Symantec 1996 Annual Report Download - page 27

in fiscal 1997 as compared to fiscal 1996 as benefits are
a c h i e ved from the elimination of duplicative functions subse-
quent to the acquisition of Delrina.
Acquisition, Restructuring and Other Expenses
Acquisition Expenses. In connection with the various acquisi-
tions completed in fiscal 1996, 1995 and 1994 (see Summary
of Significant Accounting Policies and No t e 10 of Notes to
Consolidated Financial Statements), significant acquisition
expenses were incurred. These acquisition expenses principally
included fees for legal, accounting and financial advisory ser-
vices, the write-off of duplicative capitalized technology, the
modification of certain development contracts and expenses
related to the combination of the companies, including the
elimination of duplicative and excess facilities and personnel.
These charges approximated $19.7 million, $9.5 million and
$25.9 million in fiscal 1996, 1995 and 1994, respectively.
In connection with the acquisition of Delrina in fiscal 1996,
Symantec re c o r ded total acquisition charges of $22.0 million,
which included $8.8 million for legal, accounting and financial
advisory services, $6.4 million for the elimination of duplicative
and excess facilities and equipment, $3.7 million for personnel
severance and outplacement expenses and $3.1 million for the
consolidation and discontinuance of certain operational activi-
ties and other acquisition-related expenses.
In connection with the acquisitions of Central Point and S L R,
Symantec re c o rded total acquisition charges of $9.5 million in
fiscal 1995. The charges included $3.2 million for legal, account-
ing and financial advisory services, $1.0 million for the write-off
of duplicative pro d u c t - related expenses and modification of cert a i n
d e velopment contracts, $0.9 million for the elimination of
d u p l i c a t i ve and excess facilities, $3.1 million for personnel seve r -
ance and outplacement expenses and $1.3 million for the
c o n s o l idation and discontinuance of certain operational activities
and other acquisition-related expenses. During fiscal 1996, the
Company re c o g n i zed a reduction in accrued acquisition, re s t r u c-
turing and other expenses of $2.3 million as actual costs incurre d
we r e less than costs previously accrued by the Company.
Symantec has completed a number of acquisitions and expects
to acquire other companies in the future. While the Company
b e l i e ves that previous acquisitions we r e in the best interest of the
Company and its stockholders, acquisitions invo l ve a number of
special risks, including the diversion of management’s attention
to assimilation of the operations and personnel of the acquire d
companies in an efficient and timely manner, the retention of
key employees, the difficulty of presenting a unified corporate
image, the coordination of re s e a rch and development and sales
e f f o r ts and the integration of the acquired products.
The Company has lost certain employees of acquired compa-
nies whom it desired to retain, and, in some cases, the
assimilation of the operations of acquired companies took longer
than initially had been anticipated by the Company. In addition,
because the employees of acquired companies have fre q u e n t l y
remained in their existing, geographically diverse facilities, the
Company has not re a l i zed certain economies of scale that might
o t h e rwise have been achieve d .
Symantec typically incurs significant acquisition expenses for
legal, accounting and financial advisory services, the write-off of
d u p l i c a t i ve technology and other expenses related to the combi-
nation of the companies. These expenses may have a significant
a d verse impact on the Company’s future profitability and finan-
cial re s o u rc e s .
Re s t ructuring Expenses. In Fe b ru a ry1 9 9 5 ,Symantec announced
a plan to consolidate certain re s e a r ch and development activities.
This plan was designed to gain greater synergy between the
Company’sThird Generation Language and Fourth Generation
Language development groups. D uring fiscal 1996, the
Company completed the combination and incurred $2.2 million
for the relocation costs of moving equipment and personnel.
During fiscal 1994, Symantec implemented a plan to consol-
idate and centralize certain operational activities (See Note 10
of Notes to Consolidated Financial Statements). This plan was
designed to reduce operating expenses and enhance operational
efficiencies by centralizing certain order administration, techni-
cal support and customer service activities in Eugene, Oregon.
In fiscal 1994, the Company recorded a charge of $4.7 million,
which included $1.1 million for the elimination of duplicative
and excess facilities, $1.5 million for the relocation of the
Company’s existing operations and equipment, $1.1 million for
e m p l oyee relocation expenses and $1.0 million for employe e
severance payments. This centralization has been completed.
During fiscal 1994, Central Point incurred $16.0 million of
expenses related to the restructuring of its operations in order
to reduce its overall cost stru c t u re and to re d i rect its software
d e velopment and marketing efforts away from the personal
desktop computer market tow a rd personal computer network
markets. The charge included $6.2 million for employee sever-
ance, outplacement and relocation expenses, $5.6 million for
the write-off of certain excess fixed and intangible assets, $1.8
million for lease abandonments and facility relocation and $2.4
million for the consolidation and discontinuance of cert a i n
operational activities and other related expenses. T his re s t ru c-
turing has been completed.
Other Expenses. In fiscal 1996, Symantec sold the assets of
Time Line Solutions Corporation, a wholly-owned subsidiary,
to a group comprised of Time Line Solutions Corporation’s
management and incurred a $2.7 million loss on the sale. In
the fourth quarter of fiscal 1996, the Company recorded $2.0
million in estimated legal fees expected to be incurred in con-
nection with a securities class action complaint filed in
March 1996 and other legal expenses (See Note 11 of Notes to
Consolidated Financial Statements).
During fiscal 1994, Symantec reached an agreement with the
plaintiffs and Sy m a n t e c’s insurance carriers to settle two securities
class actions and a related deriva t i ve lawsuit brought by stock-
holders of Symantec (See No t e 10 of Notes to Consolidated