Symantec 2000 Annual Report Download - page 39

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NOTE 2. INCOME STATEMENT INFORMATION
Year Ended March 31,
(In thousands) 2000 1999 1998
Technical support costs included
in sales and marketing $ 32,427 $ 34,219 $ 38, 582
Advertising expense $ 43,630 $ 50,779 $ 46, 814
Technical support costs included in sales and marketing relate to
the estimated cost of providing post-contract support (generally
telephone support) that is accrued at the time of product sale.
Advertising expenditures are charged to operations as incurred.
NOTE 3. ACQUISITIONS AND DIVESTITURES
Acquisition of 20/20 Software On March 31, 2000, we purchased
100%of the outstanding common stock of 20/20 Software (“20/20”)
for up to $16.5million. The terms of the agreement require two
guaranteed payments totaling approximately $7.5million plus
contingent payments based on targeted future sales of certain of
our products. The contingency period will be from July 1, 2000 to
June 30, 2001. The maximum contingency payment per the agree-
ment is $9.0million. The transaction was accounted for as a
purchase. In connection with the transaction, we recorded approx-
imately $6.1million for goodwill and $2.3million for acquired
product rights, offset by $0.9million in related income tax liabili-
ties. As we pay additional amounts over the contingency period,
we will record additional goodwill equal to these payments. The
goodwill and acquired product rights will be amortized over a
five-year period.
Acquisition of L-3 Network Security On March 9, 2000, we
acquired the operations of L-3Network Security (“L-3”) for a one-
time cash payment of approximately $20.1million. The transaction
was accounted for as a purchase. In connection with the trans-
action, we recorded approximately $3.1million for acquired
in-process research and development, $12.4million for goodwill,
$3.4million for acquired product rights and $1.2million for other
tangible and intangible assets. A valuation specialist used our
estimates to establish the amount of acquired in-process
research and development. The goodwill and other intangibles are
being amortized over a five-year period.
Acquisition of URLabs On July 21, 1999, we purchased 100%of
the outstanding common stock of URLabs for a one-time cash
payment of approximately $42.1 million. The transaction was
accounted for as a purchase. In connection with the transaction,
we recorded approximately $1.2 million for acquired in-process
research and development, $ 37.0 million for goodwill, $5.0mil-
lion for acquired product rights and $1.6 million for other
intangible assets, offset by approximately $2.7 million in related
income tax liabilities. A valuation specialist used our estimates
to establish the amount of acquired in-process research and
development. The goodwill and other intangibles are being amor-
tized over a five-year period.
The following table outlines the values of the above referenced
fiscal 2000 acquisitions’ net tangible and intangible assets:
Fiscal 2000 Acquisitions
Allocated Purchase Price Components
Acquired Acquired Income Other
(in thousands) Purchase In-Process Product Other Tax Assets
Price R&D Rights Goodwill Intangibles Liabilities Acquired
URLabs $ 42,700 $ 1,200 $ 5 ,000 $ 37,000 $ 1,610 $ (2,710 ) $ 600
L-3 20,240 3,100 3 ,400 12,396 1,060 — 284
20/20 7,538 — 2 ,250 6, 111 — ( 900 ) 77
Total $ 70,478 $ 4,300 $ 10 ,650 $ 55,507 $ 2,670 $ ( 3,610 ) $ 961