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Symantec Corporation
2007 Annual Report

Table of contents

  • Page 1
    Symantec Corporation 2007 Annual Report

  • Page 2
    ... fiscal amounts combine Symantec's 2006 fiscal results with Veritas' historical results for the three months ended March 31, 2005. Additional non-GAAP adjustments consist of: non-cash charges related to acquisitions, such as the amortization of intangibles and stock-based compensation expense, and...

  • Page 3
    ... enhanced system allowing us to implement new buying programs, drive operational efficiencies, and create a platform to improve the ease of transacting business with our customers and partners. This project was important as it provides the foundation for scaling our business and lowering our costs...

  • Page 4
    ...-in-one security service. The Norton 360 product combines Symantec's proven, industry-leading technologies for antivirus, anti-spyware, firewall, intrusion protection, anti-phishing, backup, and tuneup, eliminating the need to purchase and manage multiple products. This innovative product is getting...

  • Page 5
    ... with our Control Compliance Suite. This initiative will combine the strength of our agent-based and non-agent based compliance products, giving customers a choice of deployment approaches. In the storage arena, a refresh of our market-leading offerings, combined with our ability to help customers...

  • Page 6
    ... portfolio of award-winning technologies and our diverse base of enterprise and individual customers around the world. More than ever, our customers and partners are looking to Symantec for IT risk management solutions across a broad spectrum of operating platforms and we look forward to delivering...

  • Page 7
    ... value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of Symantec common stock on September 29, 2006 as reported on the Nasdaq Global Select Market: $19,987,197,653. Number of shares outstanding of the registrant's common stock as of April 27, 2007...

  • Page 8
    ... 25 26 26 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ...Item 6. Selected Financial Data ...Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ...Item 7A. Quantitative and Qualitative...

  • Page 9
    ... not undertake any obligation to update these forward-looking statements to reflect events occurring or circumstances arising after the date of this report. These forward-looking statements involve risks and uncertainties, and our actual results, performance, or achievements could differ materially...

  • Page 10
    ... Storage FoundationTM 5.0, Veritas Cluster ServerTM 5.0, NetBackupTM 6.0, Symantec Information FoundationTM 2007, Backup ExecTM 11d, and SymantecTM Security Information Manager. Customers are leveraging our broader product portfolio to help them solve the cost, complexity, and compliance issues...

  • Page 11
    ...acquisition of Veritas in July 2005, we are now the leading supplier of hardware-independent storage software. The worldwide storage software market consists of storage management, server and application management, backup and archiving, and infrastructure software products and services. Key drivers...

  • Page 12
    ..., virus definitions, firewall rules, Uniform Resource Locator, or URL, databases, and uninstall scripts. Our primary consumer products are: Norton Internet Security This PC and transaction security suite helps defend home and home office users against the latest online threats by blocking online...

  • Page 13
    ... and security management, endpoint security, messaging management, and data protection management software solutions that allow our customers to secure, provision, backup, and remotely access their laptops, PCs, mobile devices, and servers. Our comprehensive solutions include virus protection and...

  • Page 14
    .... Symantec Managed Security Services uses global intelligence to offer fast and accurate analysis of security data to protect customers against emerging threats and reduce overall security risk. Threat and Early Warning Systems Our customized and comprehensive alerts of impending Internet-based...

  • Page 15
    ... network of distribution partners. Our strategy is to place our products in a variety of channels where consumers might consider purchasing security and backup products. Our products are available to customers through channels that include distributors, retailers, direct marketers, Internet-based...

  • Page 16
    ..., trade shows, collateral production, and all forms of direct marketing. We also invest in cooperative marketing campaigns with distributors, resellers, retailers, OEMs, and industry partners. We continually conduct market research to understand evolving customer needs and buying behaviors...

  • Page 17
    ... Periodic software updates • Access to our technical knowledge base and frequently asked questions, or FAQ, facility • An invitation to our annual user group meeting Our consumer product support program provides self-help online services, chat, and email support to consumer customers worldwide...

  • Page 18
    ..., compliance, and security control criteria for organizational information and business objectives. Company-i is a United Kingdom-based professional services firm that we acquired in December 2006. The firm specializes in addressing key challenges associated with operating and managing a data center...

  • Page 19
    ... a security suite that competes with our consumer products. This security suite includes antispyware and antivirus features, PC tuneup, a managed two-way firewall, and a backup utility. In addition, Microsoft has recently added security features to new versions of its operating system products that...

  • Page 20
    ... in the U.S. Approximately 6,000 employees work in sales, marketing, and related activities; 5,000 in product development; 3,600 in support and services; and 2,500 in management, manufacturing, and administration. Other Information Our Internet address is www.symantec.com. We make available free of...

  • Page 21
    ... and storage solutions • Incorporating acquired products and technologies • Trade compliance issues affecting our ability to ship new products • Developing or expanding efficient sales channels • Obtaining sufficient licenses to technology and technical access from operating system software...

  • Page 22
    ... software-as-a-service (SaaS) business model, whereby software vendors develop and host their applications for use by customers over the Internet. This allows enterprises to obtain the benefits of commercially licensed, internally operated software without the associated complexity or high initial...

  • Page 23
    ... 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 products to customers around the world through multi-tiered sales and distribution networks. Sales...

  • Page 24
    ... OEM partners may develop, market, and distribute their own products and market and distribute products of our competitors, which could reduce our sales If we fail to manage our sales and distribution channels successfully, these channels may conflict with one another or otherwise fail to perform as...

  • Page 25
    ... operations • Regulations or restrictions on the use, import, or export of encryption technologies that could delay or prevent the acceptance and use of encryption products and public networks for secure communications • Central bank and other restrictions on our ability to repatriate cash...

  • Page 26
    ... 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, we may decide to issue fewer equity-based...

  • Page 27
    ... or use of our products or proprietary information could result in reduced sales of our products. Any legal action to protect proprietary information that we may bring or be engaged in with a strategic partner or vendor could adversely affect our ability to access software, operating system, and...

  • Page 28
    ... use in our products. In addition, many of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, negatively affect our business. Our software products and website may be subject to intentional disruption that could adversely impact our reputation...

  • Page 29
    ... in the future or pursue acquisitions that involve issuances of our stock. Our operating results for prior periods may not be effective predictors of our future performance. Factors associated with our industry, the operation of our business, and the markets for our products may cause our quarterly...

  • Page 30
    ...of our products • The number, severity, and timing 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...

  • Page 31
    ... 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 532,000 square foot facility...

  • Page 32
    ...and Issuer Purchases of Equity Securities Market for Our Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol "SYMC." The high and low sales prices set forth below are as reported on the Nasdaq Global Select Market (formerly the Nasdaq National Market). Mar. 31...

  • Page 33
    ... share repurchase program announced in June 2006. On January 24, 2007, we announced that the Board authorized the repurchase of an additional $1 billion of Symantec common stock, without a scheduled expiration date. During fiscal 2007, we repurchased 162 million shares of our common stock at prices...

  • Page 34
    ... dividends other than stock dividends have been declared on Symantec common stock). The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of Symantec common stock. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Symantec...

  • Page 35
    ...graph below are based on historical data and are not intended to forecast the possible future performance of Symantec common stock. COMPARISON OF 18 YEAR CUMULATIVE TOTAL RETURN* Among Symantec Corporation, The S & P 500 Index And The S & P Information Technology Index 3500 Symantec Corporation 3000...

  • Page 36
    ... their respective dates of acquisition. In April 2003, we purchased certain assets related to Roxio Inc.'s GoBackTM 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...

  • Page 37
    ...$1 million, respectively, of acquired in-process research and development in connection with our acquisitions of Veritas and BindView Development Corporation. In fiscal 2006, we recorded patent settlement costs and entered into a cross-licensing agreement with Altiris, Inc. For more information, see...

  • Page 38
    ... and service network-based endpoints. The aggregate purchase price, excluding acquisition related costs, was approximately $815 million in cash, which amount was net of Altiris' cash balance. We believe this acquisition will enable us to help customers better manage and enforce security policies at...

  • Page 39
    ... as compared to only the nine months subsequent to the acquisition date of July 2, 2005 in fiscal 2006. We believe our revenue growth is also partly attributable to increased awareness of Internet-related threats around the world and demand for storage solutions. Weakness in the U.S. dollar compared...

  • Page 40
    ... many estimates. 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 the fair value of the undelivered elements, and...

  • Page 41
    ... based on the terms and conditions of the promotional programs, 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 also consider current market conditions and economic...

  • Page 42
    ...of the fair value of stock-based awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and...

  • Page 43
    ... the purchase price of Veritas to reflect a reduction in the amount of pre-acquisition tax liabilities assumed; and (2) we would be required to recognize an equal amount of income tax expense, up to $130 million. In June 2006, the Financial Accounting Standards Board, or FASB, issued Interpretation...

  • Page 44
    ...offer more flexibility in contractual terms and in product deployments, and provide more services in combination with license and maintenance sales. In the December 2006 quarter, we combined our buying programs for all of our enterprise offerings to provide our customers and partners a single vendor...

  • Page 45
    ... to the 2006 period due primarily to growth in Norton Internet Security products and online revenues due to growth in the use of the Internet, and increased awareness and sophistication of security threats. Enterprise products and services, excluding Veritas-related products and services, increased...

  • Page 46
    ... renewals due to an increasing installed base, increased demand for our service offerings, other acquisitions, and the combination of our buying programs implemented in the December 2006 quarter, which impacted VSOE methodology and classification of Licenses revenue and Content, subscriptions...

  • Page 47
    ... protection to address the rapidly changing threat environment. Our electronic orders include OEM subscriptions, upgrades, online sales, and renewals. Revenue from electronic orders (which includes sales of our Norton Internet Security products and our Norton AntiVirus products) grew by $221 million...

  • Page 48
    ... our acquisition of Veritas. Revenue from our Data Center Management segment was $861 million in fiscal 2006 and was comprised primarily of revenue related to Storage Foundation and Server Foundation product families and NetBackup products of $501 million and $332 million, respectively. Services...

  • Page 49
    ..."Total Net Revenues" above. The purchase accounting adjustment increased fiscal 2007 revenues by $186 million in North America and $85 million in the international regions compared to fiscal 2006. Growth in our Consumer Products segment, driven by Norton Internet Security, resulted in a $137 million...

  • Page 50
    ...-sharing agreements. Cost of content, subscriptions, and maintenance remained relatively constant as a percentage of the related revenue in fiscal 2007 as compared to fiscal 2006. The year over year increase in costs is primarily driven by sales of products acquired through the Veritas acquisition...

  • Page 51
    ... Veritas acquisition. The Veritas acquisition added $13 million of costs in fiscal 2006, which was offset by a $17 million decrease in consumer products license costs as compared to fiscal 2005. These costs and the associated revenue are reported as Content, subscriptions, and maintenance beginning...

  • Page 52
    ..., which added $56 million of stock-based compensation expense in fiscal 2007 for which there is no comparable expense in fiscal 2006. In addition, approximately $171 million of the increase is due to an additional three months of sales and marketing expenses related to the Veritas acquisition, which...

  • Page 53
    ..., which added $24 million of stock-based compensation expense in fiscal 2007 for which there is no comparable expense in fiscal 2006. In addition, approximately $20 million of the increase is due to an additional three months of general and administrative expenses related to the Veritas acquisition...

  • Page 54
    ... which consist of $19 million related to severance, associated benefits, and outplacement services for the termination of approximately 323 employees located in the Americas, Europe and Asia Pacific and $51 million dollars related to the 2007 cost savings initiative announced in January 2007. We...

  • Page 55
    ... rates realized on our invested cash and available-for-sale securities. The increase in Interest income in fiscal 2006 as compared to fiscal 2005 was due primarily to a higher average investment balance, due to the cash acquired through the Veritas acquisition, and higher average interest rates...

  • Page 56
    ...all of which was attributable to acquisition-related assets, the benefit of which reduced goodwill. The valuation allowance increased by $59 million in fiscal 2006, of which approximately $58 million was attributable to acquisition-related assets. American Jobs Creation Act of 2004 - Repatriation of...

  • Page 57
    ... disagree with the IRS over both its transfer pricing methodologies and the amount of the assessment, we have established additional tax reserves for all Veritas pre-acquisition years to account for both contingent tax and interest risk. On March 30, 2006, we received notices of proposed adjustment...

  • Page 58
    ... a leading provider of IT management software that enables businesses to easily manage and service network-based endpoints. We used a portion of our domestic cash balance to fund the aggregate purchase price, excluding acquisition related costs, of approximately $815 million in cash, which amount is...

  • Page 59
    ... buildings in Mountain View, California. Net cash used for investing activities in fiscal 2005 was primarily the result of payments for business acquisitions of $424 million and net purchases of available-for-sale securities of $143 million. Financing Activities In the June 2006 quarter, we issued...

  • Page 60
    ... certain circumstances. Upon conversion, we would pay the holder the cash value of the applicable number of shares of Symantec common stock, up to the principal amount of the note. Amounts in excess of the principal amount, if any, may be paid in cash or in stock at our option. As of March 31, 2007...

  • Page 61
    ...value of these indemnification agreements in excess of applicable insurance coverage is minimal. We provide limited product warranties and the majority of our software license agreements contain provisions that indemnify licensees of our software from damages and costs resulting from claims alleging...

  • Page 62
    ... Accounting for Certain Investments in Debt and Equity Securities. We consider investments in instruments purchased with an original maturity of 90 days or less to be cash equivalents. We classify our short-term investments as available-for-sale, and short-term investments consist of marketable debt...

  • Page 63
    .... Upon conversion, we would pay the holder the cash value of the applicable number of shares of Symantec common stock, up to the principal amount of the note. Amounts in excess of the principal amount, if any, may be paid in cash or in stock at our option. Concurrent with the issuance of...

  • Page 64
    .... During fiscal 2006, we recorded patent settlement costs and entered into a cross-licensing agreement with Altiris, Inc. For more information, see Note 4 of the Notes to Consolidated Financial Statements. We recorded integration costs in connection with our acquisition of Veritas in July 2005...

  • Page 65
    ...on Effectiveness of Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can...

  • Page 66
    ... Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended March 30, 2007. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to Symantec's Proxy Statement for its 2007 Annual Meeting of...

  • Page 67
    ......Consolidated Statements of Cash Flows for the years ended March 31, 2007, 2006, and 2005 ...Summary of Significant Accounting Policies ...Notes to Consolidated Financial Statements ...2. Financial Statement Schedule: The following financial statement schedule of Symantec Corporation for the years...

  • Page 68
    ... due 2013) Registration Rights Agreement, dated as of June 16, 8-K 000-17781 2006, among Symantec Corporation and Citigroup Global Markets, Inc., Morgan Stanley & Co. Incorporated and UBS Securities LLC, for themselves and the other Initial Purchasers Form of Master Terms and Conditions For 10-Q 000...

  • Page 69
    ... 17, 2006) Form of Indemnification 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...

  • Page 70
    ... Corporation, included as Exhibit C to that certain Agreement of Purchase and Sale, dated March 29, 1999, between Veritas and Fairchild Semiconductor of California Subsidiaries of Symantec Corporation Consent of Independent Registered Public Accounting Firm Power of Attorney (see Signature page to...

  • Page 71
    ... this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2 as promulgated under the Securities Exchange Act of 1934. Filed by Veritas Software Corporation. This exhibit is being furnished, rather than filed, and shall...

  • Page 72
    ... ...Consolidated Statements of Stockholders' Equity and Comprehensive Income for the years ended March 31, 2007, 2006, and 2005 ...Consolidated Statements of Cash Flows for the years ended March 31, 2007, 2006, and 2005 ...Summary of Significant Accounting Policies ...Notes to Consolidated Financial...

  • Page 73
    ... of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 23, 2007 expressed an unqualified opinion on management's assessment of, and the effective operation of, internal control over financial reporting. /s/ KPMG LLP Mountain View, California May 23, 2007 67

  • Page 74
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Symantec Corporation and subsidiaries as of March 31, 2007 and 2006, and the related consolidated statements of income, stockholders' equity and comprehensive income, and cash flows for each of...

  • Page 75
    SYMANTEC CORPORATION CONSOLIDATED BALANCE SHEETS March 31, 2007 2006 (In thousands, except par value) ASSETS Current assets: Cash and cash equivalents ...Short-term investments ...Trade accounts receivable, net Inventories ...Current deferred income taxes Other current assets ...Total current ...

  • Page 76
    ...share) Net revenues: Content, subscriptions, and maintenance, net ...$3,917,572 Licenses, net...1,281,794 Total net revenues ...Cost of revenues: Content, subscriptions, and maintenance ...Licenses ...Amortization of acquired product rights ...Gross profit ...Operating expenses: Sales and marketing...

  • Page 77
    ... Stock-Based Income Compensation (In thousands) Total Stockholders' Equity Common Stock Shares Amount Retained Earnings Balances, March 31, 2004 ...311,854 $ 3,119 $ 1,573,466 Components of comprehensive income: Net income ...- - - Change in unrealized loss on available-for-sale securities...

  • Page 78
    ... income to net cash provided by operating activities: Depreciation ...Amortization ...Impairment of equity investments ...Stock-based compensation expense ...Write-off of acquired in-process research and development ...Deferred income taxes ...Income tax benefit from stock options ...Excess income...

  • Page 79
    ..., and interactions by delivering software and services that address risks to information security, availability, compliance, and information technology, or IT, systems performance. We strive to help our customers manage compliance, complexity, and cost by protecting their IT infrastructure as they...

  • Page 80
    ... Content, subscriptions, and maintenance and is deferred and recognized ratably over the 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...

  • Page 81
    Indirect channel sales For our Consumer Products segment, 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 ...

  • Page 82
    ... 2007, 2006, and 2005, we recognized impairment losses on our equity investments of $3 million, $4 million, and an insignificant amount, respectively. Each quarter we assess our compliance with accounting guidance, including the provisions of Financial Accounting Standards Board Interpretation No...

  • Page 83
    ... the form of a working model has been established. Our software has been available for general release concurrent with the establishment of technological feasibility, and accordingly no software development costs have been capitalized in fiscal 2007, 2006, and 2005. Acquired Product Rights Acquired...

  • Page 84
    ...their effect would be antidilutive. Stock-Based Compensation Prior to April 1, 2006, we accounted for stock-based compensation awards to employees using the intrinsic value method in accordance with Accounting Principles Board Opinion, or APB, No. 25, Accounting for Stock Issued to Employees, and to...

  • Page 85
    ... 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 and cash equivalents, short-term investments, trade accounts...

  • Page 86
    ... April 1, 2006, we allocate revenue based upon VSOE, for all transactions. Prior to April 1, 2006, for our Consumer product line, we recognized returns on a monthly straight-line basis, commencing with the month of the return over a default twelve-month subscription term. Effective April 1, 2006, we...

  • Page 87
    ... cost of revenues on a daily straight-line basis, commencing on the day the related subscription revenue term begins. Prior to April 1, 2006, we recorded an accrual related to a promotion that provided 90 days free technical support for customers purchasing our Consumer products. This program...

  • Page 88
    ... financial statements. In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments, which amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities , and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and...

  • Page 89
    ... key challenges associated with operating and managing a data center in the financial services industry, for $26 million in cash, including an insignificant amount for acquisition related expenses. The aggregate purchase price was allocated as follows, based on the currency exchange rate on the date...

  • Page 90
    ..., for approximately $7 million in cash. 4FrontSecurity developed and distributed governance, risk management, and regulatory compliance software that enabled companies to measure and manage business and security assessments of organizational information. The aggregate purchase price was allocated as...

  • Page 91
    ... acquisition of Veritas, we assumed Veritas' contractual obligations related to its deferred revenue. Veritas' deferred revenue was derived from licenses, maintenance, consulting, education, and other services. We estimated our obligation related to the Veritas deferred revenue using the cost build...

  • Page 92
    ... in which there is no remaining risk relating to the development. At the time of the acquisition, Veritas was developing new products in multiple product areas that qualified as IPR&D. These efforts included NetBackup 6.1, Backup Exec 11.0, Server Management 5.0, and various other projects. At the...

  • Page 93
    ... in our Data Center Management segment. Details of the purchase price allocations related to these other fiscal 2006 acquisitions are included in the table below. XtreamLok Sygate WholeSecurity Technologies BindView (In thousands) IMlogic Relicore Total Acquisition date . . Net tangible assets...

  • Page 94
    ...-held companies for a total purchase price of $461 million, including acquisition-related expenses resulting from financial 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...

  • Page 95
    ...operating segments. Goodwill is allocated as follows: Consumer Products Security and Data Management Data Center Management (In thousands) Total Company Services Balance as of March 31, 2006(a) ...Goodwill acquired through business combinations...Goodwill adjustments(b) ...Effect of exchange rates...

  • Page 96
    ... million million million Other intangible assets, net Other intangible assets subject to amortization are as follows: Gross Carrying Amount March 31, 2007 Accumulated Amortization (In thousands) Net Carrying Amount Customer base ...Trade name ...Marketing-related assets ...Partnership agreements...

  • Page 97
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) March 31, 2006 Accumulated Amortization (In thousands) Gross Carrying Amount Net Carrying Amount Customer base ...Trade name ...Marketing-related assets ...Partnership agreements ... $1,493,982 107,202 2,100 2,300 $1,...

  • Page 98
    ... ...$ 587,675 Money market funds ...561,240 Commercial paper ...1,354,302 Corporate debt securities ...10,709 Bank debt securities and deposits ...45,108 Government and government-sponsored debt securities ...- Total cash and cash equivalents ...$2,559,034 Short-term investments: Asset-backed debt...

  • Page 99
    ... the fair market value has been lower than the cost basis, the financial condition and near-term prospects of the investee, credit quality, and our ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair market value. In fiscal 2007, 2006 and 2005...

  • Page 100
    ... the five business-day period after any five consecutive trading-day period during which the trading price of the Senior Notes falls below a certain threshold. Upon conversion, we would pay the holder the cash value of the applicable number of shares of Symantec common stock, up to the principal...

  • Page 101
    ... the acquisition of Veritas Software Corporation on July 2, 2005, we assumed the Veritas 0.25% convertible subordinated notes, or the 0.25% Notes. On August 1, 2006, at the option of certain of the holders, we repurchased $510 million of the 0.25% Notes at a price equal to the principal amount, plus...

  • Page 102
    ... included in our restructuring reserve. For more information, see Note 12. Rent expense charged to operations totaled $83 million, $70 million, and $35 million in fiscal 2007, 2006, and 2005, respectively. Development agreements During fiscal 2006, we entered into agreements in connection with the...

  • Page 103
    ... share repurchase program announced in June 2006. On January 24, 2007, we announced that our Board of Directors authorized the repurchase of $1 billion of Symantec common stock, without a scheduled expiration date. During fiscal 2007, we repurchased 162 million shares of our common stock at prices...

  • Page 104
    ... were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive: Year Ended March 31, 2007 2006 2005 (In thousands) Stock options ...69,186 Restricted stock units ...108,862 Veritas 0.25% Notes(1) ...- 178,048 (1) 56,348 146 12,674 69,168 4,225...

  • Page 105
    ...' Stock Purchase Plan and reserved 250,000 shares of common stock for issuance thereunder, of which no shares are subject to adjustment pursuant to changes in capital. The purpose of the plan is to provide executive officers with a means to acquire an equity interest in Symantec at fair market value...

  • Page 106
    ... are important to our success by offering them an opportunity to participate in our future performance through equity awards of stock options and stock bonuses. Under the terms of the 2004 Plan, the exercise price of stock options may not be less than 100% of the fair market value on the date of...

  • Page 107
    ... expense in fiscal 2006. Valuation of stock-based awards The fair value of each stock option granted under our equity incentive plans and each ESPP purchase right granted prior to July 1, 2005 is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted...

  • Page 108
    ...31, 2006 2005 (In thousands) Cost of revenues - Content, subscriptions, and maintenance ...$ 12,373 Cost of revenues - Licenses ...4,064 Sales and marketing ...55,895 Research and development...57,132 General and administrative ...24,416 Total stock-based compensation ...Tax benefit associated with...

  • Page 109
    ... 123 to stock-based employee compensation using the Black-Scholes option-pricing model for the fiscal years ended March 31, 2006, and March 31, 2005: Year Ended March 31, 2006 2005 (In thousands, except per share amounts) Net income, as reported...$ 156,852 Add: Amortization of deferred stock-based...

  • Page 110
    ... summarizes our stock option plans as of March 31, 2006 and 2005 and the activity for the years ended on those dates. Year Ended March 31, 2005 WeightedWeightedNumber of Average Number of Average Shares Exercise Price Shares Exercise Price (In thousands, except per share amounts) 2006 Outstanding...

  • Page 111
    ... expenses which consist of $19 million related to severance, associated benefits, and outplacement services for the termination of approximately 323 employees located in the Americas, Europe, and Asia Pacific and $51 million related to the 2007 cost savings initiative announced in January 2007. We...

  • Page 112
    ...benefits, and outplacement services. These restructuring costs reflect the termination of redundant employees and the consolidation of certain facilities as a result of the Veritas acquisition. At March 31, 2007, an insignificant amount remained related to this reserve. At March 31, 2006, $3 million...

  • Page 113
    ... statutory rate ...State taxes, net of federal benefit ...Foreign earnings taxed at less than the federal rate ...Non-deductible stock-based compensation...American Jobs Creation Act - tax expense on repatriation of foreign earnings ...Non-deductible IPR&D ...Domestic production activities deduction...

  • Page 114
    ...which was attributable to acquisition-related assets, the benefit of which reduced goodwill. The valuation allowance increased by $59 million in fiscal 2006, of which approximately $58 million was attributable to acquisition-related assets. As of March 31, 2007, we have net operating loss and credit...

  • Page 115
    ...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 adjustments to the purchase accounting...

  • Page 116
    ... for compliance and security management, endpoint security, messaging management, and data protection management software solutions that allow our customers to secure, provision, backup, and remotely access their laptops, PCs, mobile devices, and servers. • Data Center Management. Our Data Center...

  • Page 117
    ... from sales of our Norton Internet Security product within our Consumer Products segment represented 18%, 15%, and 18% of our total net revenues during fiscal 2007, 2006, and 2005, respectively. Net revenues from sales of our storage and server management products within our Data Center Management...

  • Page 118
    ... deferred revenue for our consumer products, we discovered an error in the unit renewal prices manually entered into the application. The unit renewal prices used to calculate the deferred revenue did not reflect the correct subscription renewal prices for foreign currency sales, which serves as the...

  • Page 119
    ... and service network-based endpoints. The aggregate purchase price, excluding acquisition related costs, was approximately $815 million in cash, which amount is net of Altiris' cash balance. We believe this acquisition will enable us to help customers better manage and enforce security policies at...

  • Page 120
    ...behalf by the undersigned, thereunto duly authorized, in the City of Cupertino, State of California, on the 23rd day of May, 2007. SYMANTEC CORPORATION By /s/ John W. Thompson John W. Thompson, Chairman and Chief Executive Officer KNOWALL PERSONS BY THESE PRESENTS, that each person whose signature...

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    Signature Title Date /s/ /s/ /s/ /s/ Robert S. Miller Robert S. Miller George Reyes George Reyes David J. Roux David J. Roux Director Director Director Director Director May 23, 2007 May 23, 2007 May 23, ...

  • Page 122
    ... Charged to Charged to Other Costs and (4) Accounts Expenses (In thousands) Amount Written Off or Used Balance at End of Period Allowance for doubtful accounts: Year ended March 31, 2007 ...Year ended March 31, 2006 ...Year ended March 31, 2005 ...Reserve for product returns: Year ended March 31...

  • Page 123
    ... LISTING Symantec's common stock is traded on the Nasdaq Global Select Market under the symbol "SYMC". TRANSFER AGENT John F. Brigden Senior Vice President, Europe, the Middle East and Africa Sales George W. Harrington Senior Vice President, Finance Operations, Chief Accounting Officer Charles...

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    20330 Stevens Creek Blvd. Cupertino, CA 95014 Tel: (408) 517-8000 www.symantec.com