Symantec 2002 Annual Report Download - page 41

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Deferred Income Taxes
On a quarterly basis we evaluate our deferred tax asset balance for realizability. To the extent we believe
it is more likely than not that some portion or all of our deferred tax assets will not be realized, we will
establish a valuation allowance against the deferred tax assets. Realization of our deferred tax assets is
dependent upon future U.S. taxable income and future taxable income in certain foreign jurisdictions, as well
as our implementation of prudent and feasible tax planning strategies. Our judgments regarding future
proÑtability may change due to future market conditions, changes in U.S. or international tax laws and other
factors. These changes, if any, may require possible material adjustments to these deferred tax assets, resulting
in a reduction in net income or an increase in net loss in the period when such determinations are made.
Recent SigniÑcant Acquisitions and Divestitures
In August 2001, we divested our web access management product line, which we acquired in our
acquisition of AXENT, to PassGo Technologies Ltd. for approximately $1.1 million. We also entered into an
exclusive license and option agreement with PassGo whereby they will license our web access management
technology products. In consideration for the license, PassGo is required to pay us quarterly royalties based on
their net revenue over a four-year period. PassGo also has an option to purchase this technology at a price
starting at $18.8 million and declining to $3.3 million over a four-year period.
In December 2000, we acquired 100% of the outstanding common stock of AXENT, an enterprise
security software company, in exchange for Symantec common stock. We also assumed all of the outstanding
AXENT employee stock options. The transaction was accounted for as a purchase and was initially recorded
for approximately $924.7 million, which included goodwill of $699.7 million, tangible and intangible assets of
$220.8 million, in-process research and development of $22.3 million, deferred compensation of $992,000,
oÅset by $19.1 million in deferred income taxes. During the December 2001 quarter, we recorded additional
deferred tax assets of $5.0 million attributable to carryforward tax beneÑts, with a corresponding oÅset to
goodwill. During the June 2001 quarter, we increased the purchase price and goodwill by $4.5 million, as we
resolved certain pre-acquisition contingencies.
EÅective April 1, 2002, the related net balance of goodwill and workforce-in-place for the AXENT
acquisitions and other acquisitions completed prior to July 1, 2001 will no longer be amortized, but will be
subject to an annual impairment test. See Recent Accounting Pronouncements. For further discussion on our
recent signiÑcant acquisitions and divestitures, see Note 3 of the Notes to Consolidated Financial Statements
of this Form 10-K.
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