Symantec 1999 Annual Report Download - page 78

SYMANTEC CORPORATION
Notes to Consolidated Financial Statements, Continued
64
The principal components of deferred tax assets were as follows:
March 31,
(In thousands) 1999 1998
Tax credit carryforwards $ 232 $ 6,821
Net operating loss carryforwards 2,927 3,161
Inventory valuation accounts 3,057 2,806
Other reserves and accruals not
currently tax deductible 10,943 8,521
Accrued compensation and benefits 3,722 3,512
Deferred revenue 6,019 4,155
Sales incentive programs 5,195 5,555
Allowance for doubtful accounts 1,478 1,365
Reserve for returns and allowances 9,536 4,307
Acquired in-process research and development expenses,
other intangible assets 9,135 1,139
Accrued acquisition, restructuring and other expenses 1,545 931
Other 4,831 2,599
58,620 44,872
Valuation allowance (30,465) (25,195)
$ 28,155 $ 19,677
Realization of the approximately $28 million of net deferred tax asset that is reflected in the financial statements is
dependent upon our ability to generate sufficient future U.S. taxable income. Management believes that it is more
likely than not that the asset will be realized based on forecasted U.S. earnings.
Approximately $21 million of the valuation allowance for deferred tax assets is attributable to unbenefitted stock
option deductions, the benefit of which will be credited to equity when realized. Approximately $7 million of the
valuation allowance for deferred tax assets is attributable to the charge for acquired in-process research and
development expenses, the benefit of which is not expected to be realized within five years. The remaining $2 million
of the valuation allowance represents net operating loss and tax credit carryforwards of various acquired companies
that are limited by separate return limitations and under the “change of ownership” rules of Internal Revenue Code
Section 382. The change in the valuation allowance for the years ended March 31, 1999, 1998 and 1997 was a net
increase of approximately $5 million and net decreases of approximately $15 million and $5 million, respectively.
Pretax income from international operations was approximately $64 million, $65 million and $25 million for the years
ended March 31, 1999, 1998 and 1997, respectively.
No provision has been made for federal or state income taxes on unremitted earnings of certain of our foreign subsidiaries
(cumulative $90 million at March 31, 1999) since Symantec plans to indefinitely reinvest all such earnings. At March 31,
1999, the unrecognized deferred tax liability for these earnings was approximately $23 million.
NOTE 11. EMPLOYEE BENEFITS
401(k) Plan
Symantec maintains a salary deferral 401(k) plan for all of its domestic employees. The plan allows employees to
contribute up to 15% of their pretax salary up to the maximum dollar limitation prescribed by the Internal Revenue
Code. Symantec matches 100% of the first $500 of employees’ contributions and then 50% of the employees’
contribution up to 6% of the employees’ eligible compensation. Company contributions under the plan were
approximately $2 million for each of the years ended March 31, 1999, 1998 and 1997, respectively.
Employee Stock Purchase Plan
In October 1989, we established the 1989 Employee Stock Purchase Plan (“89 Plan”) and a total of approximately 3.4
million shares of common stock had been reserved for issuance under this plan. Subject to certain limitations, our
employees may purchase, through payroll deductions of 2% to 10% of compensation, shares of common stock at a
price per share that is the lesser of 85% of the fair market value as of the beginning of the offering period or the end of
the purchase period. As of March 31, 1999, approximately 2.8 million shares had been issued and approximately 0.6