
|
Amended and Restated Certificate of Incorporation of Symantec
Corporation
|
|
S-8
|
|
333-119872
|
|
4.01
|
|
10/21/04
|
|
|
|
3
|
.02
|
|
Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Symantec Corporation
|
|
S-8
|
|
333-126403
|
|
4.03
|
|
07/06/05
|
|
|
|
3
|
.03
|
|
Certificate of Designations of Series A Junior
Participating Preferred Stock of Symantec Corporation
|
|
8-K
|
|
000-17781
|
|
3.01
|
|
12/21/04
|
|
|
|
3
|
.04
|
|
Bylaws of Symantec Corporation
|
|
8-K
|
|
000-17781
|
|
3.01
|
|
01/23/06
|
|
|
|
4
|
.01
|
|
Form of Common Stock Certificate
|
|
S-3ASR
|
|
333-139230
|
|
4.07
|
|
12/11/06
|
|
|
|
4
|
.02
|
|
Indenture related to the 0.75% Convertible Senior Notes,
due 2011, dated as of June 16, 2006, between Symantec
Corporation and U.S. Bank National Association, as trustee
(including form of 0.75% Convertible Senior Notes due 2011)
|
|
8-K
|
|
000-17781
|
|
4.01
|
|
06/16/06
|
|
|
|
4
|
.03
|
|
Indenture related to the 1.00% Convertible Senior Notes,
due 2013, dated as of June 16, 2006, between Symantec
Corporation and U.S. Bank National Association, as trustee
(including form of 1.00% Convertible Senior Notes due 2013)
|
|
8-K
|
|
000-17781
|
|
4.02
|
|
06/16/06
|
|
|
|
4
|
.04
|
|
Form of Master Terms and Conditions For Convertible Bond Hedging
Transactions between Symantec Corporation and each of Bank of
America, N.A. and Citibank, N.A., respectively, dated
June 9, 2006, including Exhibit and Schedule thereto
|
|
10-Q
|
|
000-17781
|
|
10.04
|
|
08/09/06
|
|
|
|
4
|
.05
|
|
Form of Master Terms and Conditions For Warrants Issued by
Symantec Corporation between Symantec Corporation and each of
Bank of America, N.A. and Citibank, N.A., respectively, dated
June 9, 2006, including Exhibit and Schedule thereto
|
|
10-Q
|
|
000-17781
|
|
10.05
|
|
08/09/06
|
|
|
|
4
|
.06
|
|
Credit Agreement, dated as of July 12, 2006, by and among
Symantec Corporation, the lenders party thereto (the
Lenders), JPMorgan Chase Bank, National Association,
as Administrative Agent, Citicorp USA, Inc., as Syndication
Agent, Bank of America, N.A., Morgan Stanley Bank and UBS Loan
Finance LLC, as
Co-Documentation
Agents, and J.P. Morgan Securities Inc. and Citigroup
Global Markets Inc., as Joint Bookrunners and Joint Lead
Arrangers, and related agreements.
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
12/03/07
|
|
|
|
10
|
.01*
|
|
Form of Indemnification Agreement with Officers and Directors,
as amended (form for agreements entered into prior to
January 17, 2006)
|
|
S-1
|
|
33-28655
|
|
10.17
|
|
06/21/89
|
|
|
|
10
|
.02*
|
|
Form of Indemnification Agreement for Officers, Directors and
Key Employees
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
01/23/06
|
|
|
|
10
|
.03*
|
|
Veritas Software Corporation 1993 Equity Incentive Plan,
including form of Stock Option Agreement
|
|
10-K
|
|
000-17781
|
|
10.03
|
|
06/09/06
|
|
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
10
|
.04*
|
|
Symantec Corporation 1996 Equity Incentive Plan, as amended,
including form of Stock Option Agreement and form of Restricted
Stock Purchase Agreement
|
|
10-K
|
|
000-17781
|
|
10.05
|
|
06/09/06
|
|
|
|
10
|
.05*
|
|
Symantec Corporation Deferred Compensation Plan, as adopted
November 7, 1996
|
|
10-K
|
|
000-17781
|
|
10.11
|
|
06/24/97
|
|
|
|
10
|
.06*
|
|
Brightmail Inc. 1998 Stock Option Plan, including form of Stock
Option Agreement and form of Notice of Assumption
|
|
10-K
|
|
000-17781
|
|
10.08
|
|
06/09/06
|
|
|
|
10
|
.07*
|
|
Altiris, Inc. 1998 Stock Option Plan
|
|
S-8
|
|
333-141986
|
|
99.01
|
|
04/10/07
|
|
|
|
10
|
.08*
|
|
Form of Notice of Grant of Stock Option under the Altiris, Inc.
1998 Stock Option Plan
|
|
S-8
|
|
333-141986
|
|
99.02
|
|
04/10/07
|
|
|
|
10
|
.09*
|
|
Symantec Corporation 2000 Director Equity Incentive Plan,
as amended
|
|
|
|
|
|
|
|
|
|
X
|
|
10
|
.10*
|
|
Symantec Corporation 2001 Non- Qualified Equity Incentive Plan
|
|
10-K
|
|
000-17781
|
|
10.12
|
|
06/09/06
|
|
|
|
10
|
.11*
|
|
Amended and Restated Symantec Corporation 2002 Executive
Officers Stock Purchase Plan
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
01/25/08
|
|
|
|
10
|
.12*
|
|
Altiris, Inc. 2002 Stock Plan
|
|
S-8
|
|
333-141986
|
|
99.03
|
|
04/10/07
|
|
|
|
10
|
.13*
|
|
Form of Stock Option Agreement under the Altiris, Inc. 2002
Stock Plan
|
|
S-8
|
|
333-141986
|
|
99.04
|
|
04/10/07
|
|
|
|
10
|
.14*
|
|
Vontu, Inc. 2002 Stock Option/Stock Issuance Plan, as amended
|
|
S-8
|
|
333-148107
|
|
99.02
|
|
12/17/07
|
|
|
|
10
|
.15*
|
|
Form of Vontu, Inc. Stock Option Agreement
|
|
S-8
|
|
333-148107
|
|
99.03
|
|
12/17/07
|
|
|
|
10
|
.16*
|
|
Veritas Software Corporation 2003 Stock Incentive Plan, as
amended and restated, including form of Stock Option Agreement,
form of Stock Option Agreement for Executives and Senior VPs and
form of Notice of Stock Option Assumption
|
|
10-K
|
|
000-17781
|
|
10.15
|
|
06/09/06
|
|
|
|
10
|
.17*
|
|
Symantec Corporation 2004 Equity Incentive Plan, as amended,
including Stock Option Grant Terms and Conditions,
form of RSU Award Agreement, and form of RSU Award Agreement for
Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
X
|
|
10
|
.18*
|
|
Altiris, Inc. 2005 Stock Plan
|
|
S-8
|
|
333-141986
|
|
99.05
|
|
04/10/07
|
|
|
|
10
|
.19*
|
|
Form of Incentive Stock Option Agreement under the Altiris, Inc.
2005 Stock Plan, as amended
|
|
S-8
|
|
333-141986
|
|
99.06
|
|
04/10/07
|
|
|
|
10
|
.20*
|
|
Symantec Corporation 2008 Employee Stock Purchase Plan
|
|
8-K
|
|
000-17781
|
|
10.2
|
|
09/25/08
|
|
|
|
10
|
.21*
|
|
Employment Agreement, dated April 11, 1999, between
Symantec Corporation and John W. Thompson
|
|
10-K
|
|
000-17781
|
|
10.67
|
|
07/01/99
|
|
|
|
10
|
.22*
|
|
Employment Agreement, dated December 15, 2004, between
Symantec Corporation and Greg Hughes
|
|
S-4/A
|
|
333-122724
|
|
10.08
|
|
05/18/05
|
|
|
|
10
|
.23*
|
|
Offer Letter, dated February 8, 2006, from Symantec
Corporation to James A. Beer
|
|
10-K
|
|
000-17781
|
|
10.17
|
|
06/09/06
|
|
|
|
10
|
.24*
|
|
Letter Agreement, dated April 6, 2009, between Symantec
Corporation and John W. Thompson
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
04/09/09
|
|
|
|
10
|
.25*
|
|
FY09 Long Term Incentive Plan
|
|
10-Q
|
|
000-17781
|
|
10.03
|
|
08/08/08
|
|
|
|
10
|
.26*
|
|
Form of FY09 Executive Annual Incentive Plan Group
Presidents responsible for one of Symantecs business
segments
|
|
10-Q
|
|
000-17781
|
|
10.02
|
|
08/08/08
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
10
|
.27*
|
|
Form of FY09 Executive Annual Incentive Plan
Executive Officers other than Group Presidents
responsible for one of Symantecs business segments
|
|
10-Q
|
|
000-17781
|
|
10.01
|
|
08/08/08
|
|
|
|
10
|
.28*
|
|
Symantec Senior Executive Incentive Plan, as amended and restated
|
|
10-Q
|
|
000-17781
|
|
10.03
|
|
11/07/08
|
|
|
|
10
|
.29*
|
|
Symantec Executive Retention Plan, as amended
|
|
10-Q
|
|
000-17781
|
|
10.05
|
|
08/07/07
|
|
|
|
10
|
.30
|
|
Second Amended and Restated Symantec Online Store Agreement, by
and among Symantec Corporation, Symantec Limited, Digital River,
Inc. and Digital River Ireland Limited, entered into on
October 19, 2006
|
|
10-Q
|
|
000-17781
|
|
10.02
|
|
02/07/07
|
|
|
|
10
|
.31
|
|
Amendment, dated June 20, 2007, to the Amended and Restated
Agreement Respecting Certain Rights of Publicity dated as of
August 31, 1990, by and between Peter Norton and Symantec
Corporation
|
|
10-Q
|
|
000-17781
|
|
10.01
|
|
08/07/07
|
|
|
|
10
|
.32
|
|
Assignment of Copyright and Other Intellectual Property Rights,
by and between Peter Norton and Peter Norton Computing, Inc.,
dated August 31, 1990
|
|
S-4
|
|
33-35385
|
|
10.37
|
|
06/13/90
|
|
|
|
10
|
.33
|
|
Environmental Indemnity Agreement, dated April 23, 1999,
between Veritas and Fairchild Semiconductor Corporation,
included as Exhibit C to that certain Agreement of Purchase
and Sale, dated March 29, 1999, between Veritas and
Fairchild Semiconductor of California
|
|
S-1/A
|
|
333-83777
|
|
10.27
Exhibit C
|
|
08/06/99
|
|
|
|
21
|
.01
|
|
Subsidiaries of Symantec Corporation
|
|
|
|
|
|
|
|
|
|
X
|
|
23
|
.01
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
24
|
.01
|
|
Power of Attorney (see Signature page to this annual report)
|
|
|
|
|
|
|
|
|
|
X
|
|
31
|
.01
|
|
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
31
|
.02
|
|
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
32
|
.01
|
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
32
|
.02
|
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
§ |
|
The exhibits and schedules to this agreement have been omitted
pursuant to Item 601(b)(2) of
Regulation S-K.
We will furnish copies of any of the exhibits and schedules to
the SEC upon request. |
|
* |
|
Indicates a management contract, compensatory plan or
arrangement. |
|
|
|
Certain portions of this exhibit have been omitted and have been
filed separately with the SEC pursuant to a request for
confidential treatment under
Rule 24b-2
as promulgated under the Securities Exchange Act of 1934. |
|
|
|
Filed by Veritas Software Corporation. |
|
|
|
This exhibit is being furnished, rather than filed, and shall
not be deemed incorporated by reference into any filing, in
accordance with Item 601 of
Regulation S-K. |
(b) Exhibits: We hereby file as part of this annual report,
the exhibits listed in Item 15(a)(3), as set forth above.
(c) Financial Statement Schedules: We hereby file, as part
of this annual report, the schedule listed in Item 15(a)2,
as set forth above.
60
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
|
|
62
|
|
Consolidated Balance Sheets as of April 3, 2009 and
March 28, 2008
|
|
|
64
|
|
Consolidated Statements of Operations for the years ended
April 3, 2009, March 28, 2008, and March 30, 2007
|
|
|
65
|
|
Consolidated Statements of Stockholders Equity for the
years ended April 3, 2009, March 28, 2008, and
March 30, 2007
|
|
|
66
|
|
Consolidated Statements of Cash Flows for the years ended
April 3, 2009, March 28, 2008, and March 30, 2007
|
|
|
67
|
|
Notes to Consolidated Financial Statements
|
|
|
68
|
|
61
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Symantec Corporation:
We have audited the accompanying consolidated balance sheets of
Symantec Corporation and subsidiaries as of April 3, 2009
and March 28, 2008, and the related consolidated statements
of operations, stockholders equity and cash flows for each
of the years in the three-year period ended April 3, 2009.
In connection with our audits of the consolidated financial
statements we have also audited the related financial statement
schedule listed in Item 15. These consolidated financial
statements and financial statement schedule are the
responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements and
financial statement schedule referred to above present fairly,
in all material respects, the financial position of Symantec
Corporation and subsidiaries as of April 3, 2009 and
March 28, 2008, and the results of their operations and
their cash flows for each of the years in the three-year period
ended April 3, 2009, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
As discussed in Note 1 to the consolidated financial
statements, effective March 31, 2007, Symantec Corporation
adopted the provisions of Financial Accounting Standards Board
Interpretation No. 48, Accounting for Uncertainty in
Income Taxes.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
Companys internal control over financial reporting as of
April 3, 2009, based on criteria established in Internal
Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO), and our report dated May 29, 2009
expressed an unqualified opinion on the effectiveness of the
Companys internal control over financial reporting
Mountain View, California
May 29, 2009
62
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Symantec Corporation:
We have audited Symantec Corporation and subsidiaries (the
Company) internal control over financial reporting
as of April 3, 2009, based on criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is
responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the
accompanying Managements Report on Internal Control over
Financial Reporting appearing under Item 9A(b). Our
responsibility is to express an opinion on the Companys
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our
opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as
of April 3, 2009, based on criteria established in
Internal Control Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission.
Management excluded from its assessment of the effectiveness of
the Companys internal control over financial reporting as
of April 3, 2009, (1) PC Tools Pty. Ltd. and
subsidiaries internal control over financial reporting
associated with total assets of $310.5 million (of which
$273.0 million represents goodwill and intangible assets
included within the scope of the assessment) as of April 3,
2009 and total revenues of $13.9 million for the year then
ended, and (2) MessageLabs Group Limited and
subsidiaries internal control over financial reporting
associated with total assets of $715.1 million (of which
$640.1 million represents goodwill and intangible assets
included within the scope of the assessment) as of April 3,
2009 and total revenues of $37.8 million for the year then
ended.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Symantec Corporation and
subsidiaries as of April 3, 2009 and March 28, 2008,
and the related consolidated statements of operations,
stockholders equity, and cash flows for each of the years
in the three-year period ended April 3, 2009, and our
report dated May 29, 2009 expressed an unqualified opinion
on those consolidated financial statements.
Mountain View, California
May 29, 2009
63
SYMANTEC
CORPORATION
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands, except par value)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,792,502
|
|
|
$
|
1,890,225
|
|
Short-term investments
|
|
|
198,667
|
|
|
|
536,728
|
|
Trade accounts receivable, net
|
|
|
837,010
|
|
|
|
758,200
|
|
Inventories
|
|
|
26,928
|
|
|
|
34,138
|
|
Deferred income taxes
|
|
|
165,556
|
|
|
|
193,775
|
|
Other current assets
|
|
|
279,476
|
|
|
|
316,852
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
3,300,139
|
|
|
|
3,729,918
|
|
Property and equipment, net
|
|
|
973,274
|
|
|
|
1,001,750
|
|
Intangible assets, net
|
|
|
1,638,684
|
|
|
|
1,892,474
|
|
Goodwill
|
|
|
4,560,623
|
|
|
|
11,207,357
|
|
Investment in joint venture
|
|
|
96,938
|
|
|
|
150,000
|
|
Long-term deferred income taxes
|
|
|
7,867
|
|
|
|
55,304
|
|
Other long-term assets
|
|
|
67,605
|
|
|
|
55,291
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
10,645,130
|
|
|
$
|
18,092,094
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
190,303
|
|
|
$
|
169,631
|
|
Accrued compensation and benefits
|
|
|
374,468
|
|
|
|
431,345
|
|
Current deferred revenue
|
|
|
2,644,011
|
|
|
|
2,661,515
|
|
Income taxes payable
|
|
|
43,894
|
|
|
|
72,263
|
|
Short-term borrowing
|
|
|
|
|
|
|
200,000
|
|
Other current liabilities
|
|
|
261,691
|
|
|
|
264,832
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
3,514,367
|
|
|
|
3,799,586
|
|
Convertible senior notes
|
|
|
2,100,000
|
|
|
|
2,100,000
|
|
Long-term deferred revenue
|
|
|
418,769
|
|
|
|
415,054
|
|
Long-term deferred tax liabilities
|
|
|
51,875
|
|
|
|
219,341
|
|
Long-term income taxes payable
|
|
|
522,384
|
|
|
|
478,743
|
|
Other long-term obligations
|
|
|
89,747
|
|
|
|
106,187
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
6,697,142
|
|
|
|
7,118,911
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock (par value: $0.01, 3,000,000 shares
authorized; 1,200,626 and 1,223,038 shares issued at
April 3, 2009 and March 28, 2008; 816,975 and
839,387 shares outstanding at April 3, 2009 and
March 28, 2008)
|
|
|
8,169
|
|
|
|
8,393
|
|
Additional paid-in capital
|
|
|
8,941,065
|
|
|
|
9,139,084
|
|
Accumulated other comprehensive income
|
|
|
185,594
|
|
|
|
159,792
|
|
Accumulated (deficit) earnings
|
|
|
(5,186,840
|
)
|
|
|
1,665,914
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,947,988
|
|
|
|
10,973,183
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
10,645,130
|
|
|
$
|
18,092,094
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
64
SYMANTEC
CORPORATION
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Content, subscriptions, and maintenance
|
|
$
|
4,862,287
|
|
|
$
|
4,561,566
|
|
|
$
|
3,917,572
|
|
Licenses
|
|
|
1,287,567
|
|
|
|
1,312,853
|
|
|
|
1,281,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
|
6,149,854
|
|
|
|
5,874,419
|
|
|
|
5,199,366
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Content, subscriptions, and maintenance
|
|
|
839,843
|
|
|
|
826,339
|
|
|
|
823,525
|
|
Licenses
|
|
|
34,657
|
|
|
|
44,664
|
|
|
|
49,968
|
|
Amortization of acquired product rights
|
|
|
352,427
|
|
|
|
349,327
|
|
|
|
342,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues
|
|
|
1,226,927
|
|
|
|
1,220,330
|
|
|
|
1,215,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
4,922,927
|
|
|
|
4,654,089
|
|
|
|
3,983,540
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
2,385,987
|
|
|
|
2,415,264
|
|
|
|
2,007,651
|
|
Research and development
|
|
|
879,702
|
|
|
|
894,042
|
|
|
|
866,882
|
|
General and administrative
|
|
|
342,805
|
|
|
|
347,642
|
|
|
|
316,783
|
|
Amortization of other purchased intangible assets
|
|
|
233,461
|
|
|
|
225,131
|
|
|
|
201,502
|
|
Restructuring
|
|
|
95,616
|
|
|
|
73,914
|
|
|
|
70,980
|
|
Impairment of goodwill
|
|
|
7,418,574
|
|
|
|
|
|
|
|
|
|
Impairment of assets held for sale
|
|
|
46,592
|
|
|
|
95,816
|
|
|
|
|
|
Patent settlement
|
|
|
(9,900
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
11,392,837
|
|
|
|
4,051,809
|
|
|
|
3,463,798
|
|
Operating (loss) income
|
|
|
(6,469,910
|
)
|
|
|
602,280
|
|
|
|
519,742
|
|
Interest income
|
|
|
37,054
|
|
|
|
76,896
|
|
|
|
122,043
|
|
Interest expense
|
|
|
(29,705
|
)
|
|
|
(29,480
|
)
|
|
|
(27,233
|
)
|
Impairment of marketable securities
|
|
|
(3,658
|
)
|
|
|
|
|
|
|
|
|
Settlements of litigation, net
|
|
|
|
|
|
|
58,500
|
|
|
|
|
|
Other income, net
|
|
|
12,041
|
|
|
|
4,327
|
|
|
|
17,070
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes and loss from joint venture
|
|
|
(6,454,178
|
)
|
|
|
712,523
|
|
|
|
631,622
|
|
Provision for income taxes
|
|
|
221,630
|
|
|
|
248,673
|
|
|
|
227,242
|
|
Loss from joint venture
|
|
|
53,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,728,870
|
)
|
|
$
|
463,850
|
|
|
$
|
404,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share basic
|
|
$
|
(8.10
|
)
|
|
$
|
0.53
|
|
|
$
|
0.42
|
|
Net (loss) income per share diluted
|
|
$
|
(8.10
|
)
|
|
$
|
0.52
|
|
|
$
|
0.41
|
|
Weighted-average shares outstanding basic
|
|
|
830,983
|
|
|
|
867,562
|
|
|
|
960,575
|
|
Weighted-average shares outstanding diluted
|
|
|
830,983
|
|
|
|
884,136
|
|
|
|
983,261
|
|
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
65
SYMANTEC
CORPORATION
AS OF APRIL 3, 2009, MARCH 28, 2008 AND MARCH 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
Deferred
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Stock-Based
|
|
|
Earnings
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Compensation
|
|
|
(Deficit)
|
|
|
Equity
|
|
|
|
(In thousands)
|
|
|
Balances, March 31, 2006
|
|
|
1,040,885
|
|
|
$
|
10,409
|
|
|
$
|
12,426,690
|
|
|
$
|
146,810
|
|
|
$
|
(43,595
|
)
|
|
$
|
1,128,157
|
|
|
$
|
13,668,471
|
|
Cumulative effect of adjustments from the adoption of
SAB No. 108, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33,788
|
)
|
|
|
(33,788
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted balances, March 31, 2006
|
|
|
1,040,885
|
|
|
|
10,409
|
|
|
|
12,426,690
|
|
|
|
146,810
|
|
|
|
(43,595
|
)
|
|
|
1,094,369
|
|
|
|
13,634,683
|
|
Components of comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
404,380
|
|
|
|
404,380
|
|
Change in unrealized gain (loss) on
available-for-sale
securities, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,093
|
|
|
|
|
|
|
|
|
|
|
|
4,093
|
|
Translation adjustment, net of tax of $14,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,030
|
|
|
|
|
|
|
|
|
|
|
|
32,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
440,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reversal of deferred compensation due to SFAS No. 123R
|
|
|
|
|
|
|
|
|
|
|
(43,595
|
)
|
|
|
|
|
|
|
43,595
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee stock plans
|
|
|
20,172
|
|
|
|
201
|
|
|
|
221,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,091
|
|
Repurchases of common stock
|
|
|
(161,704
|
)
|
|
|
(1,617
|
)
|
|
|
(2,694,388
|
)
|
|
|
|
|
|
|
|
|
|
|
(150,307
|
)
|
|
|
(2,846,312
|
)
|
Restricted stock units released, net of taxes
|
|
|
64
|
|
|
|
1
|
|
|
|
(699
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(698
|
)
|
Stock-based compensation, net of estimated forfeitures
|
|
|
|
|
|
|
|
|
|
|
152,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152,272
|
|
Issuance of warrants
|
|
|
|
|
|
|
|
|
|
|
326,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
326,102
|
|
Purchase of bond hedge, net of tax
|
|
|
|
|
|
|
|
|
|
|
(359,546
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(359,546
|
)
|
Income tax benefit from employee stock transactions
|
|
|
|
|
|
|
|
|
|
|
32,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 30, 2007
|
|
|
899,417
|
|
|
|
8,994
|
|
|
|
10,061,144
|
|
|
|
182,933
|
|
|
|
|
|
|
|
1,348,442
|
|
|
|
11,601,513
|
|
Components of comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
463,850
|
|
|
|
463,850
|
|
Change in unrealized gain (loss) on
available-for-sale
securities, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
278
|
|
|
|
|
|
|
|
|
|
|
|
278
|
|
Translation adjustment, net of tax of $15,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23,419
|
)
|
|
|
|
|
|
|
|
|
|
|
(23,419
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
440,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee stock plans
|
|
|
20,299
|
|
|
|
202
|
|
|
|
223,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
223,477
|
|
Repurchases of common stock
|
|
|
(80,939
|
)
|
|
|
(809
|
)
|
|
|
(1,347,490
|
)
|
|
|
|
|
|
|
|
|
|
|
(151,696
|
)
|
|
|
(1,499,995
|
)
|
Restricted stock units released, net of taxes
|
|
|
593
|
|
|
|
6
|
|
|
|
(4,144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,138
|
)
|
Stock-based compensation, net of estimated forfeitures
|
|
|
|
|
|
|
|
|
|
|
156,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,704
|
|
Acquisition PPA adjustment for options
|
|
|
|
|
|
|
|
|
|
|
31,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,522
|
|
Director retainer fee stock portion
|
|
|
17
|
|
|
|
|
|
|
|
300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
Income tax benefit from employee stock transactions
|
|
|
|
|
|
|
|
|
|
|
16,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,486
|
|
Cumulative effect of adjustments from the adoption of
FIN 48, net of taxes
|
|
|
|
|
|
|
|
|
|
|
1,287
|
|
|
|
|
|
|
|
|
|
|
|
5,318
|
|
|
|
6,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, March 28, 2008
|
|
|
839,387
|
|
|
|
8,393
|
|
|
|
9,139,084
|
|
|
|
159,792
|
|
|
|
|
|
|
|
1,665,914
|
|
|
|
10,973,183
|
|
Components of comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,728,870
|
)
|
|
|
(6,728,870
|
)
|
Change in unrealized gain (loss) on
available-for-sale
securities, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
251
|
|
|
|
|
|
|
|
|
|
|
|
251
|
|
Translation adjustment, net of tax of ($35,753)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,551
|
|
|
|
|
|
|
|
|
|
|
|
25,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,703,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock under employee stock plans
|
|
|
18,123
|
|
|
|
181
|
|
|
|
230,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
230,375
|
|
Repurchases of common stock
|
|
|
(42,342
|
)
|
|
|
(423
|
)
|
|
|
(575,574
|
)
|
|
|
|
|
|
|
|
|
|
|
(123,884
|
)
|
|
|
(699,881
|
)
|
Restricted stock units released, net of taxes
|
|
|
1,793
|
|
|
|
18
|
|
|
|
(15,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(15,607
|
)
|
Stock-based compensation, net of estimated forfeitures
|
|
|
|
|
|
|
|
|
|
|
153,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,998
|
|
Director retainer fee stock portion
|
|
|
14
|
|
|
|
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250
|
|
Income tax benefit from employee stock transactions
|
|
|
|
|
|
|
|
|
|
|
8,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, April 3, 2009
|
|
|
816,975
|
|
|
$
|
8,169
|
|
|
$
|
8,941,065
|
|
|
$
|
185,594
|
|
|
$
|
|
|
|
$
|
(5,186,840
|
)
|
|
$
|
3,947,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
66
SYMANTEC
CORPORATION
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,728,870
|
)
|
|
$
|
463,850
|
|
|
$
|
404,380
|
|
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
837,358
|
|
|
|
824,109
|
|
|
|
811,443
|
|
Stock-based compensation expense
|
|
|
157,464
|
|
|
|
163,695
|
|
|
|
153,880
|
|
Impairment of assets held for sale
|
|
|
46,592
|
|
|
|
2,200
|
|
|
|
2,841
|
|
Deferred income taxes
|
|
|
(89,224
|
)
|
|
|
(180,215
|
)
|
|
|
11,173
|
|
Income tax benefit from the exercise of stock options
|
|
|
14,026
|
|
|
|
29,443
|
|
|
|
43,118
|
|
Excess income tax benefit from the exercise of stock options
|
|
|
(17,878
|
)
|
|
|
(26,151
|
)
|
|
|
(25,539
|
)
|
Loss (Gain) on sale of assets
|
|
|
|
|
|
|
97,463
|
|
|
|
(19,937
|
)
|
Loss from joint venture
|
|
|
53,062
|
|
|
|
|
|
|
|
|
|
Gain on settlements of litigation
|
|
|
|
|
|
|
(58,500
|
)
|
|
|
|
|
Realized and other than temporary impairment loss on investments
|
|
|
6,068
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill
|
|
|
7,418,574
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
7,439
|
|
|
|
(894
|
)
|
|
|
912
|
|
Net change in assets and liabilities, excluding effects of
acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net
|
|
|
(84,958
|
)
|
|
|
(7,002
|
)
|
|
|
33,714
|
|
Inventories
|
|
|
5,813
|
|
|
|
10,791
|
|
|
|
10,324
|
|
Accounts payable
|
|
|
(48,994
|
)
|
|
|
667
|
|
|
|
(25,623
|
)
|
Accrued compensation and benefits
|
|
|
(55,092
|
)
|
|
|
97,133
|
|
|
|
23,169
|
|
Deferred revenue
|
|
|
140,728
|
|
|
|
126,716
|
|
|
|
399,517
|
|
Income taxes payable
|
|
|
(28,702
|
)
|
|
|
196,567
|
|
|
|
(181,926
|
)
|
Other assets
|
|
|
66,317
|
|
|
|
81,115
|
|
|
|
(23,332
|
)
|
Other liabilities
|
|
|
(29,125
|
)
|
|
|
(2,334
|
)
|
|
|
48,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
1,670,598
|
|
|
|
1,818,653
|
|
|
|
1,666,235
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(272,240
|
)
|
|
|
(273,807
|
)
|
|
|
(419,749
|
)
|
Proceeds from sale of property and equipment
|
|
|
39,713
|
|
|
|
104,715
|
|
|
|
121,464
|
|
Cash payments for acquisitions, net of cash acquired
|
|
|
(1,063,367
|
)
|
|
|
(1,162,455
|
)
|
|
|
(46,673
|
)
|
Investment in joint venture
|
|
|
|
|
|
|
(150,000
|
)
|
|
|
|
|
Purchase of equity investments
|
|
|
(2,000
|
)
|
|
|
|
|
|
|
|
|
Purchases of
available-for-sale
securities
|
|
|
(349,043
|
)
|
|
|
(1,233,954
|
)
|
|
|
(226,905
|
)
|
Proceeds from sales of
available-for-sale
securities
|
|
|
685,000
|
|
|
|
1,189,283
|
|
|
|
349,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(961,937
|
)
|
|
|
(1,526,218
|
)
|
|
|
(222,455
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock warrants
|
|
|
|
|
|
|
|
|
|
|
326,102
|
|
Net proceeds from sales of common stock under employee stock
benefit plans
|
|
|
229,133
|
|
|
|
224,152
|
|
|
|
230,295
|
|
Excess income tax benefit from the exercise of stock options
|
|
|
17,878
|
|
|
|
26,151
|
|
|
|
25,539
|
|
Tax payments related to restricted stock issuance
|
|
|
(15,607
|
)
|
|
|
(4,137
|
)
|
|
|
|
|
Repurchase of common stock
|
|
|
(699,881
|
)
|
|
|
(1,499,995
|
)
|
|
|
(2,846,312
|
)
|
Repayment of short-term borrowing
|
|
|
(200,000
|
)
|
|
|
|
|
|
|
|
|
Repayment of other long-term liability
|
|
|
(7,630
|
)
|
|
|
(11,724
|
)
|
|
|
(520,000
|
)
|
Proceeds from short-term borrowing
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
Proceeds from debt issuance
|
|
|
|
|
|
|
|
|
|
|
2,067,299
|
|
Purchase of bond hedge
|
|
|
|
|
|
|
|
|
|
|
(592,490
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(676,107
|
)
|
|
|
(1,065,553
|
)
|
|
|
(1,309,567
|
)
|
Effect of exchange rate fluctuations on cash and cash equivalents
|
|
|
(130,277
|
)
|
|
|
104,309
|
|
|
|
109,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
(97,723
|
)
|
|
|
(668,809
|
)
|
|
|
243,412
|
|
Beginning cash and cash equivalents
|
|
|
1,890,225
|
|
|
|
2,559,034
|
|
|
|
2,315,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending cash and cash equivalents
|
|
$
|
1,792,502
|
|
|
$
|
1,890,225
|
|
|
|
2,559,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock, stock options, and restricted stock
for business acquisitions
|
|
$
|
|
|
|
$
|
35,054
|
|
|
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid (net of refunds)
|
|
$
|
321,039
|
|
|
$
|
181,089
|
|
|
|
384,771
|
|
Interest expense paid
|
|
$
|
22,568
|
|
|
$
|
22,659
|
|
|
|
10,108
|
|
The accompanying Notes to Consolidated Financial Statements are
an integral part of these statements.
67
SYMANTEC
CORPORATION
|
|
Note 1.
|
Summary
of Significant Accounting Policies
|
Business
Symantec Corporation (we, us, and
our refer to Symantec Corporation and all of its
subsidiaries) is a global leader in providing security, storage
and systems management solutions to help businesses and
consumers secure and manage their information. We provide
customers worldwide with software and services that protect,
manage and control information risks related to security, data
protection, storage, compliance, and systems management. We help
our customers manage cost, complexity and compliance by
protecting their IT infrastructure as they seek to maximize
value from their IT investments.
Principles
of Consolidation
The accompanying consolidated financial statements of Symantec
Corporation and its wholly-owned subsidiaries are prepared in
conformity with generally accepted accounting principles in the
United States. All significant intercompany accounts and
transactions have been eliminated. Certain prior year amounts
have been reclassified to conform to the current presentation.
Fiscal
Years
We have a 52/53-week fiscal year ending on the Friday closest to
March 31. Unless otherwise stated, references to years in
this report relate to fiscal years rather than calendar years.
|
|
|
|
|
Fiscal Year
|
|
Ended
|
|
Weeks
|
|
2009
|
|
April 3, 2009
|
|
53
|
2008
|
|
March 28, 2008
|
|
52
|
2007
|
|
March 30, 2007
|
|
52
|
The fiscal year ending April 2, 2010 will comprise
52 weeks of operating results.
Use of
Estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles in the
United States requires management to make estimates and
assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Estimates are based
upon historical factors, current circumstances and the
experience and judgment of management. Management evaluates its
assumptions and estimates on an ongoing basis and may engage
outside subject matter experts to assist in its valuations.
Actual results could differ from those estimates. Significant
items subject to such estimates and assumptions include those
related to the allocation of revenues between recognized and
deferred amounts, fair value of financial instruments, valuation
of goodwill, intangible assets and long-lived assets, valuation
of stock-based compensation, contingencies and litigation, and
the valuation allowance for deferred income taxes.
Foreign
Currency Translation
The functional currency of our foreign subsidiaries is generally
the local currency. Assets and liabilities denominated in
foreign currencies are translated using the exchange rate on the
balance sheet dates. Revenues and expenses are translated using
monthly average exchange rates prevailing during the year. The
translation adjustments resulting from this process are included
as a component of Accumulated other comprehensive income.
Foreign currency transaction gains and losses are included in
Other income, net. When legal entities are liquidated,
reclassification translation adjustments are made from
Accumulated comprehensive income to Other income, net. Deferred
tax assets (liabilities) are established on the cumulative
translation adjustment attributable to unremitted foreign
earnings that are not intended to be indefinitely reinvested.
68
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Revenue
Recognition
We market and distribute our software products both as
stand-alone software products and as integrated product suites.
We recognize revenue when 1) persuasive evidence of an
arrangement exists, 2) delivery has occurred or services
have been rendered, 3) fees are fixed or determinable and
4) collectibility is probable. If we determine that any one
of the four criteria is not met, we will defer recognition of
revenue until all the criteria are met.
We derive revenue primarily from sales of content,
subscriptions, maintenance and licenses. We present revenue net
of sales taxes and any similar assessments.
Content, subscriptions, and maintenance revenue includes
arrangements for software maintenance and technical support for
our products, content and subscription services primarily
related to our security products, revenue from arrangements
where vendor-specific objective evidence (VSOE) of
the fair value of undelivered elements does not exist,
arrangements for managed security services, and
Software-as-a-Service (SaaS) offerings. These
arrangements are generally offered to our customers over a
specified period of time, and we recognize the related revenue
ratably over the maintenance, subscription, or service period.
Content, subscriptions, and maintenance revenue also includes
professional services revenue, which consists primarily of the
fees we earn related to consulting and educational services. We
generally recognize revenue from professional services as the
services are performed or upon written acceptance from
customers, if applicable, assuming all other conditions for
revenue recognition noted above have been met.
License revenue is derived primarily from the licensing of our
various products and technology. We generally recognize license
revenue upon delivery of the product, assuming all other
conditions for revenue recognition noted above have been met.
We enter into perpetual software license agreements through
direct sales to customers and indirect sales with distributors
and resellers. The license agreements generally include product
maintenance agreements, for which the related revenue is
included with Content, subscriptions, and maintenance and is
deferred and recognized ratably over the period of the
agreements.
In arrangements that include multiple elements, including
perpetual software licenses and maintenance
and/or
services and packaged products with content updates, we allocate
and defer revenue for the undelivered items based on VSOE of
fair value of the undelivered elements, and recognize the
difference between the total arrangement fee and the amount
deferred for the undelivered items as license revenue. VSOE of
each element is based on the price for which the undelivered
element is sold separately. We determine fair value of the
undelivered elements based on historical evidence of our
stand-alone sales of these elements to third parties or from the
stated renewal rate for the undelivered elements. When VSOE does
not exist for undelivered items such as maintenance, the entire
arrangement fee is recognized ratably over the performance
period. Our deferred revenue consists primarily of the
unamortized balance of enterprise product maintenance, consumer
product content update subscriptions, and arrangements where
VSOE does not exist.
Indirect
channel sales
For our Consumer segment, we sell packaged software products
through a multi-tiered distribution channel. We also sell
electronic download and packaged products via the Internet. We
separately sell annual content update subscriptions directly to
end-users primarily via the Internet. For our consumer products
that include content updates, we recognize revenue for these
products ratably over the term of the subscription upon
sell-through to end-users, as the subscription period commences
upon sale to an end-user. For most other consumer products, we
recognize package product revenue on distributor and reseller
channel inventory that is not in excess of specified inventory
levels in these channels. We offer the right of return of our
products under various policies and programs with our
distributors, resellers, and end-user customers. We estimate and
record reserves for product returns as an
69
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
offset to revenue. We fully reserve for obsolete products in the
distribution channel as an offset to deferred revenue for
products with content updates and to revenue for all other
products.
For our Security and Compliance and Storage and Server
Management segments, we generally recognize revenue from the
licensing of software products through our indirect sales
channel upon sell-through to an end-user. For licensing of our
software to OEMs, royalty revenue is recognized when the OEM
reports the sale of the software products to an end-user,
generally on a quarterly basis. In addition to license
royalties, some OEMs pay an annual flat fee
and/or
support royalties for the right to sell maintenance and
technical support to the end-user. We recognize revenue from OEM
support royalties and fees ratably over the term of the support
agreement.
We offer channel and end-user rebates for our products. Our
estimated reserves for channel volume incentive rebates are
based on distributors and resellers actual
performance against the terms and conditions of volume incentive
rebate programs, which are typically entered into quarterly. Our
reserves for end-user rebates are estimated based on the terms
and conditions of the promotional program, actual sales during
the promotion, the amount of actual redemptions received,
historical redemption trends by product and by type of
promotional program, and the value of the rebate. We estimate
and record reserves for channel and end-user rebates as an
offset to revenue. For consumer products that include content
updates, rebates are recorded as a ratable offset to revenue
over the term of the subscription.
Financial
Instruments
For certain of our financial instruments, including cash and
cash equivalents, short-term investments, accounts receivable,
accounts payable and other current liabilities, the carrying
amounts approximate their fair value due to the relatively short
maturity of these balances. The following methods were used to
estimate the fair value of each class of financial instruments
for which it is practicable to estimate that value:
Cash and Cash Equivalents. We consider all
highly liquid investments with an original maturity of three
months or less to be cash equivalents. Cash equivalents are
recognized at fair value. As of April 3, 2009, our cash
equivalents consisted of $479 million in government
securities, $474 million in corporate securities and
$389 million in money market funds. As of March 28,
2008, our cash equivalents consisted of $734 million in
commercial paper, $527 million in money market funds and
$45 million in corporate securities.
Short-Term Investments. We classify short-term
investments in accordance with SFAS No. 115,
Accounting for Certain Investments in Debt and Equity
Securities. Short-term investments consist of
marketable debt or equity securities which are classified as
available-for-sale
and are recognized at fair value. The determination of fair
value is further detailed in Note 2. Our portfolios consist
of asset-backed securities, corporate securities, government
notes, and marketable equity securities. We regularly review our
investment portfolio according to FSP
FAS 115-1,
The Meaning of Other Than Temporary Impairment and Its
Application to Certain Investments. We identify and evaluate
investments that have indications of possible impairment.
Factors considered in determining whether a loss is
other-than-temporary
include: the length of time and extent to which the fair market
value has been lower than the cost basis, the financial
condition and near-term prospects of the investee, credit
quality, likelihood of recovery, and our ability to hold the
investment for a period of time sufficient to allow for any
anticipated recovery in fair market value.
Unrealized gains and losses, net of tax, are included in
Accumulated other comprehensive income. The amortization of
premiums and discounts on the investments, realized gains and
losses, and declines in value judged to be
other-than-temporary
on
available-for-sale
securities are included in Other income, net. We use the
specific-identification method to determine cost in calculating
realized gains and losses upon sale of short-term investments.
Derivative Instruments. We transact business
in various foreign currencies and have foreign currency risks
associated with monetary assets and liabilities denominated in
foreign currencies. We utilize foreign currency forward
contracts to reduce the risks associated with changes in foreign
currency exchange rates. Our forward contracts generally have
terms of one to six months. We do not use forward contracts for
trading purposes. The gains
70
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
and losses on the contracts are intended to offset the gains and
losses on the underlying transactions. Both the changes in fair
value of outstanding forward contracts and realized foreign
exchange gains and losses are included in Other income, net.
Contract fair values are determined based upon quoted prices for
identical foreign currencies in other markets from brokers. For
each fiscal year presented in this report, outstanding
derivative contracts and the related gains or losses were not
material.
Convertible senior notes, note hedge and revolving credit
facility. Our convertible senior notes were
recorded at cost based upon par value at issuance. Debt issuance
costs were recorded in Other long-term assets and are being
amortized to Interest expense using the effective interest
method over five years for the 0.75% Notes and seven years
for the 1.00% Notes. In conjunction with the issuance of
the notes, we obtained hedges which would provide us with the
option to purchase additional common shares at a fixed price
from the note holders after conversion. The cost incurred in
connection with the note hedge transaction, net of the related
tax benefit and the proceeds from the sale of warrants, was
included as a net reduction in Additional paid-in capital.
Borrowings under our $1 billion senior unsecured revolving
credit facility are generally recognized at cost plus accrued
interest based upon stated interest rates.
Trade
Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount
and are not interest bearing. We maintain an allowance for
doubtful accounts to reserve for potentially uncollectible trade
receivables. Additions to the allowance for doubtful accounts
are recorded as General and administrative expenses. We review
our trade receivables by aging category to identify specific
customers with known disputes or collectibility issues. In
addition, we maintain an allowance for all other receivables not
included in the specific reserve by applying specific
percentages of projected uncollectible receivables to the
various aging categories. In determining these percentages, we
analyze our historical collection experience and current
economic trends. We exercise judgment when determining the
adequacy of these reserves as we evaluate historical bad debt
trends, general economic conditions in the U.S. and
internationally, and changes in customer financial conditions.
We also offset deferred revenue against accounts receivable when
channel inventories are in excess of specified levels and for
transactions where collection of a receivable is not considered
probable. The following table summarizes trade accounts
receivable, net of allowances and reserves for the periods
ending:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Trade accounts receivable, net:
|
|
|
|
|
|
|
|
|
Receivables
|
|
$
|
858,001
|
|
|
$
|
781,514
|
|
Less: allowance for doubtful accounts
|
|
|
(8,863
|
)
|
|
|
(8,915
|
)
|
Less: reserve for product returns
|
|
|
(12,128
|
)
|
|
|
(14,399
|
)
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable, net:
|
|
$
|
837,010
|
|
|
$
|
758,200
|
|
|
|
|
|
|
|
|
|
|
Equity
Method Investments
We account for the Huawei-Symantec, Inc. joint venture
(joint venture) under the equity method. Under the
equity method, we record our proportionate share of the joint
ventures net loss, based on the quarterly financial
statements of the joint venture. We record our proportionate
share of the net loss one quarter in arrears. In determining our
share of the joint ventures net loss, we adjust the joint
ventures reported results to recognize the amortization
expense associated with the difference between the carrying
value of our investment in the joint venture and our
proportionate share of the book value of the joint venture. Our
proportionate share of net losses is included in the Loss from
joint venture. See Note 7 for details.
71
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Inventories
Inventories are valued at the lower of cost or market. Cost is
principally determined using the
first-in,
first-out method. Inventory predominantly consists of finished
goods as well as deferred costs of revenue. Deferred costs of
revenue were $24 million as of April 3, 2009 and
$32 million as of March 28, 2008, of which
$17 million and $22 million, respectively, are related
to consumer products that include content updates and will be
recognized ratably over the term of the subscription.
Property
and Equipment
Property, equipment, and leasehold improvements are stated at
cost, net of accumulated depreciation and amortization.
Depreciation and amortization is provided on a straight-line
basis over the estimated useful lives of the related assets.
Buildings are depreciated over 25 to 30 years, and
leasehold improvements are depreciated over the lesser of the
life of the improvement or the initial lease term. Computer
hardware and software is depreciated over two to five years and
office furniture and equipment is depreciated over a three to
five-year period. The following table summarizes property and
equipment by categories for the periods ending:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Property and equipment, net:
|
|
|
|
|
|
|
|
|
Computer hardware and software
|
|
$
|
1,041,195
|
|
|
$
|
925,156
|
|
Office furniture and equipment
|
|
|
200,943
|
|
|
|
292,306
|
|
Buildings
|
|
|
483,105
|
|
|
|
492,857
|
|
Leasehold improvements
|
|
|
246,613
|
|
|
|
276,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,971,856
|
|
|
|
1,986,435
|
|
Less: accumulated depreciation and amortization
|
|
|
(1,077,034
|
)
|
|
|
(1,079,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
894,822
|
|
|
|
906,967
|
|
Land
|
|
|
78,452
|
|
|
|
94,783
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net:
|
|
$
|
973,274
|
|
|
$
|
1,001,750
|
|
|
|
|
|
|
|
|
|
|
Business
Combinations
We account for acquisitions using the purchase method of
accounting under SFAS No. 141(R). Each acquired
companys operating results are included in our
consolidated financial statements starting on the date of
acquisition. The purchase price is allocated to tangible and
identifiable intangible assets acquired and liabilities assumed
as of the date of acquisition. Goodwill is recognized for the
remaining unallocated purchase price.
Amounts allocated to assets are based upon fair values. Such
valuations require management to make significant estimates and
assumptions, especially with respect to intangible assets.
Management makes estimates of fair value based upon assumptions
believed to be reasonable. These estimates are based on
historical experience and information obtained from the
management of the acquired companies and are inherently
uncertain. Other separately identifiable intangible assets
generally include acquired product rights, developed technology,
customer lists and tradenames. We did not acquire in-process
research and development (IPR&D) in the fiscal
years 2009, 2008 and 2007.
Amounts allocated to liabilities assumed are based upon present
values of amounts to be paid determined at current market rates.
We estimate the fair value of deferred revenue related to
product support assumed in connection with acquisitions. The
estimated fair value of deferred revenue is determined by
estimating the costs
72
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
related to fulfilling the obligations plus a normal profit
margin. The estimated costs to fulfill the support contracts are
based on the historical direct costs related to providing the
support.
For any given acquisition, we may identify certain
pre-acquisition contingencies. If the contingency is probable
and can be reasonably estimated within the purchase price
allocation period, generally within one year after acquisition,
an adjustment is recorded to goodwill. If the contingency is not
probable or cannot be reasonably estimated at the end of the
purchase price allocation period, the adjustment is recorded in
operating results in the period in which the adjustment is
determined.
Goodwill
and Intangible Assets
Goodwill. Our methodology for allocating the
purchase price relating to purchase acquisitions is determined
through established valuation techniques. Goodwill is measured
as the excess of the cost of the acquisition over the sum of the
amounts assigned to tangible and identifiable intangible assets
acquired less liabilities assumed. We review goodwill for
impairment on an annual basis during the fourth quarter of the
fiscal year and whenever events or changes in circumstances
indicate the carrying value of goodwill may be impaired. In
testing for a potential impairment of goodwill, we determine the
carrying value (book value) of the assets and liabilities for
each reporting unit, which requires the allocation of goodwill
to each reporting unit. We then estimate the fair value of each
reporting unit. The first step of evaluating impairment is to
determine if the estimated fair value is greater than the
carrying value of each reporting unit. If step one indicates
that impairment potentially exists, the second step is performed
to measure the amount of impairment, if any. Goodwill impairment
exists when the estimated fair value of goodwill is less than
its carrying value.
To determine the reporting units fair values in the
current year analyses, we used the income approach under which
we calculate the fair value of each reporting unit based on the
estimated discounted future cash flows of that reporting unit.
The results thereof are corroborated with the market approach
which measures the value of an asset through an analysis of
recent sales or offerings of comparable property. When applied
to the valuation of equity interests, consideration is given to
the financial condition and operating performance of the company
being appraised relative to those of publicly traded companies
operating in the same or similar lines of business, potentially
subject to corresponding economic, environmental, and political
factors and considered to be reasonable investment alternatives.
We also consider our market capitalization on the date of the
analysis. The methodology applied in the current year analysis
was consistent with the methodology applied in the prior year
analysis, but was based on updated assumptions, as appropriate.
Our cash flow assumptions are based on historical and forecasted
revenue, operating costs and other relevant factors. To
determine the reporting units carrying values in the
current year evaluations, we allocated them based on either
specific identification or by using judgment for those assets
and liabilities that are not held by reporting units but rather
by functional departments. Goodwill was allocated to the
reporting units based on a combination of specific
identification and relative fair values, which is consistent
with the methodology utilized in the prior year impairment
analysis. The use of relative fair values was necessary for
certain reporting units due to changes in our operating
structure in prior years. The process of evaluating the
potential impairment of goodwill requires significant judgment
at many points during the analysis, including determining the
carrying value of the reporting units and calculating fair value
of each reporting unit based on estimated future cash flows and
discount rates to be applied.
Prior to performing our second step in the goodwill impairment
analysis, we perform an assessment of long-lived assets for
impairment. Such long-lived assets include tangible and
intangible assets recorded in accordance with
SFAS No. 144, Impairment and Disposal of Long-Lived
Assets and SFAS No. 86, Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise
Marketed.
As defined in SFAS No. 142, we perform our goodwill
impairment analysis at the reporting unit level, which are the
same as our operating segments, with the exception of the
Services operating segment. We determined that
73
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
the Services operating segment was comprised of two components
that each represented a reporting unit: SaaS and Services.
Intangible Assets. In connection with our
acquisitions, we generally recognize assets for customer
relationships, developed technology or acquired product rights
(purchased product rights, technologies, databases, patents, and
contracts) and tradenames. Intangible assets and long-lived
assets are recognized at cost less accumulated amortization.
Amortization of intangible assets is provided on a straight-line
basis over the estimated useful lives of the respective assets,
generally from one to nine years. Amortization for acquired
product rights is recognized in Cost of revenues. Amortization
for customer lists and tradenames is recognized in Operating
expenses.
On an interim basis, we ascertain triggering events for
impairment of intangible assets and assess recoverability in
accordance with SFAS No. 142 for intangible assets
with indefinite lives or SFAS No. 144 for intangible
assets with definite lives. To determine the recoverability of
our definite-lived intangible assets, when indicators of an
impairment are identified, we compare the carrying amounts
against the estimated future cash flows related to the
underlying group of assets. These estimates are based on company
forecasts and are subject to change. We also evaluate net
realizability of acquired product rights in accordance with
SFAS No. 86.
Assets
Held For Sale
Assets to be sold or disposed of are included in Other current
assets and reported at the lower of the carrying amount or fair
value less costs to sell, and are no longer depreciated. We
evaluate assets held for sale for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable in accordance with
SFAS No. 144. If the estimated fair value is less than
its carrying amount, an impairment loss is recognized. The
impairment loss is measured as the difference between the
carrying amount of the asset and its fair value, which is
estimated based on appraised market values or discounted cash
flows expected to be generated by the asset. Impairment charges
are included in Impairment of assets held for sale.
The gain or loss on the sale of assets held for sale are
included in nonoperating expenses.
Restructuring
Liabilities
Upon approval of a restructuring plan by management with the
appropriate level of authority, we record restructuring
liabilities in accordance with SFAS No. 112,
Employers Accounting for Postemployment Benefits,
and SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, resulting in
the recognition of employee severance and related termination
benefits for recurring arrangements when they become probable
and estimable and on the accrual basis for one-time benefit
arrangements. We record other costs associated with exit
activities as they are incurred.
Income
Taxes
We account for income taxes in accordance with
SFAS No. 109, Accounting for Income Taxes. The
provision for income taxes is computed using the asset and
liability method, under which deferred tax assets and
liabilities are recognized for the expected future tax
consequences of temporary differences between the financial
reporting and tax bases of assets and liabilities, and for
operating loss and tax credit carryforwards in each jurisdiction
in which we operate. Deferred tax assets and liabilities are
measured using the currently enacted tax rates that apply to
taxable income in effect for the years in which those tax assets
are expected to be realized or settled. We record a valuation
allowance to reduce deferred tax assets to the amount that is
believed more likely than not to be realized.
We are required to compute our income taxes in each federal,
state, and international jurisdiction in which we operate. This
process requires that we estimate the current tax exposure as
well as assess temporary differences between the accounting and
tax treatment of assets and liabilities, including items such as
accruals and allowances not currently deductible for tax
purposes. The income tax effects of the differences we identify
are classified as
74
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
current or long-term deferred tax assets and liabilities in our
Consolidated Balance Sheets. Our judgments, assumptions, and
estimates relative to the current provision for income tax take
into account current tax laws, our interpretation of current tax
laws, and possible outcomes of current and future audits
conducted by foreign and domestic tax authorities. Changes in
tax laws or our interpretation of tax laws and the resolution of
current and future tax audits could significantly impact the
amounts provided for income taxes in our Consolidated Balance
Sheets and Consolidated Statements of Operations. We must also
assess the likelihood that deferred tax assets will be realized
from future taxable income and, based on this assessment,
establish a valuation allowance, if required. Our determination
of our valuation allowance is based upon a number of
assumptions, judgments, and estimates, including forecasted
earnings, future taxable income, and the relative proportions of
revenue and income before taxes in the various domestic and
international jurisdictions in which we operate. To the extent
we establish a valuation allowance or change the valuation
allowance in a period, we reflect the change with a
corresponding increase or decrease to our tax provision in our
Consolidated Statements of Operations, or to goodwill to the
extent that the valuation allowance related to tax attributes of
the acquired entities.
We adopted the provisions of FASB FIN 48, effective
March 31, 2007. FIN 48 clarifies the accounting for
income taxes, by prescribing a minimum recognition threshold a
tax position is required to meet before being recognized in the
financial statements. FIN 48 also provides guidance on
derecognition, measurement, classification, interest and
penalties, accounting in interim periods, disclosure and
transition.
FIN 48 prescribes a two-step process to determine the
amount of tax benefit to be recognized. The first step is to
evaluate the tax position for recognition by determining if the
weight of available evidence indicates that it is more likely
than not that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any.
The second step requires us to estimate and measure the tax
benefit as the largest amount that is more than 50% likely of
being realized upon ultimate settlement. It is inherently
difficult and subjective to estimate such amounts, as this
requires us to determine the probability of various possible
outcomes. We reevaluate these uncertain tax positions on a
quarterly basis. This evaluation is based on factors including,
but not limited to, changes in facts or circumstances, changes
in tax law, effectively settled issues under audit, and new
audit activity. Such a change in recognition or measurement
would result in the recognition of a tax benefit or an
additional charge to the tax provision in the period.
Earnings
Per Share
Earnings per share basic and diluted are presented
in conformity with SFAS No. 128, Earnings Per
Share, for all periods presented. Earnings per
share basic is computed using the weighted-average
number of common shares outstanding during the periods. Earnings
per share diluted is computed using the
weighted-average number of common shares outstanding and
potentially dilutive common shares outstanding during the
periods. Potentially dilutive common shares include the assumed
exercise of stock options using the treasury stock method, the
dilutive impact of restricted stock, restricted stock units, and
warrants using the treasury stock method, and conversion of
debt, if dilutive, in the period. See Note 8 for details of
potentially dilutive common shares from debt instruments
included in the calculation of Earnings per share
diluted.
Stock-Based
Compensation
We account for stock-based compensation in accordance with
SFAS No. 123R, Share-Based Payment. Under the
fair value recognition provisions of this statement, stock-based
compensation is measured at the grant date based on the fair
value of the award and is recognized as expense over the
requisite service period, which is generally the vesting period
of the respective award. No compensation cost is ultimately
recognized for awards for which employees do not render the
requisite service and are forfeited.
Fair Value of Stock-Based Awards. We use the
Black-Scholes option-pricing model to determine the fair value
of stock options. The determination of the fair value of
stock-based awards on the date of grant using an option-pricing
model is affected by our stock price as well as assumptions
regarding a number of complex and
75
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
subjective variables. These variables include our expected stock
price volatility over the term of the awards, actual and
projected employee stock option exercise and cancellation
behaviors, risk-free interest rates and expected dividends. We
estimate the expected life of options granted based on an
analysis of our historical experience of employee exercise and
post-vesting termination behavior considered in relation to the
contractual life of the option. Expected volatility is based on
the average of historical volatility for the period commensurate
with the expected life of the option and the implied volatility
of traded options. The risk free interest rate is equal to the
U.S. Treasury constant maturity rates for the period equal
to the expected life. We do not currently pay cash dividends on
our common stock and do not anticipate doing so in the
foreseeable future. Accordingly, our expected dividend yield is
zero. The fair value of each RSU is equal to the market value of
Symantecs common stock on the date of grant. The fair
value of each ESPP purchase right is equal to the 15% discount
on shares purchased.
Concentrations
of Credit Risk
A significant portion of our revenues and net (loss) income is
derived from international sales and independent agents and
distributors. Fluctuations of the U.S. dollar against
foreign currencies, changes in local regulatory or economic
conditions, piracy, or nonperformance by independent agents or
distributors could adversely affect operating results.
Financial instruments that potentially subject us to
concentrations of credit risk consist principally of cash and
cash equivalents, short-term investments, trade accounts
receivable, and forward foreign exchange contracts. Our
investment portfolio is diversified and consists of investment
grade securities. Our investment policy limits the amount of
credit risk exposure to any one issuer and in any one country.
We are exposed to credit risks in the event of default by the
issuers to the extent of the amount recorded in the Consolidated
Balance Sheets. The credit risk in our trade accounts receivable
is substantially mitigated by our credit evaluation process,
reasonably short collection terms, and the geographical
dispersion of sales transactions. We maintain reserves for
potential credit losses and such losses have been within
managements expectations. See Note 12 for details of
significant customers.
Advertising
costs
Advertising costs are charged to operations as incurred and
include electronic and print advertising, trade shows,
collateral production, and all forms of direct marketing.
Starting in January 2007, certain advertising contracts contain
placement fee arrangements with escalation clauses which are
expensed on an estimated average cost basis over the term of the
arrangement. The difference between the actual placement fee
paid and the estimated average placement fee cost is included in
Other long-term liabilities for fiscal 2009 and 2008, which were
$47 million and $71 million, respectively. Advertising
costs included in Sales and marketing expense for fiscal 2009,
2008, and 2007 were $572 million, $555 million, and
$382 million, respectively.
Newly
Adopted and Recently Issued Accounting Pronouncements
In April 2009, the FASB issued (1) FSP
FAS 115-2
and FSP
FAS 124-2,
which provides guidance on determining
other-than-temporary
impairments for debt securities; and (2) FSP
FAS 107-1
and FSP APB
28-1, which
provides additional fair value disclosures for financial
instruments in interim periods. Each of these FSPs are effective
for interim and annual periods ending after June 15, 2009.
We do not expect the adoption of these FSPs to have a material
impact on our consolidated financial statements.
In June 2008, the FASB issued EITF Issue
No. 07-5,
Determining Whether an Instrument (or an Embedded Feature) Is
Indexed to an Entitys Own Stock. EITF Issue
No. 07-5
provides guidance on evaluating whether an equity-linked
financial instrument (or embedded feature) is indexed to a
companys own stock, including evaluating the
instruments contingent exercise and settlement provisions.
EITF Issue
No. 07-5
is effective for fiscal years beginning after December 15,
2008. We are currently assessing the impact of EITF Issue
No. 07-5
on our consolidated financial statements.
76
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
In May 2008, the FASB issued FSP APB
No. 14-1,
Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash
Settlement). The FSP will require the issuer of convertible
debt instruments with cash settlement features to separately
account for the liability and equity components of the
instrument. The debt will be recognized at the present value of
its cash flows discounted using the issuers nonconvertible
debt borrowing rate at the time of issuance. The equity
component will be recognized as the difference between the
proceeds from the issuance of the note and the fair value of the
liability. The FSP will also require interest to be accreted as
interest expense of the resultant debt discount over the
expected life of the debt. The transition guidance requires
retrospective application to all periods presented, and does not
grandfather existing instruments. The guidance will be effective
for fiscal years beginning after December 15, 2008, and
interim periods within those years. As such, we will adopt the
FSP in the first quarter of fiscal year 2010. Our
0.75% Convertible Senior Notes due June 15, 2011, and
our 1.00% Convertible Senior Notes due June 15, 2013
(collectively the Senior Notes), each issued in June
2006, are subject to the FSP.
Upon adoption, we will record a debt discount, which will be
amortized to interest expense through maturity of the Senior
Notes. Although we have not completed our evaluation of the
impact of adoption, we expect to retrospectively adjust the
original carrying amount of the Senior Notes as of June 2006 to
reflect a discount of approximately $586 million on the
date of issuance, with an offsetting increase in additional
paid-in capital of approximately $354 million and a
decrease in deferred tax assets of approximately
$232 million. Excluding the corresponding impact of income
taxes, we expect to retrospectively record an increase in
non-cash interest expense of approximately $91 million in
fiscal 2008 and approximately $97 million in fiscal 2009.
As a result of applying the FSP, we also expect non-cash
interest expense in fiscal 2010 to increase by approximately
$104 million, excluding the corresponding impact of income
taxes. The additional non-cash interest expense will have no
impact on the total operating, investing and financing cash
flows in prior periods or in future consolidated statements of
cash flows. If future interpretations of, or changes to, the FSP
necessitate a further change in these reporting practices, our
previously reported and future results of operations could be
adversely affected.
In May 2008, the FASB issued SFAS No. 162, The
Hierarchy of Generally Accepted Accounting Principles.
SFAS No. 162 defines the order in which accounting
principles that are generally accepted should be followed.
SFAS No. 162 is effective 60 days following the
SECs approval of the Public Company Accounting Oversight
Board (PCAOB) amendments to AU Section 411,
The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles. We do not expect the
adoption of SFAS No. 162 to have a material impact on
our consolidated financial statements.
In April 2008, the FASB finalized FSP
No. 142-3,
Determination of the Useful Life of Intangible Assets.
The position amends the factors that should be considered in
developing renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FASB
SFAS No. 142. The position applies to intangible
assets that are acquired individually or with a group of other
assets and both intangible assets acquired in business
combinations and asset acquisitions.
FSP 142-3
is effective for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. We are
currently evaluating the impact of the pending adoption of
FSP 142-3
on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB
No. 51. The standard changes the accounting for
noncontrolling (minority) interests in consolidated financial
statements including the requirements to classify noncontrolling
interests as a component of consolidated stockholders
equity, to identify earnings attributable to noncontrolling
interests reported as part of consolidated earnings, and to
measure gain or loss on the deconsolidated subsidiary using the
fair value of the noncontrolling equity investment.
Additionally, SFAS No. 160 revises the accounting for
both increases and decreases in a parents controlling
ownership interest. SFAS No. 160 is effective for
fiscal years beginning after December 15, 2008, with early
adoption prohibited. We do not expect the adoption of
SFAS No. 160 to have a material impact on our
consolidated financial statements.
77
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
In December 2007, the FASB issued SFAS No. 141(R).
This standard changes the accounting for business combinations
by requiring that an acquiring entity measures and recognizes
identifiable assets acquired and liabilities assumed at the
acquisition date fair value with limited exceptions. The changes
include the treatment of acquisition related transaction costs,
the valuation of any noncontrolling interest at acquisition date
fair value, the recording of acquired contingent liabilities at
acquisition date fair value and the subsequent re-measurement of
such liabilities after acquisition date, the recognition of
capitalized in-process research and development, the accounting
for acquisition-related restructuring cost accruals subsequent
to the acquisition date, and the recognition of changes in the
acquirers income tax valuation allowance.
SFAS No. 141(R) is effective for fiscal years
beginning after December 15, 2008, with early adoption
prohibited. We are currently evaluating the impact of the
pending adoption of SFAS No. 141(R) on our
consolidated financial statements. The accounting treatment
related to pre-acquisition uncertain tax positions will change
when SFAS No. 141(R) becomes effective, which will be
in the first quarter of our fiscal year 2010. At such time, any
changes to the recognition or measurement of uncertain tax
positions related to pre-acquisition periods will be recorded
through income tax expense, where currently the accounting
treatment would require any adjustment to be recognized through
the purchase price. In April 2009, the FASB issued FSP
No. FAS 141(R)-1, Accounting for Assets Acquired
and Liabilities Assumed in a Business Combination That Arise
from Contingencies. FSP No. FAS 141(R)-1 provides
guidance on the accounting and disclosure of contingencies
acquired or assumed in a business combination. FSP
No. FAS 141(R)-1 is effective for fiscal years
beginning after December 15, 2008. We are currently
evaluating the impact of the pending adoption of FSP
No. FAS 141(R)-1 on our consolidated financial
statements. See Note 14 for further details.
In February 2007, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial
Liabilities, including an amendment of SFAS No. 115.
SFAS No. 159 permits companies to choose to
measure certain financial instruments and certain other items at
fair value and requires unrealized gains and losses on items for
which the fair value option has been elected to be reported in
earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. Effective March 29,
2008, we adopted SFAS 159, but we have not elected the fair
value option for any eligible financial instruments as of
April 3, 2009.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes guidelines for measuring fair value and expands
disclosures regarding fair value measurements.
SFAS No. 157 does not require any new fair value
measurements but rather eliminates inconsistencies in guidance
found in various prior accounting pronouncements and is
effective for fiscal years beginning after November 15,
2007. In February 2008, the FASB issued FSP
No. 157-2,
The Effective Date of FASB Statement No. 157, which
delays the effective date of SFAS No. 157 for all
nonfinancial assets and nonfinancial liabilities, except those
that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually), until
fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years. These nonfinancial items
include assets and liabilities such as reporting units measured
at fair value in a goodwill impairment test and nonfinancial
assets acquired and liabilities assumed in a business
combination. Effective March 29, 2008, we adopted
SFAS No. 157 for financial assets and liabilities
recognized at fair value on a recurring basis. The partial
adoption of SFAS No. 157 for financial assets and
liabilities did not have a material impact on our consolidated
financial position, results of operations or cash flows. In
October 2008, the FASB issued FSP
No. FAS 157-3,
Determining the Fair Value of a Financial Asset When the
Market for That Asset Is Not Active. FSP
No. FAS 157-3
provides examples to illustrate key considerations in
determining the fair value of a financial asset when the market
for that financial asset is not active. FSP
No. FAS 157-3
is effective upon issuance. The adoption of the FSP did not have
a material impact on our consolidated financial statements. In
April 2009, the FASB issued FSP
No. FAS 157-4,
Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly. FSP
No. FAS 157-4
provides guidance on estimating fair value when the volume and
level of activity for an asset or liability have significantly
decreased and determining when a transaction is not orderly. FSP
No. FAS 157-4
is effective for interim and annual periods ending after
June 15, 2009. We do not expect adoption of the FSP to have
a material impact on our consolidated financial statements. See
Note 2 for information and related disclosures regarding
our fair value measurements.
78
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 2.
|
Fair
Value Measurements
|
We measure financial assets and liabilities at fair value based
upon exit price, representing the amount that would be received
on the sale of an asset or paid to transfer a liability, as the
case may be, in an orderly transaction between market
participants. As such, fair value may be based on assumptions
that market participants would use in pricing an asset or
liability. SFAS No. 157 (as impacted by FSP Nos.
157-1,
157-2 and
157-3)
establishes a consistent framework for measuring fair value on
either a recurring or nonrecurring basis whereby inputs, used in
valuation techniques, are assigned a hierarchical level. The
following are the hierarchical levels of inputs to measure fair
value:
|
|
|
|
|
Level 1: Observable inputs that reflect
quoted prices (unadjusted) for identical assets or liabilities
in active markets.
|
|
|
|
Level 2: Inputs reflect quoted prices for
identical assets or liabilities in markets that are not active;
quoted prices for similar assets or liabilities in active
markets; inputs other than quoted prices that are observable for
the assets or liabilities; or inputs that are derived
principally from or corroborated by observable market data by
correlation or other means.
|
|
|
|
Level 3: Unobservable inputs reflecting
our own assumptions incorporated in valuation techniques used to
determine fair value. These assumptions are required to be
consistent with market participant assumptions that are
reasonably available.
|
The following table summarizes our financial assets and
liabilities measured at fair value on a recurring basis, by
level within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of April 3, 2009
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Cash equivalents
|
|
$
|
389,150
|
|
|
$
|
952,860
|
|
|
$
|
|
|
|
$
|
1,342,010
|
|
Short-term investments
|
|
|
3,306
|
|
|
|
195,361
|
|
|
|
|
|
|
|
198,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
392,456
|
|
|
$
|
1,148,221
|
|
|
$
|
|
|
|
$
|
1,540,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain financial assets and liabilities are not included in the
table above because they are measured at fair value on a
nonrecurring basis and no fair value measurements have been made
during the year ended April 3, 2009. These include our
convertible Senior Notes and bond hedge (including the
derivative call option).
FSP
FAS No. 157-2,
which measures fair value of nonfinancial assets and liabilities
which are recognized or disclosed at fair value on a
nonrecurring basis, will be effective beginning in fiscal 2010.
This deferral applies to us for such items as nonfinancial
assets and liabilities initially measured at fair value in a
business combination but not measured at fair value in
subsequent periods, nonfinancial long-lived and intangible asset
groups measured at fair value for an impairment assessment and
reporting units measured at fair value as part of a goodwill
impairment test.
79
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 3.
|
Short-Term
Investments
|
Available-for-sale
investments as of April 3, 2009 and March 28, 2008
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 3, 2009
|
|
|
March 28, 2008
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
|
(In thousands)
|
|
|
(In thousands)
|
|
|
Asset-backed securities
|
|
$
|
14,657
|
|
|
$
|
|
|
|
$
|
(2,230
|
)
|
|
$
|
12,427
|
|
|
$
|
52,377
|
|
|
$
|
210
|
|
|
$
|
(2,802
|
)
|
|
$
|
49,785
|
|
Corporate securities
|
|
|
8,402
|
|
|
|
|
|
|
|
(432
|
)
|
|
|
7,970
|
|
|
|
46,617
|
|
|
|
155
|
|
|
|
(408
|
)
|
|
|
46,364
|
|
Commercial paper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
436,342
|
|
|
|
|
|
|
|
|
|
|
|
436,342
|
|
Government securities
|
|
|
174,962
|
|
|
|
9
|
|
|
|
(7
|
)
|
|
|
174,964
|
|
|
|
997
|
|
|
|
3
|
|
|
|
|
|
|
|
1,000
|
|
Marketable equity securities
|
|
|
3,306
|
|
|
|
|
|
|
|
|
|
|
|
3,306
|
|
|
|
3,237
|
|
|
|
|
|
|
|
|
|
|
|
3,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
201,327
|
|
|
$
|
9
|
|
|
$
|
(2,669
|
)
|
|
$
|
198,667
|
|
|
$
|
539,570
|
|
|
$
|
368
|
|
|
$
|
(3,210
|
)
|
|
$
|
536,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides the gross unrealized losses and the
fair market value of our investments with unrealized losses that
are not deemed to be
other-than-temporarily
impaired, aggregated by investment category and length of time
that individual securities have been in a continuous unrealized
loss position as of the following years ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 3, 2009
|
|
|
March 28, 2008
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Greater
|
|
|
Total
|
|
|
Less than 12 Months
|
|
|
12 Months or Greater
|
|
|
Total
|
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Asset-backed securities
|
|
$
|
1
|
|
|
$
|
303
|
|
|
$
|
2,229
|
|
|
$
|
12,124
|
|
|
$
|
2,230
|
|
|
$
|
12,427
|
|
|
$
|
354
|
|
|
$
|
10,058
|
|
|
$
|
2,448
|
|
|
$
|
23,362
|
|
|
$
|
2,802
|
|
|
$
|
33,420
|
|
Corporate securities
|
|
|
41
|
|
|
|
3,960
|
|
|
|
391
|
|
|
|
4,010
|
|
|
|
432
|
|
|
|
7,970
|
|
|
|
258
|
|
|
|
9,245
|
|
|
|
150
|
|
|
|
5,830
|
|
|
|
408
|
|
|
|
15,075
|
|
Government securities
|
|
|
7
|
|
|
|
83,989
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
83,989
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
49
|
|
|
$
|
88,252
|
|
|
$
|
2,620
|
|
|
$
|
16,134
|
|
|
$
|
2,669
|
|
|
$
|
104,386
|
|
|
$
|
612
|
|
|
$
|
19,303
|
|
|
$
|
2,598
|
|
|
$
|
29,192
|
|
|
$
|
3,210
|
|
|
$
|
48,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of
available-for-sale
investments, primarily asset-backed securities, were
$685 million in fiscal 2009. The gross realized losses on
sales of
available-for-sale
investments totaled $3 million and were primarily related
to our sales of asset-backed securities and corporate securities.
Proceeds from sales of
available-for-sale
investments were $1.2 billion in fiscal 2008 and
$350 million in fiscal 2007. The gross realized gains and
losses on our sales of
available-for-sale
investments were not material during fiscal 2008 and 2007.
The amortized cost and fair value of
available-for-sale
investments and cash equivalents, as of April 3, 2009, by
contractual maturity, were as follows:
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost
|
|
|
Fair Value
|
|
|
|
(In thousands)
|
|
|
Due in 1 year
|
|
$
|
1,524,282
|
|
|
$
|
1,524,240
|
|
Due in 1-5 years
|
|
|
5,141
|
|
|
|
4,747
|
|
Due in 5-10 years
|
|
|
|
|
|
|
|
|
Due after 10 years
|
|
|
13,916
|
|
|
|
11,690
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,543,339
|
|
|
$
|
1,540,677
|
|
|
|
|
|
|
|
|
|
|
80
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 4.
|
Assets
Held for Sale
|
The following table summarizes the changes in assets held for
sale (in thousands):
|
|
|
|
|
Assets held for sale as of March 30, 2007
|
|
$
|
|
|
Added properties, net of impairment and assets of a business
|
|
|
232,638
|
|
Sold properties and assets of a
business(1)
|
|
|
(193,070
|
)
|
|
|
|
|
|
Assets held for sale as of March 28, 2008
|
|
|
39,568
|
|
Added properties, net of impairment
|
|
|
109,047
|
|
Sold
properties(1)
|
|
|
(38,203
|
)
|
Reclassifications(2)
|
|
|
(46,374
|
)
|
Additional impairments and adjustments
|
|
|
(5,420
|
)
|
|
|
|
|
|
Assets held for sale as of April 3, 2009
|
|
$
|
58,618
|
|
|
|
|
|
|
|
|
|
(1) |
|
We sold properties and a business for cash proceeds of
$40 million and $98 million during fiscal 2009 and
2008, respectively. The loss on the sale of the business was
$95 million and is included in Impairments of assets held
for sale. The gain and the loss on the sales of properties were
not significant. |
|
(2) |
|
Due to changing real estate market conditions and a review of
our real estate holdings, we decided to retain two properties
previously held for sale. As a result, we reclassified these
properties to Property and equipment. |
SFAS No. 144 provides that a long-lived asset
classified as held for sale should be measured at the lower of
its carrying amount or fair value less cost to sell, and thus,
we have recorded impairments of assets held for sale of
$47 million and $96 million during fiscal 2009 and
2008, respectively. There were no impairments in fiscal 2007.
In fiscal 2009 and 2008, as part of our ongoing review of real
estate holdings, we determined that certain properties were
underutilized and committed to sell these properties. We expect
the sale of the remaining properties to be completed no later
than the third quarter of fiscal 2010.
In fiscal 2008, we determined that certain tangible and
intangible assets and liabilities of the Storage and Server
Management segment did not meet the long term strategic
objectives of the segment. During the fourth quarter of 2008, we
sold the tangible and intangible assets (and liabilities)
classified as held for sale.
Fiscal
2009 acquisitions
MessageLabs
Purchase
On November 14, 2008, we completed the acquisition of
MessageLabs Group Limited (MessageLabs), a nonpublic
United Kingdom-based provider of managed services to protect,
control, encrypt, and archive electronic communications. The
acquisition complements our SaaS business. In exchange for all
of the voting equity interests of MessageLabs, we paid the
following (in thousands):
|
|
|
|
|
Cash paid for acquisition of common stock outstanding, excluding
cash acquired
|
|
$
|
622,214
|
|
Acquisition-related transaction costs
|
|
|
8,107
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
630,321
|
|
|
|
|
|
|
The results of operations for MessageLabs are included since the
date of acquisition as part of the Services segment.
Supplemental proforma information for MessageLabs is not
material to our financial results and is therefore not included.
In addition, the purchase price is subject to an adjustment of
up to an additional $13 million in cash due to estimates in
the initial purchase price that have yet to be finalized.
81
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
The following table presents the purchase price allocation
included on our Consolidated Balance Sheets (in thousands):
|
|
|
|
|
Net tangible
assets(1)
|
|
$
|
20,408
|
|
Other intangible
assets(2)
|
|
|
169,813
|
|
Goodwill(3)
|
|
|
470,280
|
|
Deferred tax liability
|
|
|
(30,180
|
)
|
|
|
|
|
|
Total purchase price
|
|
$
|
630,321
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net tangible assets include deferred revenue which was adjusted
down from $34 million to $10 million representing our
estimate of the fair value of the contractual obligation assumed
for support services. |
|
(2) |
|
Other intangible assets include customer relationships of
$127 million, developed technology of $39 million and
definite-lived tradenames of $4 million, which are
amortized over their estimated useful lives of one to eight
years. The weighted-average estimated useful lives were
8.0 years, 4.0 years and 1.0 years, respectively. |
|
(3) |
|
Goodwill is not tax deductible and resulted primarily from our
expectation of synergies from the integration of MessageLabs
product offerings with our product offerings. |
Other
fiscal 2009 acquisitions
During fiscal 2009, in addition to MessageLabs, we completed
acquisitions of five nonpublic companies for an aggregate of
$478 million in cash, including $6 million in
acquisition-related expenses resulting from financial advisory,
legal and accounting services, duplicate sites, and severance.
No equity interests were issued. We recorded goodwill in
connection with each of these acquisitions, which resulted
primarily from our expectation of synergies from the integration
of the acquired companys technology with our technology
and the acquired companys access to our global
distribution network. In addition, each acquired company
provided a knowledgeable and experienced workforce. All of the
goodwill from the nSuite Technologies, Inc. (nSuite)
acquisition is tax deductible and most of the goodwill from the
PC Tools Pty Ltd. (PC Tools) acquisition is tax
deductible, while goodwill for the other acquisitions is not tax
deductible. In addition, the purchase price for PC Tools is
subject to a contingent consideration adjustment of up to an
additional $30 million in cash if PC Tools achieves certain
billings and expense targets. The results of operations for the
acquired companies have been included in our results of
operations since their respective acquisition dates. AppStream,
Inc. (AppStream), nSuite and Mi5 Inc.
(Mi5) are included in our Security and Compliance
segment and SwapDrive, Inc. (SwapDrive) and PC Tools
are included in our Consumer segment. Supplemental proforma
information for the acquisitions is not material to our
financial results and is therefore not included.
The purchase price allocations related to these other fiscal
2009 acquisitions are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AppStream
|
|
|
SwapDrive
|
|
|
nSuite
|
|
|
PC Tools
|
|
|
Mi5
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Acquisition date
|
|
|
April 18, 2008
|
|
|
|
June 6, 2008
|
|
|
|
August 8, 2008
|
|
|
|
October 6, 2008
|
|
|
|
March 20, 2009
|
|
|
|
|
|
Net tangible assets (liabilities)
|
|
$
|
14,227
|
|
|
$
|
1,505
|
|
|
$
|
(838
|
)
|
|
$
|
(10,719
|
)
|
|
$
|
504
|
|
|
$
|
4,679
|
|
Other intangible
assets(1)
|
|
|
10,950
|
|
|
|
42,110
|
|
|
|
5,717
|
|
|
|
100,500
|
|
|
|
6,230
|
|
|
|
165,507
|
|
Goodwill
|
|
|
27,402
|
|
|
|
80,850
|
|
|
|
15,507
|
|
|
|
172,510
|
|
|
|
11,273
|
|
|
|
307,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
52,579
|
|
|
$
|
124,465
|
|
|
$
|
20,386
|
|
|
$
|
262,291
|
|
|
$
|
18,007
|
|
|
$
|
477,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other intangible assets include customer relationships of
$43 million, developed technology of $90 million and
definite-lived tradenames of $1 million, which are
amortized over their estimated useful lives of one to nine |
82
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
years. The weighted-average estimated useful lives were
6.5 years, 5.5 years and 1.4 years, respectively.
Other intangible assets also include indefinite-lived
trade-names of $31 million, which have an indefinite
estimated useful life. |
Fiscal
2008 acquisitions
Altiris
Purchase
On April 6, 2007, we completed the acquisition of Altiris
Inc. (Altiris), a leading provider of information
technology management software that enables businesses to easily
manage and service network-based endpoints. In exchange for all
of the voting equity interests of Altiris, we paid the following
(in thousands):
|
|
|
|
|
Cash paid for acquisition of common stock outstanding, excluding
cash acquired
|
|
$
|
989,863
|
|
Fair value of stock options assumed
|
|
|
16,847
|
|
Fair value of restricted stock awards
|
|
|
4,839
|
|
Acquisition-related transaction costs
|
|
|
4,348
|
|
Restructuring costs
|
|
|
22,341
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
1,038,238
|
|
|
|
|
|
|
The results of operations of Altiris are included since the date
of acquisition as part of the Security and Compliance segment,
with the exception of Altiris Services, which are included as
part of our Services segment. Supplemental proforma information
for Altiris was not material to our financial results and was
therefore not included.
The following table presents the purchase price allocation
included on our Consolidated Balance Sheets (in thousands):
|
|
|
|
|
Net tangible
assets(1)
|
|
$
|
231,054
|
|
Other intangible
assets(2)
|
|
|
312,920
|
|
Goodwill(3)
|
|
|
633,233
|
|
Deferred tax liability
|
|
|
(138,969
|
)
|
|
|
|
|
|
Total purchase price
|
|
$
|
1,038,238
|
|
|
|
|
|
|
|
|
|
(1) |
|
Net tangible assets include deferred revenue which was adjusted
down from $46 million to $12 million representing our
estimate of the fair value of the contractual obligation assumed
for support services. |
|
(2) |
|
Other intangible assets include customer relationships of
$201 million, developed technology of $90 million and
definite-lived tradenames of $22 million, which are
amortized over their estimated useful lives of one to eight
years. The weighted-average estimated useful lives were
8.0 years, 5.1 years and 7.6 years, respectively. |
|
(3) |
|
Goodwill is deductible in the state of California for tax
purposes. The amount resulted primarily from our expectation of
synergies from the integration of Altiris product offerings with
our product offerings. |
Other
fiscal 2008 acquisitions
During fiscal 2008, in addition to Altiris, we completed
acquisitions of two nonpublic companies for an aggregate of
$334 million in cash, including $5 million in
acquisition-related expenses resulting from financial advisory,
legal and accounting services, duplicate sites, and severance.
No equity interests were issued. We recorded goodwill in
connection with each of these acquisitions, none of which was
tax deductible, resulting primarily from our expectation of
synergies from the integration of the acquired companys
technology with our technology and the acquired companys
access to our global distribution network. In addition, each
acquired company provided a knowledgeable and experienced
workforce. The results of operations for Vontu Inc.
(Vontu) and Transparent
83
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Logic Technologies, Inc. (Transparent Logic) have
been included in our results of operations since their
respective acquisition dates and are included in our Security
and Compliance segment. Supplemental proforma information for
the acquisitions was not material to our financial results and
was therefore not included.
The purchase price allocations related to these other fiscal
2008 acquisitions are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vontu
|
|
|
Transparent Logic
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Acquisition date
|
|
|
November 30, 2007
|
|
|
|
January 11, 2007
|
|
|
|
|
|
Net tangible (liabilities) assets
|
|
$
|
(6,292
|
)
|
|
$
|
167
|
|
|
$
|
(6,125
|
)
|
Other intangible
assets(1)
|
|
|
68,830
|
|
|
|
3,485
|
|
|
|
72,315
|
|
Goodwill
|
|
|
259,425
|
|
|
|
8,777
|
|
|
|
268,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
321,963
|
|
|
$
|
12,429
|
|
|
$
|
334,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other intangible assets include customer relationships of
$33 million and developed technology of $39 million,
which are amortized over their estimated useful lives of one to
eight years. The weighted-average estimated useful lives were
8.0 years and 4.1 years, respectively. |
Fiscal
2007 acquisitions
During fiscal 2007, we completed acquisitions of two nonpublic
companies for an aggregate of $45 million in cash,
including $1 million in acquisition-related expenses
resulting from financial advisory, legal and accounting
services, duplicate sites, and severance costs. No equity
interests were issued. We recorded goodwill in connection with
each of these acquisitions, none of which was tax deductible,
resulting primarily from our expectation of synergies from the
integration of the acquired companys technology with our
technology and the acquired companys access to our global
distribution network. In addition, each acquired company
provided a knowledgeable and experienced workforce. The results
of operations for the acquired companies have been included in
our results of operations since their respective acquisition
dates. The results of operations of Company-i Limited
(Company-I) are included in our Services segment
while the results of 4FrontSecurity, Inc.
(4FrontSecurity) are included in our Security and
Compliance segment. Supplemental proforma information for the
acquisitions was not material to our financial results and was
therefore not included.
The purchase price allocations related to these other fiscal
2007 acquisitions are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-I
|
|
|
4Front Security
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Acquisition date
|
|
|
December 1, 2006
|
|
|
|
February 23, 2007
|
|
|
|
|
|
Net tangible liabilities
|
|
$
|
(1,356
|
)
|
|
$
|
(1,112
|
)
|
|
$
|
(2,468
|
)
|
Other intangible
assets(1)
|
|
|
5,900
|
|
|
|
2,788
|
|
|
|
8,688
|
|
Goodwill
|
|
|
33,510
|
|
|
|
5,739
|
|
|
|
39,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price
|
|
$
|
38,054
|
|
|
$
|
7,415
|
|
|
$
|
45,469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other intangible assets include customer relationships of
$6 million and developed technology of $3 million,
which are amortized over their estimated useful lives of five to
eight years. The weighted-average estimated useful lives were
8.0 years and 5.0 years, respectively. |
84
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 6.
|
Goodwill
and Intangible Assets
|
Goodwill
We account for goodwill in accordance with
SFAS No. 142. As such, we allocate goodwill to our
reporting units, which are the same as our operating segments,
except for the Services operating segment, which includes the
SaaS and Other Services reporting units. Goodwill is allocated
by operating segment as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage and
|
|
|
|
|
|
|
|
|
|
|
|
|
Security and
|
|
|
Server
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
Compliance
|
|
|
Management
|
|
|
Services
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Balance as of March 30, 2007
|
|
$
|
102,810
|
|
|
$
|
4,582,070
|
|
|
$
|
5,400,718
|
|
|
$
|
254,750
|
|
|
$
|
10,340,348
|
|
Operating segment
reclassification(1)
|
|
|
|
|
|
|
(1,372,380
|
)
|
|
|
1,280,739
|
|
|
|
91,641
|
|
|
|
|
|
Goodwill acquired through business
combinations(2)
|
|
|
|
|
|
|
882,321
|
|
|
|
|
|
|
|
11,705
|
|
|
|
894,026
|
|
Goodwill adjustments
(3)(4)
|
|
|
|
|
|
|
(11,294
|
)
|
|
|
(15,723
|
)
|
|
|
|
|
|
|
(27,017
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 28, 2008
|
|
$
|
102,810
|
|
|
$
|
4,080,717
|
|
|
$
|
6,665,734
|
|
|
$
|
358,096
|
|
|
$
|
11,207,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating segment
reclassification(5)
|
|
|
|
|
|
|
(84,376
|
)
|
|
|
|
|
|
|
84,376
|
|
|
|
|
|
Goodwill acquired through business
|
|
|
253,360
|
|
|
|
54,182
|
|
|
|
|
|
|
|
470,280
|
|
|
|
777,822
|
|
combinations
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
adjustments(3)
|
|
|
|
|
|
|
3,766
|
|
|
|
(9,822
|
)
|
|
|
74
|
|
|
|
(5,982
|
)
|
Goodwill impairment
|
|
|
|
|
|
|
(2,699,763
|
)
|
|
|
(4,198,715
|
)
|
|
|
(520,096
|
)
|
|
|
(7,418,574
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of April 3, 2009
|
|
$
|
356,170
|
|
|
$
|
1,354,526
|
|
|
$
|
2,457,197
|
|
|
$
|
392,730
|
|
|
$
|
4,560,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In the fourth quarter of fiscal year 2008, we modified our
operating segments to be better in line with how we manage our
business. |
|
|
|
(2) |
|
See Note 5 for acquisitions. |
|
(3) |
|
Reflects adjustments made to goodwill of prior acquisitions as a
result of tax adjustments, primarily related to stock-based
compensation. |
|
(4) |
|
The decrease of $16 million in the goodwill balance for the
Storage and Server Management segments goodwill balance is
attributable to $9 million related to the sale of the APM
business and $7 million related to various acquisition
related tax adjustments. |
|
(5) |
|
In the first quarter of fiscal year 2009, we moved Altiris
services from the Security and Compliance segment to the
Services segment. As a result of this reclassification the above
adjustments were made as required by SFAS No. 142. |
Based on a combination of factors, including the current
economic environment and a decline in our market capitalization,
we concluded that there were sufficient indicators to require us
to perform an interim goodwill impairment analysis during the
third quarter of fiscal 2009. The analysis was not completed
during the third quarter of fiscal 2009 and an estimated
impairment charge of $7.0 billion was recorded. The
analysis was subsequently finalized and an additional impairment
charge of $413 million was included in our results for the
fourth quarter of fiscal 2009. As a result, we recorded a total
non-cash goodwill impairment charge based on the interim
impairment analysis of $7.4 billion for fiscal 2009. We
also performed our annual impairment analysis during the fourth
quarter of fiscal 2009 and determined that no additional
impairment charge was required.
85
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
In accordance with SFAS No. 142, we apply a fair value
based impairment test to the net book value of goodwill and
indefinite-lived intangible assets on an annual basis and on an
interim basis, whenever events or changes in circumstances
indicate that the carrying value of goodwill or indefinite-lived
intangible assets may not be recoverable and an impairment loss
may have been incurred.
When a potential impairment of goodwill is indicated, we
determine the carrying value of the assets and liabilities
related to identified reporting units, including an allocation
of goodwill, and estimate the respective fair value of our
reporting units. The specific analysis of a potential goodwill
impairment then requires a two-step process. The first step of
evaluating impairment involves determining if the estimated fair
value of each reporting unit is less than its carrying value, in
which case we then perform the second step of the goodwill
impairment analysis. The second step requires estimating the
fair value of all identifiable assets and liabilities of the
respective reporting unit, in a manner similar to a purchase
price allocation for an acquired business. An impairment loss is
then recognized for the amount by which the carrying value of
the reporting units goodwill exceeds its implied fair
value.
As noted in the Summary of Significant Accounting Policies, the
calculation of potential goodwill impairment requires
significant judgment at many points during the analysis. In
determining the carrying value of the reporting units, we
applied judgment to allocate assets and liabilities, such as
accounts receivable and property, plant and equipment, based on
the specific identification or relevant driver, as they are not
held by those reporting units but by functional departments.
Furthermore, for the reporting units with recognized goodwill
for the purposes of our analysis, we utilize the income
approach, under which we calculate fair value based on the
estimated discounted future cash flows of that specific
reporting unit. The income approach was determined to be the
most representative valuation technique that would be utilized
by a market participant in an assumed transaction, but we also
consider the market approach which measures the value of an
asset through an analysis of recent sales or offerings of
comparable property. When applied to the valuation of equity
interests, consideration is given to the financial condition and
operating performance of the company being appraised relative to
those of publicly traded companies operating in the same or
similar lines of business, potentially subject to corresponding
economic, environmental, and political factors and considered to
be reasonable investment alternatives. We also consider our
market capitalization on the date we perform our analysis as
compared to the sum of the fair values of our reporting units to
assess the reasonableness of the values of the reporting units
determined under the income approach.
The income approach requires us to make estimates and judgments
about the future cash flows of each reporting unit as well as
discount rates to be applied. Although our cash flow forecasts
are based on assumptions that are consistent with the plans and
estimates we are using to manage the underlying reporting units,
there is significant judgment in determining the cash flows
attributable to these reporting units. As a result of the
downturn in the economic environment during the second half of
calendar 2008, determining the fair value of the individual
reporting units is even more judgmental than in the past. In
particular, the global economic recession has reduced our
visibility into long-term trends, and consequently, estimates of
future cash flows used in the current year analyses are lower
than those used in the prior year analysis. The discount rates
utilized in the analysis also reflect market-based estimates of
the risks associated with the projected cash flows of individual
reporting units and were increased from the prior year analysis
to reflect increased risk due to current volatility in the
economic environment.
Our reporting units are identified in accordance with
SFAS No. 142 and are either equivalent to, or
represent one level below, an operating segment, which
constitute a business for which discrete financial information
is available and for which segment management regularly reviews
the operating results. Our operating segments are significant
strategic business units that offer different products and
services, distinguished by customer needs. Our reporting units
are consistent with our operating segments, except for the
Services segment, which includes the SaaS and the Services
reporting units. The SaaS reporting unit is new for fiscal 2009
and was primarily the result of an acquisition during the year.
86
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Intangible
assets, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 3, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Remaining
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Useful Life
|
|
|
|
(In thousands)
|
|
|
Customer relationships
|
|
$
|
1,830,222
|
|
|
$
|
(745,148
|
)
|
|
$
|
1,085,074
|
|
|
|
5 years
|
|
Developed technology
|
|
|
1,784,792
|
|
|
|
(1,390,497
|
)
|
|
|
394,295
|
|
|
|
1 year
|
|
Definite-lived tradenames
|
|
|
130,453
|
|
|
|
(53,834
|
)
|
|
|
76,619
|
|
|
|
6 years
|
|
Patents
|
|
|
75,595
|
|
|
|
(45,851
|
)
|
|
|
29,744
|
|
|
|
4 years
|
|
Indefinite-lived tradenames
|
|
|
52,952
|
|
|
|
|
|
|
|
52,952
|
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,874,014
|
|
|
$
|
(2,235,330
|
)
|
|
$
|
1,638,684
|
|
|
|
3 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
|
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Remaining
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Useful Life
|
|
|
|
(In thousands)
|
|
|
Customer relationships
|
|
$
|
1,661,683
|
|
|
$
|
(526,512
|
)
|
|
$
|
1,135,171
|
|
|
|
5 years
|
|
Developed technology
|
|
|
1,655,895
|
|
|
|
(1,045,383
|
)
|
|
|
610,512
|
|
|
|
2 years
|
|
Definite-lived tradenames
|
|
|
125,203
|
|
|
|
(38,933
|
)
|
|
|
86,270
|
|
|
|
7 years
|
|
Patents
|
|
|
71,313
|
|
|
|
(32,875
|
)
|
|
|
38,438
|
|
|
|
5 years
|
|
Indefinite-lived tradenames
|
|
|
22,083
|
|
|
|
|
|
|
|
22,083
|
|
|
|
Indefinite
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,536,177
|
|
|
$
|
(1,643,703
|
)
|
|
$
|
1,892,474
|
|
|
|
4 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In fiscal 2009, 2008, and 2007, total amortization expense for
intangible assets was $586 million, $574 million, and
$543 million, respectively.
Total amortization expense for intangible assets which have
definite lives, based upon our existing intangible assets and
their current estimated useful lives as of April 3, 2009,
is estimated to be as follows (in thousands):
|
|
|
|
|
2010
|
|
$
|
473,496
|
|
2011
|
|
|
338,935
|
|
2012
|
|
|
293,723
|
|
2013
|
|
|
261,527
|
|
2014
|
|
|
117,195
|
|
Thereafter
|
|
|
100,856
|
|
|
|
|
|
|
Total
|
|
$
|
1,585,732
|
|
|
|
|
|
|
|
|
Note 7.
|
Investment
in Joint Venture
|
On February 5, 2008, Symantec formed Huawei-Symantec, Inc.
(joint venture) with a subsidiary of Huawei
Technologies Co., Ltd. (Huawei). The joint venture
is domiciled in Hong Kong with principal operations in Chengdu,
China. We contributed cash of $150 million, licenses
related to certain intellectual property and intangible assets
in exchange for 49% of the outstanding common shares of the
joint venture. The joint venture will develop, manufacture,
market and support security and storage appliances to global
telecommunications carriers and enterprise customers. Huawei
contributed its telecommunications storage and security business
assets,
87
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
engineering, sales and marketing resources, personnel, and
licenses related to intellectual property in exchange for a 51%
ownership interest in the joint venture.
The contribution of assets to the joint venture was accounted
for at its carrying value. The historical carrying value of the
assets contributed by Symantec comprised a significant portion
of the net assets of the joint venture. As a result, our
carrying value of the investment in the joint venture exceeded
our proportionate share in the book value of the joint venture
by approximately $75 million upon formation of the joint
venture. As the contributions for both Symantec and Huawei were
recorded at historical carrying value by the joint venture, this
basis difference is attributable to the contributed identified
intangible assets. The basis difference is being amortized over
a weighted-average period of 9 years, the estimated useful
lives of the underlying identified intangible assets to which
the basis difference is attributed.
On February 5, 2011, we have a one-time option to purchase
an additional two percent ownership interest from Huawei for
$28 million. We determined the value of the option using
the Black-Scholes option-pricing model. The value of the option
is not considered material to the financial statements and is
recorded in Investment in joint venture on the Balance Sheet. We
have concluded that the option does not meet the definition of a
derivative under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. Symantec and
Huawei each have the right to purchase all of the other
partners ownership interest through a bid process upon
certain triggering events set to occur as early as
February 5, 2011.
In fiscal 2009, we recorded a loss of approximately
$53 million related to our share of the joint
ventures net loss, including the amortization of the basis
difference described above, for the joint ventures period
ended December 31, 2008. The carrying value of our
investment in the joint venture as of April 3, 2009 was
approximately $97 million.
Summarized unaudited statement of operations information for the
joint venture and the calculation of our share of the joint
ventures loss are as follows:
|
|
|
|
|
|
|
For the Period from
|
|
|
|
February 5, 2008 to
|
|
|
|
December 31, 2008
|
|
|
|
(In thousands)
|
|
|
Net revenues
|
|
$
|
28,081
|
|
Gross margin
|
|
|
6,997
|
|
Net loss, as reported by the joint venture
|
|
$
|
(92,550
|
)
|
Symantecs ownership interest
|
|
|
49
|
%
|
|
|
|
|
|
Symantecs proportionate share of net loss
|
|
$
|
(45,349
|
)
|
Adjustment for amortization of basis difference
|
|
|
(7,713
|
)
|
|
|
|
|
|
Loss from joint venture
|
|
$
|
(53,062
|
)
|
|
|
|
|
|
Convertible
senior notes
In June 2006, we issued $1.1 billion principal amount of
0.75% Convertible Senior Notes due June 15, 2011 (the
0.75% Notes) and $1.0 billion principal
amount of 1.00% Convertible Senior Notes due June 15,
2013 (the 1.00% Notes) to initial purchasers in
a private offering for resale to qualified institutional buyers
pursuant to SEC Rule 144A. We refer to the 0.75% Notes
and the 1.00% Notes collectively as the Senior Notes. We
received proceeds of $2.1 billion from the Senior Notes and
incurred net transaction costs of approximately
$33 million, which were allocated proportionately to the
0.75% Notes and the 1.00% Notes. The 0.75% Notes
and 1.00% Notes were each issued at par and bear interest
at 0.75% and 1.00% per annum, respectively. Interest is payable
semiannually in arrears on June 15 and December 15,
beginning December 15, 2006.
88
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Each $1,000 of principal of the Senior Notes will initially be
convertible into 52.2951 shares of Symantec common stock,
which is the equivalent of $19.12 per share, subject to
adjustment upon the occurrence of specified events. Holders of
the Senior Notes may convert their Senior Notes prior to
maturity during specified periods as follows: (1) during
any calendar quarter beginning after June 30, 2006, if the
closing price of our common stock for at least 20 trading days
in the 30 consecutive trading days ending on the last trading
day of the immediately preceding calendar quarter is more than
130% of the applicable conversion price per share; (2) if
specified corporate transactions, including a change in control,
occur; (3) with respect to the 0.75% Notes, at any
time on or after April 5, 2011, and with respect to the
1.00% Notes, at any time on or after April 5, 2013; or
(4) during the five
business-day
period after any five consecutive
trading-day
period during which the trading price of the Senior Notes falls
below a certain threshold. Upon conversion, we would pay the
holder the cash value of the applicable number of shares of
Symantec common stock, up to the principal amount of the note.
Amounts in excess of the principal amount, if any, may be paid
in cash or in stock at our option. Holders who convert their
Senior Notes in connection with a change in control may be
entitled to a make whole premium in the form of an
increase in the conversion rate. As of April 3, 2009, none
of the conditions allowing holders of the Senior Notes to
convert had been met. In addition, upon a change in control of
Symantec, the holders of the Senior Notes may require us to
repurchase for cash all or any portion of their Senior Notes for
100% of the principal amount.
Concurrently with the issuance of the Senior Notes, we entered
into note hedge transactions with affiliates of certain of the
initial purchasers whereby we have the option to purchase up to
110 million shares of our common stock at a price of $19.12
per share. The options as to 58 million shares expire on
June 15, 2011 and the options as to 52 million shares
expire on June 15, 2013. The options must be settled in net
shares. The cost of the note hedge transactions to us was
approximately $592 million. In addition, we sold warrants
to affiliates of certain of the initial purchasers whereby they
have the option to purchase up to 110 million shares of our
common stock at a price of $27.3175 per share. The warrants
expire on various dates from July 2011 through August 2013 and
must be settled in net shares. We received approximately
$326 million in cash proceeds from the sale of these
warrants.
In accordance with SFAS No. 128, the Senior Notes will
have no impact on diluted earnings per share (EPS)
until the price of our common stock exceeds the conversion price
of $19.12 per share because the principal amount of the Senior
Notes will be settled in cash upon conversion. Prior to
conversion, we will include the effect of the additional shares
that may be issued if our common stock price exceeds $19.12 per
share using the treasury stock method. As a result, for the
first $1.00 by which the average price of our common stock for a
quarterly period exceeds $19.12 per share there would be
dilution of approximately 5.4 million shares. As the share
price continues to increase, additional dilution would occur at
a declining rate such that an average price of $27.3175 per
share would yield cumulative dilution of approximately
32.9 million shares. If the average price of our common
stock exceeds $27.3175 per share for a quarterly period we will
also include the effect of the additional potential shares that
may be issued related to the warrants using the treasury stock
method. The Senior Notes along with the warrants have a combined
dilutive effect such that for the first $1.00 by which the
average price exceeds $27.3175 per share there would be
cumulative dilution of approximately 39.5 million shares
prior to conversion. As the share price continues to increase,
additional dilution would occur but at a declining rate.
Prior to conversion, the note hedge transactions are not
considered for purposes of the EPS calculation, as their effect
would be anti-dilutive. Upon conversion, the note hedge will
automatically serve to neutralize the dilutive effect of the
Senior Notes when the stock price is above $19.12 per share. For
example, if upon conversion the price of our common stock was
$28.3175 per share, the cumulative effect of approximately
39.5 million shares in the example above would be reduced
to approximately 3.9 million shares.
The preceding calculations assume that the average price of our
common stock exceeds the respective conversion prices during the
period for which EPS is calculated and exclude any potential
adjustments to the conversion ratio provided under the terms of
the Senior Notes. See Note 15 for information regarding the
impact on EPS of the Senior Notes and warrants in the current
period.
89
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Revolving
credit facility
In July 2006, we entered into a five-year $1 billion senior
unsecured revolving credit facility that expires in July 2011.
Borrowings under the facility bear interest, at our option, at
either a rate equal to the banks base rate or a rate equal
to LIBOR plus a margin based on our leverage ratio, as defined
in the credit facility agreement. In connection with the credit
facility, we must maintain certain covenants, including a
specified ratio of debt to earnings (before interest, taxes,
depreciation, amortization and impairments) as well as various
other non-financial covenants.
On November 29, 2007, we borrowed $200 million under
this credit agreement to partially finance our acquisition of
Vontu with an interest rate of 4.7075% per annum due and payable
quarterly. During the first quarter of fiscal 2009, we repaid
the entire line of credit principal amount of $200 million
plus accrued interest of $3 million. Total interest expense
associated with this borrowing was approximately
$6 million. As of April 3, 2009, we were in compliance
with all required covenants, and there was no outstanding
balance on the credit facility.
Our restructuring costs consist of severance, benefits,
facilities and other costs. Severance and benefits generally
include severance, stay-put or one-time bonuses, outplacement
services, health insurance coverage, effects of foreign currency
exchange and legal costs. Facilities costs generally
include rent expense, less expected sublease income and lease
termination costs. Other costs generally include relocation,
asset abandonment costs, the effects of foreign currency
exchange and consulting services. Restructuring expenses
generally do not impact a particular reporting segment and are
included in the Other reporting segment.
Charges for severance, benefits and facilities were
$75 million, $74 million, and $70 million for
fiscal 2009, 2008, and 2007, respectively. Charges for fiscal
2009, 2008, and 2007 periods were primarily related to severance
and benefits related to the worldwide headcount reduction
actions in each year as well as the business structure changes
in the 2008 Plan described below which occurred in fiscal 2009.
Additionally, we incurred $21 million in charges for
transition and transformation fees, consulting charges and other
costs related to the outsourcing of back office functions in
fiscal 2009.. The transition and transformation related
activities are expected to be substantially complete at the end
of fiscal 2010. Total remaining costs for these activities are
estimated to be $40 million.
2009
Restructuring Plan (2009 Plan)
In the third quarter of fiscal 2009, management approved and
initiated the following restructuring events to:
|
|
|
|
|
Reduce operating costs through a worldwide headcount
reduction. Charges related to this action are for
severance and benefits. These actions were initiated in the
third quarter of fiscal 2009 and are expected to be
substantially completed in fiscal 2010. Total remaining costs
for relocation are not expected to be material.
|
|
|
|
Consolidate facilities. In an ongoing effort
to consolidate facilities, we decided to move our corporate
headquarters to Mountain View, California. Charges related to
this action will primarily be associated with moving costs.
These actions have been initiated and costs are expected to be
substantially completed in fiscal 2010 but are not expected to
be material.
|
2008
Restructuring Plan (2008 Plan)
In the third quarter of fiscal 2008, management approved and
initiated the following restructuring events to:
|
|
|
|
|
Reduce operating costs through a worldwide headcount
reduction. This action was initiated in the third
quarter of fiscal 2008 and was substantially completed in the
fourth quarter of fiscal 2008. Charges related to this action
are for severance and benefits. Total remaining costs are not
expected to be material.
|
90
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
Reduce operating costs, implement management structure
changes, optimize the business structure and discontinue certain
products. Charges related to these actions are
for severance and benefits. These actions were initiated in the
third quarter of fiscal 2008 and are expected to be completed in
fiscal 2010. Total remaining costs for the 2008 Plan are
estimated to range from $15 million to $20 million.
|
|
|
|
Outsource certain back office functions
worldwide. Charges related to these actions are
primarily for severance and benefits. These actions were
initiated in the second quarter of fiscal 2009 and are expected
to be substantially completed in fiscal 2010. Total remaining
costs for severance and benefits are expected to range from
$10 million to $35 million.
|
Prior
and Acquisition-Related Restructuring Plans
Prior
Restructuring Plans
2007 Restructuring Plan. In fiscal 2007,
management approved and initiated the following restructuring
events to reduce operating costs through a worldwide headcount
reduction. This action was initiated and substantially completed
in the first quarter of fiscal 2008. Charges related to this
action were for severance and benefits. Total remaining costs
are not expected to be material.
Acquisition-Related
Restructuring Plans
We review our real estate holdings on an ongoing basis. In this
review, we assess underutilized space which has largely resulted
from the integration efforts related to earlier business
acquisitions. Restructuring liabilities consist of excess
facilities obligations. These restructuring liabilities at
April 3, 2009 primarily related to excess facility
obligations at several locations around the world.
Acquisition-related restructuring liabilities are expected to be
paid between fiscal 2010 and fiscal 2016 when their respective
lease terms end.
Restructuring
Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2009 Restructuring Liability
|
|
|
|
|
|
|
Costs,
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative
|
|
|
|
|
|
|
Net of
|
|
|
Other
|
|
|
Cash
|
|
|
April 3,
|
|
|
Incurred
|
|
|
|
March 28, 2008
|
|
|
Adjustments(1)
|
|
|
Adjustments
|
|
|
Payments
|
|
|
2009
|
|
|
to Date
|
|
|
|
(In thousands)
|
|
|
2009 Restructuring Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
$
|
|
|
|
$
|
39,886
|
|
|
$
|
|
|
|
$
|
(36,888
|
)
|
|
$
|
2,998
|
|
|
$
|
39,886
|
|
2008 Restructuring Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
16,337
|
|
|
|
22,706
|
|
|
|
|
|
|
|
(31,518
|
)
|
|
|
7,525
|
|
|
|
64,331
|
|
Prior & Acquisition Restructuring Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
20
|
|
|
|
1,184
|
|
|
|
680
|
|
|
|
(950
|
)
|
|
|
934
|
|
|
|
118,892
|
|
Facilities
|
|
|
14,263
|
|
|
|
10,830
|
|
|
|
1,212
|
|
|
|
(10,412
|
)
|
|
|
15,893
|
|
|
|
46,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
30,620
|
|
|
$
|
74,606
|
|
|
$
|
1,892
|
|
|
$
|
(79,768
|
)
|
|
$
|
27,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transition, transformation and other costs:
|
|
|
|
|
|
|
21,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Restructuring Charges:
|
|
|
|
|
|
$
|
95,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities
|
|
$
|
24,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,735
|
|
|
|
|
|
Other long-term liabilities
|
|
|
6,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Total net adjustments or reversals, which include the effects of
foreign currency, for each respective fiscal year were not
material. |
91
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 10.
|
Commitments
and Contingencies
|
Lease
Commitments
We lease certain of our facilities and related equipment under
operating leases that expire at various dates through 2029. We
currently sublease some space under various operating leases
that will expire on various dates through 2018. Some of our
leases contain renewal options, escalation clauses, rent
concessions, and leasehold improvement incentives. Rent expense
was $88 million, $87 million, and $83 million in
fiscal 2009, 2008, and 2007, respectively.
As of April 3, 2009, our future commitments and sublease
information under non-cancellable leases were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease
|
|
|
Sublease
|
|
|
Net Lease
|
|
|
|
Commitment
|
|
|
Income
|
|
|
Commitment
|
|
|
|
(In thousands)
|
|
|
2010
|
|
$
|
93,203
|
|
|
$
|
5,631
|
|
|
$
|
87,572
|
|
2011
|
|
|
70,831
|
|
|
|
4,312
|
|
|
|
66,519
|
|
2012
|
|
|
57,749
|
|
|
|
2,422
|
|
|
|
55,327
|
|
2013
|
|
|
48,788
|
|
|
|
1,391
|
|
|
|
47,397
|
|
2014
|
|
|
41,605
|
|
|
|
753
|
|
|
|
40,852
|
|
Thereafter
|
|
|
114,433
|
|
|
|
1,589
|
|
|
|
112,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
426,609
|
|
|
$
|
16,098
|
|
|
$
|
410,511
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The net lease commitment amount includes $11 million
related to facilities that are included in our restructuring
reserve. For more information, see Note 9. |
Indemnification
As permitted under Delaware law, we have agreements whereby we
indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was, serving at
our request in such capacity. The maximum potential amount of
future payments we could be required to make under these
indemnification agreements is not limited; however, we have
directors and officers insurance coverage that
reduces our exposure and may enable us to recover a portion of
any future amounts paid. We believe the estimated fair value of
these indemnification agreements in excess of applicable
insurance coverage is minimal.
We provide limited product warranties and the majority of our
software license agreements contain provisions that indemnify
licensees of our software from damages and costs resulting from
claims alleging that our software infringes the intellectual
property rights of a third party. Historically, payments made
under these provisions have been immaterial. We monitor the
conditions that are subject to indemnification to identify if a
loss has occurred.
Litigation
Contingencies
For a discussion of our pending tax litigation with the Internal
Revenue Service relating to the 2000 and 2001 tax years of
Veritas, see Note 14.
On July 7, 2004, a purported class action complaint
entitled Paul Kuck, et al. v. Veritas Software Corporation,
et al. was filed in the United States District Court for the
District of Delaware. The lawsuit alleges violations of federal
securities laws in connection with Veritas announcement on
July 6, 2004 that it expected results of
92
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
operations for the fiscal quarter ended June 30, 2004 to
fall below earlier estimates. The complaint generally seeks an
unspecified amount of damages. Subsequently, additional
purported class action complaints have been filed in Delaware
federal court, and, on March 3, 2005, the Court entered an
order consolidating these actions and appointing lead plaintiffs
and counsel. A consolidated amended complaint (CAC),
was filed on May 27, 2005, expanding the class period from
April 23, 2004 through July 6, 2004. The CAC also
named another officer as a defendant and added allegations that
Veritas and the named officers made false or misleading
statements in press releases and SEC filings regarding the
companys financial results, which allegedly contained
revenue recognized from contracts that were unsigned or lacked
essential terms. The defendants to this matter filed a motion to
dismiss the CAC in July 2005; the motion was denied in May 2006.
In April 2008, the parties filed a stipulation of settlement. On
July 31, 2008, the Court held a final approval hearing and,
on August 5, 2008, the Court entered an order approving the
settlement. An objector to the fees portion of the settlement
has lodged an appeal. In fiscal 2008, we recorded an accrual in
the amount of $21.5 million for this matter and, pursuant
to the terms of the settlement, we established a settlement fund
of $21.5 million on May 1, 2008.
We are also involved in a number of other judicial and
administrative proceedings that are incidental to our business.
Although adverse decisions (or settlements) may occur in one or
more of the cases, it is not possible to estimate the possible
loss or losses from each of these cases. The final resolution of
these lawsuits, individually or in the aggregate, is not
expected to have a material adverse effect on our financial
condition or results of operations.
|
|
Note 11.
|
Stock
Transactions
|
Stock
repurchases
The following table presents a summary of our stock repurchases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Total number of shares repurchased
|
|
|
42,342
|
|
|
|
80,939
|
|
|
|
161,705
|
|
Dollar amount of shares repurchased
|
|
$
|
699,881
|
|
|
$
|
1,499,995
|
|
|
$
|
2,846,312
|
|
Average price paid per share
|
|
$
|
16.53
|
|
|
$
|
18.53
|
|
|
$
|
17.60
|
|
Range of price paid per share
|
|
$
|
10.34 to $22.64
|
|
|
$
|
16.67 to $20.16
|
|
|
$
|
15.61 to $21.66
|
|
We have operated stock repurchase programs in the past. Our most
recent program was authorized by our Board of Directors on
June 14, 2007 to repurchase up to $2 billion of our
common stock. This program does not have an expiration date and
as of April 3, 2009, $300 million remained authorized
for future repurchases.
|
|
Note 12.
|
Segment
Information
|
During the first quarter of fiscal 2009, we changed our
operating segments to better align our operating structure.
Altiris services that were formerly included in the Security and
Compliance segment were moved to the Services segment. This move
is a result of operational changes in our Services segment and
the continued integration of our Altiris business. All operating
segments are managed by the chief operating decision maker,
which is our current chief executive officer, formerly our chief
operating officer. Our chief operating decision maker, manages
business operations, evaluates performance and allocates
resources based primarily on the operating segments net
revenues. The new business structure more directly aligns the
operating segments with markets and customers, and we believe
will establish more direct lines of reporting responsibilities,
speed decision making, and enhance the ability to pursue
strategic growth opportunities. We revised the business segment
93
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
information for prior years to conform to the new presentation.
Our reportable segments are the same as our operating segments.
As of April 3, 2009, we operated in five operating segments:
|
|
|
|
|
Consumer. Our Consumer segment focuses on
delivering our Internet security, PC tuneup, and backup products
to individual users and home offices.
|
|
|
|
Security and Compliance. Our Security and
Compliance segment focuses on providing large, medium, and
small-sized businesses with solutions for endpoint security and
management, compliance, archiving, messaging management, and
data loss prevention solutions that allow our customers to
secure, provision, and remotely access their laptops, PCs,
mobile devices, and servers.
|
|
|
|
Storage and Server Management. Our Storage and
Server Management segment focuses on providing enterprise and
large enterprise customers with storage and server management,
backup, and data protection solutions across heterogeneous
storage and server platforms.
|
|
|
|
Services. Our Services segment provides
customers with leading IT risk management services and solutions
to manage security, availability, performance and compliance
risks across multi-vendor environments. Our services include
consulting, business critical, education, SaaS and managed
security services.
|
|
|
|
Other. Our Other segment is comprised of
sunset products and products nearing the end of their life
cycle. It also includes general and administrative expenses;
amortization of acquired product rights, intangible assets, and
other assets; goodwill impairment charges; charges such as
stock-based compensation and restructuring; and certain indirect
costs that are not charged to the other operating segments.
|
The accounting policies of the segments are the same as those
described in the Summary of Significant Accounting Policies.
There are no intersegment sales. Our chief operating decision
maker evaluates performance primarily based on net revenue.
Except for goodwill, as disclosed in Note 6, the majority
of our assets are not discretely identified by segment. The
depreciation and amortization of our property, equipment, and
leasehold improvements are allocated based on headcount, unless
specifically identified by segment.
94
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Segment
information
The following table presents a summary of our operating segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Security and
|
|
|
Server
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
Consumer
|
|
|
Compliance
|
|
|
Management
|
|
|
Services
|
|
|
Other
|
|
|
Company
|
|
|
|
(In thousands)
|
|
|
Fiscal 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,773,207
|
|
|
$
|
1,610,835
|
|
|
$
|
2,294,929
|
|
|
$
|
469,495
|
|
|
$
|
1,388
|
|
|
$
|
6,149,854
|
|
Percentage of total net revenues
|
|
|
29
|
%
|
|
|
26
|
%
|
|
|
37
|
%
|
|
|
8
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income
(loss)(1)
|
|
|
948,090
|
|
|
|
520,837
|
|
|
|
1,024,393
|
|
|
|
(442
|
)
|
|
|
(8,962,788
|
)
|
|
|
(6,469,910
|
)
|
Operating margin of segment
|
|
|
53
|
%
|
|
|
32
|
%
|
|
|
45
|
%
|
|
|
0
|
%
|
|
|
|
*
|
|
|
|
|
Depreciation and amortization expense
|
|
|
15,288
|
|
|
|
23,721
|
|
|
|
49,011
|
|
|
|
14,805
|
|
|
|
734,533
|
|
|
|
837,358
|
|
Fiscal 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,746,089
|
|
|
$
|
1,609,468
|
|
|
$
|
2,136,307
|
|
|
$
|
380,620
|
|
|
$
|
1,935
|
|
|
$
|
5,874,419
|
|
Percentage of total net revenues
|
|
|
30
|
%
|
|
|
27
|
%
|
|
|
37
|
%
|
|
|
6
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income
(loss)(1)
|
|
|
938,627
|
|
|
|
466,849
|
|
|
|
683,567
|
|
|
|
(36,101
|
)
|
|
|
(1,450,662
|
)
|
|
|
602,280
|
|
Operating margin of segment
|
|
|
54
|
%
|
|
|
29
|
%
|
|
|
32
|
%
|
|
|
(9
|
)%
|
|
|
|
*
|
|
|
|
|
Depreciation and amortization expense
|
|
|
6,680
|
|
|
|
26,216
|
|
|
|
59,744
|
|
|
|
10,515
|
|
|
|
720,954
|
|
|
|
824,109
|
|
Fiscal 2009 vs. Fiscal 2008 period over period comparison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
9,463
|
|
|
$
|
53,988
|
|
|
$
|
340,826
|
|
|
$
|
35,659
|
|
|
$
|
(7,512,126
|
)
|
|
$
|
(7,072,190
|
)
|
Operating income percentage year over year change
|
|
|
1
|
%
|
|
|
12
|
%
|
|
|
50
|
%
|
|
|
99
|
%
|
|
|
|
*
|
|
|
|
|
Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
1,590,505
|
|
|
$
|
1,408,906
|
|
|
$
|
1,906,607
|
|
|
$
|
293,226
|
|
|
$
|
122
|
|
|
$
|
5,199,366
|
|
Percentage of total net revenues
|
|
|
30
|
%
|
|
|
27
|
%
|
|
|
37
|
%
|
|
|
6
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Operating income
(loss)(1)
|
|
|
931,989
|
|
|
|
368,954
|
|
|
|
633,993
|
|
|
|
(43,606
|
)
|
|
|
(1,371,588
|
)
|
|
|
519,742
|
|
Operating margin of segment
|
|
|
59
|
%
|
|
|
26
|
%
|
|
|
33
|
%
|
|
|
(15
|
)%
|
|
|
|
*
|
|
|
|
|
Depreciation and amortization expense
|
|
|
5,282
|
|
|
|
29,782
|
|
|
|
58,823
|
|
|
|
10,485
|
|
|
|
707,071
|
|
|
|
811,443
|
|
Fiscal 2008 vs. Fiscal 2007 period over period comparison
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
$
|
6,638
|
|
|
$
|
97,895
|
|
|
$
|
49,574
|
|
|
$
|
7,505
|
|
|
$
|
(79,074
|
)
|
|
$
|
82,538
|
|
Operating income percentage year over year change
|
|
|
1
|
%
|
|
|
27
|
%
|
|
|
8
|
%
|
|
|
17
|
%
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
* |
|
Percentage not meaningful. |
|
(1) |
|
In fiscal 2009, we revised an allocation of sales and marketing
expense between the Security and Compliance segment and Storage
and Server Management segment as a result of a misclassification
which has been revised for all periods presented. The result of
this reclassification increased the operating income of the
Security and Compliance segment and decreased the operating
income of the Storage and Server Management segment by
$201 million in fiscal 2008 and $146 million in fiscal
2007. |
Product
revenue information
Net revenues from sales of our core consumer security products
within our Consumer segment represented 27%, 28%, and 28% of our
total net revenues for fiscal 2009, 2008, and 2007, respectively.
Net revenues from sales of our endpoint security products within
our Security and Compliance segment represented 10%, 11%, and
16% of our total net revenues during fiscal 2009, 2008, and
2007, respectively.
95
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Net revenues from sales of our storage and availability
management products within our Storage and Server Management
segment represented 12%, 11%, and 9% of our total revenues
during fiscal 2009, 2008, and 2007, respectively.
Net revenue from sales of our data protection products within
our Storage and Server Management segment represented 20%, 20%,
and 20% of our total revenues during fiscal 2009, 2008, and
2007, respectively.
Geographical
information
The following table represents revenue amounts reported for
products shipped to customers in the corresponding regions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
April 3, 2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Net revenues from customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
3,024,137
|
|
|
$
|
2,814,444
|
|
|
$
|
2,560,342
|
|
United Kingdom
|
|
|
684,947
|
|
|
|
729,958
|
|
|
|
542,244
|
|
Other foreign
countries(1)
|
|
|
2,440,770
|
|
|
|
2,330,017
|
|
|
|
2,096,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,149,854
|
|
|
$
|
5,874,419
|
|
|
$
|
5,199,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
No individual country represented more than 10% of the
respective totals. |
The table below lists our property and equipment, net of
accumulated depreciation, by geographic area for fiscal 2009 and
2008. With the exception of property and equipment, we do not
identify or allocate our assets by geographic area:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
March 28,
|
|
|
|
April 3, 2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
811,176
|
|
|
$
|
802,181
|
|
Foreign
countries(1)
|
|
|
162,098
|
|
|
|
199,569
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
973,274
|
|
|
$
|
1,001,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
No individual country represented more than 10% of the
respective totals. |
Significant
customers
In fiscal 2009, 2008 and 2007, one reseller, Digital River
accounted for 10%, 11% and 12%, respectively, of our total net
revenues. Digital River represented the only customer that
accounted for 10 percent or more of revenues in fiscal
2009. In fiscal 2008 and 2007, one distributor, Ingram Micro
accounted for 10% and 11%, respectively, of our total net
revenues. Our distributor arrangements with Ingram Micro consist
of several non-exclusive, independently negotiated agreements
with its subsidiaries, each of which cover different countries
or regions. Each of these agreements is separately negotiated
and is independent of any other contract (such as a master
distribution agreement), and these agreements are not based on
the same form of contract. None of these contracts were
individually responsible for over 10 percent of our total
net revenues in fiscal 2008 and 2007.
96
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 13.
|
Employee
Benefits and Stock-Based Compensation
|
401(k)
plan
We maintain a salary deferral 401(k) plan for all of our
domestic employees. This plan allows employees to contribute up
to 50% of their pretax salary up to the maximum dollar
limitation prescribed by the Internal Revenue Code. We match 50%
of the employees contribution. The maximum match in any
given plan year is 3% of the employees eligible
compensation, up to $6,000. Our contributions under the plan
were $20 million, $24 million, and $24 million,
in fiscal 2009, 2008, and 2007, respectively.
Stock
purchase plans
1998
Employee Stock Purchase Plan
In September 1998, our stockholders approved the 1998 Employee
Stock Purchase Plan (1998 ESPP), and reserved shares
of common stock for issuance thereunder. Under the 1998 ESPP,
4 million, 5 million, and 4 million shares were
issued during fiscal 2009, 2008, and 2007, respectively,
representing $63 million, $69 million, and
$65 million in contributions, respectively. The 1998 ESPP
expired in fiscal 2009. As of April 3, 2009 a total of
33 million shares had been issued and no shares remain
available for issuance under this plan.
2008
Employee Stock Purchase Plan
In September 2008, our stockholders approved the 2008 Employee
Stock Purchase Plan (2008 ESPP) and reserved
20 million shares of common stock for issuance thereunder.
As of April 3, 2009, 20 million shares remain
available for issuance under the 2008 ESPP.
Subject to certain limitations, our employees may elect to have
2% to 10% of their compensation withheld through payroll
deductions to purchase shares of common stock under the 2008
ESPP. Employees purchase shares of common stock at a price per
share equal to 85% of the fair market value on the purchase date
at the end of each six-month purchase period.
2002
Executive Officers Stock Purchase Plan
In September 2002, our stockholders approved the 2002 Executive
Officers Stock Purchase Plan and reserved
250,000 shares of common stock for issuance thereunder,
which was amended by our Board of Directors in January 2008. The
purpose of the plan is to provide executive officers with a
means to acquire an equity interest in Symantec at fair market
value by applying a portion or all of their respective bonus
payments towards the purchase price. As of April 3, 2009,
40,401 shares have been issued under the plan and
209,599 shares remain available for future issuance. Shares
reserved for issuance under this plan have not been adjusted for
the stock dividends.
Stock
award plans
2000 Director
Equity Incentive Plan
In September 2000, our stockholders approved the
2000 Director Equity Incentive Plan and reserved
50,000 shares of common stock for issuance thereunder.
Stockholders increased the number of shares of stock that may be
issued by 50,000 in both September 2004 and September 2007. The
purpose of this plan is to provide the members of the Board of
Directors with an opportunity to receive common stock for all or
a portion of the retainer payable to each director for serving
as a member. Each director may elect any portion up to 100% of
the retainer to be paid in the form of stock. As of
April 3, 2009, a total of 40,119 shares had been
issued under this plan and 109,881 shares remained
available for future issuance.
97
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
2004
Equity Incentive Plan
Under the 2004 Equity Incentive Plan, (2004 Plan)
our Board of Directors, or a committee of the Board of
Directors, may grant incentive and nonqualified stock options,
stock appreciation rights, restricted stock units
(RSUs), or restricted stock awards
(RSAs) to employees, officers, directors,
consultants, independent contractors, and advisors to us, or to
any parent, subsidiary, or affiliate of ours. The purpose of the
2004 Plan is to attract, retain, and motivate eligible persons
whose present and potential contributions are important to our
success by offering them an opportunity to participate in our
future performance through equity awards of stock options and
stock bonuses. Under the terms of the 2004 Plan, the exercise
price of stock options may not be less than 100% of the fair
market value on the date of grant. Options generally vest over a
four-year period. Options granted prior to October 2005
generally have a maximum term of ten years and options granted
thereafter generally have a maximum term of seven years.
As of April 3, 2009, we have reserved 131 million
shares for issuance under the 2004 Plan. These shares include
18 million shares originally reserved for issuance under
the 2004 Plan upon its adoption by our stockholders in September
2004, 23 million shares that were transferred to the 2004
Plan from the 1996 Equity Incentive Plan, (1996
Plan), 40 million and 50 million shares that
were approved for issuance on the amendment and restatement of
the 2004 Plan at our 2006 and 2008 annual meeting of
stockholders, respectively. In addition to the shares currently
reserved under the 2004 Plan, any shares reacquired by us from
options outstanding under the 1996 Plan upon their cancellation
will also be added to the 2004 Plan reserve. As of April 3,
2009, 77 million shares remain available for future grant
under the 2004 Plan.
Assumed
Vontu stock options
In connection with our acquisition of Vontu, we assumed all
unexercised, outstanding options to purchase Vontu common stock.
Each unexercised, outstanding option assumed was converted into
an option to purchase Symantec common stock after applying the
exchange ratio of 0.5351 shares of Symantec common stock
for each share of Vontu common stock. In total, all unexercised,
outstanding Vontu options were converted into options to
purchase approximately 2.2 million shares of Symantec
common stock. As of April 3, 2009, total unrecognized
compensation cost adjusted for estimated forfeitures related to
unexercised, outstanding Vontu stock options was approximately
$4 million.
Furthermore, all shares obtained upon exercise of unvested Vontu
options were converted into the right to receive cash of $9.33
per share upon vesting. The total value of the assumed
exercised, unvested Vontu options on the date of acquisition was
approximately $7 million, assuming no options are forfeited
prior to vesting. As of April 3, 2009, total unrecognized
compensation cost adjusted for estimated forfeitures related to
exercised, unvested Vontu stock options was approximately
$1 million.
The assumed options retained all applicable terms and vesting
periods, except for certain options that were accelerated
according to a change in control provision and will generally
vest within a twelve month period from the date of acquisition
and certain other options that vested in full as of the
acquisition date. In general, the assumed options typically vest
over a period of four years from the original date of grant of
the option and have a maximum term of ten years.
Assumed
Altiris stock options and awards
In connection with our acquisition of Altiris, we assumed all of
the outstanding options to purchase Altiris common stock. Each
option assumed was converted into an option to purchase Symantec
common stock after applying the exchange ratio of
1.9075 shares of Symantec common stock for each share of
Altiris common stock. In total, we assumed and converted Altiris
options into options to purchase approximately 3 million
shares of Symantec common stock. In addition, we assumed and
converted all outstanding Altiris RSUs into approximately
320,000 Symantec RSUs, based on the same exchange ratio.
Furthermore, we assumed all outstanding Altiris RSAs
98
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
which were converted into the right to receive cash in the
amount of $33.00 per share upon vesting. The total value of the
assumed Altiris RSAs on the date of acquisition was
approximately $9 million, assuming no Altiris RSAs are
forfeited prior to vesting, and all Altiris RSAs have vested and
been paid. As of April 3, 2009, the total unrecognized
compensation cost adjusted for estimated forfeitures, related to
the Altiris unvested stock options and RSUs, was immaterial.
The assumed Altiris options, RSUs, and RSAs retained all
applicable terms and vesting periods, except for certain Altiris
options, RSAs and RSUs that were accelerated according to the
executive vesting plan and were vested over a four to twelve
month period from the date of acquisition and certain other
options that vested in full as of the acquisition date. In
general, the assumed Altiris options vest over a period of three
to four years from the original date of grant and have a maximum
term of ten years. The assumed Altiris RSUs and RSAs typically
vest over a period of two to three years from the original date
of grant.
Other
stock option plans
Options remain outstanding under several other stock option
plans, including the 2001 Non-Qualified Equity Incentive Plan,
the 1999 Acquisition Plan, the 1996 Plan, and various plans
assumed in connection with acquisitions. No further options may
be granted under any of these plans.
Valuation
of stock-based awards
The fair value of each stock option granted under our equity
incentive plans is estimated on the date of grant using the
Black-Scholes option-pricing model with the following
weighted-average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Options
|
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
Expected life
|
|
|
3 years
|
|
|
|
3 years
|
|
|
|
3 years
|
|
Expected volatility
|
|
|
37
|
%
|
|
|
33
|
%
|
|
|
34
|
%
|
Risk-free interest rate
|
|
|
2.04
|
%
|
|
|
4.52
|
%
|
|
|
4.86
|
%
|
Changes in the Black-Scholes valuation assumptions and our
estimated forfeiture rate may change the estimate of fair value
for stock-based compensation and the related expense recognized.
There have not been any material changes to our stock-based
compensation expense due to changes in our valuation assumptions
of stock-based awards.
99
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
Stock-based
compensation expense
The following table sets forth the total stock-based
compensation expense recognized in our Consolidated Statements
of Operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Cost of revenues Content, subscriptions, and
maintenance
|
|
$
|
11,180
|
|
|
$
|
13,003
|
|
|
$
|
12,373
|
|
Cost of revenues Licenses
|
|
|
3,053
|
|
|
|
3,731
|
|
|
|
4,064
|
|
Sales and marketing
|
|
|
65,744
|
|
|
|
58,181
|
|
|
|
55,895
|
|
Research and development
|
|
|
49,285
|
|
|
|
57,597
|
|
|
|
57,132
|
|
General and administrative
|
|
|
28,202
|
|
|
|
31,183
|
|
|
|
24,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
|
157,464
|
|
|
|
163,695
|
|
|
|
153,880
|
|
Tax benefit associated with stock-based compensation expense
|
|
|
(44,471
|
)
|
|
|
(41,589
|
)
|
|
|
(35,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of stock-based compensation expense on operations
|
|
$
|
112,993
|
|
|
$
|
122,106
|
|
|
$
|
118,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of stock-based compensation expense on earnings per
share basic
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of stock-based compensation expense on earnings per
share diluted
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|
$
|
0.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net effect of a forfeiture rate adjustment in the third
quarter based upon actual results was a decrease to our
stock-based compensation expense for the twelve months ended
April 3, 2009 by approximately $13 million.
As of April 3, 2009, total unrecognized compensation cost
adjusted for estimated forfeitures related to unvested stock
options, and RSUs was $79 million and $77 million,
respectively, which is expected to be recognized over the
remaining weighted-average vesting periods of 2 years for
stock options and 2 years for RSUs.
Stock
option activity
The following table summarizes stock option activity for the
year ended April 3, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
Number
|
|
|
Exercise
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
of Shares
|
|
|
Price
|
|
|
Years
|
|
|
Value(1)
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Outstanding at March 28, 2008
|
|
|
95,268
|
|
|
$
|
18.08
|
|
|
|
|
|
|
$
|
|
|
Granted
|
|
|
5,469
|
|
|
|
18.97
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(14,042
|
)
|
|
|
11.96
|
|
|
|
|
|
|
|
|
|
Forfeited(2)
|
|
|
(4,730
|
)
|
|
|
18.73
|
|
|
|
|
|
|
|
|
|
Expired(3)
|
|
|
(7,942
|
)
|
|
|
24.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at April 3, 2009
|
|
|
74,023
|
|
|
$
|
18.61
|
|
|
|
3.96
|
|
|
$
|
136,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at April 3, 2009
|
|
|
57,611
|
|
|
$
|
18.65
|
|
|
|
3.57
|
|
|
$
|
129,608
|
|
Vested and expected to vest at April 3, 2009
|
|
|
68,472
|
|
|
$
|
18.62
|
|
|
|
3.86
|
|
|
$
|
134,250
|
|
|
|
|
(1) |
|
Intrinsic value is calculated as the difference between the
market value of Symantecs common stock as of April 3,
2009 and the exercise price of the option. The aggregate
intrinsic value of options outstanding and |
100
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
exercisable includes options with an exercise price below
$16.23, the closing price of our common stock on April 3,
2009, as reported by the NASDAQ Global Select Market. |
|
(2) |
|
Refers to options cancelled before their vest dates. |
|
(3) |
|
Refers to options cancelled on or after their vest dates. |
The weighted-average fair value per share of options granted
during fiscal 2009, 2008 and 2007 including assumed options was
$5.26, $6.03, and $5.06, respectively. The total intrinsic value
of options exercised during fiscal 2009, 2008 and 2007 was
$111 million, $142 million, and $142 million,
respectively.
The following table summarizes RSU activity for the year ended
April 3, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
Weighted-
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Average
|
|
|
Aggregate
|
|
|
|
Number
|
|
|
Purchase
|
|
|
Remaining
|
|
|
Intrinsic
|
|
|
|
of Shares
|
|
|
Price
|
|
|
Years
|
|
|
Value
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Outstanding at March 28, 2008
|
|
|
5,129
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Granted
|
|
|
9,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(2,571
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(1,693
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at April 3, 2009
|
|
|
10,772
|
|
|
$
|
|
|
|
|
1.12
|
|
|
$
|
174,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest at April 3, 2009
|
|
|
5,885
|
|
|
$
|
|
|
|
|
0.94
|
|
|
$
|
95,510
|
|
The weighted-average grant date fair value per share of RSUs
granted during fiscal 2009, 2008, and 2007, including assumed
RSUs was $19.41, $19.39, and $16.53, respectively. The total
fair value of RSUs that vested in fiscal 2009, 2008, and 2007
was $52 million, $15 million, and $2 million,
respectively.
Shares
reserved
As of April 3, 2009, we had reserved the following shares
of authorized but unissued common stock:
|
|
|
|
|
Stock purchase plans
|
|
|
20,209,599
|
|
Stock award plans
|
|
|
40,119
|
|
Employee stock option plans
|
|
|
162,291,769
|
|
|
|
|
|
|
Total
|
|
|
182,541,487
|
|
|
|
|
|
|
101
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
The components of the provision for income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
160,908
|
|
|
$
|
258,432
|
|
|
$
|
136,626
|
|
State
|
|
|
48,593
|
|
|
|
48,460
|
|
|
|
4,133
|
|
International
|
|
|
101,353
|
|
|
|
123,297
|
|
|
|
75,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
310,854
|
|
|
|
430,189
|
|
|
|
216,069
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(88,271
|
)
|
|
|
(147,604
|
)
|
|
|
11,410
|
|
State
|
|
|
(33,969
|
)
|
|
|
(28,387
|
)
|
|
|
7,482
|
|
International
|
|
|
33,016
|
|
|
|
(5,525
|
)
|
|
|
(7,719
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(89,224
|
)
|
|
|
(181,516
|
)
|
|
|
11,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
221,630
|
|
|
$
|
248,673
|
|
|
$
|
227,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income (loss) from international operations was
$(1,465) million, $458 million, and $336 million
for fiscal 2009, 2008, and 2007, respectively.
The difference between our effective income tax and the federal
statutory income tax is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Expected Federal statutory tax
|
|
$
|
(2,258,962
|
)
|
|
$
|
249,383
|
|
|
$
|
221,064
|
|
State taxes, net of federal benefit
|
|
|
(3,403
|
)
|
|
|
10,409
|
|
|
|
7,690
|
|
Goodwill impairment non deductible
|
|
|
2,509,967
|
|
|
|
|
|
|
|
|
|
Foreign earnings taxed at less than the federal rate
|
|
|
(64,190
|
)
|
|
|
(676
|
)
|
|
|
(14,304
|
)
|
Non-deductible stock-based compensation
|
|
|
2,730
|
|
|
|
6,185
|
|
|
|
12,570
|
|
Domestic production activities deduction
|
|
|
(12,118
|
)
|
|
|
(14,168
|
)
|
|
|
(5,040
|
)
|
Contingent penalty accrual
|
|
|
|
|
|
|
|
|
|
|
6,100
|
|
IRS audit settlement
|
|
|
|
|
|
|
|
|
|
|
(7,584
|
)
|
Federal research and development credit
|
|
|
(12,086
|
)
|
|
|
(7,529
|
)
|
|
|
(6,156
|
)
|
Valuation allowance increase
|
|
|
61,023
|
|
|
|
|
|
|
|
|
|
Benefit of losses from joint venture
|
|
|
(8,899
|
)
|
|
|
|
|
|
|
|
|
Other, net
|
|
|
7,568
|
|
|
|
5,069
|
|
|
|
12,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
221,630
|
|
|
$
|
248,673
|
|
|
$
|
227,242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
The principal components of deferred tax assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(In thousands)
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Tax credit carryforwards
|
|
$
|
19,774
|
|
|
$
|
29,452
|
|
Net operating loss carryforwards of acquired companies
|
|
|
202,077
|
|
|
|
180,095
|
|
Other accruals and reserves not currently tax deductible
|
|
|
160,097
|
|
|
|
148,808
|
|
Deferred revenue
|
|
|
56,843
|
|
|
|
77,161
|
|
Loss on investments not currently tax deductible
|
|
|
21,802
|
|
|
|
15,845
|
|
Book over tax depreciation
|
|
|
27,349
|
|
|
|
18,542
|
|
State income taxes
|
|
|
43,043
|
|
|
|
36,970
|
|
Convertible debt
|
|
|
122,875
|
|
|
|
162,303
|
|
Other
|
|
|
73,290
|
|
|
|
63,866
|
|
Goodwill
|
|
|
77,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
804,163
|
|
|
|
733,042
|
|
Valuation allowance
|
|
|
(101,513
|
)
|
|
|
(38,253
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
702,650
|
|
|
|
694,789
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
(377,387
|
)
|
|
|
(474,159
|
)
|
Unremitted earnings of foreign subsidiaries
|
|
|
(206,557
|
)
|
|
|
(190,893
|
)
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
$
|
118,706
|
|
|
$
|
29,737
|
|
|
|
|
|
|
|
|
|
|
Of the $101 million total valuation allowance provided
against our deferred tax assets, approximately $89 million
is attributable to acquisition-related assets. When
SFAS No. 141(R) becomes effective in the first quarter
of our fiscal year 2010, the benefits attributable to our
valuation allowance will reduce income tax expense when and if
realized. The valuation allowance increased by $63 million
in fiscal 2009, $56 million was attributable to certain
Irish deferred tax assets that will require an extended period
of time to realize, $6 million was attributable to capital
losses, and $1 million was attributable to
acquisition-related assets.
As of April 3, 2009, we have U.S. federal net
operating loss and credit carryforwards attributable to various
acquired companies of approximately $186 million and
$5 million, respectively, which, if not used, will expire
between fiscal 2010 and 2029. These net operating loss
carryforwards are subject to an annual limitation under Internal
Revenue Code § 382, but are expected to be fully
realized. Furthermore, we have U.S. state net operating
loss and credit carryforwards attributable to various acquired
companies of approximately $250 million and
$12 million, respectively, which will expire in various
fiscal years. In addition, we have foreign net operating loss
carryforwards attributable to various acquired foreign companies
of approximately $349 million net of valuation allowances,
which, under current applicable foreign tax law, can be carried
forward indefinitely.
As a result of the impairment of goodwill, we have cumulative
pre-tax book losses, as measured by the current and prior two
years. We considered the negative evidence of this cumulative
pre-tax book loss position on our ability to continue to
recognize deferred tax assets that are dependent upon future
taxable income for realization. We considered the following as
positive evidence: the vast majority of the goodwill impairment
is not deductible for tax purposes and thus will not result in
tax losses; we have a strong, consistent taxpaying history; we
have substantial U.S. federal income tax carryback
potential; and we have substantial amounts of scheduled future
reversals of
103
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
taxable temporary differences from our deferred tax liabilities.
We have concluded that this positive evidence outweighs the
negative evidence and, thus, that the deferred tax assets as of
April 3, 2009 of $702 million, after application of
the valuation allowances, are realizable on a more likely
than not basis.
As of April 3, 2009, no provision has been made for federal
or state income taxes on $1.5 billion of cumulative
unremitted earnings of certain of our foreign subsidiaries,
since we plan to indefinitely reinvest these earnings. As of
April 3, 2009, the unrecognized deferred tax liability for
these earnings was $447 million.
The Company adopted the provisions of FASB FIN 48,
effective March 31, 2007. The cumulative effect of adopting
FIN 48 was a decrease in tax reserves of $16 million,
resulting in a decrease to Veritas goodwill of $10 million,
an increase of $5 million to the March 31, 2007
Accumulated earnings balance, and a $1 million increase in
Additional paid-in capital. Upon adoption, the gross liability
for unrecognized tax benefits as of March 31, 2007 was
$456 million, exclusive of interest and penalties.
The aggregate changes in the balance of gross unrecognized tax
benefits since adoption were as follows (in thousands):
|
|
|
|
|
Beginning balance as of March 31, 2007 (date of adoption)
|
|
$
|
456,183
|
|
Settlements and effective settlements with tax authorities and
related remeasurements
|
|
|
(6,680
|
)
|
Lapse of statute of limitations
|
|
|
(6,030
|
)
|
Increases in balances related to tax positions taken during
prior years
|
|
|
40,390
|
|
Decreases in balances related to tax positions taken during
prior years
|
|
|
(6,570
|
)
|
Increases in balances related to tax positions taken during
current year
|
|
|
111,197
|
|
|
|
|
|
|
Balance as of March 28, 2008
|
|
$
|
588,490
|
|
|
|
|
|
|
Settlements and effective settlements with tax authorities and
related remeasurements
|
|
|
(1,764
|
)
|
Lapse of statute of limitations
|
|
|
(8,901
|
)
|
Increases in balances related to tax positions taken during
prior years
|
|
|
31,138
|
|
Decreases in balances related to tax positions taken during
prior years
|
|
|
(19,369
|
)
|
Increases in balances related to tax positions taken during
current year
|
|
|
44,379
|
|
|
|
|
|
|
Balance as of April 3, 2009
|
|
$
|
633,973
|
|
|
|
|
|
|
Of the $45 million of changes in gross unrecognized tax
benefits during the year disclosed above, approximately
$22 million was provided through purchase accounting in
connection with acquisitions made in fiscal 2009. This gross
liability is reduced by offsetting tax benefits associated with
the correlative effects of potential transfer pricing
adjustments, interest deductions, and state income taxes, as
well as payments made to date.
Of the total unrecognized tax benefits at April 3, 2009,
$632 million, if recognized, would favorably affect the
Companys effective tax rate, while $2 million would
affect the cumulative translation adjustments. However, one or
more of these unrecognized tax benefits could be subject to a
valuation allowance if and when recognized in a future period,
which could impact the timing of any related effective tax rate
benefit.
Our policy to include interest and penalties related to gross
unrecognized tax benefits within our provision for income taxes
did not change upon the adoption of FIN 48. At
April 3, 2009, before any tax benefits, we had
$136 million of accrued interest and accrued penalties on
unrecognized tax benefits. Interest included in our provision
for income taxes was a benefit of approximately $2 million
for the year ended April 3, 2009. If the accrued interest
and penalties do not ultimately become payable, amounts accrued
will be reduced in the period that such determination is made,
and reflected as a reduction of the overall income tax provision.
We file income tax returns in the U.S. on a federal basis
and in many U.S. state and foreign jurisdictions. Our two
most significant tax jurisdictions are the U.S. and
Ireland. Our tax filings remain subject to examination by
104
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
applicable tax authorities for a certain length of time
following the tax year to which those filings relate. Our 2000
through 2008 tax years remain subject to examination by the
Internal Revenue Service (IRS) for U.S. federal
tax purposes, and our 2004 through 2008 tax years remain subject
to examination by the appropriate governmental agencies for
Irish tax purposes. Other significant jurisdictions include
California, Japan, and India. As of April 3, 2009, we are
under examination by the IRS, for the Veritas U.S. federal
income taxes for the 2002 through 2005 tax years. In addition,
we are under examination by the California Franchise Tax Board
for the Symantec California income taxes for the 2004 through
2005 tax years. We are also under audit by the Japanese and
Indian income tax authorities for fiscal years 2004 through
2008, and 2004 through 2005, respectively.
We continue to monitor the progress of ongoing income tax
controversies and the impact, if any, of the expected tolling of
the statute of limitations in various taxing jurisdictions.
Considering these facts, we do not currently believe there is a
reasonable possibility of any significant change to our total
unrecognized tax benefits within the next twelve months.
On March 29, 2006, we received a Notice of Deficiency from
the IRS claiming that we owe $867 million of additional
taxes, excluding interest and penalties, for the 2000 and 2001
tax years based on an audit of Veritas. On June 26, 2006,
we filed a petition with the U.S. Tax Court protesting the
IRS claim for such additional taxes. In the March 2007 quarter,
we agreed to pay $7 million out of $35 million
originally assessed by the IRS in connection with several of the
lesser issues covered in the assessment. The IRS agreed to waive
the assessment of penalties. During July 2008, we completed the
trial phase of the Tax Court case, which dealt with the
remaining issue covered in the assessment. At trial, the IRS
changed its position with respect to this remaining issue, which
decreased the remaining amount at issue from $832 million
to $545 million, excluding interest. We filed our
post-trial briefs in October 2008 and rebuttal briefs in
November 2008 with the U.S. Tax Court.
We strongly believe the IRS position with regard to this
matter is inconsistent with applicable tax laws and existing
Treasury regulations, and that our previously reported income
tax provision for the years in question is appropriate. If, upon
resolution, the final assessment differs from our tax provision,
the adjustment including interest, would be accounted for
through income tax expense in the period the matter is resolved,
when SFAS 141(R) becomes effective in the first quarter of
fiscal year 2010.
On September 5, 2006, we executed a closing agreement with
the IRS with respect to the audit of Symantecs fiscal 2003
and 2004 federal income tax returns. The closing agreement
represents the final assessment by the IRS of additional tax for
these fiscal years of approximately $35 million, including
interest. Based on the final settlement, a tax benefit of
$8 million is reflected in the September 2006 quarter.
In July 2008, we reached an agreement with the IRS concerning
our eligibility to claim a lower tax rate on a distribution made
from a Veritas foreign subsidiary prior to the July 2005
acquisition. The distribution was intended to be made pursuant
to the American Jobs Creation Act of 2004, and therefore
eligible for a 5.25% effective U.S. federal rate of tax, in
lieu of the 35% statutory rate. The final impact of this
agreement is not yet known since this relates to the taxability
of earnings that are otherwise the subject of the tax years
2000-2001
transfer pricing dispute which in turn is being addressed in the
U.S. Tax Court. To the extent that we owe taxes as a result
of the transfer pricing dispute, we anticipate that the
incremental tax due from this negotiated agreement will
decrease. We currently estimate that the most probable outcome
from this negotiated agreement will be $13 million or less,
for which an accrual has already been made. We made a payment of
$130 million to the IRS for this matter in May 2006. We
applied $110 million of this payment as a deposit on the
outstanding transfer pricing matter for the tax years
2000-2001.
The accounting treatment related to pre-acquisition unrecognized
tax benefits will change when FAS 141(R) becomes effective,
which will be in the first quarter of our fiscal year 2010. At
such time, any changes to the recognition or measurement of
unrecognized tax benefits related to pre-acquisition periods
will be recorded through income tax expense, while for fiscal
2009 and earlier the accounting treatment would require any
adjustment to be recognized through the purchase price as an
increase or decrease to goodwill.
105
SYMANTEC
CORPORATION
Notes to
Consolidated Financial
Statements (Continued)
|
|
Note 15.
|
Earnings
Per Share
|
Basic and diluted earnings per share are computed on the basis
of the weighted average number of shares of common stock
outstanding during the period. Diluted earnings per share also
includes the incremental effect of dilutive potential common
shares outstanding during the period using the treasury stock
method. Dilutive potential common shares include shares
underlying outstanding stock options, stock awards, warrants,
and convertible notes.
The components of earnings per share are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands, except per share data)
|
|
|
Net (loss) income per share basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,728,870
|
)
|
|
$
|
463,850
|
|
|
$
|
404,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share basic
|
|
|
(8.10
|
)
|
|
|
0.53
|
|
|
|
0.42
|
|
Weighted-average outstanding common shares
|
|
|
830,983
|
|
|
|
867,562
|
|
|
|
960,575
|
|
Net (loss) income per share diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(6,728,870
|
)
|
|
$
|
463,850
|
|
|
$
|
404,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share diluted
|
|
|
(8.10
|
)
|
|
|
0.52
|
|
|
|
0.41
|
|
Weighted-average outstanding common shares
|
|
|
830,983
|
|
|
|
867,562
|
|
|
|
960,575
|
|
Shares issuable from assumed exercise of options
|
|
|
|
|
|
|
15,191
|
|
|
|
20,047
|
|
Dilutive impact of restricted stock and restricted stock units
|
|
|
|
|
|
|
1,383
|
|
|
|
522
|
|
Dilutive impact of assumed conversion of Senior Notes
|
|
|
|
|
|
|
|
|
|
|
2,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total weighted-average shares outstanding diluted
|
|
|
830,983
|
|
|
|
884,136
|
|
|
|
983,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following potential common shares were excluded from the
computation of diluted earnings per share, as their effect would
have been anti-dilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
April 3,
|
|
|
March 28,
|
|
|
March 30,
|
|
|
|
2009(1)
|
|
|
2008(1)
|
|
|
2007(1)
|
|
|
|
(In thousands)
|
|
|
Stock options
|
|
|
61,436
|
|
|
|
65,955
|
|
|
|
69,186
|
|
Restricted stock units
|
|
|
2,044
|
|
|
|
113
|
|
|
|
109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,480
|
|
|
|
66,068
|
|
|
|
69,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For these fiscal years, the effect of the warrants issued and
option purchased in connection with the convertible Senior Notes
were excluded because, as discussed in Note 8, they have no
impact on diluted earnings per share until our average stock
price for the applicable period reaches $27.3175 per share and
$19.12 per share, respectively. |
106
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of Cupertino, State of
California, on the 29th day of May, 2009.
SYMANTEC CORPORATION
Enrique T. Salem,
President, Chief Executive Officer, and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Enrique T.
Salem, James A. Beer and Scott C. Taylor, and each or any of
them, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities to sign any and
all amendments to this report on
Form 10-K
and any other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact, and each of them, full power and authority to
do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby
ratifying and confirming all that such attorneys-in-fact, or his
or their substitute or substitutes, may lawfully do or cause to
be done by virtue hereof. This Power of Attorney may be signed
in several counterparts.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the
dates indicated below.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Enrique
T. Salem
Enrique
T. Salem
|
|
President, Chief Executive Officer, and Director
(Principal Executive Officer)
|
|
May 29, 2009
|
|
|
|
|
|
/s/ James
A. Beer
James
A. Beer
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
May 29, 2009
|
|
|
|
|
|
/s/ George
W. Harrington
George
W. Harrington
|
|
Senior Vice President, Finance and
Chief Accounting Officer
(Principal Accounting Officer)
|
|
May 29, 2009
|
|
|
|
|
|
/s/ John
W. Thompson
John
W. Thompson
|
|
Chariman of the Board
|
|
May 29, 2009
|
|
|
|
|
|
/s/ Michael
A. Brown
Michael
A. Brown
|
|
Director
|
|
May 29, 2009
|
|
|
|
|
|
/s/ William
T. Coleman III
William
T. Coleman III
|
|
Director
|
|
May 29, 2009
|
|
|
|
|
|
/s/ Frank
E. Dangeard
Frank
E. Dangeard
|
|
Director
|
|
May 29, 2009
|
107
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Geraldine
B. Laybourne
Geraldine
B. Laybourne
|
|
Director
|
|
May 29, 2009
|
|
|
|
|
|
/s/ David
L. Mahoney
David
L. Mahoney
|
|
Director
|
|
May 29, 2009
|
|
|
|
|
|
/s/ Robert
S. Miller
Robert
S. Miller
|
|
Director
|
|
May 29, 2009
|
|
|
|
|
|
/s/ Daniel
Schulman
Daniel
Schulman
|
|
Director
|
|
May 29, 2009
|
|
|
|
|
|
/s/ V.
Paul Unruh
V.
Paul Unruh
|
|
Director
|
|
May 29, 2009
|
108
Schedule II
SYMANTEC
CORPORATION
VALUATION
AND QUALIFYING ACCOUNTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Charged Against
|
|
|
Charged to
|
|
|
Amount
|
|
|
Balance at
|
|
|
|
Beginning
|
|
|
Revenue and to
|
|
|
Other
|
|
|
Written Off
|
|
|
End of
|
|
|
|
of Period
|
|
|
Operating
Expense(1)
|
|
|
Accounts
|
|
|
or Used
|
|
|
Period
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended April 3, 2009
|
|
$
|
8,915
|
|
|
$
|
1,340
|
|
|
$
|
|
|
|
$
|
(1,392
|
)
|
|
$
|
8,863
|
|
Year ended March 28, 2008
|
|
|
8,391
|
|
|
|
1,173
|
|
|
|
|
|
|
|
(649
|
)
|
|
|
8,915
|
|
Year ended March 30, 2007
|
|
|
8,794
|
|
|
|
4,644
|
|
|
|
(1,777
|
)(2)
|
|
|
(3,270
|
)
|
|
|
8,391
|
|
Reserve for product returns:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended April 3, 2009
|
|
$
|
14,399
|
|
|
$
|
52,266
|
|
|
$
|
|
|
|
$
|
(54,537
|
)
|
|
$
|
12,128
|
|
Year ended March 28, 2008
|
|
|
12,221
|
|
|
|
67,635
|
|
|
|
|
|
|
|
(65,457
|
)
|
|
|
14,399
|
|
Year ended March 30, 2007
|
|
|
12,840
|
|
|
|
72,789
|
|
|
|
|
|
|
|
(73,408
|
)
|
|
|
12,221
|
|
Reserve for rebates:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended April 3, 2009
|
|
$
|
81,629
|
|
|
$
|
192,194
|
|
|
$
|
90,697
|
(3)
|
|
$
|
(294,980
|
)
|
|
$
|
69,540
|
|
Year ended March 28, 2008
|
|
|
99,857
|
|
|
|
220,967
|
|
|
|
109,132
|
(3)
|
|
|
(348,327
|
)
|
|
|
81,629
|
|
Year ended March 30, 2007
|
|
|
64,590
|
|
|
|
196,775
|
|
|
|
105,993
|
(3)
|
|
|
(267,501
|
)
|
|
|
99,857
|
|
|
|
|
(1) |
|
Reserve for product returns and reserve for rebates are charged
against revenue. |
|
(2) |
|
SAB 108 adjustment to fiscal 2007 beginning balance,
charged to accumulated earnings. |
|
(3) |
|
Balances represent unrecognized customer rebates that will be
amortized within 12 months and are recorded as a reduction
of deferred revenue. |
109
EXHIBIT INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
2
|
.01§
|
|
Agreement and Plan of Merger among Symantec Corporation, Atlas
Merger Corp. and Altiris, Inc. dated January 26, 2007
|
|
10-Q
|
|
000-17781
|
|
2.01
|
|
02/09/09
|
|
|
|
3
|
.01
|
|
Amended and Restated Certificate of Incorporation of Symantec
Corporation
|
|
S-8
|
|
333-119872
|
|
4.01
|
|
10/21/04
|
|
|
|
3
|
.02
|
|
Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Symantec Corporation
|
|
S-8
|
|
333-126403
|
|
4.03
|
|
07/06/05
|
|
|
|
3
|
.03
|
|
Certificate of Designations of Series A Junior
Participating Preferred Stock of Symantec Corporation
|
|
8-K
|
|
000-17781
|
|
3.01
|
|
12/21/04
|
|
|
|
3
|
.04
|
|
Bylaws of Symantec Corporation
|
|
8-K
|
|
000-17781
|
|
3.01
|
|
01/23/06
|
|
|
|
4
|
.01
|
|
Form of Common Stock Certificate
|
|
S-3ASR
|
|
333-139230
|
|
4.07
|
|
12/11/06
|
|
|
|
4
|
.02
|
|
Indenture related to the 0.75% Convertible Senior Notes,
due 2011, dated as of June 16, 2006, between Symantec
Corporation and U.S. Bank National Association, as trustee
(including form of 0.75% Convertible Senior Notes due 2011)
|
|
8-K
|
|
000-17781
|
|
4.01
|
|
06/16/06
|
|
|
|
4
|
.03
|
|
Indenture related to the 1.00% Convertible Senior Notes,
due 2013, dated as of June 16, 2006, between Symantec
Corporation and U.S. Bank National Association, as trustee
(including form of 1.00% Convertible Senior Notes due 2013)
|
|
8-K
|
|
000-17781
|
|
4.02
|
|
06/16/06
|
|
|
|
4
|
.04
|
|
Form of Master Terms and Conditions For Convertible Bond Hedging
Transactions between Symantec Corporation and each of Bank of
America, N.A. and Citibank, N.A., respectively, dated
June 9, 2006, including Exhibit and Schedule thereto
|
|
10-Q
|
|
000-17781
|
|
10.04
|
|
08/09/06
|
|
|
|
4
|
.05
|
|
Form of Master Terms and Conditions For Warrants Issued by
Symantec Corporation between Symantec Corporation and each of
Bank of America, N.A. and Citibank, N.A., respectively, dated
June 9, 2006, including Exhibit and Schedule thereto
|
|
10-Q
|
|
000-17781
|
|
10.05
|
|
08/09/06
|
|
|
|
4
|
.06
|
|
Credit Agreement, dated as of July 12, 2006, by and among
Symantec Corporation, the lenders party thereto (the
Lenders), JPMorgan Chase Bank, National Association,
as Administrative Agent, Citicorp USA, Inc., as Syndication
Agent, Bank of America, N.A., Morgan Stanley Bank and UBS Loan
Finance LLC, as Co-Documentation Agents, and J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., as Joint
Bookrunners and Joint Lead Arrangers, and related agreements.
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
12/03/07
|
|
|
|
10
|
.01*
|
|
Form of Indemnification Agreement with Officers and Directors,
as amended (form for agreements entered into prior to
January 17, 2006)
|
|
S-1
|
|
33-28655
|
|
10.17
|
|
06/21/89
|
|
|
|
10
|
.02*
|
|
Form of Indemnification Agreement for Officers, Directors and
Key Employees
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
01/23/06
|
|
|
|
10
|
.03*
|
|
Veritas Software Corporation 1993 Equity Incentive Plan,
including form of Stock Option Agreement
|
|
10-K
|
|
000-17781
|
|
10.03
|
|
06/09/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
10
|
.04*
|
|
Symantec Corporation 1996 Equity Incentive Plan, as amended,
including form of Stock Option Agreement and form of Restricted
Stock Purchase Agreement
|
|
10-K
|
|
000-17781
|
|
10.05
|
|
06/09/06
|
|
|
|
10
|
.05*
|
|
Symantec Corporation Deferred Compensation Plan, as adopted
November 7, 1996
|
|
10-K
|
|
000-17781
|
|
10.11
|
|
06/24/97
|
|
|
|
10
|
.06*
|
|
Brightmail Inc. 1998 Stock Option Plan, including form of Stock
Option Agreement and form of Notice of Assumption
|
|
10-K
|
|
000-17781
|
|
10.08
|
|
06/09/06
|
|
|
|
10
|
.07*
|
|
Altiris, Inc. 1998 Stock Option Plan
|
|
S-8
|
|
333-141986
|
|
99.01
|
|
04/10/07
|
|
|
|
10
|
.08*
|
|
Form of Notice of Grant of Stock Option under the Altiris, Inc.
1998 Stock Option Plan
|
|
S-8
|
|
333-141986
|
|
99.02
|
|
04/10/07
|
|
|
|
10
|
.09*
|
|
Symantec Corporation 2000 Director Equity Incentive Plan,
as amended
|
|
|
|
|
|
|
|
|
|
X
|
|
10
|
.10*
|
|
Symantec Corporation 2001 Non- Qualified Equity Incentive Plan
|
|
10-K
|
|
000-17781
|
|
10.12
|
|
06/09/06
|
|
|
|
10
|
.11*
|
|
Amended and Restated Symantec Corporation 2002 Executive
Officers Stock Purchase Plan
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
01/25/08
|
|
|
|
10
|
.12*
|
|
Altiris, Inc. 2002 Stock Plan
|
|
S-8
|
|
333-141986
|
|
99.03
|
|
04/10/07
|
|
|
|
10
|
.13*
|
|
Form of Stock Option Agreement under the Altiris, Inc. 2002
Stock Plan
|
|
S-8
|
|
333-141986
|
|
99.04
|
|
04/10/07
|
|
|
|
10
|
.14*
|
|
Vontu, Inc. 2002 Stock Option/Stock Issuance Plan, as amended
|
|
S-8
|
|
333-148107
|
|
99.02
|
|
12/17/07
|
|
|
|
10
|
.15*
|
|
Form of Vontu, Inc. Stock Option Agreement
|
|
S-8
|
|
333-148107
|
|
99.03
|
|
12/17/07
|
|
|
|
10
|
.16*
|
|
Veritas Software Corporation 2003 Stock Incentive Plan, as
amended and restated, including form of Stock Option Agreement,
form of Stock Option Agreement for Executives and Senior VPs and
form of Notice of Stock Option Assumption
|
|
10-K
|
|
000-17781
|
|
10.15
|
|
06/09/06
|
|
|
|
10
|
.17*
|
|
Symantec Corporation 2004 Equity Incentive Plan, as amended,
including Stock Option Grant Terms and Conditions,
form of RSU Award Agreement, and form of RSU Award Agreement for
Non-Employee Directors
|
|
|
|
|
|
|
|
|
|
X
|
|
10
|
.18*
|
|
Altiris, Inc. 2005 Stock Plan
|
|
S-8
|
|
333-141986
|
|
99.05
|
|
04/10/07
|
|
|
|
10
|
.19*
|
|
Form of Incentive Stock Option Agreement under the Altiris, Inc.
2005 Stock Plan, as amended
|
|
S-8
|
|
333-141986
|
|
99.06
|
|
04/10/07
|
|
|
|
10
|
.20*
|
|
Symantec Corporation 2008 Employee Stock Purchase Plan
|
|
8-K
|
|
000-17781
|
|
10.2
|
|
09/25/08
|
|
|
|
10
|
.21*
|
|
Employment Agreement, dated April 11, 1999, between
Symantec Corporation and John W. Thompson
|
|
10-K
|
|
000-17781
|
|
10.67
|
|
07/01/99
|
|
|
|
10
|
.22*
|
|
Employment Agreement, dated December 15, 2004, between
Symantec Corporation and Greg Hughes
|
|
S-4/A
|
|
333-122724
|
|
10.08
|
|
05/18/05
|
|
|
|
10
|
.23*
|
|
Offer Letter, dated February 8, 2006, from Symantec
Corporation to James A. Beer
|
|
10-K
|
|
000-17781
|
|
10.17
|
|
06/09/06
|
|
|
|
10
|
.24*
|
|
Letter Agreement, dated April 6, 2009, between Symantec
Corporation and John W. Thompson
|
|
8-K
|
|
000-17781
|
|
10.01
|
|
04/09/09
|
|
|
|
10
|
.25*
|
|
FY09 Long Term Incentive Plan
|
|
10-Q
|
|
000-17781
|
|
10.03
|
|
08/08/08
|
|
|
|
10
|
.26*
|
|
Form of FY09 Executive Annual Incentive Plan Group
Presidents responsible for one of Symantecs business
segments
|
|
10-Q
|
|
000-17781
|
|
10.02
|
|
08/08/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
10
|
.27*
|
|
Form of FY09 Executive Annual Incentive Plan
Executive Officers other than Group Presidents
responsible for one of Symantecs business segments
|
|
10-Q
|
|
000-17781
|
|
10.01
|
|
08/08/08
|
|
|
|
10
|
.28*
|
|
Symantec Senior Executive Incentive Plan, as amended and restated
|
|
10-Q
|
|
000-17781
|
|
10.03
|
|
11/07/08
|
|
|
|
10
|
.29*
|
|
Symantec Executive Retention Plan, as amended
|
|
10-Q
|
|
000-17781
|
|
10.05
|
|
08/07/07
|
|
|
|
10
|
.30
|
|
Second Amended and Restated Symantec Online Store Agreement, by
and among Symantec Corporation, Symantec Limited, Digital River,
Inc. and Digital River Ireland Limited, entered into on
October 19, 2006
|
|
10-Q
|
|
000-17781
|
|
10.02
|
|
02/07/07
|
|
|
|
10
|
.31
|
|
Amendment, dated June 20, 2007, to the Amended and Restated
Agreement Respecting Certain Rights of Publicity dated as of
August 31, 1990, by and between Peter Norton and Symantec
Corporation
|
|
10-Q
|
|
000-17781
|
|
10.01
|
|
08/07/07
|
|
|
|
10
|
.32
|
|
Assignment of Copyright and Other Intellectual Property Rights,
by and between Peter Norton and Peter Norton Computing, Inc.,
dated August 31, 1990
|
|
S-4
|
|
33-35385
|
|
10.37
|
|
06/13/90
|
|
|
|
10
|
.33
|
|
Environmental Indemnity Agreement, dated April 23, 1999,
between Veritas and Fairchild Semiconductor Corporation,
included as Exhibit C to that certain Agreement of Purchase
and Sale, dated March 29, 1999, between Veritas and
Fairchild Semiconductor of California
|
|
S-1/A
|
|
333-83777
|
|
10.27
Exhibit C
|
|
08/06/99
|
|
|
|
21
|
.01
|
|
Subsidiaries of Symantec Corporation
|
|
|
|
|
|
|
|
|
|
X
|
|
23
|
.01
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
|
|
X
|
|
24
|
.01
|
|
Power of Attorney (see Signature page to this annual report)
|
|
|
|
|
|
|
|
|
|
X
|
|
31
|
.01
|
|
Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
31
|
.02
|
|
Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
32
|
.01
|
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
32
|
.02
|
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
§ |
|
The exhibits and schedules to this agreement have been omitted
pursuant to Item 601(b)(2) of
Regulation S-K.
We will furnish copies of any of the exhibits and schedules to
the SEC upon request. |
|
* |
|
Indicates a management contract, compensatory plan or
arrangement. |
|
|
|
Certain portions of this exhibit have been omitted and have been
filed separately with the SEC pursuant to a request for
confidential treatment under
Rule 24b-2
as promulgated under the Securities Exchange Act of 1934. |
|
|
|
Filed by Veritas Software Corporation. |
|
|
|
This exhibit is being furnished, rather than filed, and shall
not be deemed incorporated by reference into any filing, in
accordance with Item 601 of
Regulation S-K. |