Symantec 2010 Annual Report Download

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2010 Annual Report

Table of contents

  • Page 1
    2010 Annual Report

  • Page 2

  • Page 3
    ... year over year. We improved our customer retention rate by 30% boosting the average life of a Norton customer to more than four years. We expanded product distribution through our multi-channel strategy. Our products are shipping on 60% of global consumer Windows-based PC's. We increased the number...

  • Page 4
    ...larger Symantec enterprise sales force to drive incremental SaaS sales. Partners selling our hosted services exceed 1,100 - an over 200% increase from when we acquired MessageLabs. In addition, we expanded our SaaS product offering to include instant messaging security and hosted endpoint protection...

  • Page 5
    ... services in data loss prevention and backup. We are making it easy for customers to adopt and manage more of our hosted services by building a single platform for our solutions. We will continue to leverage our sales force and partner network to drive double-digit growth in this important market...

  • Page 6
    ... employees, and a drive to win will make us successful now and in the years to come. I look forward to sharing with you the many accomplishments team Symantec will achieve in fiscal 2011. Sincerely, ENRIQUE SALEM President and Chief Executive Officer FORWARD-LOOKING STATEMENTS: This annual report...

  • Page 7
    ... of Non-GAAP Adjustments Operating Income (Loss) Stock-based compensation Amortization of acquired product rights Amortization of other intangible assets Restructuring Impairment of goodwill Impairment of assets held for sale Executive incentive bonuses Patent settlement Total Operating Income (Loss...

  • Page 8
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  • Page 9
    ... the U.S. and Canada). BY ORDER OF THE BOARD OF DIRECTORS SCOTT C. TAYLOR Executive Vice President, General Counsel and Secretary Mountain View, California July 30, 2010 Every stockholder vote is important. To assure that your shares are represented at the Annual Meeting, please vote over the...

  • Page 10
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  • Page 11
    ......Contacting the Board of Directors ...Attendance of Board Members at Annual Meetings ...PROPOSAL NO. 1 ELECTION OF DIRECTORS ...Nominees for Director ...Director Compensation ...PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ...Principal Accountant Fees...

  • Page 12
    ...Stock Purchase Plan ...U.S. Federal Income Tax Consequences ...Accounting Treatment ...New Plan Benefits ...EQUITY COMPENSATION PLAN INFORMATION ...Material Features of Equity Compensation Plans Not Approved by Stockholders ...OUR EXECUTIVE OFFICERS ...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS...

  • Page 13
    ... public accounting firm for the 2011 fiscal year; 3. The approval of an amendment to our 2004 Equity Incentive Plan, as amended, to increase the number of authorized shares issuable thereunder by 55,000,000 shares; and 4. The approval of an amendment to our 2008 Employee Stock Purchase Plan...

  • Page 14
    ... accounting firm for the 2011 fiscal year (Proposal 2); FOR the amendment to our 2004 Equity Incentive Plan (Proposal 3); and FOR the amendment to our 2008 Employee Stock Purchase Plan (Proposal 4). Who can vote at the Annual Meeting? Stockholders as of the record date for the meeting, July 26, 2010...

  • Page 15
    ...to one vote for each share of Symantec common stock held as of July 26, 2010, the record date. What is the quorum requirement for the meeting? A majority of our outstanding shares as of the record date must be present at the meeting in order to hold the meeting and conduct business. This presence is...

  • Page 16
    ... similar means, or in person. Our directors, officers, and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, e-mail, or otherwise. Following the original mailing of the proxies and other soliciting materials, Symantec will request brokers...

  • Page 17
    ... announced at the Annual Meeting and posted on our website at www.symantec.com/invest. The final results will be tallied by the inspector of elections and filed with the U.S. Securities and Exchange Commission (SEC) in a current report on Form 8-K within four business days of the Annual Meeting. 5

  • Page 18
    ... section of our website located at www.symantec.com/invest, by clicking on "Company Charters," under "Corporate Governance." Any amendments or waivers of our Code of Conduct and Code of Ethics for Chief Executive Officer and Senior Financial Officers pertaining to a member of our Board or one of...

  • Page 19
    ... rules require listed companies to have a board of directors with at least a majority of independent directors, as defined under NASDAQ's Marketplace Rules. Currently, each member of our Board, other than our Chief Executive Officer, Enrique Salem, and our Chairman of the Board, John W. Thompson, is...

  • Page 20
    ... 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, industry and...

  • Page 21
    ... directors will hold an executive session to evaluate the Chief Executive Officer's performance and compensation. Succession Planning Our Board recognizes the importance of effective executive leadership to Symantec's success, and meets to discuss executive succession planning at least annually...

  • Page 22
    ... the Board and available on our website at www.symantec.com/invest, by clicking on "Company Charters," under "Corporate Governance." Audit Committee Members: William T. Coleman III (effective April 3, 2010) Frank E. Dangeard David L. Mahoney Robert S. Miller V. Paul Unruh (Chair) Number of Meetings...

  • Page 23
    ... Number of Meetings in Fiscal Year 2010: 4 Independence: Each member is an independent director as defined by current NASDAQ listing standards. To identify, consider and nominate candidates for membership on our Board; To develop, recommend and evaluate corporate governance standards and a code...

  • Page 24
    ... Expertise. Knowledge of financial markets, financing operations, and accounting and financial reporting processes is important because it assists our directors in understanding, advising, and overseeing Symantec's capital structure, financing and investing activities, financial reporting, and...

  • Page 25
    ... for the 2011 Annual Meeting." Contacting the Board of Directors Any stockholder who wishes to contact members of our Board may do so by mailing written communications to: Symantec Corporation 350 Ellis Street Mountain View, California 94043 Attn: Corporate Secretary The Corporate Secretary will...

  • Page 26
    ... 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 of Seagate Technology, Inc. and United Parcel Service, Inc...

  • Page 27
    ... a leader in computer storage products, and most recently as Chief Executive Officer from 1995 to 2002 and Chairman of the Board from 1998 to 2003. Mr. Brown is a member of the board of directors of Quantum Corporation and two private companies. He has previously served as a director of a variety of...

  • Page 28
    ... market experience through her former CEO and senior management roles. Mr. Mahoney has served as a member of our Board since April 2003. Mr. Mahoney previously served as coChief Executive Officer of McKesson HBOC, Inc., a healthcare services company, and as Chief Executive Officer of iMcKesson LLC...

  • Page 29
    ... President and Chief Executive Officer of Brightmail Incorporated, an anti-spam software company that was acquired by Symantec. From January 2001 to April 2002, Mr. Salem served as Senior Vice President of Products and Technology at Oblix Inc., an identity-based security products developer, and from...

  • Page 30
    ..., 2009, with a per share fair value of $15.32 and a full grant date fair value of $179,995. (7) In fiscal year 2010 and 2009, there were no stock option grants to any person who served as a non-employee director. The outstanding stock options held by each non-employee director at 2010, 2009 and 2008...

  • Page 31
    ...May 2010, the Board amended the Non-Employee Director Grant Policy so that each non-employee member of the Board will receive an annual award of fully-vested restricted stock units having a fair market value on the grant date equal to $200,000. The restricted stock units granted for fiscal year 2011...

  • Page 32
    ... FIRM The Audit Committee has appointed KPMG as Symantec's principal independent registered public accounting firm to perform the audit of Symantec's consolidated financial statements for fiscal year 2011. As a matter of good corporate governance, the Audit Committee has decided to submit its...

  • Page 33
    ... registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The...

  • Page 34
    ...fair market value on the date of grant. • Repricing of stock options and SARs is prohibited unless stockholder approval is obtained. We believe that the increase in the number of shares reserved for issuance under the 2004 Plan is in the best interests of our company because of the continuing need...

  • Page 35
    ... the Secretary at Symantec's headquarters in Mountain View, California. Eligibility. Employees (including officers), consultants, independent contractors, advisors and members of the Board (including non-employee directors) are eligible to participate in the 2004 Plan. As of July 2, 2010, there were...

  • Page 36
    ... "Code") generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to the company's Chief Executive Officer or any of the three other most highly compensated officers (excluding a company's chief financial officer). Certain performance-based compensation...

  • Page 37
    ... of the Code such that performance-based awards in excess of $1 million payable to our Chief Executive Officer and our three other most highly compensated executive officers (excluding our Chief Financial Officer) may be deductable by us. Non-Employee Director Equity Awards. Under the 2004 Plan, non...

  • Page 38
    ... directors, executive officers, employees and other eligible participants under the 2004 Plan are discretionary and cannot be determined at this time. Further, since the number of shares subject to the RSUs to be granted to non-employee directors under the 2004 Plan depends on the fair market value...

  • Page 39
    ... of Options Granted Number of Restricted Shares and Restricted Shares Stock Units Granted Name Named Executive Officers: Enrique Salem ...James A. Beer ...Gregory W. Hughes ...William T. Robbins ...J. David Thompson...All current executive officers as a group (8 persons) ...All current non-employee...

  • Page 40
    ... to 40,000,000 shares. The Board approved this amendment in April 2010, subject to stockholder approval at the annual meeting. The ESPP provides our employees the means to acquire shares of our common stock at a discount to the purchase date fair market value through accumulated payroll deductions...

  • Page 41
    ... in fair market value of such stock (determined as of the Offering Date) for each calendar year in which the option is outstanding. In addition, we have set 10,000 shares as the maximum number of shares an employee may purchase on each Purchase Date. The ESPP allows us to increase or decrease this...

  • Page 42
    ...or the failure of the participant to remain in the continuous employ of Symantec for at least 20 hours per week and more than five months in any calendar year during the applicable Offering Period cancels his or her option to purchase shares under the ESPP and terminates his or her participation. In...

  • Page 43
    ...the time of the exercise of an option under a Non-Statutory Plan, an employee subject to tax under the Internal Revenue Code would recognize ordinary income equal to the excess of the fair market value of the stock on the date of exercise and the purchase price, Symantec would be able to claim a tax...

  • Page 44
    ... issuance under Symantec's 2000 Director Equity Incentive Plan, 209,599 shares remaining available for future issuance under Symantec's 2002 Executive Officer's Stock Purchase Plan, 15,636,064 shares remaining available for future issuance under Symantec's 2008 Employee Stock Purchase Plan and 59...

  • Page 45
    ... Compensation Committee, in other forms of consideration. • Termination of Employment: Options cease vesting on the date of termination of service or death of the participant. Options granted under the plan generally expire three months after the termination of the optionee's service to Symantec...

  • Page 46
    ... and Chief Accounting Officer Group President, Consumer Business Unit 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 47
    ... and Chief Information Officer for 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...

  • Page 48
    ... owner of more than 5% of Symantec common stock, (ii) each member of the Board, (iii) the named executive officers of Symantec included in the Summary Compensation Table appearing on page 51 of this proxy statement and (iv) all current executive officers and directors of Symantec as a group...

  • Page 49
    ...288,636 shares subject to options that will be exercisable as of August 31, 2010. 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...

  • Page 50
    ...officers under our Executive Annual Incentive Plan. Although Symantec's revenue and earnings per share declined slightly year over year, the Company's business continued to deliver strong cash flow from operations. Our named executive officers were compensated consistent with our pay-for-performance...

  • Page 51
    ... named executive officers who remain our employees as of the end of fiscal 2012; and • For fiscal 2010, the named executive officers other than the CEO received approximately 55% of the value of their equity compensation in the form of restricted stock units and 45% in stock options, while the CEO...

  • Page 52
    .... Our CEO, CFO, Chief Human Resources Officer and General Counsel regularly attend the Compensation Committee's meetings to provide: their perspectives on competition in the industry, the needs of the business, information regarding Symantec's performance, and other advice specific to their areas of...

  • Page 53
    ... equity grant levels relative to base salary than employees who are not senior executives. A materially higher proportion of the CEO's compensation opportunity is at-risk relative to the other named executive officers because the nature of his role and ability to influence the Company's performance...

  • Page 54
    ...Executive Annual Incentive Plans for a given fiscal year, each named executive officer has a target award opportunity, expressed as a percentage of base salary, with the ability to earn above or below that target based on actual performance. The Compensation Committee uses peer group and survey data...

  • Page 55
    ... officers included as reported non-GAAP earnings per share ("EPS") and non-GAAP revenue achievement. For our CEO, these two performance measures were weighted equally. For all named executive officers other than the CEO, the Fiscal Year 2010 Executive Annual Incentive Plans also included business...

  • Page 56
    ... the FY10 LTIP, named executive officers are eligible to receive performance-based compensation based upon the level of attainment of target operating cash flow through the Company's fiscal year ending April 2, 2010. The Compensation Committee implemented the FY10 LTIP in order to provide an ongoing...

  • Page 57
    ...retention value even during periods in which our trading price does not appreciate, which supports continuity in the senior management team. Shares of our stock are issued to RSU holders as the awards vest. The vesting schedule for RSUs granted to our named executive officers in fiscal 2010 provided...

  • Page 58
    ... to the named executive officers at its first meeting of each fiscal year, or shortly thereafter through subsequent action. The grant date for all stock options and RSUs granted to employees, including the named executive officers, is the 10th day of the month following the applicable meeting or, if...

  • Page 59
    ...: Symantec's named executive officers are eligible to participate in a nonqualified deferred compensation plan that 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 at a future date. This plan is...

  • Page 60
    ... purchase or write any put or call option involving Symantec's securities. In addition, our Insider Trading Policy requires that our Chief Executive Officer, Chief Financial Officer, and each of our directors conduct open market transactions in our securities only through use of stock trading plans...

  • Page 61
    ... financial statements, 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...

  • Page 62
    ... the CD&A be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended April 2, 2010. By: The Compensation Committee of the Board of Directors: Stephen M. Bennett Michael A. Brown Geraldine B. Laybourne David L. Mahoney Daniel H. Schulman (Chair...

  • Page 63
    ...our Chief Executive Officer or Chief Financial Officer) at April 2, 2010 (the "Named Executive Officers" or "NEOs"). Summary Compensation Table for Fiscal 2010 Fiscal Year Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($) All Other Compensation...

  • Page 64
    ...'s FY07 sales achiever's trip and Board retreat, the Company's contributions to Mr. Hughes' account under its 401(k) plan, and reimbursement for tax services. (22) This amount represents (a) $163,800 for Mr. Robbins' executive annual bonus under his Executive Annual Incentive Plan for fiscal 2010...

  • Page 65
    ...the Named Executive Officers from our incentive plans: Grants of Plan-Based Awards in Fiscal 2010 All Other Stock Awards: Number of Shares of Stock or Units (#) All Other Option Awards: Number of Securities Underlying Options (#) Grant Date Fair Value of Stock and Option Awards ($) Name Grant Date...

  • Page 66
    ... equity awards at fiscal year end for the Named Executive Officers. Outstanding Equity Awards At Fiscal Year-End 2010 Option Awards Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Stock Awards Number of Shares...

  • Page 67
    ... regarding option exercises and stock vested during the last fiscal year with respect to the Named Executive Officers: Option Exercises and Stock Vested in Fiscal 2010 Option Awards Number of Shares Acquired Value Realized on Exercise on Exercise (#) ($) Stock Awards Number of Shares Acquired Value...

  • Page 68
    ... or above-market. In fiscal 2010, certain management employees on our U.S. payroll with a base salary of $150,000 or greater, including each of the named executive officers, are eligible to participate in the Symantec Corporation Deferred Compensation Plan. The plan provides the opportunity for...

  • Page 69
    ... agreement, the Symantec Executive Retention Plan, assuming a qualifying termination as of April 2, 2010 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $16.77 on April 2, 2010 minus the exercise price): Severance Pay COBRA Premiums Option...

  • Page 70
    ... agreement, the Symantec Executive Retention Plan, and the Symantec Corporation Severance Plan assuming a qualifying termination as of April 2, 2010 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $16.77 on April 2, 2010 minus the exercise price...

  • Page 71
    ... 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 2, 2010 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $16.77 on April...

  • Page 72
    ... from Mr. Thompson's company from time to time solely for Mr. Thompson's business-related travel, at a dry-lease rate of $1,650 per flight hour. Pursuant to an agreement with an unrelated party, Symantec has also agreed to pay the variable operating costs of Mr. Thompson's business travel on this...

  • Page 73
    ... 2011. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in Symantec's Annual Report on Form 10-K for the fiscal year ended April 2, 2010 for filing with the SEC...

  • Page 74
    ...a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet Availability and, if applicable, annual report and other proxy materials, you may write or call Symantec's Investor Relations department at 350 Ellis Street, Mountain...

  • Page 75
    ... 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 76
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  • Page 77
    ...View, California (Address of principal executive offices) 94043 (zip code) Registrant's telephone number, including area code: (650) 527-8000 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 (Name...

  • Page 78
    ...III Directors, 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...

  • Page 79
    ... assets, as well as statements including words such as "expects," "plans,"...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...

  • Page 80
    ... and our principal executive offices are located at 350 Ellis Street, Mountain View, California, 94043. Our telephone number at that location is (650) 527-8000. Our home page on the Internet is www.symantec.com. Other than the information expressly set forth in this annual report, the information...

  • Page 81
    ... image storage costs and provide secure, web-based image sharing. In addition, we developed a scalable file server solution that combines our file system and clustering technologies, and integrates our security and backup software in order to deliver an optimized infrastructure for public or private...

  • Page 82
    ... IT Management Suite provides client, server and asset management with full service desk and automation capabilities that reduce IT costs and enhance IT effectiveness. SaaS Symantec Hosted Services, our SaaS offerings, enable customers to increase their messaging and web protection by blocking email...

  • Page 83
    ... training, to help customers optimize their Symantec solutions. Business Critical Services, our highest level of service, provide personalized, proactive support from technical experts for enterprises that require secure, uninterrupted access to their data and applications. Managed Services Symantec...

  • Page 84
    services include: Managed Security Services, Managed Endpoint Protection Services and Managed Backup Services. Other The Other segment includes sunset products and general administrative, unallocated costs and is not considered an active business component of the company. Financial Information by ...

  • Page 85
    ...; periodic software updates; and access to our technical knowledge base and frequently asked questions. Our consumer product support program provides self-help online services, phone, chat, email support, and feebased premium support and diagnostic services to consumers worldwide. Customers that...

  • Page 86
    ..., who may provide various solutions and functions in their current and future products. We also compete for 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...

  • Page 87
    ..., and corporate partners, and we enter into license agreements with respect to our software, documentation, and other proprietary information. These license agreements are generally non-transferable and have a perpetual term. We also educate our employees on trade secret protection and employ...

  • Page 88
    ... 6,200 employees work in sales and marketing; 5,600 in research and development; 4,200 in support and services; and 1,400 in management and administration. Other Information Our Internet address is www.symantec.com. We make available free of charge on our website our annual reports on Form...

  • Page 89
    ..., management solutions, customer service, and support into unified enterprise security and storage solutions • Incorporating acquired products and technologies • Addressing trade compliance issues affecting our ability to ship new or acquired products • Developing or expanding efficient sales...

  • Page 90
    .... These firms are increasingly developing and incorporating into their products data protection and storage and server management software that competes at some levels with our product offerings. Our competitive position could be adversely affected to the extent that our customers perceive the...

  • Page 91
    ... OEM sales • The development work that we must generally undertake under our agreements with our OEM partners may require us to invest significant resources and incur significant costs with little or no associated revenues • The time and expense required for the sales and marketing organizations...

  • Page 92
    ...-off of in-process research and development, impairment of goodwill, amortization of intangible assets, and stock-based compensation expense, such as the $7.4 billion goodwill write-down we recorded during fiscal 2009 Integrating acquired businesses has been and will continue to be a complex, time...

  • Page 93
    ... obtain financing for software products or that could make our products more expensive or could increase our costs of doing business in certain countries • Limitations on future growth or inability to maintain current levels of revenues from international sales if we do not invest sufficiently in...

  • Page 94
    ... or fail to manage our employee base effectively, we may be unable to develop new and enhanced 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...

  • Page 95
    ... with a strategic partner or vendor could adversely affect our ability to access software, operating system, and hardware platforms of such partner or vendor, or cause such partner or vendor to choose not to offer our products to their customers. In addition, any legal action to protect proprietary...

  • Page 96
    ... 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 97
    ... to other key assumptions such as the discount rate applied to future operating results, the estimate of the fair value of our reporting units could change significantly, which could result in a goodwill impairment charge. In addition, we evaluate our other long-lived assets, including intangible...

  • Page 98
    ... purchases near the end of each quarter • Enterprise customers' tendency to negotiate site licenses near the end of each quarter • Cancellation, deferral, or limitation of orders by customers • Movement in interest rates • The rate of adoption of new product technologies and new releases...

  • Page 99
    ... primarily of owned and leased office facilities for sales, research and development, administrative, customer service, and technical support personnel. Our corporate headquarters is located in Mountain View, California in a 667,000 square foot facility, of which 592,000 square feet is owned and 75...

  • Page 100
    ... our equity securities Stock repurchases during the three months ended April 2, 2010 were as follows: Maximum Dollar Value of Shares That May Yet be Total Number of Shares Purchased Under Total Number of Average Price Purchased Under Publicly the Plans Shares Purchased Paid Per Share Announced Plans...

  • Page 101
    ... 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 Corporation, The S & P 500 Index And...

  • Page 102
    ... consistent with 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 21 YEAR CUMULATIVE TOTAL RETURN* Among Symantec Corporation, The S & P 500...

  • Page 103
    ... Financial Statements included in this annual report since their respective dates of acquisition. Five-Year Summary 2010(c) Fiscal (a,b) 2009 2008 2007(d) 2006(e) (In millions, except per share data) Consolidated Statements of Operations Data: Net revenue...Operating income (loss)(f) ...Net income...

  • Page 104
    ... Business Symantec is a global provider of security, storage and systems management solutions that 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...

  • Page 105
    ... particularly affected by lower new license sales of our storage products on the Solaris platform. If the economic conditions affecting global markets continue or IT spending remains tight, we may continue to experience slower or negative revenue growth and our business and operating results might...

  • Page 106
    ... that include multiple elements, including perpetual software licenses and maintenance and/or services, packaged products with content updates, managed security services, and subscriptions, we allocate and defer revenue for the undelivered items based on vendor specific objective evidence ("VSOE...

  • Page 107
    ... of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to intangible assets. These estimates are based on information obtained from management of the acquired companies and historical...

  • Page 108
    ...of publicly traded companies operating in the same or similar lines of business. Applying the income approach requires that we make a number of important estimates and assumptions. We estimate the future cash flows of each reporting unit based on historical and forecasted revenue and operating costs...

  • Page 109
    ... 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 2, 2010, $342 million of investments were classified as...

  • Page 110
    ...are significant 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 the authoritative guidance on...

  • Page 111
    ...American Jobs Creation Act of 2004, and therefore eligible for a 5.25% effective U.S. federal rate of tax, in lieu of the 35% statutory rate. The final impact of this agreement... transfer pricing matter for the tax years 2000-2004. RESULTS OF OPERATIONS Total Net Revenue 2010 vs. 2009 Fiscal 2010 $ ...

  • Page 112
    ... comprehensive IT solution. Furthermore, growth in our customer base through acquisitions and new license sales resulted in an increase to Content, subscription, and maintenance revenue because a large number of our customers renew their annual maintenance contracts. License revenue 2010 vs. 2009...

  • Page 113
    ... Trends." Our electronic channel sales are derived from OEMs, subscriptions, upgrades, online sales, and renewals. Electronic channel revenue has increased year-over-year since fiscal 2008. Electronic sales accounted for approximately 81%, 78%, and 73% of Consumer revenue for fiscal 2010, 2009 and...

  • Page 114
    ... our ongoing focus on cost efficiency. Storage and Server Management revenue increased for fiscal 2009, as compared to fiscal 2008, primarily due to increased sales of products related to storage management, data protection, disaster recovery and products supporting high availability. The demand for...

  • Page 115
    ... Other segment includes general and administrative expenses; amortization of acquired product rights, other intangible assets, and other assets; impairment charges for goodwill and assets held for sale; charges such as stock-based compensation and restructuring; and certain indirect costs that are...

  • Page 116
    ... of fee-based technical support costs, costs of billable services, and payments to OEMs under revenue-sharing agreements. Cost of content, subscription, and maintenance as a percentage of related revenue remained relatively consistent for fiscal 2010, as compared to fiscal 2009, as increases in...

  • Page 117
    ... fiscal 2009. Fiscal 2010 sales and marketing expense reflects the impact of our prior year restructuring plan, partially offset by increases in headcount related expenses from our fiscal 2009 acquisitions and increases in Consumer OEM fees and costs associated with the development and operations of...

  • Page 118
    ... charges are estimated to range from $35 million to $45 million related to the 2010 Plan. Total remaining costs for the transition and transformation activities associated with outsourcing back office functions are estimated to be approximately $10 million to $20 million. For further information...

  • Page 119
    ... estimates the fair value of our reporting units based on comparable market prices. During fiscal 2010, 2009 and 2008, we recognized impairments of $20 million, $46 million, and $93 million, respectively, on certain land and buildings classified as held for sale. The impairments were recorded in...

  • Page 120
    ...venture") (fiscal 2010 and 2009 only), domestic manufacturing incentives, and research and development credits, partially offset by state income taxes. As a result of the impairment of goodwill in fiscal 2009, we have cumulative pre-tax book losses, as measured by the current and prior two years. We...

  • Page 121
    ... in Hong Kong with principal operations in Chengdu, China. The joint venture develops, manufactures, markets and supports security and storage appliances for global telecommunications carriers and enterprise customers. As described in Note 6 of the Notes to Consolidated Financial Statements in...

  • Page 122
    ...whereby we have the option to purchase up to 110 million shares of our common stock at a price of $19.12 per share. For the fiscal years ended April 2, 2010, April 3, 2009 and March 28, 2008, we have not repaid any of this debt other than the related interest costs. Stock Repurchases. We repurchased...

  • Page 123
    ... joint venture, net of cash acquired. Financing Activities Net cash used in financing activities of $441 million for fiscal 2010 was due to repurchases of common stock of $553 million, partially offset by net proceeds from sales of common stock through employee stock plans of $124 million. Net cash...

  • Page 124
    ... Upon conversion, we would pay the holder the cash value of the applicable number of shares of our 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 April 2, 2010, the conditions to conversion...

  • Page 125
    ... this annual report for additional information on the adoption. In the first quarter of fiscal 2010, we adopted new authoritative guidance on business combinations that requires an acquiring entity to measure and recognize identifiable assets acquired and liabilities assumed at the acquisition date...

  • Page 126
    ... primarily of money market funds, commercial paper, corporate debt securities, and U.S. government and government-sponsored debt securities. Our short-term investments do not include equity investments in privately held companies. Our short-term investments are reported at fair value with unrealized...

  • Page 127
    .... 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 128
    ... Jul. 3, Apr. 3, Jan. 2, Oct. 3, Jul. 4, Jan. 2, 2009(a) 2009(a) 2009 2009 2008 2008(b) 2010(a) As Adjusted As Adjusted As Adjusted (In millions, except per share data) Net revenue ...Gross profit ...Impairment of goodwill(c) ...Operating income (loss) ...Net income (loss) ...Net income (loss) per...

  • Page 129
    ...Other Information None PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated by reference to Symantec's Proxy Statement for its 2010 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the...

  • Page 130
    ... 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated by reference to Symantec's Proxy Statement for its 2010 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of...

  • Page 131
    ... to: Symantec Corporation Attn: Investor Relations 350 Ellis Street Mountain View, California 94043 650-527-8000 a) The following documents are filed as part of this report: Page Number 1. Consolidated Financial Statements: Reports of Independent Registered Public Accounting Firm ...Consolidated...

  • Page 132
    ...Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of April 2, 2010 and April 3, 2009 ...Consolidated Statements of Operations for the years ended April 2, 2010, April 3, 2009, and March 28, 2008...Consolidated Statements of Stockholders' Equity for the years...

  • Page 133
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders Symantec Corporation: We have audited the accompanying consolidated balance sheets of Symantec Corporation and subsidiaries (the "Company") as of April 2, 2010 and April 3, 2009, and the related ...

  • Page 134
    ... express an opinion on the Company's internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable...

  • Page 135
    SYMANTEC CORPORATION CONSOLIDATED BALANCE SHEETS April 2, April 3, 2010 2009 * (In millions, except par value) ASSETS Current assets: Cash and cash equivalents ...Short-term investments ...Trade accounts receivable, net Inventories ...Deferred income taxes ...Other current assets ...Total current ...

  • Page 136
    ... Total net revenue ...Cost of revenue: Content, subscription, and maintenance ...License ...Amortization of acquired product rights ...Gross profit...Operating expenses: Sales and marketing ...Research and development...General and administrative ...Amortization of other purchased intangible assets...

  • Page 137
    ...Issuance 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 ...Acquisition PPA adjustment for options ...Income tax benefit from employee stock transactions ...Cumulative...

  • Page 138
    ... of acquisitions: Trade accounts receivable, net...Inventories ...Accounts payable ...Accrued compensation and benefits ...Deferred revenue ...Income taxes payable ...Other assets ...Other liabilities ...Net cash provided by operating activities ...INVESTING ACTIVITIES: Purchase of property and...

  • Page 139
    ... and "the Company" refer to Symantec Corporation and all of its subsidiaries) is a provider of security, storage and systems management solutions that help businesses and consumers secure and manage their information. We provide customers worldwide with software and services that protect, manage and...

  • Page 140
    ... period of the agreements. For arrangements that include multiple elements, including perpetual software licenses, maintenance, services, and packaged products with content updates, managed security services, and subscriptions, we allocate and defer revenue for the undelivered items based on VSOE of...

  • Page 141
    ... when the OEM reports the sale of the software products to an end-user, generally on a quarterly basis. In addition to license royalties, some OEMs pay an annual flat fee and/or support royalties for the right to sell maintenance and technical support to the end-user. We recognize revenue from OEM...

  • Page 142
    ..., net. Contract fair values are determined based on quoted prices for similar assets or liabilities in active markets using inputs such as LIBOR, currency rates, forward points, and commonly quoted credit risk data. For each fiscal period presented in this report, outstanding derivative contracts...

  • Page 143
    ...costs of revenue and finished goods. Deferred costs of revenue were $23 million as of April 2, 2010 and $24 million as of April 3, 2009, of which $17 million in both periods was related to consumer products that include content updates and will be recognized ratably over the term of the subscription...

  • Page 144
    ... a market participant. These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. The separately identifiable intangible assets generally include acquired product rights, developed technology, customer lists...

  • Page 145
    ... goodwill impairment analysis, we perform an assessment of longlived assets, including intangible assets, for impairment. Intangible Assets. In connection with our acquisitions, we generally recognize assets for customer relationships, developed technology, acquired product rights (purchased product...

  • Page 146
    .... 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 stock options. The determination of the grant date fair...

  • Page 147
    ... - (Continued) 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 January 2007, certain advertising contracts contain placement fee arrangements...

  • Page 148
    ... Reported Adjustments (In millions) As Adjusted Current assets...Property and equipment, net ...Intangible assets, net ...Goodwill ...Investment in joint venture ...Other long-term assets ...Total assets ...Current liabilities ...Convertible senior notes ...Long-term deferred revenue ...Long...

  • Page 149
    ... Fiscal Year Ended March 28, 2008 As Previously As As Previously As Reported Adjustments Adjusted Reported Adjustments Adjusted (In millions, except per share data) Total net revenue ...Costs and expenses ...Operating (loss) income ...Interest income ...Interest expense ...Impairment of marketable...

  • Page 150
    ... costs. Other Recently Adopted Authoritative Guidance In the first quarter of fiscal 2010, we adopted new authoritative guidance on business combinations that requires an acquiring entity to measure and recognize identifiable assets acquired and liabilities assumed at the acquisition date fair value...

  • Page 151
    ...represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The 75

  • Page 152
    ... fair value: • Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities...

  • Page 153
    ... 2011. The fair value measurements were based on recent offers made by third parties to purchase the properties or on valuation appraisals. To reflect the fair value less costs to sell, assets held for sale were written down during fiscal 2010, 2009 and 2008. As a result, we recorded impairments...

  • Page 154
    ... 10.0 years and 4.0 years, respectively. Fiscal 2009 acquisitions MessageLabs Purchase On November 14, 2008, we completed the acquisition of MessageLabs Group Limited ("MessageLabs"), a nonpublic United Kingdom-based provider of managed services to protect, control, encrypt, and archive electronic...

  • Page 155
    ... 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. Most of the goodwill from the PC Tools Pty Limited ("PC Tools") acquisition was...

  • Page 156
    ... software that enables businesses to easily manage and service network-based endpoints. In exchange for all of the voting equity interests of Altiris, we paid the following (in millions): Cash paid for acquisition of common stock outstanding, excluding cash acquired ...Fair value of stock options...

  • Page 157
    ...Total Acquisition date ...Net tangible liabilities ...Intangible assets(1) ...Goodwill ...Total purchase price ...(1) November 30, 2007 $ (6) 69 259 $ 322 January 11, 2007 $ - 3 9 $ 12 $ (6) 72 268 $334 Intangible assets included customer relationships of $33 million and developed technology of...

  • Page 158
    ... of potential goodwill impairment requires significant judgment at many points during the analysis. In determining the carrying value of equity of the reporting units, we applied judgment to allocate assets and liabilities, such as accounts receivable and property and equipment, based on the...

  • Page 159
    ... management regularly reviews the operating results. Our operating segments are significant strategic business units that offer different products and services, distinguished by customer needs. Our reporting units are consistent with our operating segments. Intangible assets, net April 2, 2010...

  • Page 160
    ... venture develops, manufactures, markets and supports security and storage appliances to global telecommunications carriers and enterprise customers. Huawei contributed its telecommunications storage and security business assets, engineering, sales and marketing resources, personnel, and licenses...

  • Page 161
    ... revenue...Gross margin...Net loss, as reported by the joint venture ...Symantec's ownership interest ...Symantec's proportionate share ...and incurred net transaction costs of approximately $33 million, of which $9 million was allocated to equity and the remainder allocated proportionately to the 0.75...

  • Page 162
    ... 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 163
    ...: 2010 Restructuring Plan ("2010 Plan") In the fourth quarter of fiscal 2010, management approved and initiated the following restructuring events to: • Reduce operating costs through a workforce realignment. This action was initiated to more appropriately allocate resources to the Company's key...

  • Page 164
    ...-related costs have generally been adjusted to goodwill to reflect changes in the purchase price of the respective acquisition. With the adoption of new authoritative guidance on business combinations, restructuring charges related to our business acquisitions starting in fiscal 2010 are...

  • Page 165
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Restructuring Summary April 3, 2009 Fiscal 2010 Restructuring Liability Costs, Cash April 2, Net of 2010 Adjustments(1) Payments (In millions) Cumulative Incurred to Date Fiscal 2010 Severance and benefits ...Fiscal 2008 ...

  • Page 166
    ... as a defendant and added allegations that Veritas and the named officers made false or misleading statements in press releases and SEC filings regarding the company's financial results, which allegedly contained revenue recognized from contracts that were unsigned or lacked essential terms. The...

  • Page 167
    ...-sized businesses with storage and server management, backup, archiving, and data protection solutions across heterogeneous storage and server platforms, as well as services delivered through our SaaS offerings. • Services. Our Services segment provides customers with implementation services and...

  • Page 168
    ... revenue from sales of our storage and availability management products within our Storage and Server Management segment represented 11%, 12%, and 11% of our total revenue during fiscal 2010, 2009, and 2008, respectively. Net revenue from sales of our data protection products within our Storage and...

  • Page 169
    ... Note 12. 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. We...

  • Page 170
    ... our Board of Directors in January 2008. The purpose of the plan is to provide executive officers with a means to acquire an equity interest in Symantec at fair market value by applying a portion or all of their respective bonus payments towards the purchase price. As of April 2, 2010, 40,401 shares...

  • Page 171
    ... of these plans. Valuation of stock-based awards The fair value of each stock option granted under our equity incentive plans is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Employee Stock Options Fiscal Fiscal Fiscal...

  • Page 172
    .... Year Ended April 2, April 3, March 28, 2010 2009 2008 (In millions, except per share data) Cost of revenue - Content, subscription, and maintenance ...Cost of revenue - License ...Sales and marketing ...Research and development ...General and administrative ...Total stock-based compensation...

  • Page 173
    ...options exercised during fiscal 2010, 2009, and 2008 was $64 million, $111 million, and $142 million, respectively. The following table summarizes restricted stock activity: Number of Shares (In millions) WeightedAverage Grant Date Fair Value WeightedAverage Remaining Years Aggregate Intrinsic Value...

  • Page 174
    ...Year Ended April 3, March 28, 2009 2008 (In millions) Expected Federal statutory tax ...State taxes, net of federal benefit ...Goodwill impairment - non deductible ...Foreign earnings taxed at less than the federal rate ...Domestic production activities deduction ...Federal research and development...

  • Page 175
    ... impairment of goodwill in fiscal year 2009, we have cumulative pre-tax book losses, as measured by the current and prior two years. We considered the negative evidence of this cumulative pre-tax book loss position on our ability to continue to recognize deferred tax assets that are dependent upon...

  • Page 176
    ... U.S. and Ireland. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our 2000 through 2009 tax years remain subject to examination by the Internal Revenue Service ("IRS") for U.S. federal tax...

  • Page 177
    ... v. Commissioner, holding that stock-based compensation related to research and development ("R&D") must be shared by the participants of a R&D cost sharing arrangement. The Ninth Circuit held that related parties to such an arrangement must share stock option costs, notwithstanding the U.S. Tax...

  • Page 178
    .... 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 2, April 3, March 28, 2010 2009 2008 (In millions, except per share data) Net income (loss...

  • Page 179
    ...fiscal 2011. The Consulting Services business is included in the Services segment in this annual report. On May 19, 2010, we signed a definitive agreement to acquire certain assets of VeriSign, Inc. ("VeriSign"), a publicly-held US-based provider of internet authentication and domain naming services...

  • Page 180
    ... caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, State of California, on the 21st day of May 2010. SYMANTEC CORPORATION By /s/ Enrique Salem Enrique Salem, President, Chief Executive Officer, and Director KNOWALL PERSONS BY...

  • Page 181
    Signature Title Date /s/ Frank E. Dangeard Frank E. Dangeard /s/ Geraldine B. Laybourne Geraldine B. Laybourne /s/ David L. Mahoney David L. Mahoney /s/ Robert S. Miller Robert S. Miller Director May 21, 2010 Director May 21, 2010 Director May 21, 2010 Director May 21, 2010 /s/ Daniel ...

  • Page 182
    ... Revenue and to (1) Accounts of Period Operating Expense (In millions) Amount Written Off or Used Balance at End of Period Allowance for doubtful accounts: Year ended April 2, 2010 ...Year ended April 3, 2009 ...Year ended March 28, 2008 ...Reserve for product returns: Year ended April 2, 2010...

  • Page 183
    ... Ranninger Executive Vice President Chief Human Resources Officer William Robbins Executive Vice President Worldwide Sales Scott Taylor Executive Vice President General Counsel and Secretary David Thompson Group President Services Group Rowan Trollope Senior Vice President Hosted Services Bernard...

  • Page 184
    350 Ellis Street Mountain View, CA 94043 Tel: (650) 527-8000 www.symantec.com