Symantec 2007 Annual Report Download - page 90

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life of eight years. The results of operations of Company-i have been included in our results of operations since its
acquisition date. The financial results of this acquisition are considered insignificant for purposes of pro forma
financial disclosures. Company-i is included in our Services segment. No goodwill is deductible for tax purposes.
In addition, the purchase price may be increased by up to $11 million in cash if Company-i meets certain
billings targets by September 30, 2008. Payments of the additional consideration may be accelerated if certain
billings targets are met by March 31, 2007 or September 30, 2007. Under the terms of the purchase agreement,
Symantec has 90 days from the respective dates to determine whether the billings target for payment of the
additional consideration has been met. Any increase in the purchase consideration would result in a corresponding
increase in goodwill. We believe that it is not determinable beyond a reasonable doubt that the billing target are met
as of March 31, 2007 and therefore we have not booked an adjustment in accordance with SFAS No. 141, Business
Combinations.
On February 23, 2007, we completed our acquisition of 4FrontSecurity, Inc, 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 follows: goodwill, $6 million; other intangible assets, $3 million; and
insignificant amounts to income tax payable and net deferred tax liabilities. Goodwill resulted primarily from our
expectation of synergies from the integration of 4FrontSecurity’s technology with our technology. The amount
allocated to other intangible assets is being amortized to Operating expenses in the Consolidated Statements of
Income over their estimated lives of one to seven years. The results of operations of 4FrontSecurity have been
included in our results of operations since its acquisition date. The financial results of this acquisition are considered
insignificant for purposes of pro forma financial disclosures. 4FrontSecurity is included in our Security and Data
Management segment. No goodwill is deductible for tax purposes.
Fiscal 2006 acquisitions
On July 2, 2005, we completed our acquisition of Veritas, 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 $12.5 billion, assumed stock options and restricted stock units, or RSUs, with a fair value of
$699 million, and acquisition-related expenses of $39 million. The total purchase price of the acquisition is as
follows (in thousands):
Value of Symantec stock issued ......................................... $12,498,336
Estimated fair value of options assumed and RSUs exchanged .................. 698,514
Acquisition related expenses ........................................... 38,791
Total purchase price . . .............................................. $13,235,641
The acquisition was structured to qualify as a tax-free reorganization and we have accounted for the
acquisition using the purchase method of accounting. The results of operations of Veritas have been included
in the Consolidated Statements of Income beginning on July 2, 2005 and had a significant impact on our revenues,
cost of revenues, and operating expenses.
The Veritas business is included in our Consumer Products, Security and Data Management, Data Center
Management, and Services segments.
Purchase price allocation
In accordance with SFAS No. 141, the total purchase price was allocated to Veritas’ net tangible and intangible
assets based on their estimated fair values as of July 2, 2005. The excess purchase price over the value of the net
84
SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)