Symantec 2001 Annual Report Download - page 42

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 approxi-
mately $1.2 million for acquired in-process research and development,
$37.0 million for goodwill, $5.2 million for acquired product rights
and $1.4 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
amortized over a five-year period.
The following table outlines the values of the above referenced fiscal
2000 acquisitions’net tangible and intangible assets, adjusted for final
purchase price allocations, as certain pre-acquisition contingencies
that existed upon acquisition have been resolved:
Acquisition of Quarterdeck On October 15, 1998, we signed a
definitive merger agreement to acquire Quarterdeck. On November 17,
1998, we completed our tender offer for the common stock of
Quarterdeck acquiring an approximately 63% interest. On March 29,
1999, we acquired Quarterdeck’s remaining shares through a cash
merger at the tender offer price of $0.52 per share in accordance with
the definitive merger agreement. The transaction was accounted for as
a purchase. Under the transaction, we recorded approximately $8.3
million of acquired in-process research and development, $8.5 million
of acquired product rights, $65.9 million of goodwill and $2.7 million
of other intangibles. A valuation specialist used our estimates to estab-
lish the amount of acquired in-process research and development. The
amounts related to workforce-in-place were amortized over two years.
The acquired product rights, goodwill and other intangibles are being
amortized over a five-year period. During fiscal 2000, we resolved cer-
tain pre-acquisition contingencies, and as a result, we made final
purchase price allocations and reduced the purchase price and the
amount allocated to goodwill by approximately $1.7 million. In addi-
tion, we reclassified the amount initially allocated to goodwill by
$26 million due to a change in the characterization of the purchase for
tax purposes. During fiscal 2001, we reclassified the amount initially
allocated to goodwill by an additional $2.5 million due to a change in
the characterization of the purchase for tax purposes. As a result of
these changes, goodwill was reduced and deferred tax assets were
increased by a total of $28.5 million. Quarterdeck had also issued $25
million of 6% convertible senior subordinated notes, due in 2001, to
an institutional investor in a private placement pursuant to the terms
of a Note Agreement dated March 1, 1996. The Notes were paid in full
without any premium on March 30, 1999.
Acquisition of Intel’s Anti-Virus Business On September 28, 1998,
we entered into an agreement whereby we purchased Intel Corporation’s
anti-virus business for approximately $16.5 million. We also licensed
Intel’s systems management technology. The transaction was accounted
for as a purchase. Under the transaction, we recorded approximately
$5.0 million for acquired in-process research and development, $10.7
million for acquired product rights and $0.8 million for certain intan-
gible assets.A valuation specialist used our estimates to establish the
amount of acquired in-process research and development. The
acquired product rights and intangibles are being amortized over a
five-year period. During fiscal 2000, we resolved certain pre-acquisi-
tion contingencies and as a result, we made final purchase price
allocations and reduced the purchase price and the amount allocated
to acquired product rights by approximately $0.9 million.
Acquisition of Binary Operations On June 24, 1998, we purchased
the operations of Binary Research, an Auckland, New Zealand-based
company, for approximately $27.9 million. The transaction was
accounted for as a purchase. Under the transaction, we recorded approx-
imately $7.1 million for acquired in-process research and development
and $17.0 million for acquired product rights, with the remaining $3.8
million of the purchase price allocated to goodwill. A valuation specialist
used our estimates to establish the amount of acquired in-process
research and development. The acquired product rights, goodwill and
intangibles are being amortized over a four-year period. During fiscal
2000, we resolved certain pre-acquisition contingencies and as a result,
we made final purchase price allocations and reduced the purchase price
and the amount allocated to goodwill by
$2.3 million.
Fiscal 2000 Acquisitions: Allocated Purchase Price Components
Acquired Acquired Income Other
Purchase In-Process Product Other Tax Assets
(In thousands) Price R&D Rights Goodwill Intangibles Liabilities Acquired
URLabs $ 42,700 $ 1,200 $ 5,210 $ 37,000 $ 1,400 $ (2,710) $ 600
L-3 20,240 3,100 3,860 12,396 600 —284
20/20 12,294 —2,250 10,867 —(900) 77
Total $ 75,234 $ 4,300 $ 11,320 $ 60,263 $ 2,000 $ (3,610) $ 961
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