Symantec 2015 Annual Report Download

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2015 Annual Report
Proxy Statement and Form 10-K

Table of contents

  • Page 1
    2015 Annual Report Proxy Statement and Form 10-K

  • Page 2
    ... to take as part of our new strategy and the expected impact thereof, our intent to pay quarterly cash dividends in the future, and other characterizations of future events or circumstances are forward-looking statements. These statements are only predictions, based on our current expectations about...

  • Page 3
    ... opportunities and am confident we have the right team in place to execute our strategy. STRATEGIC AND OPERATIONAL FOCUS DROVE PROGRESS We made critical progress in our multi-year transformation during fiscal year 2015. In May 2014, we set five key priorities, including: 1-managing our businesses...

  • Page 4
    ...-based subscription offering; 3-boosting customer retention rates by improving the user experience throughout the customer lifecycle; and 4-expanding distribution channels through telcos and other service providers. Enterprise Security: During fiscal 2015, we returned endpoint protection to market...

  • Page 5
    ... our lead in the security industry. Our robust product pipeline, new product adoption by our global installed base, our capable and committed management team, and improving sales force execution make us confident that we'll grow our enterprise security business in the second half of fiscal 2016. We...

  • Page 6
    ... adjust for the following items: stock-based compensation expense; charges related to the amortization of intangible assets; certain other income and expense items that management considers unrelated to the Company's core operations; and the associated income tax effects of the adjustments. We...

  • Page 7
    ... talent to our executive team. Most importantly, he showed vision and creativity as he worked with the Board and the management team to develop a strategic plan to return Symantec to growth. Separating Our Information Management Business: The separation of our information management business marks...

  • Page 8
    ... at 9:00 a.m. (Pacific Time) on Tuesday, November 3, 2015, at Symantec Corporation's offices located at 350 Ellis Street, Mountain View, California 94043. For your convenience, we are pleased to offer a live and re-playable webcast of the Annual Meeting at www.symantec.com/invest. We are holding the...

  • Page 9
    ...PROPOSAL ...Stockholder's Supporting Statement ...Our Board of Directors' Statement in Opposition to Proposal 4 ...OUR EXECUTIVE OFFICERS ...SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ...Section 16(a) Beneficial Ownership Reporting Compliance ...EXECUTIVE COMPENSATION AND RELATED...

  • Page 10
    ... ...EQUITY COMPENSATION PLAN INFORMATION ...CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...Related-Person Transactions Policy and Procedures ...REPORT OF THE AUDIT COMMITTEE ...2015 ANNUAL MEETING INFORMATION ...Information About Solicitation and Voting ...About the Annual Meeting ...ADDITIONAL...

  • Page 11
    ... Time Symantec Corporation's offices located at 350 Ellis Street, Mountain View, California 94043 A live and re-playable webcast of the Annual Meeting is available on our Investor Relations website at www.symantec.com/invest September 4, 2015 VOTING MATTERS Board Recommendation Page Number for...

  • Page 12
    ...Stockholder Ability to Act by Written Consent Non-stockholder Approved Poison Pill Annual Advisory Vote on Executive Compensation Prohibit Short-selling, Hedging and Pledging Symantec Securities Stock Ownership Requirements for Directors and Executive Officers 9 8 Yes Yes Yes Yes Yes Yes Yes Yes Yes...

  • Page 13
    ... COMPONENTS FOR FISCAL 2015: Component Base Salary Executive Annual Incentive Award Restricted Stock Units Performance-based Restricted Stock Units (PRUs) Key Characteristics Based on talent, experience, performance, contribution levels, individual role, positioning relative to market, and our...

  • Page 14
    ... 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 15
    ...2013. The Board believes that having an independent director serve as the non-executive Chairman of the Board is the appropriate leadership structure for our company at this time because it allows our Chief Executive Officer to focus on executing our company's strategic plan and managing our company...

  • Page 16
    ... and our company with regard to each director's business and other activities as they may relate to Symantec and our management. Based on this review and consistent with our independence criteria, the Board has affirmatively determined that the following current directors and director nominees are...

  • Page 17
    ... 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 competitive issues...

  • Page 18
    ... M. Vautrinot Number of Meetings in Fiscal 2015 = Member * = Chair No Yes Yes Yes Yes Yes Yes Yes Yes 17 11 9 4 * Mr. Miller was a member of the Audit Committee until October 28, 2014. Audit Committee Our Audit Committee oversees our company's accounting and financial reporting processes and the...

  • Page 19
    ... that support our company's ability to retain and develop the executive and leadership talent required to deliver against our company's short term and long term business strategies, including succession planning for the executive officers. ‰ Review our company's compensation policies, plans and...

  • Page 20
    ... the Compensation and Leadership Development Committee for the Board and executive officers. ‰ Implement and oversee the processes for evaluating the Board, its committees and the CEO on an annual basis. ‰ Oversee the management of risks that may arise in connection with our company's governance...

  • Page 21
    ... global sales, marketing or product development organization, are important to us, because they bring experience and perspective in analyzing, shaping, and overseeing the execution of important strategic, operational and policy issues at a senior level. ‰ Public Company Board Experience. Directors...

  • Page 22
    ... - Stockholder Proposals for the 2016 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...

  • Page 23
    ... master's of business administration from Stanford Business School and a bachelor's degree from Harvard University. Director Qualifications: ‰ Industry and Technology Experience - former Chief Executive Officer and Chairman of Quantum Corporation; former member of the board of directors of Quantum...

  • Page 24
    ...Member of the board of directors of Telenor (Norway), former Chairman and Chief Executive Officer of Thomson S.A. (France); former Deputy CEO of France Telecom (France); former member of the board of directors of SonaeCom (Portugal) and MoserBaer (India). ‰ Leadership Experience - Managing Partner...

  • Page 25
    ... a director of a variety of companies, including Tercica Incorporated. Mr. Mahoney has a bachelor's degree from Princeton University and a master's of business administration from Harvard Business School. Director Qualifications: ‰ Industry and Technology Experience - Co-Chief Executive Officer of...

  • Page 26
    ... Managing Director, Head of Change Leadership and a member of the Wealth Management Americas Executive Committee of UBS Financial Services, a global financial services firm, from April 2012 to September 2013. She was Group Managing Director and Chief Operating Officer of Wealth Management Americas...

  • Page 27
    ... 2010, when Sprint Nextel acquired Virgin Mobile USA, a cellular phone service provider. Mr. Schulman served as Chief Executive Officer of Virgin Mobile USA from September 2001 to November 2009, and a member of the board of directors of Virgin Mobile USA from October 2001 to November 2009. From...

  • Page 28
    ... Air Force in October 2013 after over 30 years of service. During her career with the United States Air Force, she served in a number of leadership positions including Major General and Commander, 24th Air Force/Network Operations from April 2011 to October 2013; Special Assistant to the Vice Chief...

  • Page 29
    ... an annual award of fully-vested restricted stock under the 2013 Plan having a fair market value on the grant date equal to a pre-determined dollar value, which was $235,000. The restricted stock awards granted for fiscal year 2015 were granted on May 13, 2014 and are fully vested. Director Stock...

  • Page 30
    ... Only one non-employee director held stock options at 2015 fiscal year-end: Mr. Miller (12,000). (6) In lieu of cash, Mr. Miller received 100% of his annual retainer fee of $50,000 in the form of our common stock. Accordingly, pursuant to the terms of the 2000 Director Equity Incentive Plan, he was...

  • Page 31
    ...'s financial statements for Symantec's 2015 fiscal year. Representatives of KPMG are expected to attend the meeting with the opportunity to make a statement and respond to appropriate questions from stockholders present at the meeting. Principal Accountant Fees and Services We regularly review the...

  • Page 32
    ..., audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit...

  • Page 33
    ... development, or software and engineering-driven companies that compete with us for talent. Our peer group companies are comparable to us in terms of complexity, global reach, revenue and market capitalization. ‰ We have long-standing stock ownership guidelines for our named executive officers...

  • Page 34
    ... vote to approve the compensation of our named executive officers is advisory, and therefore not binding. Although the vote is non-binding, the Compensation Committee and the Board value your opinion and will consider the outcome of the vote in establishing compensation philosophy and making future...

  • Page 35
    ... 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, telephone: (650...

  • Page 36
    ..., including those cited by the proponent. Since 2006, Symantec has supported the ten principles of the United Nations Global Compact (UNGC) to protect human rights, uphold ethical labor conditions, preserve the environment, and combat corruption. In the years since, we have worked diligently to...

  • Page 37
    ... President and Chief Human Resources Officer Executive Vice President and General Manager, Information Management Senior Vice President and Chief Accounting Officer Executive Vice President, Enterprise Security Worldwide Sales Executive Vice President, Norton Business Unit Executive Vice President...

  • Page 38
    ... from University of California at Santa Barbara. Mr. Jones has served as our Executive Vice President, Enterprise Security Worldwide Sales since March 2015. From June 2014 to March 2015, he served as our Senior Vice President, Asia Pacific & Japan. Prior to joining us, he served as Managing Director...

  • Page 39
    ... stockholder's address is 555 California Street, 40th Floor, San Francisco, CA 94104. (2) Based solely on a Schedule 13G/A filing made by BlackRock, Inc. on January 29, 2015, reporting sole voting and dispositive power over the shares. This stockholder's address is 55 East 52nd Street, New York, NY...

  • Page 40
    ... with copies of all Section 16(a) forms that they file. Based solely on its review of the copies of such forms furnished to Symantec and written representations from the directors and executive officers, Symantec believes that all Section 16(a) filing requirements were met in fiscal year 2015. 30

  • Page 41
    ... to pay-for-performance and to corporate governance best practices: ‰ We reward performance that meets our predetermined goals. Our compensation plans do not have guaranteed payout levels, and our named executive officers do not receive any payouts under performance-based cash or equity awards if...

  • Page 42
    ... 2014, we announced plans to separate our business into two independent companies: one focused on security and one focused on information management. ‰ We hired five new executives, who bring valuable skills in analytics, backup and recovery software, sales, security, strategy, and human resources...

  • Page 43
    ... the FY15 Executive Annual Incentive Plans, the named executive officers were eligible to receive performance-based incentive cash awards based on our company's achievement of targeted non-GAAP operating income for fiscal 2015 and targeted non-GAAP revenue during fiscal 2015. ‰ Long-term incentive...

  • Page 44
    ... officer pay levels (as described below), the competitiveness of our executive and director compensation programs, the design of awards and proposed performance metrics and opportunity ranges for incentive plans, compensation-related trends and developments in our industry and the broader talent...

  • Page 45
    ...to our named executive officers depends on the company share price performance. A Total Rewards Approach: Elements of the total rewards offered to our executive officers include base salary, short- and long-term incentives including equity awards, health benefits, a deferred compensation program and...

  • Page 46
    ...its determinations with regard to compensation, the Compensation Committee reviews the various compensation elements for the CEO and our other named executive officers (including base salary, target annual bonus, and the value of vested and unvested equity awards actually or potentially issued). 36

  • Page 47
    ...total direct compensation (sum of base salary, target annual incentive and grant date fair value of equity award) was at-risk, and on average approximately 88% of our other named executive officers' compensation opportunity was at-risk compensation. FY15 CEO Target Total Direct Compensation Mix FY15...

  • Page 48
    ... were: (i) base salary, (ii) short-term cash incentive awards, and (iii) long-term equity incentive awards. I. Base Salary The Compensation Committee reviews the named executive officers' salaries annually as part of its overall competitive market assessment and may make adjustments based on talent...

  • Page 49
    ... Mr. Rosch's base salary increased by 10% in connection with his promotion to Executive Vice President, Norton Business Unit in May 2014. - 875,000 Mr. Gillett did not receive a base salary increase in fiscal 2015. n/a Former Officer Stephen E. Gillett ... (1) Mr. Brown received a salary of $100...

  • Page 50
    ... than our CEO) against individual performance targets as well. Executive Annual Incentive Plan Target Opportunities: Under the 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...

  • Page 51
    ... the compensation of our named executive officers are made solely by the Compensation Committee. Although the Compensation Committee has the discretion to adjust awards as appropriate, it did not exercise such discretion for fiscal 2015. For the non-GAAP operating income and non-GAAP revenue metrics...

  • Page 52
    ... for the other named executive officers, makes any appropriate adjustments, and approves their compensation, if warranted. Achievement of Fiscal Year 2015 Performance Metrics: For fiscal 2015, our non-GAAP operating income target was $1,905 million and our non-GAAP revenue target was $6,737...

  • Page 53
    ... 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 regular RSUs granted to our named executive officers in fiscal 2015 as part of the annual review process provide...

  • Page 54
    ... of our company under the terms of the Symantec Executive Retention Plan, as amended), the award shall vest, if at all, only at the end of the third year of the performance period (i.e., fiscal 2017), and the named executive officer must be employed by us at the end of such period in order to vest...

  • Page 55
    ... granted in fiscal 2015, value of each award and the total value of the equity awards for each named executive officer as of the Grant Date (all values of restricted stock unit awards are based upon the closing price for a share of our common stock of $21.29 on June 10, 2014, except Mr. Brown's RSU...

  • Page 56
    ...$150,000 or greater (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 provided to be competitive in the executive talent market, and to provide executives with a tax-efficient alternative for...

  • Page 57
    ... defined in the plan). Under the terms of this plan, eligible executive officers are entitled to receive a severance payment equal to one year of base salary. Payment of the foregoing benefit is subject to the applicable officer returning a release of claims. The Compensation Committee determined to...

  • Page 58
    ...from purchasing or selling Symantec securities while in possession of material, non-public information. It also requires that each of our directors, our Chief Executive Officer and our Chief Financial Officer conduct open market sales of our securities only through use of stock trading plans adopted...

  • Page 59
    ... or more executive officers who served on our Board of Directors or Compensation Committee during fiscal 2015. Compensation Committee Report The information contained in the following report of Symantec's Compensation Committee is not considered to be "soliciting material," "filed" or incorporated...

  • Page 60
    ... of the fiscal year (the "named executive officers"). Summary Compensation Table for Fiscal 2015 Fiscal Salary Year ($) 2015 1,473,077(2) 2014 36,364(6) 2015 2014 2015 Bonus ($) - - Stock Awards ($)(1) 14,177,180(3) - Non-Equity Option Incentive Plan All Other Awards Compensation Compensation Total...

  • Page 61
    ... Company's contributions to Mr. Brown's account under its 401(k) plan. Mr. Brown received a prorated salary of $36,364 based on his period of employment as our interim President and Chief Executive Officer in fiscal 2014. Represents the following non-employee director compensation paid to Mr. Brown...

  • Page 62
    ..., Norton Business Unit in fiscal 2015. Mr. Rosch's base annual salary increased from $400,000 to $440,000 in July 2014 in connection with his promotion to our Executive Vice President, Norton Business Unit. (21) Represents (a) 12,145 for coverage of expenses related to attendance at the FY14 sales...

  • Page 63
    ...shows for the fiscal year ended April 3, 2015, certain information regarding grants of plan-based awards to our named executive officers from our incentive plans: Grants of Plan-Based Awards in Fiscal 2015 All Other Grant All Other Option Date Stock Awards: Fair Awards: Number Value Estimated Future...

  • Page 64
    ... achieve of those goals and the same employment condition is met. For additional detail on the grant date fair value of the PRUs, see footnote 2 to the Summary Compensation Table above. (4) This RSU grant was granted under the 2013 Plan and vests over three years: 30% to vest on the first and second...

  • Page 65
    ... for the fiscal year ended April 3, 2015, certain information regarding outstanding equity awards at fiscal year end for our named executive officers. Outstanding Equity Awards At Fiscal Year-End 2015 Option Awards Stock Awards Equity Incentive Plan Awards: Number of Unearned Shares, Market Value...

  • Page 66
    ... year with respect to our named executive officers: Option Exercises and Stock Vested in Fiscal 2015 Option Awards Number of Shares Acquired Value Realized on Exercise on Exercise (#) ($) Stock Awards Number of Shares Value Acquired Realized on Vesting on Vesting (#) ($) Name Michael A. Brown...

  • Page 67
    ... each of the named executive officers, are eligible to participate in the Symantec Corporation Deferred Compensation Plan. The plan provides the opportunity for participants to defer up to 75% of base salary and 100% of variable pay each year. Variable pay includes all bonus and commission payments...

  • Page 68
    ..., part of a business, divestiture or spin-off and offered employment upon terms and conditions substantially identical to those in effect immediately prior to such sale, divestiture or spin-off; and (iii) the executive officer is not entitled to severance under any other plan, fund, program, policy...

  • Page 69
    ... Brown pursuant to the Symantec Executive Retention Plan and the Symantec Executive Severance Plan, assuming a qualifying termination as of April 3, 2015: Severance Pay COBRA Premiums Option Vesting RSU Vesting PRU Vesting Involuntary Termination Because of Market Conditions or Division Performance...

  • Page 70
    .... He received a cash severance payment equal to one year's annual base salary, 75% of his target FY15 Executive Annual Incentive Plan bonus, reimbursement of COBRA premiums for 12 months, and six months of outplacement services. Severance Pay COBRA Premiums Option Vesting RSU Vesting PRU Vesting...

  • Page 71
    ... of Symantec's existing equity compensation plans as of April 3, 2015: Equity Compensation Plan Information Number of Securities Number of Securities Remaining Available for to be Issued Upon Weighted-Average Future Issuance Under Exercise of Exercise Price of Equity Compensation Plans Outstanding...

  • Page 72
    ...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 73
    ... financial statements be included in Symantec's Annual Report on Form 10-K for the fiscal year ended April 3, 2015 for filing with the SEC. By: The Audit Committee of the Board of Directors: Frank E. Dangeard Robert S. Miller (member through October 28, 2014) Anita M. Sands V. Paul Unruh (Chair...

  • Page 74
    ... on behalf of the Board for use at the Annual Meeting to be held at Symantec's offices located at 350 Ellis Street, Mountain View, California 94043 on Tuesday, November 3, 2015, at 9:00 a.m. (Pacific Time), and any adjournment or postponement thereof. We will provide a live and re-playable webcast...

  • Page 75
    ... 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. For questions regarding your stock ownership, you may contact our transfer agent, Computershare Investor Services, by email through their website at www...

  • Page 76
    ... the 2016 fiscal year. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the Annual Meeting. What is the vote required for each proposal? The votes required to approve each proposal are as follows: ‰ Proposal No. 1. Each director must be...

  • Page 77
    ...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 in a current report on Form 8-K within four business days of the Annual Meeting. ADDITIONAL...

  • Page 78
    ... Relations department at 350 Ellis Street, Mountain View, California 94043, Attn: Investor Relations, telephone number (650) 527-5523. Any stockholders who share the same address and currently receive multiple copies of Symantec's Notice of Internet Availability or annual report and other proxy...

  • Page 79
    ... Period from to Commission File Number 000-17781 Symantec Corporation (Exact name of the registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 350 Ellis Street, Mountain View, California (Address of principal executive offices) 77-0181864...

  • Page 80
    ... ...Item 11. Executive Compensation ...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...Item 13. Certain Relationships and Related Transactions, and Director Independence ...Item 14. Principal Accounting Fees and Services ...PART IV Item 15...

  • Page 81
    ...to our plans to distribute shares of our information management business to shareholders, projections of our future financial performance, anticipated growth and trends in our businesses and in our industries, the anticipated impacts of acquisitions, our intent to pay quarterly cash dividends in the...

  • Page 82
    ... Our market leading products and services protect people and information in any environment - from the mobile device in your pocket, to the enterprise data center, to cloud-based systems. Founded in April 1982, Symantec operates one of the largest global threat-intelligence networks. The company has...

  • Page 83
    ... in its future. As part of this program we paid quarterly cash dividends of $0.15 per share of common stock in fiscal 2015, paying out a total of $413 million to shareholders. Our Board of Directors approved an additional $1.0 billion stock repurchase program in February 2015. This program does not...

  • Page 84
    ...productive and protected at home and at work. Our Norton-branded services provide multi-layer security and identity protection on major desktop and mobile operating systems, to defend against increasingly complex online threats to individuals, families, and small businesses. Our Norton products help...

  • Page 85
    ... sales resources that support our global partner ecosystem. We also maintain important relationships with a number of Original Equipment Manufacturers ("OEMs"), Internet Service Providers ("ISPs"), and retail and online stores by which we market and sell our products. Our dedicated renewals team...

  • Page 86
    ... online services and phone, chat, and email support to consumers worldwide, and our Norton Security products come with a "Virus Protection Promise," which in some markets provides free virus removal services to customers whose protected computers become infected. We provide customers various levels...

  • Page 87
    ... agreements are generally non-transferable and have either a perpetual or subscription based time limited term. We also educate our employees on trade secret protection and employ measures to protect our facilities, equipment, and networks. Trademarks, Patents, Copyrights, and Licenses Symantec...

  • Page 88
    ... work in sales and marketing, 6,700 in research and development, 4,900 in support and services, and 1,900 in management, manufacturing, and administration. Available Information Our Internet address is www.symantec.com. We make available free of charge our annual reports on Form 10-K, quarterly...

  • Page 89
    ... 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 key management, technical, sales, marketing, finance...

  • Page 90
    ... reduce staffing levels when required by market conditions, our business and operating results could be adversely affected. Effective succession planning is also important to our long-term success. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could...

  • Page 91
    ... we operate; Addressing trade compliance issues affecting our ability to ship our products; Developing or expanding efficient sales channels; and Obtaining sufficient licenses to technology and technical access from operating system software vendors on reasonable terms to enable the development and...

  • Page 92
    ... things, price reductions of our products, reduced profitability and loss of market share. Many of our competitors have greater financial, technical, sales, marketing, or other resources than we do and consequently may have the ability to influence customers to purchase their products instead of...

  • Page 93
    ... parties; and Health or similar issues, such as a pandemic. Any of the foregoing factors could cause the trading price of our common stock to fluctuate significantly. Our business models present execution and competitive risks. In recent years, our SaaS offerings have become increasingly critical...

  • Page 94
    ... of our products or changes in customer demand, our revenues could decrease. The increase in open source software distribution may also cause us to change our pricing models. Our business depends on customers renewing their arrangements for maintenance, subscriptions, managed security services and...

  • Page 95
    ..., 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, any errors, defects, disruptions in service or other performance problems with our SaaS...

  • Page 96
    ... effect on our reputation and business. Our customers may also accidentally disclose their passwords or store them on a mobile device that is lost or stolen, creating the perception that our systems are not secure against third-party access. Additionally, if third parties that we work with, such as...

  • Page 97
    ... general economic conditions, strategic direction, competitive risks, and other issues that could result in a reduction of 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...

  • Page 98
    ...performance problems with our products and services could harm our reputation and may damage our customers' businesses. For example, we may experience disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, capacity...

  • Page 99
    ... inflationary conditions could reduce our customers' ability to obtain financing for software products or 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...

  • Page 100
    ... delayed or lost revenues as a result of these errors. Errors, failures, or bugs in 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...

  • Page 101
    ... also subject us 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...

  • Page 102
    ... condition and results of operations. Our software products, SaaS Offerings and website may be subject to intentional disruption that could adversely impact our reputation and future sales. Despite our precautions and significant ongoing investments to protect against security risks, data protection...

  • Page 103
    ...approximately $222 million from the period beginning January 2007 and ending September 2012. In 2012, a sealed civil lawsuit was filed against Symantec related to compliance with the GSA Schedule contract and contracts with California, Florida, and New York. In July 2014, following expiration of the...

  • Page 104
    ... and other long-lived assets; Stock-based compensation expense; Restructuring charges; and Loss on sale of a business and similar write-downs of assets held for sale. Our effective tax rate may increase, which could increase our income tax expense and reduce (increase) our net income (loss). Our...

  • Page 105
    ..., which may increase our operating costs. Such incidences of uncertainty could disrupt customers' spending on our products and services which may adversely affect our revenue. In addition, our corporate headquarters are located in the Silicon Valley area of Northern California, a region known...

  • Page 106
    ... 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 approximately 1,074,000 square feet, of which 723...

  • Page 107
    ...are subject to the approval of our Board of Directors. Repurchases of our equity securities Stock repurchases during the three months ended April 3, 2015 were as follows: Total Number of Shares Purchased Under Publicly Announced Average Price Paid Plans or per Share Programs (In millions, except per...

  • Page 108
    ... day of trading for fiscal 2010, and the reinvestment of all dividends). The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of our common stock. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN Among Symantec Corporation...

  • Page 109
    ... Condition and Results of Operations. Historical results may not be indicative of future results. Five-Year Summary Fiscal (a) 2014 2013 2012 (In millions, except per share data) 2015 2011 Consolidated Statements of Income Data: Net revenue Operating income Net income attributable to Symantec...

  • Page 110
    ...Our fiscal 2015 was a 53-week year whereas our fiscal 2014 and 2013 were 52-week years. Strategy In our security business, we operate a global civilian cyber intelligence threat network and track a vast number of threats across the Internet from hundreds of millions of mobile devices, endpoints, and...

  • Page 111
    ... for customers to be productive and protected at home and at work. Our Norton-branded services provide multi-layer security and identity protection on major desktop and mobile operating systems, to defend against increasingly complex online threats to individuals, families, and small businesses...

  • Page 112
    ... 53-week fiscal 2015 year and by increased license revenue. Content, subscription, and maintenance revenue decreased $211 million primarily due to the general strengthening of the U.S. dollar against foreign currencies and declines in our consumer security products driven by our channel strategy to...

  • Page 113
    ... and require us to make estimates. For software arrangements that include multiple elements, including perpetual software licenses and maintenance or services, packaged products with content updates, and subscriptions, we allocate and defer revenue for the undelivered items based on the fair value...

  • Page 114
    ... 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 maintenance, subscriptions, managed security services and SaaS offerings are generally offered to our customers over...

  • Page 115
    ... to our market capitalization and to the valuation 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...

  • Page 116
    ... revenues offset by estimated future costs to dispose of the product to which the asset relates. For indefinite-lived intangible assets, we review impairment on an annual basis consistent with the timing of the annual evaluation for goodwill. These assets generally include trade names and trademarks...

  • Page 117
    ... expense is measured at the grant date based on the fair value of the award and is generally recognized ratably over the requisite service period, which is generally the vesting period of the respective award. We record stock-based compensation expense for awards that are expected to vest. As...

  • Page 118
    ... and financial condition. RESULTS OF OPERATIONS The following table sets forth certain Consolidated Statements of Income data as a percentage of net revenue for the fiscal years indicated below: 2015 2014 2013 Net revenue: Content, subscription, and maintenance License Total net revenue Cost of...

  • Page 119
    ... License revenue decreased $169 million due to declines from our Information Management segment of $89 million, Enterprise Security segment of $63 million and Consumer Security segment of $17 million. Net revenue and operating income by segment by fiscal year Change in % 2013 2015 v 2014 2014 v 2013...

  • Page 120
    ... associated with our services business. Net revenue by geographic region by fiscal year 2015 2014 Change in % 2013 2015 v 2014 2014 v 2013 (Dollars in millions) Revenue by geographic region: Americas (U.S., Canada and Latin America) EMEA (Europe, Middle East, Africa) Asia Pacific/Japan Total net...

  • Page 121
    ... technologies from acquired companies became fully amortized early in fiscal 2014. Operating expenses by fiscal year 2015 Change in % 2014 2013 2015 v 2014 2014 v 2013 (Dollars in millions) Sales and marketing expense Research and development expense General and administrative expense Amortization...

  • Page 122
    ... expenses of $66 million in fiscal 2015 as compared to fiscal 2014. 2014 compared to 2013: Sales and marketing expense decreased $350 million in fiscal 2014, primarily due to lower salaries and wages of $188 million resulting from lower headcount, and lower advertising and promotion expenses of $146...

  • Page 123
    ... 25% in fiscal 2015, 2014, and 2013, respectively. The tax expense in fiscal 2015 was reduced by the following benefits: (1) $59 million for tax benefits related to the settlement of the Symantec 2009 through 2013 Internal Revenue Service ("IRS") audit, (2) $21 million in tax benefits resulting from...

  • Page 124
    ... through 2005 tax years and executed the final closing agreement. Accordingly, we recorded a further tax benefit of $3 million in fiscal 2013 based on the closing agreement. We also amended our state tax returns for the Veritas 2002 through 2005 tax years in fiscal 2013 to reflect the adjustments...

  • Page 125
    ... future dividends and dividend equivalents will be subject to the approval of our Board of Directors. Restructuring Plans. In fiscal 2015, we announced plans to separate our business into two independent publicly-traded companies: one focused on security and one focused on information management. We...

  • Page 126
    ... was $1.6 billion for fiscal 2013, which resulted from net income of $755 million adjusted for non-cash items, including depreciation and amortization charges of $698 million and stock-based compensation expense of $164 million, and an increase in deferred revenue of $119 million. These amounts were...

  • Page 127
    ... notes of $1.0 billion, repurchases of our common stock of $500 million and cash dividends paid of $418 million, partially offset by net proceeds from sales of common stock through employee stock benefit plans of $234 million. Net cash provided by financing activities of $308 million for fiscal 2013...

  • Page 128
    .... Therefore, $134 million in long-term income taxes payable has been excluded from the contractual obligations table. For further information, see Note 11 of the Notes to Consolidated Financial Statements in this annual report. (3) (4) Indemnifications In the ordinary course of business, we may...

  • Page 129
    ... this Item 8. Selected quarterly financial data Apr. 3, 2015 Fiscal 2015 Fiscal 2014 Jan. 2, Oct. 3, Jul. 4, Mar. 28, Dec. 27, Sep. 27, 2015 2014 2014 2014 2013 2013 (In millions, except per share data) Jun. 28, 2013 Net revenue Gross profit Operating income Net income Net income per share - basic...

  • Page 130
    ... of the Exchange Act) for Symantec. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 3, 2015, based on criteria established in Internal...

  • Page 131
    inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. Item 9B. Other Information None. 53

  • Page 132
    .... Executive Compensation 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 12. Security Ownership of Certain Beneficial Owners...

  • Page 133
    ... 350 Ellis Street Mountain View, California 94043 650-527-8000 The following documents are filed as part of this report: Page 1. 2. Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm ...Consolidated Balance Sheets as of April 3, 2015 and March 28, 2014...

  • Page 134
    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 as of April 3, 2015 and March 28, 2014, and the related consolidated statements ...

  • Page 135
    SYMANTEC CORPORATION CONSOLIDATED BALANCE SHEETS April 3, March 28, 2015 2014 (In millions, except par value) ASSETS Current assets: Cash and cash equivalents Short-term investments Trade accounts receivable, net of allowance for doubtful accounts of $7 and $7, respectively Deferred income taxes ...

  • Page 136
    SYMANTEC CORPORATION CONSOLIDATED STATEMENTS OF INCOME Year Ended April 3, March 28, March 29, 2015 2014 2013 (In millions, except per share data) Net revenue: Content, subscription, and maintenance License Total net revenue Cost of revenue: Content, subscription, and maintenance License ...

  • Page 137
    SYMANTEC CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended April 3, March 28, March 29, 2015 2014 2013 (Dollars in millions) Net income Other comprehensive (loss) income, net of taxes: Foreign currency translation adjustments: Translation adjustments Reclassification ...

  • Page 138
    ... to restricted stock units Dividends paid and accrued Stock-based compensation, net of estimated forfeitures Income tax benefit from employee stock transactions Balance as of April 3, 2015 - $ The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 60

  • Page 139
    ... Net gain from sale of short-term investments Other Net change in assets and liabilities, excluding effects of acquisitions: Trade accounts receivable, net Deferred commissions Accounts payable Accrued compensation and benefits Deferred revenue Income taxes payable Other assets Other liabilities...

  • Page 140
    ... long-lived assets, valuation of stock-based compensation, contingencies and litigation, and the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions). Segment reporting change In fiscal 2015, we focused on managing our businesses as...

  • Page 141
    ... loss was $3 million. For fiscal 2014 and 2013, the net foreign currency transaction losses were $6 million for each year. These net losses are included in other income, net, in our Consolidated Statements of Income. Revenue recognition We market and distribute our software products both as stand...

  • Page 142
    ... ("OEMs"), royalty revenue is recognized 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...

  • Page 143
    ...time to maturity. Short-term investments. Short-term investments consist of investment and marketable equity securities that are classified as available-for-sale and recognized at fair value using Level 1 and Level 2 inputs, which are quoted using market prices, independent pricing vendors, or other...

  • Page 144
    ...116 Depreciation expense was $280 million, $281 million, and $283 million in fiscal 2015, 2014, and 2013, respectively. Business combinations We use the acquisition method of accounting under the authoritative guidance on business combinations. Each acquired company's operating results are included...

  • Page 145
    ...any goodwill impairment charges in fiscal 2015, 2014 or 2013. Intangible assets. In connection with our acquisitions, we generally recognize assets for customer relationships, developed technology, finite-lived trade names, patents, and indefinite-lived trade names. Finitelived intangible assets are...

  • Page 146
    .... Fair value of stock-based awards. Stock-based awards principally consist of restricted stock units ("RSU"). The fair value of each RSU is equal to the market value of Symantec's common stock on the date of grant. Because the Company's RSUs include dividend-equivalent rights, the fair values...

  • Page 147
    ... operations and certain other disposals that do not meet the definition of a discontinued operation. The new standard is effective for the Company April 4, 2015, and will apply to the treatment of the planned separation of our information management business that is expected to occur on January...

  • Page 148
    ... actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the fair value of these assets. Marketable equity securities are recorded at fair value using quoted prices in...

  • Page 149
    ... our current and long-term debt was $2.2 billion based on Level 2 inputs. Note 3. Goodwill and Intangible Assets During fiscal 2015, 2014, and 2013 we completed business acquisitions primarily to enhance our technology portfolio for aggregate cash consideration, net of cash acquired, of $19 million...

  • Page 150
    ... April 3, 2015 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Carrying Amount Amount (Dollars in millions) March 28, 2014 Accumulated Amortization Net Carrying Amount Customer relationships Developed technology Finite-lived trade names Patents Total finite-lived intangible assets...

  • Page 151
    ... fiscal 2014. On May 14, 2015, we declared a cash dividend of $0.15 per share of common stock to be paid on June 24, 2015 to all stockholders of record as of the close of business on June 10, 2015. All shares of common stock issued and outstanding, and unvested restricted stock and performance-based...

  • Page 152
    ... Notes is payable semiannually. Both the discount and issuance costs are being amortized as incremental interest expense over the respective terms of the Senior Notes. Contractual interest expense totaled $73 million, $73 million, and $67 million in fiscal years 2015, 2014, and 2013, respectively...

  • Page 153
    ...In fiscal 2015, we announced plans to separate our business into two independent publicly-traded companies: one focused on security and one focused on information management. We expect to complete the legal separation on January 2, 2016, subject to market, regulatory and certain other conditions. In...

  • Page 154
    ...$121 million, and $124 million for fiscal 2015, 2014, and 2013, respectively. The minimum future rentals on noncancelable operating leases by fiscal year are as follows: April 3, 2015 (Dollars in millions) 2016 2017 2018 2019 2020 Thereafter Total minimum future lease payments Sublease income Total...

  • Page 155
    ... agreements for purchases of goods or services. Management believes that cancellation of these contracts is unlikely and we expect to make future cash payments according to the contract terms. The following reflects unrecognized purchase obligations by fiscal year: April 3, 2015 (Dollars in millions...

  • Page 156
    ..., Symantec Endpoint Protection, and other Symantec email and web security products. In October 2014, one patent was dismissed from the case. On January 26, 2015, a jury trial began on the remaining three patents. At trial, IV requested a damages award of approximately $299 million. Symantec offered...

  • Page 157
    ... for customers to be productive and protected at home and at work. Our Norton-branded services provide multi-layer security and identity protection on major desktop and mobile operating systems, to defend against increasingly complex online threats to individuals, families, and small businesses...

  • Page 158
    ...The following table summarizes revenue by significant product categories: Year Ended April 3, March 28, March 29, 2015 2014 2013 (Dollars in millions) Core consumer security Backup Information availability Endpoint security and management Others (1) Total product revenue (1) $ 1,887 1,536 585 604...

  • Page 159
    ... of the respective totals. Significant customers In fiscal 2015, 2014 and 2013, there were no significant customers that accounted for more than 10% of our total net revenue. Note 10. Stock-Based Compensation Stock purchase plans 2008 Employee Stock Purchase Plan We maintain the 2008 Employee Stock...

  • Page 160
    ... of Income. Year Ended March 28, March 29, 2014 2013 (In millions) April 3, 2015 Cost of revenue Sales and marketing Research and development General and administrative Total stock-based compensation expense Tax benefit associated with stock-based compensation expense Net stock-based compensation...

  • Page 161
    ... years. Performance-based restricted stock units During fiscal 2015, 2014 and 2013, we granted performance-based restricted stock units ("PRUs") to certain senior level employees under our 2013 Plan and 2004 Plan. During fiscal 2015, we granted 2 million PRUs. As of April 3, 2015 and March 28, 2014...

  • Page 162
    ... income tax is as follows: Year Ended April 3, March 28, March 29, 2015 2014 2013 (Dollars in millions) Federal statutory tax State taxes, net of federal benefit Foreign earnings taxed at less than the federal rate Domestic production activities deduction Federal research and development credit...

  • Page 163
    ...2015 2014 (Dollars in millions) Deferred tax assets: Tax credit carryforwards Net operating loss carryforwards of acquired companies Other accruals and reserves not currently tax deductible Deferred revenue Loss on investments not currently tax deductible State income taxes Stock-based compensation...

  • Page 164
    ... include California, Japan, the UK, India and Australia. As of April 3, 2015, we have effectively settled Symantec U.S. federal income taxes for the fiscal years 2009 through 2013. In addition, we are under examination by the California Franchise Tax Board for the Symantec California income taxes...

  • Page 165
    ... for the Symantec 2009 through 2013 fiscal years. The settlement and effective settlement resulted in a benefit to tax expense in fiscal year 2015 of $59 million. Additionally, the Company settled transfer price related matters of $158 million, a portion of which was accounted for against deferred...

  • Page 166
    ...and March 10, 2011. In April 2015, we reached agreement in principle with the plaintiffs under which the Company will pay the plaintiffs $30 million. As we consider this settlement amount now estimable and probable, we have recorded it as an offset to revenue during the year ended April 3, 2015. 88

  • Page 167
    ... 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 22nd day of May 2015. SYMANTEC CORPORATION By: /s/ Michael A. Brown Michael A. Brown President and Chief Executive Officer, and Director KNOW ALL...

  • Page 168
    ... Funding, Inc., as CoDocumentation Agents, and Wells Fargo Securities, LLC, Banc of America Securities LLC and Citigroup Global Markets Inc., as Joint Bookrunners and Joint Lead Arrangers First Amendment to Credit Agreement, dated June 7, 2012, by and among Symantec Corporation, Wells Fargo Bank...

  • Page 169
    ...) Form of Indemnification Agreement for Officers, Directors and Key Employees Symantec Corporation 1996 Equity Incentive Plan, as amended, including form of Stock Option Agreement and form of Restricted Stock Purchase Agreement Symantec Corporation Deferred Compensation Plan, restated and amended...

  • Page 170
    ... Number Exhibit Description Form Incorporated by Reference Filed File No. Exhibit Filing Date Herewith 10.16(*) Symantec Corporation 2013 Equity Incentive Plan, including form of Stock Option Grant - Terms and Conditions and form of RSU Awards Agreement Symantec Senior Executive Incentive Plan...

  • Page 171
    ..., to the Trademark License Agreement, dated August 9, 2010, by and between VeriSign, Inc. and Symantec Corporation Executive Employment Agreement dated September 24, 2014 between Symantec Corporation and Michael A. Brown Amendment dated April 30, 2014 to Offer Letter between Symantec Corporation and...

  • Page 172
    ...Incorporated by Reference Filed File No. Exhibit Filing Date Herewith 101.PRE XBRL Taxonomy Presentation Linkbase Document 101.DEF XBRL Taxonomy Definition Linkbase Document Indicates a management contract, compensatory plan or arrangement. Filed by Veritas Software Corporation. X X This exhibit...

  • Page 173
    ... General Manager, Veritas Adrian M. Jones Executive Vice President, Enterprise Security Worldwide Sales Sheila Jordan Senior Vice President and Chief Information Officer Francis C. Rosch Executive Vice President, Norton Business Unit Jeff Scheel Senior Vice President Corporate Development, Alliances...

  • Page 174
    350 Ellis Street Mountain View, CA 94043 Tel: (650) 527-8000 www.symantec.com