Symantec 2006 Annual Report Download

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ANNUAL REPORT
2006

Table of contents

  • Page 1
    ANNUAL REPORT 2006

  • Page 2
    ... deferred revenue Non-GAAP Deferred Revenue 2006 2005 The non-GAAP information reï¬,ects the combined results of Symantec and Veritas Software, including adjustments based on the fair values of assets acquired and liabilities assumed by Symantec as of the actual acquisition date of July 2, 2005. For...

  • Page 3
    ... industry segments, including storage management, backup and recovery software, secure content management, and consumer security, to name just a few. Our software protects more than 370 million computers or email accounts worldwide, and 99 % of the Fortune 1000 utilize Symantec products. We believe...

  • Page 4
    ... the continuous availability of information, systems, and applications requires businesses to protect their entire data center infrastructure - from client to storage to servers. Symantec pioneered the idea of protection. We are the leader in creating and deploying new data security and availability...

  • Page 5
    ... of digital protection to ensure that our customers continue to be free to work and play in this increasingly connected world. That's why, in addition to delivering the next version of our market-leading Norton AntiVirusâ„¢ and Norton Internet Securityâ„¢ products, we are launching Nortonâ„¢ Con...

  • Page 6
    ... employees, partners, and customers around the globe. We are exceptionally grateful to our investors as we realize it has been a challenging year. As always, we are looking forward to continuing to build shareholder value through keen strategic insight and solid business execution. Sincerely, John...

  • Page 7
    ... by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes n No ¥ Aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of Symantec common stock on September 30, 2005 as reported on...

  • Page 8
    ...Item 14. PART III Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accountant Fees and Services 27 28 30 56 57 58 58...

  • Page 9
    ...are only predictions, based on our current expectations about future events and may not prove to be accurate. We do not undertake any obligation to update these forward-looking statements to reflect events occurring or circumstances arising after the date of this annual report. These forward-looking...

  • Page 10
    ... referred to, on our website is not part of this annual report. Industry The secure content management market consists of antivirus, messaging security, web filtering, and antispyware products and services. Security threats continue to evolve from traditional viruses, worms, Trojan horses, and other...

  • Page 11
    ... Data Center Management segment. Consumer Products Our Consumer Products segment focuses on delivering our Internet security and problem-solving products to individual users, home offices, and small businesses. Our Norton brand of consumer security software solutions provides protection for Windows...

  • Page 12
    ... of our sales within the Enterprise Security segment consist of solutions providing protection from virus attacks, including Symantec AntiVirus, Symantec Client Security, and Symantec Mail Security. Users of our virus protection and filtering products are able to protect their computer networks from...

  • Page 13
    ... software helps organizations take advantage of both tape and disk storage through advances in disk backups, off-site tape management, and automated server recovery. Symantec recently announced NetBackup PureDisk, a diskbased backup solution that protects remote office data without the 7 Veritas...

  • Page 14
    ...SharePoint Portal Server, and Microsoft Windows file systems. In addition, this product reduces storage costs and simplifies management of email. Enterprise Vault software manages email and instant messaging content through automated, policy-controlled archiving to online stores for active retention...

  • Page 15
    ... products are available to customers through channels that include distributors, retailers, direct marketers, Internet-based resellers, original equipment manufacturers, or OEMs, educational institutions, and Internet Service Providers, or ISPs. We separately sell annual content update subscriptions...

  • Page 16
    ... communicate with customers through the Symantec website, regularly scheduled web-based seminars and online newsletters, as well as through direct mailings, both physical and electronic, to existing end-users and prospects. Other marketing activities include the production of brochures, sales tools...

  • Page 17
    ... Internet ‚ Immediate patches for severe problems ‚ Periodic software updates ‚ Access to our technical knowledge base and frequently asked question, or FAQ, facility ‚ An invitation to our annual user group meeting Our consumer product support program provides free self-help online services...

  • Page 18
    ... products, including server provisioning, clustering, application performance management, and service level management ‚ Initiatives to improve replication, storage resource management, and next generation virtualization technology ‚ Development of new data protection technologies for disk-based...

  • Page 19
    ... to offer a comprehensive set of solutions for message archiving as a whole Ì across both email and instant messaging, with the opportunity to include other forms of digital communications. Relicore, Inc., a leader in data center change and configuration management, was acquired in February 2006...

  • Page 20
    ... Enterprise Security In the Enterprise Security markets, we compete against many companies that offer competing products to our technology solutions and competing services to our response and support services. Our primary competitors in Enterprise Security are McAfee, Trend Micro, CA, Inc., Internet...

  • Page 21
    ... information. These license agreements are generally nontransferable and have a perpetual term. We also educate our employees on trade secret protection and employ measures to protect our facilities, equipment, and networks. Trademarks, Patents, Copyrights, and Licenses Symantec and the Symantec...

  • Page 22
    ..., customer service, and support into unified enterprise security and storage solutions ‚ Incorporating acquired products and technologies ‚ Developing or expanding efficient sales channels ‚ Obtaining sufficient licenses to technology and technical access from operating system software vendors...

  • Page 23
    ... product features and new product offerings that compete with a number of our product offerings. In addition, we believe that Microsoft has recently made changes to its operating systems that make it more difficult for independent security vendors to provide effective solutions for their customers...

  • Page 24
    ... we compete. If we fail to manage our sales and distribution channels effectively or if our partners choose not to market and sell our products to their customers, our operating results could be adversely affected. We sell our consumer products to individuals and small offices/home offices around...

  • Page 25
    ... into our existing business, sales force, employee base, product lines, and technology ‚ Diversion of management time and attention from our existing business and other business opportunities ‚ Loss or termination of employees, including costs associated with the termination or replacement...

  • Page 26
    ... time and attention of our management. We derive a substantial portion of our revenues from customers located outside of the U.S. and we have significant operations outside of the U.S., including engineering, sales, customer support, and production. We plan to expand our international operations...

  • Page 27
    ... approvals of future increases in the number of shares available for issuance under our equity compensation plans, and recent changes in accounting rules require us to treat the issuance of employee stock options and other forms of equity-based compensation as compensation expense. As a result...

  • Page 28
    ...not to offer our products to their customers. In addition, any legal action to protect proprietary information that we may bring or be engaged in, alone or through our alliances with the Business Software Alliance (BSA), or the Software & Information Industry Association (SIIA), could be costly, may...

  • Page 29
    ... offer technical support services with many of our products. We may be unable to respond quickly enough to accommodate short-term increases in customer demand for support services. We also may be unable to modify the format of our support services to compete with changes in support services provided...

  • Page 30
    ...the requirements of certain tax rulings ‚ Changes in accounting and tax treatment of stock-based compensation ‚ The tax effects of purchase accounting for acquisitions and restructuring charges that may cause fluctuations between reporting periods ‚ Tax assessments, or any related tax interest...

  • Page 31
    ... of threat outbreaks (e.g. worms and viruses) ‚ Our resellers making a substantial portion of their purchases near the end of each quarter ‚ Enterprise customers' tendency to negotiate site licenses near the end of each quarter ‚ Cancellation, deferral, or limitation of orders by customers...

  • Page 32
    ... and leased office facilities for sales, research and development, administrative, customer service, and technical support personnel. Our Dublin, Ireland facility also includes manufacturing operations. Our corporate headquarters is located in Cupertino, California in a 296,000 square foot facility...

  • Page 33
    ... Matters and Issuer Purchases of Equity Securities Market for Our Common Stock Our common stock is traded on the Nasdaq National Market under the symbol ""SYMC.'' The high and low sales prices set forth below are as reported on the Nasdaq National Market. All sales prices have been adjusted...

  • Page 34
    ... computer recovery software business. In addition, in August 2003, we purchased a security technology patent as part of a legal settlement in Hilgraeve, Inc. v. Symantec Corporation and in May 2005, we resolved patent litigation matters with Altiris, Inc. by entering into a cross-licensing agreement...

  • Page 35
    ... with our acquisition of Veritas in fiscal 2006, we incurred integration planning costs. (g) In fiscal 2006, we recorded patent settlement costs and entered into a cross-licensing agreement with Altiris, Inc. In fiscal 2004, we recorded patent settlement costs and purchased a security technology...

  • Page 36
    ... solutions and services, we help individuals and enterprises protect and manage their digital assets. We provide a wide range of solutions including enterprise and consumer security, data protection, application and infrastructure management, security management, storage and server management...

  • Page 37
    ... to secure and manage their most valuable asset, their information. The combined company offers customers a broad portfolio of leading software and solutions across all tiers of the infrastructure. We believe that this acquisition better positions us to help enable our customers to build a resilient...

  • Page 38
    ...our Internet security and problem-solving products to individual users, home offices, and small businesses. ‚ Enterprise Security. Our Enterprise Security segment provides security solutions for all tiers of a network: at the server tier behind the gateway and at the client tier, including desktop...

  • Page 39
    ... sales in the future, changes in foreign exchange rates may have a potentially greater impact on our revenues and operating results. In the December 2005 quarter, we released our 2006 consumer products and increased subscription pricing for those 2006 consumer products that include content updates...

  • Page 40
    ... inventory of consumer packaged products to meet future customer demand, which is generally four or six weeks of customer demand based on recent buying trends. We ship product to our distributors and resellers at their request and based on their valid purchase orders. Our distributors and resellers...

  • Page 41
    ...its carrying value, including the goodwill allocated to that reporting unit. To determine the reporting units' fair values in the current year evaluation, we used the income approach under which we calculate the fair value of each reporting unit based on the estimated discounted future cash flows of...

  • Page 42
    ... and are subject to change based upon new information and intervening events. Prior to our acquisition of Veritas, Veritas had been in discussions with the staff of the SEC regarding the SEC's review of certain matters, as described in Note 14 of the Notes to Consolidated Financial Statements, and...

  • Page 43
    ... growth in demand was attributable to the continued increase in vulnerabilities, Internet attacks, and malicious code activity coupled with a growing level of awareness of these threats around the world. Content, subscriptions, and maintenance revenues 2006 Year Ended March 31, 2005 ($ in thousands...

  • Page 44
    ...security products, respectively. The increased sales of these products were due primarily due to increased awareness of information security threats and continuing growth in demand for our consumer security protection products and our enterprise virus protection solutions. Licenses revenue 2006 Year...

  • Page 45
    ...customers continue to migrate to the Norton Internet Security products, which offer broader protection to address the rapidly changing threat environment. Revenue from our electronic distribution channel (which includes sales of our Norton Internet Security products and our Norton AntiVirus products...

  • Page 46
    ... from our Storage and Server Management segment was due primarily to sales of products acquired through the Veritas acquisition, which contributed $531 million of net revenues during fiscal 2006. This amount was offset slightly by the continued decline in sales of our pcAnywhere product, which we...

  • Page 47
    ... from our Norton Internet Security and Norton AntiVirus products in our Consumer Products segment and our antivirus products in our Enterprise Security segment in those regions. We believe this increase in sales is attributable to increased customer awareness related to security threats. In addition...

  • Page 48
    ...of acquired product rights, fee-based technical support costs, costs of billable services, payments to OEMs under revenue-sharing arrangements, manufacturing and direct material costs, and royalties paid to third parties under technology licensing agreements. Gross margin decreased in fiscal 2006 as...

  • Page 49
    ... licensing agreements and manufacturing and direct material costs. Cost of licenses decreased as a percentage of the related revenue in fiscal 2006 as compared to fiscal 2005 due primarily to lower costs associated with products acquired through the Veritas acquisition. The Veritas acquisition added...

  • Page 50
    ... headcount resulting in an additional $118 million of employee compensation cost. In addition, we spent $44 million more on advertising and promotion activities in fiscal 2005 as compared to the prior fiscal year. Research and development expenses 2006 Year Ended March 31, 2005 2004 ($ in thousands...

  • Page 51
    ...-based compensation expense: Included in Cost of revenues 439 $ Ì Sales and marketing 13,314 Research and development 17,497 General and administrative 7,151 $37,962 $1,298 1,780 1,446 $4,524 In connection with the acquisition of Veritas in July 2005, we assumed Veritas stock options...

  • Page 52
    ... of relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by Veritas and its competitors. The rate utilized to discount the net cash flows to their present values was based on Veritas' weighted average cost of capital...

  • Page 53
    ...million related to severance, associated benefits, and outplacement services and $7 million related to excess facilities. These restructuring costs reflect the termination of 446 redundant employees located in the United States, Europe, and Asia Pacific and the consolidation of certain facilities in...

  • Page 54
    ...the purchase price allocation of the applicable acquisition. Integration planning In connection with our acquisition of Veritas, we recorded integration planning costs of $16 million in fiscal 2006 and $3 million in fiscal 2005, which consisted primarily of costs incurred for consulting services and...

  • Page 55
    ...$49 million was recorded as Acquired product rights in the Consolidated Balance Sheets and is being amortized to Cost of revenues in the Consolidated Statements of Income over the remaining life of the primary patent, which expires in June 2011. Non-operating Income and Expense 2006 Year Ended March...

  • Page 56
    ... tax liability asserted by the IRS with regard to the Veritas claim is $867 million, excluding penalties and interest. The Notice of Deficiency primarily relates to transfer pricing in connection with a technology license agreement between Veritas and a foreign subsidiary. We do not agree 50

  • Page 57
    ... of taxes payable accrued as part of the purchase accounting for preacquisition contingent tax risks. For further information, see Note 13 of the Notes to Consolidated Financial Statements and Critical Accounting Estimates Ì Income Taxes above. LIQUIDITY AND CAPITAL RESOURCES 2006 Year Ended March...

  • Page 58
    ... for $627 million in cash, including acquisition-related expenses resulting from financial advisory, legal and accounting services, duplicate sites, and severance costs. During April 2006, we purchased an office building of approximately 236,000 square feet in Cupertino, California for $81 million...

  • Page 59
    ...Stockholder Matters and Issuer Purchases of Equity Securities of this annual report. In fiscal 2006, 2005, and 2004, we received net proceeds of $210 million, $160 million, and $189 million, respectively, from the sale of our common stock through employee benefit plans. In fiscal 2006, we repaid the...

  • Page 60
    ... is $147 million as of March 31, 2006 which mainly relates to the construction of the Culver City, California facility. Royalties We have certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped...

  • Page 61
    ... in Summary of Significant Accounting Policies for information related to the pro forma effects on our reported net income and net income per share when applying the fair value recognition provisions of the previous SFAS No. 123 to stock-based employee compensation. On April 1, 2006, we adopted SFAS...

  • Page 62
    ...-sale securities as of the balance sheet dates. Our available-for-sale securities are reported at fair market value and any unrealized gains and losses are included as a component of Stockholders' equity in Accumulated other comprehensive income in our Consolidated Balance Sheets. Our cash...

  • Page 63
    ... costs and entered into a cross-licensing agreement with Altiris, Inc. For more information, see Note 4 of the Notes to Consolidated Financial Statements. (d) During fiscal 2006, we acquired Veritas. In connection with this acquisition, we recorded integration planning costs. For more information...

  • Page 64
    ...-acquisition income tax return for Veritas and, accordingly, did not secure certain income tax related elections. In addition, this material weakness resulted in errors in our annual accounting for income taxes. These errors in accounting were corrected prior to the issuance of our 2006 consolidated...

  • Page 65
    ... sections captioned ""Directors and Management Ì Directors and Executive Officers,'' and ""Section 16(a) Beneficial Ownership Reporting Compliance.'' Such information is incorporated herein by reference. We have adopted a code of business conduct that applies to all Symantec employees. We have also...

  • Page 66
    ..., Severance, and Change of Control Agreements,'' and ""Compensation Committee Interlocks and Insider Participation.'' Such information is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information with respect...

  • Page 67
    ... documents are filed as part of this report: Page Number 1. Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of March 31, 2006 and 2005 Consolidated Statements of Income for the years ended March 31, 2006, 2005, and...

  • Page 68
    ... 10-K, as applicable: Exhibit Number Exhibit Description Form Incorporated by Reference File No. Exhibit Filing Date Filed Herewith 2.01Û 3.01 3.02 3.03 3.04 4.01 4.02 4.03 4.04 10.01* 10.02* Agreement and Plan of Reorganization dated as of December 15, 2004 among Symantec Corporation...

  • Page 69
    ....14* 10.15* Agreement for Officers, Directors and Key Employees Veritas Software Corporation 1993 Equity Incentive Plan, including form of Stock Option Agreement Veritas Software Corporation 1993 Directors Stock Option Plan, including form of Stock Option Agreement Symantec Corporation 1996 Equity...

  • Page 70
    ...* 10.27Æ' 10.28Æ' Symantec Corporation 2004 Equity Incentive Plan, as amended, including form of Stock Option Agreement, and form of Restricted Stock Unit Award Agreement Offer Letter, dated February 8, 2006, from Symantec Corporation to James A. Beer Employment Agreement, dated December 15, 2004...

  • Page 71
    ...that certain Agreement of Purchase and Sale, dated March 29, 1999, between Veritas and Fairchild Semiconductor of California 21.01 Subsidiaries of Symantec Corporation 23.01 Consent of Independent Registered Public Accounting Firm 24.01 Power of Attorney (see Signature page to this annual report) 31...

  • Page 72
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of March 31, 2006 and 2005 Consolidated Statements of Income for the years ended March 31, 2006, 2005, and 2004 Consolidated Statements of Stockholders' Equity ...

  • Page 73
    ... of the Treadway Commission (COSO), and our report dated June 8, 2006 expressed an unqualified opinion on management's assessment of, and an adverse opinion on the effective operation of, internal control over financial reporting. /s/ KPMG LLP Mountain View, California June 8, 2006 67

  • Page 74
    ...on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan...

  • Page 75
    ... and for the year ended March 31, 2006, and this report does not affect our report dated June 8, 2006, which expressed an unqualified opinion on those consolidated financial statements. In our opinion, management's assessment that Symantec Corporation did not maintain effective internal control over...

  • Page 76
    SYMANTEC CORPORATION CONSOLIDATED BALANCE SHEETS March 31, 2006 2005 (In thousands, except par value) ASSETS Current assets: Cash and cash equivalents 2,315,622 $1,091,433 Short-term investments 550,180 2,115,154 Trade accounts receivable, net 670,937 285,325 Inventories 48,687 19,118 Current ...

  • Page 77
    ... Cost of revenues1: Content, subscriptions, and maintenance Licenses Amortization of acquired product rights Total cost of revenues Gross profit Operating expenses: Sales and marketing Research and development General and administrative Amortization of other intangible assets Stock-based...

  • Page 78
    ... income 536,159 536,159 Change in unrealized loss on available-for-sale securities, net of tax 1,776) Ì Ì (1,776) Translation adjustment, net of tax of $18,014 68,230 Ì Ì 68,230 Total comprehensive income 602,613 Issuance of common stock under employee stock benefit plans 14,951 149 159,778...

  • Page 79
    ...taxes Income tax benefit from employee stock transactions Other Net change in assets and liabilities, excluding effects of acquisitions: Trade accounts receivable, net Inventories Other current assets Other long-term assets Accounts payable Accrued compensation and benefits Deferred revenue...

  • Page 80
    ...solutions including enterprise and consumer security, data protection, application and infrastructure management, security management, storage and server management, and response and managed security services. Founded in 1982, we have operations in 40 countries worldwide. Principles of Consolidation...

  • Page 81
    ... period of the agreements. In arrangements that include multiple elements, including perpetual software licenses and maintenance and/or services and packaged products with content updates, we allocate and defer revenue for the undelivered items based on VSOE of fair value of the undelivered elements...

  • Page 82
    ...our distributors, resellers, and enduser customers. We estimate and record reserves for product returns as an offset to revenue. We fully reserve for obsolete products in the distribution channel as an offset to revenue. For our Enterprise Security, Data Protection, and Storage and Server Management...

  • Page 83
    ...-five to thirty years Capitalized Software Development Costs Costs incurred in connection with the development of software products are accounted for in accordance with SFAS No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed. Development costs incurred in...

  • Page 84
    ...its carrying value, including the goodwill allocated to that reporting unit. To determine the reporting units' fair values in the current year evaluation, we used the income approach under which we calculate the fair value of each reporting unit based on the estimated discounted future cash flows of...

  • Page 85
    .... 123 to stock-based employee compensation using the Black-Scholes option-pricing model for the three years ended March 31, 2006, 2005, and 2004: Year Ended March 31, 2006 2005 2004 (In thousands, except per share data) Net income, as reported 156,852 Add: Employee stock-based compensation expense...

  • Page 86
    ...the Black-Scholes option-pricing model with the following weighted-average assumptions: Employee Stock Options 2006 2005 2004 Employee Stock Purchase Plans 2006 2005 2004 Expected life (years 3 5 5 0.5 1.25 1.25 Expected volatility 0.45 0.64 0.69 0.33 0.36 0.46 Risk free interest rate 3.55% 3.71...

  • Page 87
    ...gains and losses on our available-for-sale securities were $6 million in fiscal 2006 and insignificant in fiscal 2005 and 2004. Comprehensive income is presented in the accompanying Consolidated Statements of Stockholders' Equity and Comprehensive Income. Newly Adopted and Recently Issued Accounting...

  • Page 88
    ... employee stock purchase plans, to be recognized in the Consolidated Statements of Income based on their fair values. Pro forma disclosure of fair value recognition will no longer be an alternative. See Stock-Based Compensation above for information related to the pro forma effects on our reported...

  • Page 89
    ..., a leading provider of software and services to enable storage and backup, whereby Veritas became a wholly owned subsidiary of Symantec in a transaction accounted for using the purchase method of accounting. The total purchase price of $13.2 billion includes Symantec common stock valued at $12...

  • Page 90
    ... in our Data Protection, Storage and Server Management, and Services segments. Purchase price allocation In accordance with SFAS No. 141, Business Combinations, the total purchase price was allocated to Veritas' net tangible and intangible assets based on their estimated fair values as of July...

  • Page 91
    ... combination of Veritas processes, patents, and trade secrets developed through years of experience in design and development of their products. Backlog relates to firm customer orders that generally are scheduled for delivery within the next quarter, as well as OEM revenues that are reported in the...

  • Page 92
    ... of relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by Veritas and its competitors. The rate utilized to discount the net cash flows to their present value was based on Veritas' weighted average cost of capital...

  • Page 93
    ... from the acquisition date through March 31, 2006, certain unvested options and RSUs were cancelled as a result of employee terminations, and deferred stock-based compensation was reduced by $6 million. We recorded amortization of deferred stock-based compensation from the Veritas transaction of...

  • Page 94
    ... Corporation, and IMlogic, Inc. are included in our Enterprise Security segment, and Relicore, Inc. is included in our Storage Management segment. Details of the purchase price allocations related to these other fiscal 2006 acquisitions are included in the table below. The financial results...

  • Page 95
    ... advisory, legal and accounting services, duplicate sites, and severance costs. The purchase price consisted of $439 million in cash and assumed stock options valued at $22 million. We recorded goodwill in connection with each of these acquisitions. In each acquisition, goodwill resulted primarily...

  • Page 96
    ... segments. Goodwill is allocated as follows: Enterprise Security Storage & Server Management Data Protection Services (In thousands) Consumer Products Total Balance as of March 31, 2005 $1,017,622 $ 193,192 $ Ì $ 149,183 $ 5,216 Goodwill acquired through the Veritas acquisition 3,439,107 4,986...

  • Page 97
    ...the acquisition of Sygate, we obtained certain acquired product rights related to patent licenses held by Sygate valued at approximately $18 million. The Acquired product rights are being amortized to Cost of revenues in the Consolidated Statements of Income over their estimated life of twelve years...

  • Page 98
    ...we purchased acquired product rights related to Roxio Inc.'s GoBack computer recovery software business for $13 million in cash. The acquired product rights are being amortized to Cost of revenues in the Consolidated Statements of Income over their estimated life of three years. In fiscal 2006, 2005...

  • Page 99
    ... are as follows: Amortized Cost March 31, 2006 Unrealized Unrealized Gains Losses (In thousands) Estimated Fair Value and their current $201 $199 $197 $196 $195 $453 million million million million million million Cash and cash equivalents: Cash 558,361 Money market funds 736,174 Commercial...

  • Page 100
    ... recovery in market value. The changes in the values in the above securities are considered to be temporary in nature and, accordingly, we do not believe that the values of these securities are impaired as of March 31, 2006. Unrealized gains and losses on available-for-sale securities are reported...

  • Page 101
    ... rating for Veritas on July 6, 2005 and, as a result, the 0.25% Notes are currently convertible into shares of Symantec common stock at the option of the holder. If any holder elected to convert, Symantec would pay the holder the cash value of the applicable number of shares of Symantec common stock...

  • Page 102
    ... is $147 million as of March 31, 2006 which mainly relates to the construction of the Culver City, California facility. Royalties We have certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped...

  • Page 103
    ... amount to repurchase shares in the open market in the March 2006 quarter and we intend to use the remaining amount to make stock repurchases under Rule 10b5-1 trading plans and opportunistically in fiscal 2007. In fiscal 2006, we repurchased 174 million shares at prices ranging from $15.83 to $23...

  • Page 104
    ...any future unsolicited acquisition attempt to ensure a fair value of Symantec for our stockholders. In connection with the plan, the Board of Directors declared and paid a dividend of one preferred share purchase right for each share of Symantec common stock outstanding on the record date, August 21...

  • Page 105
    ... at fair market value by applying a portion or all of their respective bonus payments towards the purchase price. Each executive officer may purchase up to 10,000 shares in any fiscal year. As of March 31, 2006, 25,413 shares have been issued under the plan and 224,587 shares remain available for...

  • Page 106
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements Ì (Continued) equal to the lesser of 85% of the fair market value as of the beginning of the two-year offering period or the end of the six-month purchase period. The Board of Directors eliminated the two-year offering period in March ...

  • Page 107
    ... in fiscal 2006. In January and March 2006, we accelerated the vesting of options held by three former officers of Veritas upon their resignation from Symantec. We accelerated the vesting of options to purchase an aggregate of 728,106 shares and recorded a charge to Stock-based compensation expense...

  • Page 108
    ... Statements Ì (Continued) Stock option activity The following table summarizes our stock option plans as of March 31, 2006, 2005, and 2004 and the activity for the years ended on those dates. Year Ended March 31, 2006 2005 2004 WeightedWeightedWeightedNumber of Average Number of Average Number of...

  • Page 109
    ...million related to severance, associated benefits, and outplacement services and $7 million related to excess facilities. These restructuring costs reflect the termination of 446 redundant employees located in the United States, Europe, and Asia Pacific and the consolidation of certain facilities in...

  • Page 110
    ... related to severance, associated benefits, and outplacement services and $4 million related to excess facilities costs. These restructuring costs reflect the termination of redundant employees and the consolidation of certain facilities as a result of our other acquisitions. In fiscal 2006, we paid...

  • Page 111
    ...: Tax credit carryforwards 45,911 Net operating loss carryforwards of acquired companies 274,103 Other accruals and reserves not currently tax deductible 75,905 Deferred revenue 18,503 Loss on investments not currently tax deductible 18,313 Book over tax depreciation 48,021 State income taxes...

  • Page 112
    ... for principally as additions to the cost of Veritas purchase price. Any incremental interest accrued subsequent to the date of the Veritas acquisition would be recorded as an expense in the period the matter is resolved. In the fourth quarter of fiscal 2006, we made $90 million of tax-related...

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    ...software licenses and the purchase of online advertising services. In March 2005, the SEC charged AOL with securities fraud pursuant to a complaint entitled Securities and Exchange Commission v. Time Warner, Inc. In its complaint, the SEC described certain transactions between AOL and a ""California...

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    ...our Internet security and problem-solving products to individual users, home offices, and small businesses. ‚ Enterprise Security. Our Enterprise Security segment provides security solutions for all tiers of a network: at the server tier behind the gateway and at the client tier, including desktop...

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    ... allocated based on headcount, unless specifically identified by segment. Segment information The following table presents a summary of our operating segments: Consumer Products Enterprise Security Data Protection Storage & Server Management (In thousands) Services Other Total Company Fiscal 2006...

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    ... Notes to Consolidated Financial Statements Ì (Continued) Geographical information The following table represents revenue amounts reported for products shipped to customers in the corresponding regions. 2006 Year Ended March 31, 2005 (In thousands) 2004 Net revenues from external customers: United...

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    ...Notes to Consolidated Financial Statements Ì (Continued) Note 17. Subsequent Events In April 2006, we purchased two buildings in Cupertino, California, for a total purchase price of $81 million. These buildings are currently leased to a third party. From April 1 through May 31, 2006, we repurchased...

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    ... of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cupertino, State of California, on the 8th day of June, 2006. SYMANTEC CORPORATION By /s/ John W. Thompson John W. Thompson...

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    Signature Title Date /s/ /s/ David J. Roux David J. Roux Director Director Director June 8, 2006 June 8, 2006 June 8, 2006 Daniel H. Schulman Daniel H. Schulman V. Paul Unruh V. Paul Unruh /s/ 113

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    ...Costs and Written Off Expenses or Used (In thousands) Balance at End of Period Allowance for doubtful accounts: Year ended March 31, 2006 Year ended March 31, 2005 Year ended March 31, 2004 Reserve for product returns: Year ended March 31, 2006 Year... with our acquisition of Veritas. 114

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    ... solutions to help individuals and enterprises assure the security, availability, and integrity of their information. Headquartered in Cupertino, Calif., Symantec has operations in more than 40 countries. More information is available at www.symantec.com. Forward-Looking Statement This annual report...

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