Symantec 2004 Annual Report Download - page 57

SYMANTEC CORPORATION «55»
The weighted average estimated fair values of employee stock
options granted during fiscal 2004, 2003 and 2002 were $17.45,
$11.18 and $10.33 per share, respectively. The weighted average
estimated fair value of employee stock purchase rights granted
under the Employee Stock Purchase Plan during fiscal 2004, 2003
and 2002 were $10.18, $8.93 and $7.28, respectively.
For purposes of pro forma disclosure, the estimated fair value
of the options was amortized to expense over the options’ vesting
period, for employee stock options, and the six-month purchase
period, for stock purchases under the Employee Stock Purchase Plan.
Options assumed as a result of our acquisition of AXENT Technologies
were not included in the estimated fair value. Shares purchased
through the AXENT Purchase Plan subsequent to the closing date
of the AXENT acquisition were included in the estimated fair
value and were included in the pro forma information above.
Concentrations of Credit Risk Our product revenues are
concentrated in the software industry, which is highly competitive
and rapidly changing. Significant technological changes in the
industry or customer requirements, or the emergence of competitive
products with new capabilities or technologies, could adversely
affect operating results. In addition, a significant portion of our
revenues and net income (loss) is derived from international
sales and independent agents and distributors. Fluctuations of the
United States dollar against foreign currencies, changes in local
regulatory or economic conditions, piracy or nonperformance
by independent agents or distributors could adversely affect
operating results.
Financial instruments that potentially subject us to concentrations
of credit risk consist principally of cash equivalents, short-term
investments and trade accounts receivable. Our investment port-
folio is diversified and consists of investment grade securities.
Our investment policy limits the amount of credit risk exposure
to any one issuer and in any one country. We are exposed to
credit risks in the event of default by the issuers to the extent of
the amount recorded on the balance sheet. The credit risk in
our trade accounts receivable is substantially mitigated by our
credit evaluation process, reasonably short collection terms and
the geographical dispersion of sales transactions. We maintain
reserves for potential credit losses and such losses have been
within management’s expectations.
2004 Annual Report
The following table illustrates the effect on net income (loss) and net income (loss) per share as if we had applied the fair value recognition
provisions of SFAS No. 123 to stock-based employee compensation for each of the three years ended March 31, 2004, 2003 and 2002:
(In thousands, except per share data) Year Ended March 31,
2004 2003 2002
Net income (loss), as reported $370,619 $248,438 $ (28,151)
Add: Amortization of unearned compensation included in reported net income, net of tax $–$ 253 $ –
Less: Stock-based employee compensation expense excluded from reported net income (loss),
net of tax (98,083) (89,036) (79,141)
Pro forma net income (loss) $272,536 $159,655 $(107,292)
Basic net income (loss) per share:
As reported $ 1.21 $ 0.85 $ (0.10)
Pro forma $ 0.89 $ 0.55 $ (0.37)
Diluted net income (loss) per share:
As reported $ 1.07 $ 0.77 $ (0.10)
Pro forma $ 0.81 $ 0.53 $ (0.37)
The fair value of options granted during fiscal 2004, 2003 and 2002 reported below has been estimated at the date of grant using
the Black-Scholes option-pricing model assuming no expected dividends and the following weighted average assumptions:
(In thousands) Employee Stock Options Employee Stock Purchase Plans
2004 2003 2002 2004 2003 2002
Expected life (years) 5.14 5.23 5.62 0.50 0.50 0.50
Expected volatility 0.69 0.72 0.76 0.46 0.59 0.80
Risk free interest rate 3.00% 3.12% 4.60% 1.00% 1.35% 2.70%