Symantec 2004 Annual Report Download - page 37

SYMANTEC CORPORATION «35»
2004 Annual Report
RESTRUCTURING, SITE CLOSURES AND OTHER
Year Ended March 31, % Change % Change
Fiscal 2003 Fiscal 2002
($ in thousands) 2004 2003 2002 to 2004 to 2003
Expenses $907 $11,089 $20,428 (92)% (46)%
Percentage of total net revenues *1% 2%
* Percentage not meaningful
OPERATING INCOME
Year Ended March 31, % Change % Change
Fiscal 2003 Fiscal 2002
($ in thousands) 2004 2003 2002 to 2004 to 2003
Operating income $513,585 $341,512 $8,041 50% *
Percentage of total net revenues 27% 24% 1%
* Percentage not meaningful
Operating income increased during fiscal 2004 as compared to
fiscal 2003 due primarily to increased revenue growth of 33% during
fiscal 2004, offset by increased headcount related costs and related
operating expenses. Operating income increased during fiscal
2003 as compared to fiscal 2002 due primarily to the adoption
of SFAS No. 142. As a result, in fiscal 2003, we recorded no
amortization of goodwill, compared with a charge of $197 million
during fiscal 2002. In addition, revenue growth of 31% contributed
to the increase in operating income during fiscal 2003.
During fiscal 2004, we recorded an insignificant amount for
costs of severance, related benefits and outplacement services
for a member of our senior management team and adjustments
to prior period restructuring provisions.
During fiscal 2003, we recorded $10 million for costs of severance,
related benefits and outplacement services and $3 million for
costs associated with the consolidation of certain facilities in the
United States and Europe. The costs resulted from relocating
certain development, sales and finance activities, realigning certain
worldwide marketing efforts and outsourcing our North American
and European consumer support functions. As a result, we termi-
nated 424 employees. In addition, during fiscal 2003, we recorded
$2 million to decrease prior period restructuring provisions.
During fiscal 2002, we recorded $18 million for costs associated
with the excess facilities and fixed assets associated with relocating
certain sites in the United States and Europe. We moved our
operations in Newport News, Virginia to a larger facility and we
relocated our North American support group from Eugene, Oregon
to an expanded facility in Springfield, Oregon. In addition, we
consolidated our European support functions by relocating our
Leiden, Netherlands operations to Dublin, Ireland and consolidating
most of our United Kingdom facilities to one facility in Maidenhead,
UK. We also recorded $2 million of costs of severance, related
benefits and outplacement services, as we reorganized and con-
solidated various operating functions. As a result, we terminated
87 employees.
PATENT SETTLEMENT
In August 2003, we purchased a security technology patent as part
of a settlement in Hilgraeve, Inc. versus Symantec Corporation. As
part of the settlement, we also received licenses to the remaining
patents in Hilgraeve’s portfolio. The total cost of purchasing the
patent and licensing additional patents was $63 million, which was
paid in cash in August 2003. Under the transaction, we recorded
$14 million of patent settlement costs in the June 2003 quarter,
representing costs related to benefits received by us in and prior
to the June 2003 quarter. During the September 2003 quarter, we
recorded acquired product rights of $49 million, which are being
amortized to cost of goods sold over the remaining life of the
primary patent, which expires in June 2011. There was no corre-
sponding expense recorded during fiscal 2003 or fiscal 2002.
LITIGATION JUDGMENT
During the March 2002 quarter, we accrued litigation expenses
of $3 million for post-judgment interest and other costs related
to a judgment by a Canadian court on a decade-old copyright
action assumed by us as a result of our acquisition of Delrina
Corporation. There was no corresponding expense recorded
during fiscal 2004 or fiscal 2003.