Symantec 2004 Annual Report Download - page 54

«52»SYMANTEC CORPORATION
Principles of Consolidation The accompanying consolidated
financial statements include the accounts of Symantec Corporation
and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Acquisitions and Divestitures During the three years ended
March 31, 2004, we acquired the following businesses:
•ON Technology Corp. in the March 2004 quarter;
•PowerQuest, Inc. and SafeWeb, Inc. in the December
2003 quarter;
•Nexland, Inc. in the September 2003 quarter;
•Riptech, Inc., Recourse Technologies, Inc., SecurityFocus, Inc.,
and Mountain Wave, Inc. in the September 2002 quarter; and
•Lindner & Pelc Consult GmbH and Foster-Melliar Limited’s
enterprise security management division in the September
2001 quarter.
Each of these acquisitions was accounted for as a purchase and,
accordingly, their operating results have been included in our
consolidated financial statements since their respective dates
of acquisition.
In August 2001, we sold assets and transferred liabilities and
employees related to our Web Access Management product line
to PassGo Technologies, Ltd. and agreed to license them the
related technology for a period of four years through August 2005.
In December 1999, we licensed substantially all of the ACT! product
line technology to Interact Commerce Corporation for a period
of four years through December 2003.
Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Foreign Currency Translation The functional currency of our foreign
subsidiaries is the local currency. Assets and liabilities denominated
in foreign currencies are translated using the exchange rate on the
balance sheet dates. The translation adjustments resulting from
this process are included as a component of stockholders’ equity
in accumulated other comprehensive income (loss). Revenues and
expenses are translated using average exchange rates prevailing
during the year. Foreign currency transaction gains and losses are
included in the determination of net income (loss). Deferred tax
assets (liabilities) are established on the cumulative translation
adjustment attributable to unremitted foreign earnings that are
not intended to be indefinitely reinvested.
Revenue Recognition We derive revenue primarily from sales
of packaged products, perpetual license agreements, product
maintenance and services, and recognize this revenue when the
following conditions have been met:
•persuasive evidence of an arrangement exists;
•passage of title occurs;
•delivery has occurred or services have been rendered;
•if applicable, customer acceptance has been received;
•collection of a fixed or determinable license fee is considered
probable; and
•if appropriate, reasonable estimates of future product returns
have been made.
We sell packaged software products through a multi-tiered
distribution channel. We also sell electronic download and
packaged products, via the Internet. We separately sell annual
content update subscriptions directly to end-users primarily
via the Internet. We defer package product revenue on all distri-
bution and reseller channel inventory in excess of specified
inventory levels in these channels. We defer the portion of revenue
from package and electronic download products related to content
updates. Revenue related to content updates is deferred and
recognized ratably over the year that such updates are provided.
We offer the right of return of our products under various policies
and programs with our distributors, resellers and end-user customers.
We estimate and record reserves for end-user product returns
as an offset to revenue.
We offer channel and end-user rebates for products within our
Enterprise Security, Enterprise Administration and Consumer
Products segments. Our estimated reserves for channel volume
incentive rebates are based on distributors’ and resellers’ actual
performance against the terms and conditions of volume incentive
rebate programs, which are typically entered into quarterly. Our
reserves for end-user rebates are estimated on the terms and
conditions of the promotional program, actual sales during
the promotion, amount of actual redemptions received, historical
redemption trends by product and by type of promotional
program and the value of the rebate. We estimate and record
reserves for channel and end-user rebates, and we account
for these reserves as an offset to revenue.
We enter into perpetual software license agreements through
direct sales to customers and indirect sales with distributors and
resellers. The license agreements generally include product
maintenance agreements, for which the related revenue is
deferred and recognized ratably over the period of the agreements.
2004 Annual Report
NSummary of Significant Accounting Policies