Symantec 2004 Annual Report Download - page 72

«70»SYMANTEC CORPORATION
2004 Annual Report
Realization of a significant portion of the $54 million of net deferred
tax assets is dependent upon our ability to generate sufficient
future taxable income and the implementation of tax planning
strategies. We believe it is more likely than not that the net
deferred tax assets will be realized based on historical earnings,
expected levels of future taxable income in the United States
and certain foreign jurisdictions, and the implementation of tax
planning strategies. The valuation allowance increased by $2 million
during fiscal 2004 and remained unchanged during fiscal 2003.
As of March 31, 2004, we have tax credit carryforwards of $18 million
that expire in fiscal 2005 through 2022. In addition, we have
net operating loss carryforwards attributable to various acquired
companies of $117 million that expire in fiscal 2018 through 2023.
These net operating loss carryforwards are subject to an annual
limitation under Internal Revenue Code §382, but are expected
to be fully realized.
Pretax income from international operations was $354 million,
$225 million and $168 million for fiscal 2004, 2003 and 2002,
respectively.
No provision has been made for federal or state income taxes
on $740 million of cumulative unremitted earnings of certain
of our foreign subsidiaries as of March 31, 2004, since we plan
to indefinitely reinvest these earnings. As of March 31, 2004,
the unrecognized deferred tax liability for these earnings was
$221 million.
Note 15. Litigation
On November 17, 2003, Health &Sport LLC filed a lawsuit on
behalf of itself and purportedly on behalf of the general public
and a class including purchasers of Norton AntiVirus 2004
and/or Norton Internet Security 2004 in the California Superior
Court, San Francisco County. The complaint alleges violations
of California Business and Professions Code 17200 and 17500
and breach of express and implied warranties in connection
with the specified products. The complaint seeks damages and
injunctive and other equitable relief, as well as costs and attorneys’
fees. We intend to defend the action vigorously.
On October 20, 2003, Marilyn Johnston filed a lawsuit on behalf
of herself and purportedly on behalf of the general public and
an undefined class in the California Superior Court, San Diego
County. The complaint alleges violations of California Civil
Code section 1787.8 and Business and Professions Code 17200
arising from the collection of telephone number information
in connection with online credit card transactions. The complaint
seeks damages and injunctive and other equitable relief,
as well as costs and attorneys fees. We intend to defend the
action vigorously.
On March 28, 2003, Ronald Pearce filed a lawsuit on behalf
of himself and purportedly on behalf of the general public
of the United States and Canada in the California Superior Court,
Santa Clara County, alleging violations of California Business
and Professions Code section 17200 and false advertising in
The principal components of deferred tax assets were as follows:
(In thousands) March 31,
2004 2003
Deferred tax assets:
Tax credit carryforwards $ 18,219 $ 8,712
Net operating loss carryforwards of acquired companies 41,990 43,874
Other accruals and reserves not currently tax deductible 41,077 49,485
Deferred revenue 25,258 21,000
Loss on investments not currently tax deductible 6,705 10,375
Other 6,264 7,117
139,513 140,563
Valuation allowance (6,705) (5,111)
Deferred tax assets 132,808 135,452
Deferred tax liabilities:
Acquired intangible assets (13,326) (13,010)
Tax over book depreciation (14,073) (8,012)
Unremitted earnings of foreign subsidiaries (51,721) (14,160)
Net deferred tax assets $53,688 $100,270