Symantec 2001 Annual Report Download - page 43

Pro Forma The following unaudited pro forma results of operations
for fiscal 2001 and 2000 are as if the AXENT acquisition had occurred
at the beginning of fiscal 2000. The pro forma information excludes
$22.3 million of acquired in-process research and development. The
pro forma information has been prepared for comparative purposes
only and is not indicative of what operating results would have been if
the acquisitions had taken place at the beginning of fiscal 2000 or of
future operating results.
Year Ended March 31
(In thousands, except net income per share; unaudited) 2001 2000
Net revenues $ 944,150 $ 867,437
Net income $ 75,841 $ 169,312
Basic net income per share $ 0.98 $ 2.34
Diluted net income per share $ 0.97 $ 2.23
Divestiture of the Visual Café and ACT! Product Lines On December
31, 1999, we entered into an Asset Purchase Agreement, whereby we
sold the principal assets and liabilities of the Visual Café product line
to WebGain, Inc. (“WebGain”). The assets primarily consisted of fixed
assets and intangible assets. The liabilities related to certain revenue
deferrals recorded on our balance sheet as of December 31, 1999. In
exchange for the assets and liabilities sold, we received $75.0 million in
a lump-sum cash payment on December 31, 1999.We wrote off and
transferred approximately $4.7 million of capitalized software, fixed
assets and inventory related to the Visual Café product line. In addi-
tion, we accrued approximately $1.4 million in transaction costs and
$0.4 million in retention packages for the affected employees. As a
result, we recorded a pre-tax gain of approximately $68.5 million on
the divestiture, which was recorded in income, net of expenses, from
sale of technologies and product lines on the Consolidated Statements
of Income.
On December 31, 1999, we entered into an exclusive Software License
Agreement (“License”) and licensed substantially all of the ACT! prod-
uct line technology, on an exclusive basis, to Interact Commerce
Corporation, previously SalesLogix (“Interact”), for a period of four
years. In addition, the inventory and fixed assets related to the ACT!
product line were sold to Interact. In consideration for the license and
assets, Interact transferred to us 623,247 shares of its unregistered
common stock. These shares was valued at approximately $20.0 mil-
lion as of December 6, 1999, the date the License was signed and the
date the number of shares were determined. In addition to these shares
received, Interact is required to pay us quarterly royalty payments for
four years. Interact will pay these royalties based on a formula set forth
in the License, up to an aggregate maximum of $57.0 million, which
will be recorded in income, net of expenses, from sale of technologies
and product lines on the Consolidated Statements of Income.
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Acquisition of IBM’s Anti-Virus Business Effective May 18, 1998, we
entered into a Master Agreement with IBM to acquire rights to IBM’s
digital immune technology. In addition, we assumed the majority of
IBM’s license arrangements with customers of IBM anti-virus
products. In return for the various rights we acquired from IBM, we
agreed to pay $16 million in installments over a specified period as
well as pay royalties on revenues received by us from distribution of
immune-enabled Symantec products and immune services provided
by us using the digital immune technology. The royalties are subject to
specified maximums and vary by time periods with ultimate termina-
tion of royalties as of a specified date. We also entered into a patent
cross-licensing agreement under which the parties licensed to each
other their respective patent portfolios. The transaction was accounted
for as a purchase. As of March 31, 2000, had paid the entire $16 million
to IBM. In addition, we assumed liabilities of $3.0 million and
incurred additional expenses of approximately $1.0 million as part of
the transaction. Under the transaction, we recorded approximately
$7.1 million for acquired in-process research and development, $11.9
million for goodwill and $1.2 million for certain prepaid research and
development and other assets.A valuation specialist used our estimates
to establish the amount of acquired in-process research and develop-
ment. Goodwill is being amortized over a five-year period.
The below table outlines the value of the above referenced fiscal 1999
acquisitions’net tangible and intangible assets, adjusted for final pur-
chase price allocations, as certain pre-acquisition contingencies that
existed upon acquisition have been resolved:
Fiscal 1999 Acquisitions: Allocated Purchase Price Components
Acquired Acquired Deferred
Purchase In-Process Product Other Prepaid Tax
(In thousands) Price R&D Rights Goodwill Intangibles R&D Asset
IBM $ 20,250 $ 7,100 $ —$ 11,850 $ 100 $ 1,200 $ —
Binary 25,571 7,100 17,020 1,451 —— —
Intel 15,625 5,017 9,797 —811 ——
Quarterdeck 83,732 8,300 8,520 35,723 2,689 —28,500
Total $ 145,178 $ 27,517 $ 35,337 $ 49,024 $ 3,600 $ 1,200 $ 28,500