Symantec 2004 Annual Report Download - page 61

SYMANTEC CORPORATION «59»
Our fiscal 2003 acquisitions were considered immaterial for pro
forma financial disclosure, both individually and in the aggregate.
FISCAL YEAR 2002 ACQUISITIONS
During fiscal 2002, we acquired one privately-held company and
one company division for a total of $4 million in cash, which
was recorded as goodwill in the Consolidated Balance Sheet. We
acquired Lindner &Pelc Consult GmbH, a security services and
implementation company in Berlin, Germany, for $2 million in cash
and the enterprise security management division of Foster-Melliar
Limited, an IT services company located in Johannesburg, South
Africa for $2 million in cash. The results of operations of the
acquired company and division have been included in our operations
as of the dates of acquisition. These acquired companies are
included in our Services segment.
Under the terms of both acquisition agreements, we were liable
for contingency payments based on targeted future sales through
fiscal 2004. During fiscal 2004, 2003 and 2002, we paid insignificant
amounts of contingency payments in accordance with these
agreements, which was recorded as compensation expense.
ACCOUNTING FOR INTANGIBLE ASSETS
Acquired IPR&D In connection with our acquisitions described
above, we wrote off acquired in-process research and development
of $4 million and $5 million in fiscal 2004 and 2003, respectively,
because the acquired technologies had not reached technological
feasibility and had no alternative uses. The efforts required to
develop the acquired in-process technology principally related
to the completion of all planning, design, development and
test activities that were necessary to establish that the product
or service could be produced to meet its design specifications,
including features, functions and performance. We determined
the fair value of the acquired in-process technology for these
purchases by estimating the projected cash flows related to the
projects and future revenues to be earned upon commercialization
of the products. We discounted the resulting cash flows back to
their net present values. We based the net cash flows from such
projects on our analysis of the respective markets and estimates
of revenues and operating profits related to these projects.
Acquired Product Rights In connection with our acquisitions
described above, the amounts allocated to acquired product
rights are being amortized to cost of revenues over their useful
lives of one to five years.
Other Intangibles In connection with our acquisitions described
above, the amounts allocated to other intangibles include customer
relationships, tradenames, and customer lists, and are being
amortized to operating expenses over their useful lives of one
to seven years.
DIVESTITURES
Web Access Management Product Line On August 24, 2001, we
sold assets and transferred liabilities and employees related to our
Web Access Management product line to PassGo Technologies,
Ltd. We also entered into an exclusive license and option agreement
with PassGo whereby they licensed our Web Access Management
technology products. In consideration for the license, PassGo is
required to pay us quarterly royalties based on their net revenue
starting at 30% and declining to 10% over a four-year period
through August 2005. Because the royalties are not guaranteed
and the quarterly amounts to be received are not determinable
until earned, we recognized these royalties as payments were
due. The pre-tax gain on the divestiture, the subsequent royalties
received, and the amortization of the developed technology related
to the Web Access Management products has been recorded
in Income, net of expense, from sale of technologies and product
lines in the Consolidated Statements of Operations and has been
immaterial. During fiscal 2003, we wrote off $3 million of developed
technology related to the Web Access Management product
line due to impairment, which was also recorded in Income, net
of expense, from sale of technologies and product lines in the
Consolidated Statements of Operations.
2004 Annual Report
FISCAL YEAR 2003 PURCHASE PRICE ALLOCATIONS
The following table summarizes the allocation of the purchase price, adjusted for revised estimates related to certain liabilities, for each
of the acquisitions during fiscal 2003 (in thousands):
Acquired Deferred Other assets
Purchase Acquired product Other tax (liabilities),
(In thousands) price IPR&D rights Goodwill intangibles assets, net net
Riptech $147,446 $ 2,100 $ 12,700 $ 116,543 $ – $ 7,974 $ 8,129
Recourse 137,555 1,000 19,000 108,546 2,164 9,090 (2,245)
SecurityFocus 76,177 1,600 6,840 64,091 2,100 503 1,043
Mountain Wave 20,698 – 2,000 17,320 – 1,740 (362)
Total $381,876 $ 4,700 $ 40,540 $ 306,500 $ 4,264 $ 19,307 $ 6,565