Symantec 2011 Annual Report Download

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Symantec 2011 Annual Report

Table of contents

  • Page 1
    Symantec 2011 Annual Report

  • Page 2
    ... technologies into our customer installed base. FINANCIAL RESULTS During fiscal 2011, GAAP revenue totaled $6.19 billion and grew 4% in constant currency terms from the previous year. Non-GAAP1 earnings per share were $1.42, down 5% year over year as reported. Excluding the purchase accounting...

  • Page 3
    ... ever. I am pleased with our sales team's performance during fiscal year 2011. Focused account management helped us cross-sell the entire product portfolio as customers continued to expand their commitment to Symantec. Symantec is uniquely positioned to protect businesses globally from the types of...

  • Page 4
    ... our archiving and backup installed base. In Storage and Availability Management, we want to build on the value we bring to customers by helping them reduce costs and virtualize their business-critical applications. And, in Enterprise Security, we will deliver products that leverage our encryption...

  • Page 5
    ... that lie ahead. We remain diligent and focused on meeting our customer needs, executing against our business plan, and returning value to our shareholders. I look forward to sharing with you the many accomplishments Symantec will achieve in fiscal 2012. Sincerely, ENRIQUE SALEM President and Chief...

  • Page 6
    ... Stock-based compensation Amortization of acquired product rights Amortization of other purchased intangible assets Restructuring and transition Impairment of intangible assets and goodwill Loss and impairment of assets held for sale Acquisition-related expense Internally developed software costs...

  • Page 7
    ...BY ORDER OF THE BOARD OF DIRECTORS SCOTT C. TAYLOR Executive Vice President, General Counsel and Secretary Mountain View, California September 1, 2011 Every stockholder vote is important. To assure that your shares are represented at the Annual Meeting, please vote over the Internet or by telephone...

  • Page 8
    ... ...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 and Services ...Policy on Audit...

  • Page 9
    ... Ownership Reporting Compliance ...EXECUTIVE COMPENSATION AND RELATED INFORMATION ...Compensation Discussion & Analysis (CD&A) ...Summary Compensation Table for Fiscal 2011...Grants of Plan-Based Awards in Fiscal 2011 ...Outstanding Equity Awards at Fiscal Year-End 2011 ...Option Exercises and Stock...

  • Page 10
    ... accompanying proxy is solicited on behalf of Symantec Corporation's Board of Directors (the "Board") for use at Symantec's 2011 Annual Meeting of Stockholders (the "Annual Meeting") to be held at Symantec's offices located at 350 Ellis Street, Mountain View, California 94043 on Tuesday, October 25...

  • Page 11
    ... the Annual 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 of a Broker or Nominee If on August 26, 2011, your shares were held in an account...

  • Page 12
    .... What is the quorum requirement for the Annual 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 called a quorum. Your shares are counted as present at the meeting if you are present...

  • Page 13
    ... owners of shares for their expenses in forwarding solicitation materials to such beneficial owners. In addition, our directors, officers, and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, e-mail, or otherwise. If you choose to access...

  • Page 14
    ... section of our website located at www.symantec.com/invest, by clicking on "Company Charters," under "Investor Resources." 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 15
    ... It is the policy of the Board and NASDAQ's 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...

  • Page 16
    ... 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 17
    ... Chief Executive Officer's performance and compensation. To date, executive sessions of the Board have been generally led by the Lead Independent Director. Effective immediately after the Annual Meeting, and assuming that Mr. Bennett is re-elected by the Company's stockholders at the Annual Meeting...

  • Page 18
    ... activities and actions to the full Board. Each member of the Audit Committee, Compensation Committee and Nominating and Governance Committee was appointed by the Board. Each of the Board committees has a written charter approved by the Board and available on our website at www.symantec.com/invest...

  • Page 19
    Number of Meetings in Fiscal Year 2011: Independence: Functions: 7 Each member is an independent director as defined by current NASDAQ listing standards. To review and recommend to the independent directors of our Board all compensation arrangements for our Chief Executive Officer; To review and ...

  • Page 20
    .... We are a global organization with offices in many countries. Directors with global expertise can provide a useful business and cultural perspective regarding many significant aspects of our business. • Legal Expertise. Directors who have legal education and experience can assist the Board in...

  • Page 21
    ... for the 2012 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 22
    ... Annual Meeting. The Board thanks Messrs. Thompson and Coleman for their leadership and years of service to Symantec. Effective as of the opening of the polls at our Annual Meeting, our authorized number of directors will be reduced to nine. Unless proxy cards are otherwise marked, the persons named...

  • Page 23
    ... 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 24
    ...-based security products developer, and from October 1999 to January 2001, he was Vice President of Technology and Operations at Ask Jeeves Inc., an online search engine provider. From 1990 to October 1999, Mr. Salem led the security business unit at Symantec. Mr. Salem is a member of the board...

  • Page 25
    ... FASB Accounting Standards Codification Topic 718 for awards granted during the fiscal year. (4) Mr. Miller received an additional annual fee in the amount of $30,000 for his role as Lead Independent Director. (5) Represents Mr. Thompson's compensation for his service as an employee of Symantec. Mr...

  • Page 26
    ... member of the Board receives an annual award of fully-vested restricted stock awards having a fair market value on the grant date equal to a pre-determined dollar value, which was $200,000 during fiscal 2011. The restricted stock awards granted for fiscal year 2011 were granted on May 10, 2010...

  • Page 27
    ..., does not impair KPMG's independence from Symantec. The aggregate fees billed for fiscal years 2011 and 2010 for each of the following categories of services are as follows: Fees Billed to Symantec 2011 2010 Audit fees(1) ...Audit related fees(2)...Tax fees(3)...All other fees(4)... ...$ 9,600,201...

  • Page 28
    ... 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 Audit...

  • Page 29
    ... to increase the shares of Symantec common stock available for issuance under the Director Plan is in the best interests of Symantec and its stockholders. The purpose of the Director Plan is to provide our non-employee members of the Board with an opportunity to receive all or a portion of the base...

  • Page 30
    ... the benefits that will be received by Symantec's directors under the Director Plan. The following table summarizes the benefits that were received by our current directors who are not executive officers in the 2011 fiscal year. Name and Position Number of Shares Stephen M. Bennett...Geraldine...

  • Page 31
    ... for fiscal 2011 was below the median total target direct compensation of CEOs within our peer group; • We do not provide for gross-ups of excise tax values under Section 4999 of the Internal Revenue Code; • Any potential severance payments are well under 3 times our executive officers' total...

  • Page 32
    ... votes on compensation of our named executive officers be held annually. Our Board believes that holding a vote every year is the most appropriate option because (i) it would enable our stockholders to provide us with input regarding the compensation of our named executive officers on a timely...

  • Page 33
    ...the name, address and, to Symantec's knowledge, the number of voting securities held by the proponent of the stockholder proposal, upon receiving a written or oral request directed to: Symantec Corporation, Attn: Scott C. Taylor, Corporate Secretary, 350 Ellis Street, Mountain View, California 94043...

  • Page 34
    ... corporate actions, such as a merger or sale of substantially all of Symantec's assets, be approved by stockholders. In addition, NASDAQ-listed companies, such as Symantec, are required to obtain stockholder approval for certain actions, such as adopting or materially amending equity compensation...

  • Page 35
    ...under Symantec's 2002 Executive Officer's Stock Purchase Plan, 30,869,122 shares remaining available for future issuance under Symantec's 2008 Employee Stock Purchase Plan and 97,882,994 shares remaining available for future issuance as stock options, restricted stock units or other awards permitted...

  • Page 36
    ... 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 or a parent or subsidiary of Symantec, except in the case of death or disability, in which case...

  • Page 37
    ..., Consumer Business Unit Group President, Enterprise Products & Services Executive Vice President and Chief Human Resources Officer Executive Vice President, Worldwide Sales & Services Executive Vice President, General Counsel and Secretary Group President, Information Technology and Services Group...

  • Page 38
    ... Services and Chief Information Officer at PeopleSoft, Inc., an enterprise application software products developer, which was later acquired by Oracle. Mr. Thompson is a member of the board of directors of CoreSite Realty Corporation. Mr. Trollope has served as our Group President, SMB and Symantec...

  • Page 39
    ...shares. This stockholder's address is 555 California Street, 40th Floor, San Francisco, CA 94104. (2) Based solely on a Schedule 13G filing made by BlackRock, Inc. on February 8, 2011, reporting sole voting and dispositive power over the shares. This stockholder's address is 40 East 52nd Street, New...

  • Page 40
    ... 30, 2011. 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 41
    ..., Consumer Business Unit • William T. Robbins, Executive Vice President, Worldwide Sales and Services • Rebecca Ranninger, Executive Vice President and Chief Human Resources Officer Our Compensation Philosophy: Pay for Performance The overriding principle driving our compensation programs is...

  • Page 42
    ... fiscal 2011, our named executive officers received 95% to 108% of their target payout under our Fiscal Year 2011 Executive Annual Incentive Plans based on the Company's revenue and EPS performance and, other than our CEO, the named executive officer's business unit performance. • For fiscal 2011...

  • Page 43
    ... of the annual equity compensation component of the compensation program for our named executive officers. We will continue to grant restricted stock units and will replace stock options with performance-based restricted stock units using earnings per share and relative total stockholder return as...

  • Page 44
    ... that the Compensation Committee uses to develop a market composite for purposes of establishing named executive officer pay levels (as described below), the competitiveness of our director and executive compensation programs, the proposed performance goals and ranges for incentive plans, 35 Cash...

  • Page 45
    .... 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 46
    ... of high technology companies in different market segments that are of a comparable size to us. The Compensation Committee uses the peer group, as well as other relevant market data, to evaluate named executive officer pay levels (as described above). In addition, the peer group performance is used...

  • Page 47
    ... several years: stock options and restricted stock units. (See "Equity Incentive Awards" below for more information regarding the specific features of each form). For fiscal 2011, the named executive officers, other than the CEO, received approximately 57% of the value of their equity compensation...

  • Page 48
    .... For fiscal 2011, they received a merit increase ranging from 4.8% to 11.1% based on an evaluation of individual role, performance, contribution level and market compensation position. The following table presents each named executive officer's base salary for fiscal 2011 as compared to fiscal 2010...

  • Page 49
    ... market composite, the desired mix between cash and equity-based incentive pay, internal pay equity goals, and the role of the named executive officer. Taking into account these factors, for fiscal 2011, the Compensation Committee increased the target award opportunity as a percentage of base salary...

  • Page 50
    ...areas and results are monitored quarterly: • Business Results • Customer and Partner Loyalty • Operational Excellence • Employee Engagement The CEO evaluates the performance level of each named executive officer's business unit against the predetermined goals following the end of fiscal year...

  • Page 51
    ... our LTIP for fiscal 2011. Under the terms of the FY11 LTIP, named executive officers are eligible to receive performance-based compensation based upon the level of attainment of target operating cash flow for the fiscal year ending April 1, 2011. The Compensation Committee implemented the FY11 LTIP...

  • Page 52
    ... fiscal 2011, four named executive officers participated in the 2008 Employee Stock Purchase Plan. We seek to provide equity incentive awards that are competitive with companies in our peer group and the other information technology companies that the Compensation Committee includes in its market...

  • Page 53
    ... grant date value of Symantec's stock was slightly lower in fiscal 2011 than in fiscal 2010. Ms. Chaffin's total target long-term incentive compensation value increased because she received a larger equity grant in fiscal year 2011 as a result of the strong performance of the consumer business unit...

  • Page 54
    ...performance period (i.e., fiscal 2014), and the named executive officer must be employed by us at the end of such period in order to vest in the award. Burn Rate and Dilution: We closely manage how we use our equity to compensate employees. We think of "gross burn rate" as the total number of shares...

  • Page 55
    ... salary and 100% of cash bonuses for payment at a future date. This plan is provided to be competitive in the executive talent market, and to provide executives with a tax-efficient alternative for receiving earnings. One of our named executive officers participated in this plan during fiscal 2011...

  • Page 56
    ... trading in Symantec-based option contracts (for example, buying and/or writing puts and calls). In addition, our Insider Trading Policy requires that our Chief Executive Officer, Chief Financial Officer, and each of our directors conduct open market sales of our securities only through use of stock...

  • Page 57
    ... for the named executive officers do not qualify as performance-based compensation; however, as no officer received salary in excess of $1,000,000 during fiscal 2011, the entire amount of salaries paid to our named executive officers is deductible. Our executive annual incentive plan is structured...

  • Page 58
    ... and Analysis ("CD&A") contained in proxy statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the CD&A be included in this proxy statement. By: The Compensation Committee of the Board of Directors: Stephen M. Bennett Michael A. Brown Geraldine...

  • Page 59
    ...our Chief Executive Officer or Chief Financial Officer) at April 1, 2011 (the "Named Executive Officers" or "NEOs"). Summary Compensation Table for Fiscal 2011 Fiscal Year Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($)(2) Non-Equity Incentive Plan Compensation ($) All Other Compensation...

  • Page 60
    ... Executive Annual Incentive Plan for fiscal 2011, which was earned in fiscal 2011 and paid in fiscal 2012, and (b) $465,000 for Mr. Robbins' performance during fiscal 2011 under the FY11 LTIP. Mr. Robbins will be eligible to receive the FY11 LTIP award if he remains employed by the Company through...

  • Page 61
    ... shows for the fiscal year ended April 1, 2011, certain information regarding grants of planbased awards to the Named Executive Officers from our incentive plans: Grants of Plan-Based Awards in Fiscal 2011 All Other Stock Awards: Number of Shares of Stock or Units (#) All Other Option Awards: Number...

  • Page 62
    ...awards at fiscal year end for the named executive officers. Outstanding Equity Awards At Fiscal Year-End 2011 Option Awards Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Stock Awards Number of Shares or Units...

  • Page 63
    ...3/1/2014. The following table shows for the fiscal year ended April 1, 2011, certain information 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 2011 Option Awards Number of Shares Value...

  • Page 64
    ... or above-market. In fiscal 2011, 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...

  • Page 65
    ... level are also entitled to receive six months of outplacement services, including counseling and guidance. Payment of severance payments and COBRA premiums and provision of outplacement assistance pursuant to the Symantec Corporation Severance Plan is subject to the applicable employee's returning...

  • Page 66
    ... Beer pursuant to the Symantec Executive Retention Plan and the Symantec Corporation Severance Plan, assuming a qualifying termination as of April 1, 2011 (intrinsic values of equity awards are based upon the closing price for a share of our common stock of $18.46 on April 1, 2011 minus the exercise...

  • Page 67
    ...related person is any Symantec executive officer, director, nominee for director, or stockholder holding more than 5% of any class of Symantec's voting securities, in each case, since the beginning of the previous fiscal year, and their immediate family members. Under the policy, absent any facts or...

  • Page 68
    ... of Symantec's financial reporting. The Audit Committee also received the report of management contained in Symantec's Annual Report on Form 10-K for the fiscal year ended April 1, 2011, as well as KPMG's Report of Independent Registered Public Accounting Firm included in Symantec's Annual Report on...

  • Page 69
    ... 350 Ellis Street Mountain View, California 94043 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...

  • Page 70
    ... Availability or annual report and other proxy materials who wish to receive only one copy in the 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...

  • Page 71
    ... 350 Ellis Street, Mountain 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: The Nasdaq Stock Market LLC Common Stock, par value $0.01 per share...

  • Page 72
    ...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 Accounting Fees and Services...

  • Page 73
    ... 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 74
    ... 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 75
    ... critical applications continuously available. Our new storage management initiatives help customers provide high-performance, low-cost storage in a virtualized environment. Business Developments and Highlights During fiscal 2011, we took the following actions in support of our business: • Our new...

  • Page 76
    ... with them. Our award-winning Norton 2011 products include our innovative reputation-based security, a technology that provides real-time threat detection. Our online backup offering serves 13 million customers and hosts more than 68 petabytes of consumers' data. In fiscal year 2011, we introduced...

  • Page 77
    ...and Endpoint Virtualization. Software-as-a- Service Our SaaS offerings provide customers the flexibility to manage their business requirements using hosted services. Symantec.cloud, our SaaS brand, enables customers to increase their messaging and web protection by blocking email, web and IM threats...

  • Page 78
    ...the top 10 PC OEMs globally to distribute our online backup offerings. Consumer sales through our electronic distribution channel, which includes our Norton e-Store, OEMs, subscriptions, upgrades, and renewals, represented approximately 85 percent of consumer revenue in fiscal 2011. The remaining 15...

  • Page 79
    ... insight into emerging attacks, malicious code activity, phishing, spam, and other threats. The team uses this vast intelligence to develop new technologies and approaches, such as Symantec's reputation-based security technology, to protect customer information. Research and development expenses...

  • Page 80
    ... technical support includes: self-service options, delivered by telephone or electronically, during the contracted-for hours, immediate patches for severe problems; periodic software updates; and access to our technical knowledge base and frequently asked questions. Customers In fiscal 2011 and 2010...

  • Page 81
    ... 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 82
    ...6,700 employees work in sales and marketing; 6,200 in research and development; 4,200 in support and services; and 1,500 in management, manufacturing, and administration. Other Information Our Internet address is www.symantec.com. We make available free of charge on our website our annual reports on...

  • Page 83
    ...customer service, and support into unified enterprise security and storage solutions • Addressing trade compliance issues affecting our ability to ship new or acquired products • Developing or expanding efficient sales channels • Obtaining sufficient licenses to technology and technical access...

  • Page 84
    ... identify after they begin using them that could result in unanticipated service interruptions, which could harm our reputation and our business. Since our customers use our SaaS offerings for mission-critical protection from threats to electronic information, endpoint devices, and computer networks...

  • Page 85
    ... 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 assurance of ever receiving associated revenues • The time and expense required for the sales and marketing organizations of our...

  • Page 86
    ... us, could adversely affect our renewal rates, and could harm our ability to attract new customers. Our business would also be harmed if our customers believe that our SaaS offerings are unreliable. As we continue to offer more of our software products in a SaaS-based delivery model, all of these...

  • Page 87
    ... 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 88
    ... products released by us could result in negative publicity, damage to our brand, product returns, loss of or delay in market acceptance of our products, loss of competitive position, or claims by customers or others. Many of our end-user customers use our products in applications that are critical...

  • Page 89
    ... 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, finance, and other critical personnel. Our officers and other...

  • Page 90
    ... of the risks associated with usage of open source cannot be eliminated, and could, if not properly addressed, negatively affect our business. Our software products and website may be subject to intentional disruption that could adversely impact our reputation and future sales. Although we believe...

  • Page 91
    ...accounting charges, including: • Amortization of intangible assets, including acquired product rights • Impairment of goodwill and other long-lived assets • Stock-based compensation expense • Restructuring charges • Loss on sale of a business and similar write-downs of assets held for sale...

  • Page 92
    ... 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 93
    ...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 in Mountain View, California where we occupy facilities totaling 900,000 square feet, of which 724,000...

  • Page 94
    ...Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol "SYMC." The high and low sales prices set forth below are as reported on the Nasdaq Global Select Market. First Quarter Fiscal 2011 Second Third Quarter Quarter Fourth Quarter First Quarter Fiscal 2010 Second...

  • Page 95
    ... repurchases during the three months ended April 1, 2011 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 or Programs or Programs (In...

  • Page 96
    ... 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 200 Symantec Corporation S&P 500 150...

  • Page 97
    ... 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 respective dates of acquisition. Five-Year Summary 2011 Fiscal (a,b) 2009 2008 2007 2010(c) (In...

  • Page 98
    .... Fiscal 2011 and 2010 each consisted of 52 weeks, while fiscal 2009 consisted of 53 weeks. Our 2012 fiscal year will consist of 52 weeks and will end on March 30, 2012. Our Operating Segments Our operating segments are significant strategic business units that offer different products and services...

  • Page 99
    ... complex and require us to make many estimates. For software arrangements 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...

  • Page 100
    ... inventory that will be returned, we primarily offset deferred revenue against trade accounts receivable for the amount of revenue in excess of the expected inventory levels. Arrangements for managed security services and SaaS offerings are generally offered to our customers over a specified period...

  • Page 101
    ... rate is based on the estimated weighted-average cost of capital for each reporting unit and may change from year to year. For example, in our valuation process in the fourth quarter of fiscal 2010 we used a lower discount rate than in the prior year due to stabilized risk associated with the global...

  • Page 102
    ... 2011 as we used in fiscal 2010. In addition to the discount rate, the impairment test includes the consideration of a number of estimates, including growth rates, operating margins and cost forecasts, foreign exchange rates and the allocation of certain tangible assets to the reporting units. Based...

  • Page 103
    ... and bank securities, respectively. Valuations for Level 1 securities 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. Valuations for Level 2 securities were based on...

  • Page 104
    ... grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. Determining the fair value of stock-based awards, primarily stock options, at the grant date requires judgment. We use the...

  • Page 105
    ...$5,266 $232 Percentage of total net revenue ...85% 5% $5,034 $171 84% 4% $4,863 79% Content, subscription, and maintenance revenue increased for fiscal 2011, as compared to fiscal 2010, primarily due to sales increases in our Consumer, Security and Compliance, and Storage and Server Management 35

  • Page 106
    ..." as well as increased sales of our premium security suite. Our electronic channel sales are derived from online sales (which include new subscriptions, renewals, and upgrades), OEMs, and ISPs. For fiscal 2011, electronic channel revenue increased as compared to fiscal 2010. Operating income for...

  • Page 107
    ... to the overall market weakness in server sales and our customers buying smaller volumes of new licenses consistent with their near term needs, particularly with respect to our storage management products. Operating income for the Storage and Server Management segment increased for fiscal 2010, as...

  • Page 108
    ... to fiscal 2010, as we continue to support the transition to our partner led consulting program while we focus on our core software business. Services revenue decreased for fiscal 2010, as compared to fiscal 2009, primarily due to a reduction in consulting revenue associated with new license sales...

  • Page 109
    ...product rights, fee-based technical support costs, fulfillment costs, costs of billable services, payments to OEMs under revenue-sharing arrangements, manufacturing, direct material costs, and royalties paid to third parties under technology licensing agreements. Cost of revenue decreased for fiscal...

  • Page 110
    ..., and maintenance increased for fiscal 2011, as compared to fiscal 2010, due to increases in fee-based technical support and fulfillment costs. Cost of content, subscription, and maintenance as a percentage of related revenue remained consistent for fiscal 2011, as compared to fiscal 2010. Cost of...

  • Page 111
    ...OEM placement fees and costs associated with the development and operations of our new proprietary eCommerce platform. Research and development expense remained relatively flat as a percentage of revenue in fiscal 2011, 2010, and 2009. General and administrative expense increased for fiscal 2011, as...

  • Page 112
    ... buildings classified as held for sale. The impairments were recorded in accordance with the authoritative guidance that requires a long-lived asset classified as held for sale to be measured at the lower of its carrying amount or fair value, less cost to sell. Also, in fiscal 2010, we sold assets...

  • Page 113
    ... 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 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...

  • Page 114
    ..., manufactures, markets and supports security and storage appliances for global telecommunications carriers and enterprise customers. For fiscal 2011, we recorded a loss of approximately $31 million related to our share of the joint venture's net loss incurred for the period from January 1, 2010 to...

  • Page 115
    ... We did not pay any amount of the 0.75% Notes or the 1.00% Notes other than the related interest costs in either of fiscal 2010 or 2009. Stock Repurchases. We repurchased 57 million, 34 million, and 42 million shares for $872 million, $553 million, and $700 million during fiscal 2011, 2010, and 2009...

  • Page 116
    ... proceeds from sales of common stock through employee stock plans of $122 million. 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...

  • Page 117
    ... Obligations The following is a schedule by years of our significant contractual obligations as of April 1, 2011: Payments Due by Period Fiscal 2013 Fiscal 2015 Fiscal 2017 Fiscal 2012 and 2014 and 2016 and Thereafter Other (In millions) Total Senior Notes(1) ...$1,100 Interest payments on...

  • Page 118
    ... 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 that indemnify licensees of our software from damages and costs resulting from...

  • Page 119
    ...of X Basis Points (bps) (25 bps) (75 bps) April 1, 2011 ...April 2, 2010 ...* Amount not applicable $ 5 $10 $ 5 $10 $ 5 $10 $ 5 $10 $ 5 $10 * * The modeling technique used above measures the change in fair market value arising from selected potential changes in interest rates. Market changes...

  • Page 120
    ... and the fair value was determined based on the closing trading price per $100 of the 1.00% Notes as of the last day of trading for the fourth quarter of fiscal 2011, which was $120.81. For business and strategic purposes, we also hold equity interests in several privately held companies, many of...

  • Page 121
    ... to ensure that information required to 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...

  • Page 122
    ...of our total assets. Total revenue subject to VeriSign's internal control over financial reporting represented $137 million of net revenue, or less than 2% of net revenue for the fiscal year ended April 1, 2011. As noted below, our internal control over financial reporting, subsequent to the date of...

  • Page 123
    ..., Executive Officers and Corporate Governance The information required by this item will be included in an amendment to this annual report on Form 10-K or incorporated by reference from Symantec's definitive proxy statement to be filed pursuant to Regulation 14A. Item 11. Executive Compensation...

  • Page 124
    ... 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 Balance Sheets as of April 1, 2011 and April 2, 2010...

  • Page 125
    ...Exhibit and Schedule thereto Convertible Note Purchase and Amendment 10-Q 000-17781 Agreement, dated September 17, 2010, between Symantec Corporation and Bank of America, N.A. Convertible Note Purchase and Amendment 10-Q 000-17781 Agreement, dated September 17, 2010, between Symantec Corporation and...

  • Page 126
    ..., LLC, Banc of America Securities LLC and Citigroup Global Markets Inc., as Joint Bookrunners and Joint Lead Arrangers Indenture, dated September 16, 2010, between Symantec Corporation and Wells Fargo Bank, National Association, as trustee Form of Global Note for Symantec's 2.750% Senior Note due...

  • Page 127
    ...John W. Thompson Employment Agreement, dated September 23, 2009, between Symantec Corporation and Enrique Salem Separation and Release Agreement, effective August 31, 2010, between Symantec Corporation and Greg Hughes FY11 Long Term Incentive Plan Form of FY11 Executive Annual Incentive Plan - Chief...

  • Page 128
    ... License Agreement, dated August 9, 2010, by and between VeriSign, Inc. and Symantec Corporation Subsidiaries of Symantec Corporation Consent of Independent Registered Public Accounting Firm Power of Attorney (see Signature page to this annual report) Certification of Chief Executive Officer...

  • Page 129
    ... Taxonomy Presentation Linkbase Document XBRL Taxonomy Definition Linkbase Document X X X X X X X Indicates a management contract, compensatory plan or arrangement. Certain portions of this exhibit have been omitted and have been filed separately with the SEC pursuant to a request for confidential...

  • Page 130
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of April 1, 2011 and April 2, 2010 ...Consolidated Statements of Operations for the years ended April 1, 2011, April 2, 2010, and April 3, 2009...Consolidated ...

  • Page 131
    ...consolidated financial statements and financial 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...

  • Page 132
    ... 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 133
    SYMANTEC CORPORATION CONSOLIDATED BALANCE SHEETS April 1, April 2, 2011 2010 (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 134
    SYMANTEC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended April 1, April 2, April 3, 2011 2010 2009 * (In millions, except per share data) Net revenue: Content, subscription, and maintenance ...License ...Total net revenue ...Cost of revenue: Content, subscription, and maintenance ......

  • Page 135
    ... stock ...Restricted stock units released, net of taxes ...Stock-based compensation, net of estimated forfeitures ...Income tax benefit from employee stock transactions ...Balances, April 2, 2010 ...Components of comprehensive income: Net income ...Change in unrealized gain on available-for-sale...

  • Page 136
    ... 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 137
    ...April 1, 2011 April 2, 2010 April 3, 2009 52 52 53 Our 2012 fiscal year will consist of 52 weeks and will end on March 30, 2012. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the U.S. requires management to make...

  • Page 138
    ... for revenue recognition noted above have been met. We enter into perpetual software license agreements through direct sales to customers and indirect sales with distributors and resellers. The license agreements generally include product maintenance agreements, for which the related revenue is...

  • Page 139
    ... 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 support royalties and fees...

  • Page 140
    ..., 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 141
    ... 2011 2010 (In millions) Trade accounts receivable, net: Receivables ...$1,034 Less: allowance for doubtful accounts ...(9) Less: reserve for product returns ...(12) Trade accounts receivable, net: ...$1,013 Inventories $873 (8) (9) $856 Inventories are valued at the lower of cost or market. Cost...

  • Page 142
    ... obtained from the management of the acquired companies and are inherently uncertain. The separately identifiable intangible assets generally include developed technology, customer relationships and tradenames. We estimate the fair value of deferred revenue related to product support assumed in...

  • Page 143
    ... fiscal year and whenever events or changes in circumstances indicate the carrying value of goodwill may be impaired. In testing for a potential impairment of goodwill, we determine the carrying value (book value) of the assets and liabilities for each reporting unit, which requires the allocation...

  • Page 144
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) timing of the annual evaluation for goodwill. These assets generally include tradenames, trademarks and in-process research and development. Recoverability of infinite-lived intangible assets would be measured by the ...

  • Page 145
    ...to operations as incurred and include electronic and print advertising, trade shows, collateral production, placement fees with hardware manufacturers, and all forms of direct marketing. Advertising costs included in Sales and marketing expense for fiscal 2011, 2010, and 2009 were $668 million, $615...

  • Page 146
    ... in the Services reporting unit of up to $19 million. Note 2. Fair Value Measurements We measure assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of...

  • Page 147
    ... summarizes our assets measured at fair value on a nonrecurring basis, by level, within the fair value hierarchy: Losses Fiscal Year Ended April 1, 2011 (In millions) Losses Fiscal Year Ended April 2, 2010 April 1, 2011 Level 2 Level 3 April 2, 2010 Level 2 Assets held for sale ...Indefinite...

  • Page 148
    ... was calculated on a market basis using the closing stock price of VeriSign Japan on the date of acquisition. PGP Corporation (2) (3) (4) On June 4, 2010, we completed the acquisition of PGP Corporation ("PGP"), a nonpublic provider of email and data encryption software. In exchange for all...

  • Page 149
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) The following table presents the purchase price allocation included in our Consolidated Balance Sheets (in millions): Net tangible assets(1) ...$ 7 Intangible assets(2) ...74 (3) Goodwill ...225 Total purchase price ...$...

  • Page 150
    ...4.0 years for developed technology. Fiscal 2009 acquisitions MessageLabs On November 14, 2008, we completed the acquisition of MessageLabs Group Limited ("MessageLabs"), a nonpublic United Kingdom-based provider of on-line services to protect, control, encrypt, and archive electronic communications...

  • Page 151
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) (2) (3) Intangible assets included customer relationships of $127 million, developed technology of $39 million, and definite-lived tradenames of $4 million, which are amortized over their estimated useful lives of one to...

  • Page 152
    ... in fiscal 2011 and 2010. Adjustments were primarily due to tax adjustments for prior acquisitions that were accounted for under the prior authoritative guidance on business combinations. Gross goodwill balances for the Consumer, Security and Compliance, Storage and Server Management, and Services...

  • Page 153
    ...CORPORATION Notes to Consolidated Financial Statements - (Continued) During the fourth quarter of fiscal 2011, in accordance with our accounting policy described in Note 1, we performed our annual impairment analysis and determined that goodwill was not impaired. Intangible assets, net April 1, 2011...

  • Page 154
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Total future amortization expense for intangible assets that have definite lives, based upon our existing intangible assets and their current estimated useful lives as of April 1, 2011, is estimated as follows (in millions...

  • Page 155
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Statement of Operations information for the joint venture and the calculation of our share of the joint venture's loss are as follows: For the Period from January 1, 2010 to December 31, 2010 For the Period from January 1,...

  • Page 156
    ...during the five business-day period after any five consecutive trading-day period during which the trading price of the Convertible 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...

  • Page 157
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) purchase up to 110 million shares of our common stock at a price of $27.3175 per share. The warrants expire on various dates from July 2011 through August 2013 and must be settled in net shares. We received approximately $...

  • Page 158
    ... greater choice in their providers for technology services. The results of such action are to pay severance and benefits to terminated employees. This plan is expected to be substantially completed by the end of fiscal 2012, and the total remaining exit costs are estimated to range from $5 million...

  • Page 159
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Restructuring summary Restructuring Liability April 2, 2010 Costs Net Cash Adjustment(1) Payments (In millions) April 1, 2011 Cumulative Incurred to Date Fiscal 2011 Plan: Severance ...Fiscal 2010 Plan: Severance ......

  • Page 160
    ... Revenue Service relating to the 2000 and 2001 tax years of Veritas, see Note 12. On July 7, 2004, a purported class action complaint entitled Paul Kuck, et al. v. Veritas Software Corporation, et al. was filed in the United States District Court for the District of Delaware. The lawsuit alleges...

  • Page 161
    ... small-sized businesses with solutions for endpoint security and management, compliance, messaging management, data loss prevention, encryption, and authentication services. These products allow our customers to secure, provision, and remotely manage their laptops, PCs, mobile devices, and servers...

  • Page 162
    ... services and solutions designed to assist them in maximizing the value of their Symantec software. Our offerings include consulting, business critical services, education, and managed security services. • Other. Our Other segment is comprised of sunset products and products nearing the end...

  • Page 163
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) Product Revenue Information April 1, 2011 Year Ended April 2, April 3, 2010 2009 Product revenue: Core consumer security ...Backup ...Storage and availability management ...Endpoint security and management ...Others(1) ...

  • Page 164
    ... 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 1, 2011, 40,401 shares have been issued under the plan and 209,599 shares remained available...

  • Page 165
    ... 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: Fiscal 2011 Fiscal 2010 Fiscal 2009 Expected...

  • Page 166
    .... Year Ended April 1, April 2, April 3, 2011 2010 2009 (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 167
    ...exercised during fiscal 2011, 2010, and 2009 was $43 million, $64 million, and $111 million, respectively. The following table summarizes restricted stock unit activity: Number of Shares (In millions) WeightedAverage Grant Date Fair Value WeightedAverage Remaining Years Aggregate Intrinsic Value (In...

  • Page 168
    ...as follows: April 1, 2011 Year Ended April 2, April 3, 2010 2009 (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...

  • Page 169
    SYMANTEC CORPORATION Notes to Consolidated Financial Statements - (Continued) The principal components of deferred tax assets are as follows: Year Ended April 1, April 2, 2011 2010 (In millions) Deferred tax assets: Tax credit carryforwards ...Net operating loss carryforwards of acquired companies ...

  • Page 170
    ...2009 ...$633 Balance as of April 2, 2010 ...$543 Balance as of April 1, 2011 ...$527 Of the $16 million of changes in gross unrecognized tax benefits during the fiscal year as disclosed above, approximately $22 million was provided through purchase accounting in connection with acquisitions during...

  • Page 171
    ... Internal Revenue Service ("IRS") for U.S. federal tax purposes, and our 2006 through 2009 fiscal years remain subject to examination by the appropriate governmental agencies for Irish tax purposes. Other significant jurisdictions include California, Japan, the UK and India. As of April 1, 2011, we...

  • Page 172
    ... the period using the treasury stock method. Dilutive potential common shares include shares underlying outstanding stock options, restricted stock, warrants and Convertible Senior Notes. The components of earnings per share are as follows: Year Ended April 1, April 2, April 3, 2011 2010 2009 (In...

  • Page 173
    ...on diluted earnings per share until our average stock price for the applicable period reaches $27.3175 per share and $19.12 per share, respectively. Subsequent Events Note 14. On May 19, 2011, we signed a definitive agreement to acquire Clearwell Systems Inc., a Mountain View based, privately-held...

  • Page 174
    ... duly 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 20th day of May 2011. SYMANTEC CORPORATION By /s/ ENRIQUE SALEM Enrique Salem, President and Chief Executive Officer KNOWALL PERSONS BY THESE...

  • Page 175
    Signature Title Date /s/ Frank E. Dangeard Frank E. Dangeard Director May 20, 2011 Director Geraldine B. Laybourne /s/ David L. Mahoney David L. Mahoney Robert S. Miller Robert S. Miller Director May 20, 2011 /s/ Director May 20, 2011 /s/ Daniel H. Schulman Daniel H. Schulman /s/ V. Paul ...

  • Page 176
    ... Revenue and to (1) Accounts Operating Expense (In millions) Amount Written Off or Used Balance at End of Period Allowance for doubtful accounts: Year ended April 1, 2011 ...Year ended April 2, 2010 ...Year ended April 3, 2009 ...Reserve for product returns: Year ended April 1, 2011 ...Year ended...

  • Page 177
    ...Relations 350 Ellis Street Mountain View, CA 94043 (650) 527-5523 [email protected] www.symantec.com/invest Annual Report on Form 10-K A copy of Symantec's Form 10-K, including exhibits, for the period ended April 1, 2011, as filed with the Securities and Exchange Commission, is available without...

  • Page 178
    350 Ellis Street Mountain View, CA 94043 Tel: (650) 527-8000 www.symantec.com