Symantec 2009 Annual Report Download

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Symantec 2009 Annual Report

Table of contents

  • Page 1
    Symantec 2009 Annual Report

  • Page 2
    ...opportunities to improve our cost structure. Furthermore, we continued to demonstrate our commitment to increasing shareholder value by repurchasing a total of $700 million of our common stock. SYMANTEC IS ABOUT SECURING AND MANAGING INFORMATION Symantec's goal is to help customers secure and manage...

  • Page 3
    ... Buying Storage" campaign which enables customers using our solutions to reduce storage costs by better utilizing existing storage and by buying lower cost storage. In the data protection market, our backup and recovery products gained market share. The transition of NetBackup to a platform based...

  • Page 4
    ... Small Business Edition and the Symantec Protection Suites in May 2009. The suites create an endpoint and messaging environment that is secure against today's complex malware, data loss and spam threats, and is quickly recoverable in the event of failure, thereby controlling costs and managing risk...

  • Page 5
    ... to ensure that we continue to meet the increasing expectations of our stakeholders. POSITIONED FOR SUCCESS Symantec holds the leading position in the markets in which we operate and customers see the value of our broad portfolio of products and services. Gaining market share is important, however...

  • Page 6
    ... revenue related to acquisitions Stock-based compensation Amortization of acquired product rights Amortization of other intangible assets Restructuring Impairment of goodwill Impairment of assets held for sale Gain on sale of assets Executive incentive bonuses Patent settlement Total Operating...

  • Page 7
    ... Investor Services, by email through their website at www.computershare.com/contactus or by phone at (877) 282-1168 (within the U.S. and Canada) or (781) 575-2879 (outside the U.S. and Canada). BY ORDER OF THE BOARD OF DIRECTORS SCOTT C. TAYLOR Executive Vice President, General Counsel and...

  • Page 8
    ... or by telephone. This process is designed to expedite stockholders' receipt of proxy materials, lower the cost of the annual meeting, and help conserve natural resources. If you previously elected to receive our proxy materials electronically, you will continue to receive these materials via e-mail...

  • Page 9
    ...'s Supporting Statement ...Our Board of Directors' Statement in Opposition to Proposal 3 ...EQUITY COMPENSATION PLAN INFORMATION ...Material Features of Equity Compensation Plans Not Approved by Stockholders ...OUR EXECUTIVE OFFICERS ...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...

  • Page 10
    ... proxy is solicited on behalf of Symantec Corporation's Board of Directors (the "Board") for use at Symantec's 2009 Annual Meeting of Stockholders (the "Annual Meeting") to be held at Symantec's offices located at 350 Ellis Street, Mountain View, California 94043 on Wednesday, September 23, 2009...

  • Page 11
    ...you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to vote over the Internet or by telephone, or if you received paper proxy materials by mail, by filling out and returning the proxy card. Beneficial Owner: Shares Registered in the Name...

  • Page 12
    ...Inc., to aid it in the solicitation process. Symantec will pay Georgeson a fee equal to $12,000, plus expenses. Our directors, officers, and other employees, without additional compensation, may also solicit proxies personally or in writing, by telephone, e-mail, or otherwise. Following the original...

  • Page 13
    ... us to send our future proxy materials to you electronically by email. Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings of stockholders on the environment. If you choose to...

  • Page 14
    ... for companies with securities listed on the NASDAQ Global Select Market, the NASDAQ Stock Market ("NASDAQ") requires that a majority of the members of our Board be independent, as defined under NASDAQ's Marketplace Rules. Currently, each member of our Board, other than our Chief Executive Officer...

  • Page 15
    ... distributed in advance of each meeting. Board meetings and background materials focus on key strategic, operational, financial, governance and compliance matters applicable to us, including the following: • Reviewing annual and longer-term strategic and business plans; • Reviewing key product...

  • Page 16
    ... SEC disclosure requirement and does not impose any additional duties, obligations or liability on any person so designated. Number of Meetings in Fiscal Year 2009: Independence: Functions: Compensation Committee Members: Michael A. Brown William T. Coleman Geraldine B. Laybourne David L. Mahoney...

  • Page 17
    ... for our other executive officers; To review the overall strategy for employee compensation; To administer our equity incentive plans; To review and recommend to the Board compensation for nonemployee members of the Board; and To review and discuss with management the Company's disclosures under the...

  • Page 18
    ...directors, management and executive recruiting firms. Process for Identifying and Evaluating Nominees The Nominating and Governance Committee considers candidates by first evaluating the current members of the Board who intend to continue in service, balancing the value of continuity of service with...

  • Page 19
    ... matters will be handled in accordance with Symantec's policy regarding accounting complaints and concerns. Attendance of Board Members at Annual Meetings The Board does not have a formal policy with respect to Board member attendance at our annual meetings of stockholders, as historically very few...

  • Page 20
    ... ("IBM"), a global information technology company, where he held senior executive positions in sales, marketing and software development. He last served as a general manager of IBM Americas and a member of the company's Worldwide Management Council. Mr. Thompson is a member of the board of directors...

  • Page 21
    ... of the Board and Chief Executive Officer of Cassatt Corporation, a provider of solutions to automate information technology operations, from August 2003 to June 2009. Previously Mr. Coleman was co-founder of BEA Systems, Inc., an enterprise application and service infrastructure software provider...

  • Page 22
    ...Salem led the security business unit at Symantec. Mr. Salem received a Bachelor of Arts in computer science from Dartmouth College. Mr. Schulman was appointed to the Board in March 2000. Mr. Schulman has served as Chief Executive Officer of Virgin Mobile USA, a cellular phone service provider, since...

  • Page 23
    ... estimated forfeitures related to service-based vesting conditions. For additional information about assumptions used in valuing our equity compensation awards, refer to Note 13 of the financial statements in our Form 10-K for the fiscal year ended April 3, 2009, as filed with the SEC. (8) In fiscal...

  • Page 24
    ... nonemployee directors will be made on a discretionary basis under the plan. Pursuant to a policy adopted by our Board, each non-employee member of the Board now receives an annual award of fully-vested restricted stock awards having a fair market value on the grant date equal to $180,000, with this...

  • Page 25
    ... for audit services principally related to the year-end examination and the quarterly reviews of Symantec's consolidated financial statements, consultation on matters that arise during a review or audit, review of SEC filings, audit services performed in connection with Symantec's acquisitions and...

  • Page 26
    ... audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report...

  • Page 27
    ...-vote. Cumulative voting. Call a special shareholder meeting. • John Thompson was both our Chairman and CEO and held two outside board seats - Over-extension concern. • Our directors also served on 3 boards rated "D" by the Corporate Library: Michael Brown Geraldine Laybourne Robert Steve Miller...

  • Page 28
    ...the stockholders of 25% of the common stock to call special meetings provides an appropriate balance between ensuring the Board's accountability to stockholders and enabling the Board and management to operate the Company in an effective manner. Stockholder meetings are costly and time consuming for...

  • Page 29
    ...amending equity compensation plans or issuing shares above a prescribed threshold. In addition, stockholders have the right under Rule 14a-8 of the Securities and Exchange Act of 1934, as amended, and under our Bylaws to propose business to be considered by the stockholders at the annual meetings of...

  • Page 30
    ... of each option granted under the plan, including the number of shares for which the option was granted, the exercise price of the option and the periods during which the option may be exercised. Each option is evidenced by a stock option agreement in such form as the Compensation Committee approved...

  • Page 31
    ... granted was not less than 100% of the fair market value of the shares of common stock on the date of the grant. • Tax Status: All options granted under the plan are non-qualified stock options. • Method of Exercise: The option exercise price is typically payable in cash or by check, but may...

  • Page 32
    ... and Chief Accounting Officer Group President, Enterprise Product Group Executive Vice President and Chief Human Resources Officer Executive Vice President, Worldwide Sales Executive Vice President, General Counsel and Secretary Group President, Information Technology and Services Group The Board...

  • Page 33
    ...Oracle Corporation, a global enterprise software company from January 2005 to January 2006. From August 1995 to January 2005, he was Vice President of Services and Chief Information Officer at PeopleSoft, Inc., an enterprise application software products developer, which was later acquired by Oracle...

  • Page 34
    ... of Class Name and Address of Beneficial Owner 5% Beneficial Owner Barclays Global Investors(1) ...42,851,044 Directors and Executive Officers John W. Thompson(2) ...8,158,221 Enrique Salem(3) ...762,387 James A. Beer(4) ...438,410 Gregory W. Hughes(5) ...1,205,832 J. David Thompson(6) ...394,389...

  • Page 35
    ... 1, 2009. Symantec has adopted a policy that executive officers and members of the Board hold an equity stake in the Company. The policy requires each executive officer to hold a minimum number of shares of Symantec common stock. Newly appointed executive officers are not required to immediately...

  • Page 36
    ... to our named executive officers ("NEOs"). For fiscal 2009, our NEOs were: • John W. Thompson, Chairman of the Board (and former Chief Executive Officer) • Enrique Salem, President and Chief Executive Officer (and former Chief Operating Officer) • James A. Beer, Executive Vice President and...

  • Page 37
    ..., business unit performance. Long-term results are measured by (a) share price appreciation, and (b) achievement of operating cash flow targets. Appropriate Market Positioning: Our current policy is to target the base salary and annual short-term cash incentive structure for named executive officers...

  • Page 38
    ... Incentive Plans, and the value of all vested and unvested equity awards). The percentage of an executive officer's compensation opportunity that is at-risk or variable instead of fixed is based primarily on the officer's level of influence at Symantec. Executive officers generally have a greater...

  • Page 39
    ... to continue to emphasize the alignment between pay and performance, the Compensation Committee also did not increase the base salaries of any of the Company's named executive officers for fiscal 2010 with the exception of a promotional increase for Gregory Hughes. Executive Annual Incentive Plans...

  • Page 40
    ...are responsible for a business unit (i.e., J. David Thompson), in addition to revenue and EPS metrics, the FY09 Executive Annual Incentive Plans also included business unit performance against budget as a performance metric. For J. David Thompson, the IT and Services group performance against budget...

  • Page 41
    ... to revenues and EPS, which can lead to fluctuations in results that are not necessarily directly tied to our business success. For our named executive officers, the target 2009 LTIP awards represented the following percentages of base salary: John Thompson, 250%; Enrique Salem, 160%; James Beer, 71...

  • Page 42
    ...information technology companies that the Compensation Committee includes in its market composite. As such, we establish target equity incentive award grant guideline levels for the named executive officers based on market pay assessments. When making annual equity awards to named executive officers...

  • Page 43
    ... of the grant-date fair market value to assure that executives will receive a benefit only when the trading price increases. Option awards generally have value for the executive only if the executive remains employed for the period required for the shares to vest. Options granted in fiscal 2009 vest...

  • Page 44
    ... below. Deferred Compensation: Symantec's named executive officers are eligible to participate in a nonqualified deferred compensation plan, which provides U.S. employees (including our named executive officers) the opportunity to defer up to 75% of base salary and 100% of cash bonuses for payment...

  • Page 45
    ... Shares Required Enrique Salem ...James Beer ...Gregory Hughes ...J. David Thompson ...John Thompson ...Recoupment Policies (Clawbacks) 150,000 85,000 35,000 35,000 N/A 181,406 60,285 52,560 41,264 1,452,591 - 24,715 - - - During fiscal 2009, the Company added provisions to its executive annual...

  • Page 46
    ..., the Company records salaries and performance-based compensation incentives as expenses in the amount paid, or to be paid, to the named executive officers. Accounting rules also require the Company to record an expense in its financial statements for equity awards, even though equity awards are not...

  • Page 47
    ... CD&A be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended April 3, 2009. By: The Compensation Committee of the Board of Directors: Michael A. Brown William T. Coleman Geraldine B. Laybourne David L. Mahoney Daniel H. Schulman (Chair) 38

  • Page 48
    ... Year Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($) All Other Compensation ($) Total ($) Name and Principal Position John W. Thompson ...Chairman of the Board of Directors and former Chief Executive Officer James A. Beer ...Executive Vice...

  • Page 49
    ...of fiscal 2011. This amount represents coverage of expenses related to attendance at the FY08 Board retreat, reimbursement for tax services and the Company's contributions to Mr. Beer's account under its 401(k) plan. This amount represents (a) $607,200 for Mr. Beer's executive annual bonus under his...

  • Page 50
    ...Option Awards: Number of Securities Underlying Options (#) Grant Date Fair Value of Stock and Option Awards ($) Name Grant Date(2) Estimated Future Payouts Under Non-Equity Incentive Plan Awards Threshold Target Maximum ($) ($) ($) Exercise or Base Price of Option Awards ($/Sh) John W. Thompson...

  • Page 51
    ... Stock Awards Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Name Grant Date Option Exercise Price ($) Option Expiration Date John W. Thompson ...12/18/2000 12/5/2001 10/20/2004 10/20/2005 5/9/2008 James A. Beer...

  • Page 52
    ... Stock Vested in Fiscal 2009 Option Awards Number of Shares Acquired Value Realized on Exercise on Exercise (#) ($) Stock Awards Number of Shares Acquired Value Realized on Vesting on Vesting (#) ($) Name John W. Thompson ...James A. Beer ...Gregory W. Hughes ...Enrique Salem ...J. David Thompson...

  • Page 53
    ... the terms of the plan, all equity compensation awards (including, among others, options and restricted stock units) granted by the Company to the Company's Section 16(b) officers (including the named executive officers) would become fully vested and, if applicable, exercisable following a change in...

  • Page 54
    ... the payouts to Mr. Thompson pursuant to Mr. Thompson's employment agreement and the Symantec Executive Retention Plan, assuming a qualifying termination as of April 3, 2009 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $16.23 on April 3, 2009...

  • Page 55
    ... the payouts to Mr. Beer pursuant to the Symantec Executive Retention Plan and the Symantec Corporation Severance Plan, assuming a qualifying termination as of April 3, 2009 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $16.23 on April 3, 2009...

  • Page 56
    ... of the payouts to Mr. Thompson pursuant to the Symantec Executive Retention Plan and the Symantec Corporation Severance Plan, assuming a qualifying termination as of April 3, 2009 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $16.23 on April...

  • Page 57
    ... company's goods and services and the transaction is subject to usual trade terms and is in the ordinary course of business and the related person is not involved in the negotiation of the transaction; • any compensation paid to a director if the compensation is required to be reported in Symantec...

  • Page 58
    ... has approved) that the audited financial statements be included in Symantec's Annual Report on Form 10-K for the fiscal year ended April 3, 2009 for filing with the SEC. By: The Audit Committee of the Board of Directors: Frank E. Dangeard David L. Mahoney Robert S. Miller V. Paul Unruh (Chair) 49

  • Page 59
    ... Cupertino, California 95014 Attn: Investor Relations The Annual Report is also available at www.symantec.com. "Householding" - Stockholders Sharing the Same Last Name and Address The SEC has adopted rules that permit companies and intermediaries (such as brokers) to implement a delivery procedure...

  • Page 60
    ... future can contact their bank, broker or other holder of record to request information about householding or Symantec's Investor Relations department at the address or telephone number listed above. OTHER MATTERS The Board does not presently intend to bring any other business before the meeting and...

  • Page 61
    ..., California (Address of principal executive offices) 95014-2132 (zip code) Registrant's telephone number, including area code: (408) 517-8000 Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.01 per share (Title of each class) The Nasdaq Stock Market LLC...

  • Page 62
    ..., Executive Officers and Corporate Governance ...Executive Compensation...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Certain Relationships and Related Transactions, and Director Independence ...Principal Accountant Fees and Services ... 24...

  • Page 63
    ... assets, as well as statements including words such as "expects," "plans," "anticipates," "believes," "estimates," "predicts," "projects," and similar expressions. In addition, statements that refer to projections of our future financial performance, anticipated growth and trends in our businesses...

  • Page 64
    ... customers worldwide with software and services that protect, manage and control information risks related to security, backup and recovery, storage, compliance, and systems management. Founded in 1982, Symantec has operations in more than 40 countries and our principal executive offices are located...

  • Page 65
    ... Compliance, Storage and Server Management, Services, and Other. Consumer Our Consumer segment provides suites and services that include Internet security, PC tuneup, and backup for individual users and home offices. Our NortonTM brand of consumer security software products provides protection for...

  • Page 66
    ... day-to-day manageability and improved end-user productivity, helping customers realize cost savings and value from their existing IT investments. Another key demand driver is endpoint virtualization, which frees up critical information from the myriad of operating system functions and devices so it...

  • Page 67
    ... training, to help customers optimize their Symantec solutions. Business Critical Services, our highest level of support, provides personalized, proactive support from technical experts for enterprises that require secure, uninterrupted access to their data and applications. Managed Services...

  • Page 68
    ... our electronic channels. Enterprise We sell and market our products and related services to enterprise customers through our direct sales force of more than 3,500 and through a variety of indirect sales channels, which include value-added resellers, large account resellers, distributors, and system...

  • Page 69
    ... engineering centers, research labs, global services teams, and new business incubator to translate R&D into next-generation security, storage and systems management technologies. Symantec focuses on short, medium, and long-term applied research, develops new products in emerging areas, participates...

  • Page 70
    ... access to retail distribution channels and for the attention of customers at the retail level and in corporate accounts. In addition, we compete with other software companies, operating system providers, network equipment manufacturers and other OEMs to acquire technologies, products, or companies...

  • Page 71
    ... asset that enables us to gain recognition for our products, services, and technology and enhance our competitive position. As part of our confidentiality procedures, we generally enter into non-disclosure agreements with our employees, distributors, and corporate partners, and we enter into license...

  • Page 72
    ... to increased credit risk should customers be unable to pay us, or delay paying us, for previously purchased products and services. Accordingly, reserves for doubtful accounts and write-offs of accounts receivable may increase. In addition, weakness in the market for end users of our products could...

  • Page 73
    ...technologies, management solutions, customer service, and support into unified enterprise security and storage solutions • Incorporating acquired products and technologies • Trade compliance issues affecting our ability to ship new or acquired products • Developing or expanding efficient sales...

  • Page 74
    ...sales and distribution networks. Sales through these different channels involve distinct risks, including the following: Direct Sales. A significant portion of our revenues from enterprise products is derived from sales by our direct sales force to end-users. Special risks associated with this sales...

  • Page 75
    ... a number of risks, including: • Our lack of control over the timing of delivery of our products to end-users • Our resellers and distributors are not subject to minimum sales requirements or any obligation to market our products to their customers • Our reseller and distributor agreements are...

  • Page 76
    ... number of special risks and challenges, including: • Complexity, time, and costs associated with the integration of acquired business operations, workforce, products, and technologies into our existing business, sales force, employee base, product lines, and technology • Diversion of management...

  • Page 77
    ... sales continue to grow as a percentage of our total sales or our operations outside the United States continue to increase. The level of corporate tax from sales to our non-U.S. customers is less than the level of tax from sales to our U.S. customers. This benefit is contingent upon existing...

  • Page 78
    ... products and services, effectively manage or expand our business, or increase our revenues. Our future success depends upon our ability to recruit and retain our key management, technical, sales, marketing, finance, and other critical personnel. Our officers and other key personnel are employees...

  • Page 79
    ... of the open source licenses, be required to release the source code of our proprietary software. In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third party commercial software, as open source licensors generally do not...

  • Page 80
    ... and other accounting charges, including: • Amortization of intangible assets, including acquired product rights • Impairment of goodwill • Stock-based compensation expense • Restructuring charges • Impairment of long-lived assets • Loss on sale of a business and similar write-downs of...

  • Page 81
    ... 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 financial results...

  • Page 82
    ...of adoption of new product technologies and new releases of operating systems • Weakness or uncertainty in general economic or industry conditions in any of the multiple markets in which we operate that could reduce customer demand and ability to pay for our products and services • Political and...

  • Page 83
    ... relate to our periodic or current reports under the Exchange Act. Item 2. Properties Our properties consist primarily of owned and leased office facilities for sales, research and development, administrative, customer service, and technical support personnel. Our corporate headquarters is located...

  • Page 84
    ... paying any cash dividends on our capital stock in the foreseeable future. Repurchases of Our Equity Securities Stock repurchases during the three months ended April 3, 2009 were as follows: Maximum Dollar Value of Shares That May Yet be Purchased Under Total Number of Shares the Plans Purchased...

  • Page 85
    ... 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 Corporation, The S & P 500 Index And The S & P Information Technology Index 250 Symantec Corporation S & P 500...

  • Page 86
    ...Symantec's history as a public company. 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 20 YEAR CUMULATIVE TOTAL RETURN* Among Symantec... Information Technology 2474.48 1039.03 1021....

  • Page 87
    ...., LIRIC Associates Ltd, and Platform Logic, Inc. during fiscal 2005 Each of these acquisitions was accounted for as a business purchase and, accordingly, the operating results of these businesses have been included in the Consolidated Financial Statements included in this annual report since their...

  • Page 88
    ... Business Symantec is a global leader in providing security, storage and systems management solutions to help businesses and consumers secure and manage their information. We provide customers worldwide with software and services that protect, manage and control information risks related to security...

  • Page 89
    .... Employee-related costs have been the primary driver of our operating expenses, and we expect this trend to continue. Employee-related costs include items such as wages, commissions, bonuses, vacation, benefits, and stock-based compensation. We had 17,426, 17,648, and 17,131 employees as of the end...

  • Page 90
    ... software licenses and maintenance and/or services, and packaged products with content updates, we allocate and defer revenue for the undelivered items based on vendor specific objective evidence ("VSOE") of the fair value of the undelivered elements, and recognize the difference between the total...

  • Page 91
    ... Long-Lived Assets and SFAS No. 86, Accounting for the Costs of Software to Be Sold, Leased of Otherwise Marketed. The process of evaluating the potential impairment of goodwill requires significant judgment at many points during the analysis. In determining the carrying value of the reporting units...

  • Page 92
    .... Our estimated future gross revenues of each product are based on company forecasts and are subject to change. Long-Lived Assets (including Assets Held for Sale). We account for long-lived assets in accordance with SFAS No. 144. We record impairment charges on long-lived assets to be held and used...

  • Page 93
    ...which represents investments in money market funds. These were classified as Level 1 because their valuations were based on quoted prices for identical securities in active markets. Determining fair value for Level 1 instruments generally does not require significant management judgment. As of April...

  • Page 94
    ...to the measurement of fair value of assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. Stock-Based Compensation We account for stock-based compensation in accordance with SFAS No. 123R, Share-Based Payment. Under the...

  • Page 95
    ...primarily due to a $301 million increase in Content, subscriptions, and maintenance revenues. This increase was primarily related to increased revenues in our Storage and Server Management and Services segments. In addition, revenues for fiscal 2009 benefited from additional amortization of deferred...

  • Page 96
    ...large number of our customers renew their annual maintenance contracts. Content, subscriptions, and maintenance revenues increased in fiscal 2008 as compared to fiscal 2007 primarily due to an increase of $394 million in revenue related to enterprise products and services, excluding acquired Altiris...

  • Page 97
    ... our retail channels. Our electronic channels include sales derived from OEMs, subscriptions, upgrades, online sales, and renewals. In addition, Consumer revenues increased from the sale of our consumer services and acquired security products. Consumer revenues increased for fiscal 2008 compared to...

  • Page 98
    .... Total expenses from our Storage and Server Management segment increased primarily as a result of the impairment of intangible assets related to the APM business of $95 million. Additionally, increases in sales expenses drove costs higher for the Storage and Server Management group. Services...

  • Page 99
    ... general and administrative expenses; amortization of acquired product rights, intangible assets, and other assets; goodwill impairment charges; charges such as stock-based compensation and restructuring; and certain indirect costs that are not charged to the other operating segments. The operating...

  • Page 100
    ... U.S. dollar and a decrease in endpoint security product sales to small and medium sized businesses. This decrease was partially offset by an increase in revenues related to our Storage and Server Management and Services segments. Asia Pacific Japan revenues increased for fiscal 2009 as compared to...

  • Page 101
    ... consists primarily of fee-based technical support costs, costs of billable services, and payments to OEMs under revenue-sharing agreements. Cost of content, subscriptions, and maintenance as a percentage of related revenue for the fiscal 2009 decreased one percentage point as compared to the...

  • Page 102
    ...as a percentage of total revenues increased to 41% in fiscal 2008 as compared to 39% in fiscal 2007. The percentage increase and increase in absolute dollars in sales and marketing expenses in fiscal 2008 as compared to fiscal 2007 is primarily due to higher employee compensation expense as a result...

  • Page 103
    ... $64 million largely related to the 2009 Plan (as defined in Note 9) reduction in force and the 2008 Plan business structure changes, $21 million related to the outsourcing of back office functions to various third-party outsourcers and $11 million related to facilities costs associated with earlier...

  • Page 104
    ... long-lived asset classified as held for sale should be measured at the lower of its carrying amount or fair value less cost to sell. During the year ended March 28, 2007, we determined that the APM business in the Storage and Server Management segment did not meet the long-term strategic objectives...

  • Page 105
    ... tax assets in a foreign jurisdiction that will require an extended period of time to realize. The valuation allowance increased by $63 million in total in fiscal 2009 and totals $101 million as of April 3, 2009. As a result of the impairment of goodwill, we have cumulative pre-tax book losses...

  • Page 106
    ... in this annual report, we established a deferred tax asset of approximately $232 million to account for the book-tax basis difference in the convertible notes resulting from note hedge transactions. The establishment of the deferred tax asset has been accounted for as an increase to additional...

  • Page 107
    ... The joint venture develops, manufactures, markets and supports security and storage appliances to global telecommunications carriers and enterprise customers. As described further in Note 7 of the Notes to Consolidated Financial Statements in this annual report, we account for our investment in the...

  • Page 108
    ... goodwill impairment charge offset by the net loss of $6.7 billion. Net cash provided by operating activities during fiscal 2008 resulted largely from net income of $464 million adjusted for non-cash items - depreciation and amortization charges of $824 million, stock-based compensation expense...

  • Page 109
    ... or in stock at our option. As of April 3, 2009, the conditions to conversion had not been met. Interest payments were calculated based on terms of the related notes. These amounts are associated with agreements for purchases of goods or services generally including agreements that are enforceable...

  • Page 110
    ... may enable us to recover a portion of any future amounts paid. We believe the estimated fair 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...

  • Page 111
    ... the accounting for business combinations by requiring that an acquiring entity measures and recognizes identifiable assets acquired and liabilities assumed at the acquisition date fair value with limited exceptions. The changes include the treatment of acquisition related transaction costs, the...

  • Page 112
    ... periods within those fiscal years. These nonfinancial items include assets and liabilities such as reporting units measured at fair value in a goodwill impairment test and nonfinancial assets acquired and liabilities assumed in a business combination. Effective March 29, 2008, we adopted SFAS No...

  • Page 113
    .... 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 114
    ... be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions...

  • Page 115
    ..., the internal control over financial reporting of (a) PC Tools Pty. Ltd. and subsidiaries, which we acquired on October 6, 2008, and is included in the fiscal 2009 consolidated financial statements of Symantec and constituted $310.5 million of total assets (of which $273.0 million represents...

  • Page 116
    ...Proxy Statement for its 2009 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended April 3, 2009. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is...

  • Page 117
    ... statement schedule. All requests should be sent to: Symantec Corporation Attn: Investor Relations 20330 Stevens Creek Boulevard Cupertino, California 95014 408-517-8000 a) The following documents are filed as part of this report: Page Number 1. Consolidated Financial Statements: Reports of...

  • Page 118
    ...statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free...

  • Page 119
    ...640.1 million represents goodwill and intangible assets included within the scope of the assessment) as of April 3, 2009 and total revenues of $37.8 million for the year then ended. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States...

  • Page 120
    ... ...Intangible assets, net ...Goodwill ...Investment in joint venture ...Long-term deferred income taxes . Other long-term assets ... Total assets ...LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ...Accrued compensation and benefits ...Current deferred revenue ...Income...

  • Page 121
    ... ...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 purchased intangible assets ...Restructuring ...Impairment of goodwill...

  • Page 122
    ... of common stock under employee stock plans ...Repurchases of common stock ...Restricted stock units released, net of taxes ...Stock-based compensation, net of estimated forfeitures ...Issuance of warrants ...Purchase of bond hedge, net of tax ...Income tax benefit from employee stock transactions...

  • Page 123
    ... by operating activities: Depreciation and amortization ...Stock-based compensation expense...Impairment of assets held for sale ...Deferred income taxes ...Income tax benefit from the exercise of stock options ...Excess income tax benefit from the exercise of stock options ...Loss (Gain) on sale of...

  • Page 124
    ... to help businesses and consumers secure and manage their information. We provide customers worldwide with software and services that protect, manage and control information risks related to security, data protection, storage, compliance, and systems management. We help our customers manage cost...

  • Page 125
    ...For our Consumer 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 via the Internet. For our consumer...

  • Page 126
    ...content updates and to revenue for all other products. For our Security and Compliance and Storage and Server Management segments, we generally recognize revenue from the licensing of software products through our indirect sales channel upon sell-through to an end-user. For licensing of our software...

  • Page 127
    ... which would provide us with the option to purchase additional common shares at a fixed price from the note holders after conversion. The cost incurred in connection with the note hedge transaction, net of the related tax benefit and the proceeds from the sale of warrants, was included as a net...

  • Page 128
    ... acquire in-process research and development ("IPR&D") in the fiscal years 2009, 2008 and 2007. Amounts allocated to liabilities assumed are based upon present values of amounts to be paid determined at current market rates. We estimate the fair value of deferred revenue related to product support...

  • Page 129
    ...144, Impairment and Disposal of Long-Lived Assets and SFAS No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. As defined in SFAS No. 142, we perform our goodwill impairment analysis at the reporting unit level, which are the same as our operating segments...

  • Page 130
    ... - (Continued) the Services operating segment was comprised of two components that each represented a reporting unit: SaaS and Services. Intangible Assets. In connection with our acquisitions, we generally recognize assets for customer relationships, developed technology or acquired product rights...

  • Page 131
    ... is generally the vesting period of the respective award. No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited. Fair Value of Stock-Based Awards. We use the Black-Scholes option-pricing model to determine the fair value of...

  • Page 132
    ... have been within management's expectations. See Note 12 for details of significant customers. Advertising costs Advertising costs are charged to operations as incurred and include electronic and print advertising, trade shows, collateral production, and all forms of direct marketing. Starting in...

  • Page 133
    ... Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162 defines the order in which accounting principles that are generally accepted should be followed. SFAS No. 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board ("PCAOB") amendments...

  • Page 134
    ... the accounting for business combinations by requiring that an acquiring entity measures and recognizes identifiable assets acquired and liabilities assumed at the acquisition date fair value with limited exceptions. The changes include the treatment of acquisition related transaction costs, the...

  • Page 135
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Note 2. Fair Value Measurements We measure financial assets and liabilities at fair value based upon exit price, representing the amount that would be received on the sale of an asset or paid to transfer a liability, as ...

  • Page 136
    ... Estimated Fair Value Amortized Cost March 28, 2008 Unrealized Unrealized Gains Losses (In thousands) Estimated Fair Value Asset-backed securities ...$ 14,657 Corporate securities ...8,402 Commercial paper ...- Government securities ...174,962 Marketable equity securities ...3,306 Total ...$201,327...

  • Page 137
    ...the Storage and Server Management segment did not meet the long term strategic objectives of the segment. During the fourth quarter of 2008, we sold the tangible and intangible assets (and liabilities) classified as held for sale. Note 5. Acquisitions Fiscal 2009 acquisitions MessageLabs Purchase On...

  • Page 138
    ... company's access to our global distribution network. In addition, each acquired company provided a knowledgeable and experienced workforce. All of the goodwill from the nSuite Technologies, Inc. ("nSuite") acquisition is tax deductible and most of the goodwill from the PC Tools Pty Ltd. ("PC Tools...

  • Page 139
    ... of common stock outstanding, excluding cash acquired ...$ 989,863 Fair value of stock options assumed ...16,847 Fair value of restricted stock awards...4,839 Acquisition-related transaction costs ...4,348 Restructuring costs ...22,341 Total purchase price...$1,038,238 The results of operations of...

  • Page 140
    ... integration of the acquired company's technology with our technology and the acquired company's access to our global distribution network. In addition, each acquired company provided a knowledgeable and experienced workforce. The results of operations for the acquired companies have been included...

  • Page 141
    ... Services reporting units. Goodwill is allocated by operating segment as follows: Security and Compliance Storage and Server Management (In thousands) Consumer Services Total Balance as of March 30, 2007...$102,810 Operating segment reclassification(1) ...- Goodwill acquired through business...

  • Page 142
    ... a manner similar to a purchase price allocation for an acquired business. An impairment loss is then recognized for the amount by which the carrying value of the reporting unit's goodwill exceeds its implied fair value. As noted in the Summary of Significant Accounting Policies, the calculation of...

  • Page 143
    ...% of the outstanding common shares of the joint venture. The joint venture will develop, manufacture, market and support security and storage appliances to global telecommunications carriers and enterprise customers. Huawei contributed its telecommunications storage and security business assets, 83

  • Page 144
    ... CORPORATION Notes to Consolidated Financial Statements - (Continued) engineering, sales and marketing resources, personnel, and licenses related to intellectual property in exchange for a 51% ownership interest in the joint venture. The contribution of assets to the joint venture was accounted for...

  • Page 145
    ... or (4) during 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...

  • Page 146
    ... required covenants, and there was no outstanding balance on the credit facility. Note 9. Restructuring Our restructuring costs consist of severance, benefits, facilities and other costs. Severance and benefits generally include severance, stay-put or one-time bonuses, outplacement services, health...

  • Page 147
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) • Reduce operating costs, implement management structure changes, optimize the business structure and discontinue certain products. Charges related to these actions are for severance and benefits. These actions were ...

  • Page 148
    ... may enable us to recover a portion of any future amounts paid. We believe the estimated fair 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...

  • Page 149
    ... our Internet security, PC tuneup, and backup products to individual users and home offices. • Security and Compliance. Our Security and Compliance segment focuses on providing large, medium, and small-sized businesses with solutions for endpoint security and management, compliance, archiving...

  • Page 150
    ... expenses; amortization of acquired product rights, intangible assets, and other assets; goodwill impairment charges; charges such as stock-based compensation and restructuring; and certain indirect costs that are not charged to the other operating segments. The accounting policies of the segments...

  • Page 151
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Segment information The following table presents a summary of our operating segments: Consumer Security and Compliance Storage and Server Management Services (In thousands) Other Total Company Fiscal 2009 Net revenues ......

  • Page 152
    ... (Continued) Net revenues from sales of our storage and availability management products within our Storage and Server Management segment represented 12%, 11%, and 9% of our total revenues during fiscal 2009, 2008, and 2007, respectively. Net revenue from sales of our data protection products within...

  • Page 153
    ...) Note 13. Employee Benefits and Stock-Based Compensation 401(k) plan We maintain a salary deferral 401(k) plan for all of our domestic employees. This plan allows employees to contribute up to 50% of their pretax salary up to the maximum dollar limitation prescribed by the Internal Revenue Code...

  • Page 154
    ... 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 grant. Options generally vest over a four-year period. Options granted prior to...

  • Page 155
    ...life ...Expected volatility ...Risk-free interest rate ... 3 years 3 years 3 years 37% 33% 34% 2.04% 4.52% 4.86% Changes in the Black-Scholes valuation assumptions and our estimated forfeiture rate may change the estimate of fair value for stock-based compensation and the related expense recognized...

  • Page 156
    ... share data) Cost of revenues - Content, subscriptions, and maintenance ...$ 11,180 Cost of revenues - Licenses ...3,053 Sales and marketing ...65,744 Research and development ...49,285 General and administrative ...28,202 Total stock-based compensation ...157,464 Tax benefit associated with stock...

  • Page 157
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) exercisable includes options with an exercise price below $16.23, the closing price of our common stock on April 3, 2009, as reported by the NASDAQ Global Select Market. (2) (3) Refers to options cancelled before their ...

  • Page 158
    ... of federal benefit ...Goodwill impairment - non deductible ...Foreign earnings taxed at less than the federal rate ...Non-deductible stock-based compensation ...Domestic production activities deduction ...Contingent penalty accrual ...IRS audit settlement ...Federal research and development credit...

  • Page 159
    ... operating loss carryforwards attributable to various acquired foreign companies of approximately $349 million net of valuation allowances, which, under current applicable foreign tax law, can be carried forward indefinitely. As a result of the impairment of goodwill, we have cumulative pre-tax book...

  • Page 160
    ... tax benefits associated with the correlative effects of potential transfer pricing adjustments, interest deductions, and state income taxes, as well as payments made to date. Of the total unrecognized tax benefits at April 3, 2009, $632 million, if recognized, would favorably affect the Company...

  • Page 161
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our 2000 through 2008 tax years remain subject to examination by the Internal Revenue Service ("IRS") for U.S. ...

  • Page 162
    ... outstanding during the period using the treasury stock method. Dilutive potential common shares include shares underlying outstanding stock options, stock awards, warrants, and convertible notes. The components of earnings per share are as follows: Year Ended April 3, March 28, March 30, 2009 2008...

  • Page 163
    ... and Chief Accounting Officer (Principal Accounting Officer) Chariman of the Board May 29, 2009 /s/ James A. Beer James A. Beer /s/ George W. Harrington George W. Harrington John W. Thompson John W. Thompson May 29, 2009 May 29, 2009 /s/ May 29, 2009 /s/ Michael A. Brown Michael A. Brown...

  • Page 164
    Signature Title Date /s/ Geraldine B. Laybourne Geraldine B. Laybourne /s/ David L. Mahoney David L. Mahoney /s/ Robert S. Miller Robert S. Miller Director May 29, 2009 Director May 29, 2009 Director May 29, 2009 /s/ Daniel Schulman Daniel Schulman /s/ V. Paul Unruh V. Paul Unruh ...

  • Page 165
    ...Beginning Revenue and to (1) Accounts of Period Operating Expense (In thousands) Amount Written Off or Used Balance at End of Period Allowance for doubtful accounts: Year ended April 3, 2009 ...$ 8,915 Year ended March 28, 2008 ...8,391 Year ended March 30, 2007 ...8,794 Reserve for product returns...

  • Page 166
    ... Executive Vice President, General Counsel and Secretary J. David Thompson Group President, Services Group Richard Spring Senior Vice President, Americas Sales Rowan M. Trollope Senior Vice President, Consumer Business Michael Wolfe Chief Technology Officer, Enterprise Product Group Annual Meeting...

  • Page 167
    350 Ellis Street Mountain View, CA 94043 Tel: (650) 527-8000 www.symantec.com