Symantec 2007 Annual Report Download - page 91

tangible and identifiable intangible assets was recorded as goodwill. The following represents the allocation of the
purchase price to the acquired net assets of Veritas and the associated estimated useful lives:
Amount
Estimated
Useful Life
(In thousands)
Net tangible assets ...................................... $ 2,300,199 —
Identifiable intangible assets:
Acquired product rights ................................ 1,301,600 4 to 5 years
(1)
Customer contracts and relationships . . . ................... 1,419,400 8 years
Trade name ......................................... 96,800 10 years
Goodwill ............................................. 8,597,768 —
In-process research and development ........................ 284,000 —
Deferred stock-based compensation ......................... 63,092 2.8 years
(2)
Deferred tax liability .................................... (827,218) —
Total purchase price ................................... $13,235,641
(1)
The Veritas backlog included in Acquired product rights was charged to Cost of revenues in the September 2005
quarter.
(2)
Estimated weighted-average remaining vesting period.
During fiscal 2007, we adjusted goodwill for amounts primarily related to tax adjustments, which consisted of
adjustments to deferred taxes and income taxes payable related to pre-acquisition tax contingencies and actual tax
benefits arising from employee exercises of assumed fully-vested stock options. The purchase price allocation may
be further adjusted in future periods pending resolution of the Veritas pre-acquisition income tax matters discussed
in Note 13.
Net tangible assets
Veritas’ tangible assets and liabilities as of July 2, 2005 were reviewed and adjusted to their fair value as
necessary, including a write down in the amount of $113 million relating to land owned in various locations. Net
tangible assets include net deferred tax assets of $223 million and income taxes payable of $269 million.
Deferred revenue
In connection with the 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-up approach.
The cost build-up approach determines fair value by estimating the costs relating to fulfilling the obligation plus a
normal profit margin. The sum of the costs and operating profit approximates, in theory, the amount that we would
be required to pay a third party to assume the support obligation. The estimated costs to fulfill the support obligation
were based on the historical direct costs related to providing the support. As a result, we recorded an adjustment to
reduce the carrying value of deferred revenue by $359 million to $173 million, which represents our estimate of the
fair value of the contractual obligations assumed.
Identifiable intangible assets
Acquired product rights include developed and core technology, patents, and backlog. Developed technology
relates to Veritas’ products across all of their product lines that have reached technological feasibility. Core
technology and patents represent a combination of Veritas processes, patents, and trade secrets developed through
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SYMANTEC CORPORATION
Notes to Consolidated Financial Statements — (Continued)